RBA Governor Michele Bullock has been branded 'absurd' after questioning whether companies should charge fees to Australians who use cash.
LNP Senator Gerard Rennick, who initiated and sits on a Senate committee conducting an inquiry into bank closures, said Ms Bullock was a “recommender” for promoting the idea.
At a conference on Tuesday, Ms Bullock raised the question of whether Aussies should pay a fee for using cash, before admitting it would likely spark a backlash.
“That said, it is also true that as economists you want people to be confronted with prices for using certain services that reflect the costs of those services,” she said.
RBA Governor Michele Bullock said at a conference this week that ideally the costs of using cash would be passed directly to customers
“What's going to happen and what's happening right now is that the costs will ultimately become entrenched in the costs of the financial institutions that provide the services and people won't have to deal with that.
“I think it would be a very big challenge to get people to bear the cost of cash.”
When asked whether banks should charge fees for using cash, Senator Rennick was adamant.
“Absolutely not,” he told Ny Breaking Australia.
“It's legal tender and it's just absurd to say you have to pay fees.”
Senator Rennick accused Ms. Bullock of “being distant.”
“She should represent the interests of the Australian people,” he said.
'This is the problem with having a so-called independent Reserve Bank, whose focus has shifted over the years from protecting the people to protecting the banks.
'The RBA is technically saying the banks don't have a social license at all, and that's not true.'
Social media users were left in stitches after suggestions they would soon be charged for not paying by card.
“I would think that would be outright illegal, you are using base currency so it would be very difficult to file charges against that,” one person wrote.
“If they do, just keep boycotting these companies for as long as we can.”
Another added: 'Banks are making record profits. How come they suddenly can't pay cash anymore?'
“If I pay a fee to use a credit card and I pay a fee to use cash, then my money isn't really mine…,” a third wrote.
While Senator Rennick said part of the RBA's role is to ensure stability in the banking sector big companies pushed people away from cash so they could charge for electronic transactions.
Ms Bullock did admit that the “community, public service aura” associated with charging people to use it would lead to a backlash
“They charge transaction fees, they charge commissions on credit cards, so they cut the ticket,” he said.
Senator Rennick pointed out that during the Covid-19 crisis, banks received a huge amount of money at extremely cheap rates from the RBA under the Term Funding Facility to 'support their customers and help the economy through a difficult period' .
“They got $188 billion in cheap loans at 1%, some of which are still unpaid,” said Senator Rennick, a former banker.
“This resulted in more than $30 billion in lower credit costs for the banks, all of which was paid for by taxpayers.”
ANZ announced this week that staff at several branches will 'no longer handle cash', a move that outraged customers.
Bank customers claimed they were unable to make deposits or withdrawals of $5 coins and notes at some branches.
One customer claimed that his local bank no longer accepted coins through ATMs and has since placed a limit on the number of notes that can be deposited.
An ANZ spokesperson said that at 'full-service branches and business cash hubs we accept deposits and make withdrawals of all Australian denominations of coins and banknotes', but that 'at some of our branches our staff no longer handles cash'.
Previously, ANZ CEO Shayne Elliott told a Senate hearing on the closure of branches in regional areas in September that small business owners were the people who mainly visited physical branches to deposit cash.
“They use them because it's still a way for them to access or transact with cash,” Elliott told the inquiry.
The number of bank branches in Australia has fallen by about 30 percent over the past five years, with many regional and rural areas losing their branches.
LNP senator Gerard Rennick called the RBA governor 'out of reach' for considering the idea of charging fees for the use of cash
The number of ATMs has fallen even further, with figures showing the number falling from 14,000 in 2017 to around 6,000 last year.
The Reserve Bank estimated that just 13 per cent of transactions were in cash at the end of 2022, a halving in just three years since the start of the Covid pandemic.
Senator Renick said that even if the use of cash declines, banks should still keep regional branches and ATMs open to provide free money.
“We have immigrant communities that are not familiar with the use of language.
“We have small business groups that need cash. We have volunteer groups that need cash on weekends and have to change signatories every year.”
'You must all go to the bank at the same time and sign your names.
“In WA, community groups have to drive together 300km and all arrive at the same place in a town 200km away to exchange signatories on their joint community group accounts,” he said.
Senator Renick said supermarkets were acting as “defacto ATMs” in some places, but that was not their job.
“I've always thought that if you need cash, you go to the bank,” he said.