Weekly Update: 9 June 2023

“A productive world-class economy needs a modern and efficient payments system – today’s announcement is a long overdue overhaul of the payment arteries that drive the Australian economy.”  

ABA CEO Anna Bligh

Feature

This week we were delighted to welcome more than 300 delegates and 80 speakers over two days to our ABA annual conference: Banking 2023: Time of Transition.

Held at the ICC in Sydney, Treasurer Jim Chalmers opened the event, announcing a major overhaul of Australia’s payments system including a Strategic Plan for Australia’s Payments System and the release of two key payments consultation papers. The ABA welcomed this with a media release. 

The Bank On It – Customer Trends 2023 report was also launched at the conference, revealing the extent of the digital revolution underway in Australian banking. The report found 98.9% of customer interactions are now taking place via apps or online, and cash is used for just 13% of payments (down from 70% in 2007). The ABA partnered with Accenture to produce the report. Read more in our media release here.

In another key session, Peter King, ABA Chair and CEO & Managing Director, Westpac Group; Marnie Baker, ABA Deputy Chair and CEO & Managing Director, Bendigo and Adelaide Bank; and Anna Bligh, CEO, ABA discussed the future focus for the banking industry. We then heard about the role of regulation in uncertain economic times from Joseph Longo Chair, ASIC; John Lonsdale Chair, APRA and Michelle Bullock, Deputy Governor, RBA. 

Other key issues discussed during the event included climate, scams and fraud, financial safety and First Nations banking.   

A huge thank you to our speakers and delegates and we look forward to welcoming you to next year’s conference!

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Parliamentary Update:

• Assistant Treasurer Stephen Jones delivered a key speech to CEDA with significant updates to the Federal Government’s approach to the Consumer Data Right.  
• Australia’s business community released a joint statement opposing the Federal Government’s ‘Same Job, Same Pay’ industrial relations proposals. The groups opposing the industrial relations changes include the Business Council of Australia, the Australian Chamber of Commerce and Industry, the Council of Small Business Organisations Australia, the National Farmers Federation, and Minerals Council of Australia.  
• Minister Tony Burke sought to refute the joint statement, and said that the Government had not finalised its policy.  
• The Federal Government’s ‘Secure Jobs, Better Pay’ laws came into effect, which expand the ability to make multi-enterprise agreements.  
• Greens Housing Spokesperson Max Chandler-Mather appeared on ABC Insiders and discussed the Greens housing proposals. Mr Chandler-Mather appeared to soften some of the Greens demands on housing, offering to pass Labor’s housing future fund bill in exchange for $2.5 billion in annual direct spending, and immediate action on rents. 
• Assistant Treasurer Stephen Jones warned against tax time scams. 
• Transcripts from 30-31 May Senate Economics Committee were published.  
• Both Houses of Federal Parliament return on 13 June for two weeks of sittings, before the winter break.  

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Regulatory Update:

• APRA has written to banks to reiterate the importance of ensuring exceptions to housing lending policy are prudent, limited and clearly justified. Exceptions refer to processes which allow borrowers who don’t meet minimum home loan serviceability criteria to access loans. These exceptions may be for some borrowers who are seeking to refinance and may no longer meet standard loan criteria. 
• Phil Lowe, Governor of the RBA, addressed the Morgan Stanley summit noting that while inflation has not yet moderated to the extent the RBA would like, household spending has slowed since mid-2022. He also illustrated the strong correlation between unit labour costs and inflation as well as declining labour productivity. 
• APRA received a new statement of expectations and statement of intent from the Federal Government. Government policy priorities include that APRA minimise the costs and burdens of regulatory requirements for regulated entities. 
• Joe Longo, ASIC Chair, addressed the AFR environmental, social and governance summit noting that mandatory disclosures around climate are only the beginning of clearer taxonomies and standards, not the end.  
• APRA has farewelled Deputy Chair Helen Rowell, who is currently responsible for superannuation but led policy development as well as supervisory support for ADIs during her 21 year career at APRA. 

Economic Update:

• This week’s release of the March quarter 2023 APRA Quarterly ADI Housing Statistics showed: 
• Australian’s have $246.2 billion sitting in offset accounts – a growth of $2.2 billion from December 2022. 
• At $15.4 billion, loans 90 days past due (non-performing loans) continuing to increase but remain below July 2021 levels in terms of value. 
• Non-performing loans account for 0.63 per cent of the total credit limits available, still far away from the peak of 0.97 per cent in June 2020. 

Figure 1: Non-performing loans, All ADIs, March 2019 – March 2023, $m and % 

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Communications and Media Update:

• A large media cohort attended the ABA annual conference, including representatives from the AFR, Sydney Morning Herald, Sky News, Wall St Journal and Bloomberg. There was further reporting of key themes from the event including in The Australian, Channel 10, SBS and the ABC. 
• Other key media this week included a range of interviews following the RBA’s interest rate increase, including an interview with ABC’s Radio National (read the transcript), the SMH and the Herald Sun. We also published a statement on our website about the rate increase, here.  

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Submissions Lodged:

• Independent review of modernising business registers program. 
• Proposed Financial Institutions Supervisory Levies for 2023-24.

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Upcoming Submissions:

Published submissions

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Selected Media:

• AFR – I’m tempted to frame the cheque I just got – there won’t be many more  
• ABC – Cheques will be phased out by 2030 as mobile wallet use sky-rockets  
• ABC – Rate rise impacts ‘getting very difficult’ for some, says Anna Bligh  
• SBS – The death of the cheque book: Here’s how Australia will phase out cheques  
• The Australian – Australia’s financial system faces ‘big’ challenges amid AI, digitisation: RBA, ASIC, APRA  
• AFR – Westpac is fielding more home loan hardship calls as rate rises bite  
• AFR – Treasurer gives RBA more power over payments 
• SMH – Cheque-mate: Chalmers makes final move on dying payment network   

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