Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Hansard source

Senator Whish-Wilson asked if I think Australian consumers know that banks are making profits. Yes, I think Australian consumers know that Australian banks make profits in all manner of different ways! Certainly, the people that I meet as I go about my daily business in engagement with constituents are well aware that banks make profits. They also know that when they go to use an ATM, if it is an ATM of a bank they do not bank with, there may be a fee attached to that because of the reforms by the RBA, but they know that fee up-front. They then have a choice as to whether they get their cash out from that ATM or they go to another ATM; whether they go to the ATM of an institution with whom they do bank, where they might be able to take their cash out for free; or whether they go and use an EFTPOS facility while they are doing their shopping, where they may be able to take their cash out for free.

Senator Whish-Wilson, you raised an interesting point with your examples. You gave an example relating to Tiger Airways. Now, I am not aware of the details of that, so I will take it as a hypothetical example, but it does highlight exactly why the government are taking the action we are taking in relation to merchant fees. We do not want to see retailers or providers of goods and services of any description misleading consumers when they say they are recouping the cost to them of processing a payment by credit card as against some other means. We want to eliminate that misleading practice, whereby some are seeking to make a profit for themselves out of that. But I again draw the distinction that that is a misleading practice; that is not what is occurring in the ATM market, which is a fee-for-service practice.

Senator Whish-Wilson, you also raised the example of Bendigo Bank applying a pass-through of costs to their consumers. Of course, in many instances where banks are providing free withdrawals of money from ATMs, they are notionally making a loss on those ATMs—just as, where the transaction incurs a cost, as you have highlighted, they might be making a profit on them. In net terms, they may make a profit out of the ATMs, depending on how you define it and deal with the capital costs et cetera that are there.

If your amendments were to go through, Senator, I imagine one of the risks in terms of the consequences would be that institutions who were no longer able to provide preferential treatment to their customers—as distinct from the customers of another banking institution—might decide that they will charge everybody a flat rate. You could in fact create a circumstance that is to the disadvantage of many consumers of existing institutions. That is a potential risk. It may or may not occur. The problem with amendments like these, were they to be passed in this manner, is that we have not fully explored any of the potential impacts that could occur.

I again emphasise that the issue in relation to ATM fees is very different from the types of merchant fees and practices that we are seeking to stamp out through this legislation.