Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

I rise to speak on the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 on behalf of the Greens. The Greens have long been campaigning about and pointing to the exorbitant amounts being made by banks and credit card companies when people do little more than use their own money, often in situations where they have no choice other than to use a card or have their transaction processed electronically. The kind of reform that we are seeing today has come through the Financial System Inquiry. A large number of submissions were made to the Murray inquiry that this overcharging—unnecessary overcharging, with no justification—be reformed. It is especially important in light of the fact that, in the future, it is very likely that we will face a cashless economy, and so these kinds of electronic transactions and how they are priced—and whether those transactions are priced fairly—in terms of the cost of the provision of these services, need to be taken into account. We welcome the legislation before us today. The Greens will be supporting this bill.

However, we do not believe that this bill goes far enough. The Greens have always campaigned for fees at automatic teller machines to be regulated also, given that the cost of provision of those machines allows the banks to make significant profits. There is some evidence that this is perhaps less true for some of the private ATM providers but, certainly in the case of the big banks, the evidence before us suggests that the banks make significant profits on the use of ATM machines, especially from customers who use other banks' machines and infrastructure that is in place. If we are going to put caps on surcharges on credit cards, why aren't we doing it when those same credit cards are put in an ATM machine to withdraw money or, in some cases, even to get an account balance? The Greens would point to Reserve Bank figures that, on average, it costs the bank 77 cents when you put your card into an ATM, and that fee covers the transaction. The same applies when you request your account balance, or get money out and have it processed. But the people we know from personal experience are being charged two dollars, $2.50, and sometimes three dollars for the privilege of accessing their own money. These fees are not only unfair, but regressive, because they hit people who are taking out smaller amounts or who have smaller balances.

I remember speaking to my students when I was teaching finance at university and I gave them an example. I asked them, 'What is the average amount of money you take out of an ATM?' It varied, but some of them would take out as much as $20—every time they went to the ATM, they would take out $20. I said to them: 'Let's have a look at the real fee that you are paying on $20. If it is a $2 fee and you are getting out $20, you have paid a 10 per cent fee to access your money.' My conclusion was that you are better off taking out a large amount of cash, if you have to do it—and to spend that wisely—but that every time you go to the machine it is going to cost you up to 10 per cent, depending on how much money take out. It is quite a ridiculous situation to be in, especially if you do not have much money in the bank and you are still getting slugged the same fee as other people who have much larger cash balances.

To give you another example, $2.50 means a lot more to someone with $50 in their account than to someone who might be able to access $1,000 in their account. We know that many have changed their behaviour and try to withdraw cash from their own ATMs as much as possible, but, as many of us know, there are times when this is just not possible. For example, when you need cash, there are many times when you have to go as close as possible and use whatever ATM is available, and, of course, in rural and regional areas you have much less chance of finding the ATM for your own bank.

The Greens believe that banks should not be able to make huge profits out of their ATMs. If you are going to another bank or to your own bank, maybe the bank can charge you the cost of recovering that—that is fair enough. That is actually what we are seeing in this legislation anyway, for other credit card payments. There is a stipulation there that they can cover the costs of provision of these services without gouging profits. The committee has heard some really stark evidence of some of that overcharging in relation to this legislation. In the case of banks, why not have the same principle apply—that we have a fair fee to cover the provision of that service which does not allow the large financial services companies to gouge profits from the Australian people. There is no reason for that with credit cards; there is no reason this should be any different.

In terms of the profits that the banks make, let's be honest: the bank business model in recent years, especially in the last decade, has moved toward making profits from fees rather than from the net margins they make on their deposits and loans. Credit cards are significant contributors, contributing profits in the billions of dollars to these banks. That is money that is coming out of the pockets of people who use the infrastructure to access their money, which the banks are holding for them.

