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Legislative Assembly for the ACT: 1997 Week 9 Hansard (4 September) . . Page.. 2958 ..

(Quorum formed)

MS TUCKER (5.23): I would like to support a lot of the comments that Mr Whitecross has just made. The Greens also are concerned about this Bill. We are concerned about what is happening in the banking industry generally in Australia and the mergers that are occurring, and the impact that that is having on local communities, particularly on small business. A number of impacts are really quite serious.

When surveys have been done we have seen that businesses dealing with the big four banks have expressed frustration at the persistently high levels of interest rates on small business loans despite high security, fees and charges and the lack of decision-making by local managers. Frequent changes of local managers also add to uncertainties. What we see with mergers is that regional small businesses are often not in a position to choose between financial institutions because almost all banks seem to be reducing their regional networks in order to pursue cost savings. In many towns there is only one bank, thus distorting the picture of which banks are, in fact, chosen, so-called. In surveys that have been done, few businesses appear to be going outside the local town if there is a branch in that town. While it is possible technically to go outside your region, it appears that that is not what small businesses are doing at this stage. With no local financial institution at all, if that is what ends up happening because of the cutting of services, costs to small businesses go up.

A report by Credit Care sought to quantify the scope and scale of these costs, and the costs are higher for businesses usually handling a lot of cash. For higher cash handling businesses, of course, the loss of the local bank branch means higher cash holdings and consequent forgone interest earned, reduced ability to pay loans quickly, extra burdens while acting as de facto banks for customers, and additional EFTPOS transactions and associated costs. The surveys that have been done also suggest that in places where the last branch closes local businesses also put off investments by not applying for loans. Superannuation is another concern. Most regional small businesses resent seeing local money being taken away to centrally managed superannuation funds and would like to see better access by regional small businesses to those funds.

There are a number of issues here that are really of concern. Of course, in the big scheme of things, the macro scene, there are worries as we see with many businesses in Australia. As you centralise and condense the ownership and there is less diversity, barriers to entry go up. It is not only killing off current competition; it is making it unlikely that new players will enter the field. I know that we keep being told about how wonderful competition is and the principles of the free market, but this is another example of what will happen. You will get a couple of major players who will do basically what they like. They will not be producing the diversity of services. They will be able to produce the services they wish to produce and the consumers are basically trapped because there are so few providers left. So, I am concerned about this Bill. I do not like the idea that these things be done by regulation. I think we need to take this whole issue very seriously. I want to see as great a transparency as possible if these sorts of issues are going to be discussed. I concur with Mr Whitecross on this and we will not be supporting this Bill.

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