It is worth remembering that the big four banks alone make up to $30 billion profit every year. Some of this is coming from us from paying our $2, $2.50 or $3 when accessing an ATM. Remember, it is a fee that the Reserve Bank itself says cost the banks about 77 cents. Also, according to the RBA, there are now more than 31,000 cash machines around the country, which the RBA says is high, relative to Australia's population, when you look overseas. Fifty-five per cent of the ATMs in Australia are owned by specialist ATM companies—this is some of the evidence that the economics committee received—they are the ones you find in a restaurant or a pub or somewhere else. Banks and other financial institutions own the rest; in other words, they own just under half of the ATMs around the country.

While it may be difficult, we accept, to limit fees that private operators are charging, we can take some steps towards regulating what the banks charge. The banks enjoy significant support from the Australian public, especially the big four, because we know they are too big to fail and the government will step in to help them if they ever get into trouble—the lessons of the GFC were very clear. Perhaps it was much more stark in the US, but we know that your government, Mr Acting Deputy President, stepped in to guarantee deposits, which, in hindsight, was a very important thing to have done, given the potential for contagion and other issues, when financial markets are collapsing. The wholesale funding advantage of that levy—and there has been no levy forthcoming to recover that for the Australian people—is still a problem for my party. We would still like to see the advantage that the big banks have received from the deposit guarantee levy paid back to the Australian people, but that is a matter for another day.

Given the support that the banks receive from the government, these are the kinds of reforms we would also like to see with this legislation. When we get to the committee stage I will be moving amendments that would prevent banks charging ATM fees that are excessive—and the definition of the word 'excessive' here is the same definition we would apply to what is currently in the bill in relation to credit card surcharges—and require the fees to reflect the reasonable cost of allowing a person to make an ATM transaction.

For the benefit of the Senate I will outline some of the amendments now. The amendments would create a new part of the act, Part 4D—ATM transactions, and a new section, around section 55N, which sets out the object of the part. The object of the part is to ensure that account holders are not charged for ATM transactions made using automatic teller machines owned or leased by the persons with whom their accounts are held, and that amounts charged for other ATM transactions are not excessive and reflect the reasonable costs of allowing a person to make an ATM transaction.

It did surprise me that some banks actually charge their own customers to access ATM machines. Bendigo and Adelaide Bank's unique policy of charging its own customers to withdraw cash has faced a consumer backlash. You have to ask yourself: when one or two banks move in this direction, where they are charging their own customers to access ATM machines, how long will it be until the other banks do this as well? We know that these are significant profit sources for the banks. If a couple of banks do it, it is very likely that other banks will follow suit and start charging some kind of fee with which they can gouge customers and make profits for their shareholders.

In a nutshell, the Australian Greens support this bill because it says credit card fees should not be in place where intermediaries or the end-users are able to make a profit out of you for simply using your credit card. This will be a much bigger issue in the future as we move to a cashless economy. It is fair enough that banks and other financial service providers should charge a fee to cover the provision of their services—otherwise they would be making losses on things such as ATM machines and networks—but excessive profits: no way. I think I speak on behalf of most Australians when I say I would like to see ATM fees in line with the cost of service provision and not see banks gouging the Australian public for using a machine that simply allows them access to their own money.

We feel this bill is a good start. It has been supported by stakeholders such as Choice, which of course is important given that Choice speaks on behalf of many consumers in this country, but let's extend it to ATM fees and make sure that banks, which every year make record profits, are not able to make a profit out of you accessing your own money. Let's end these fees of $2, $2.50 and $3 that banks sometimes charge. Let's limit them to what it actually costs the bank, which we know is closer to 77c. Let's ensure that the good principle in this bill is extended and that banks are prohibited from using, as a way of making money out of people, the fact that in this day and age everyone is required to have an electronic bank account. We support the bill, and I hope that the government, because they support the principle of this bill, will also support extending it to ATM machines. I look forward to hearing from the minister in committee as to why that would or would not be the case and I will recommend our amendments to the Senate when we get to the committee stage.