Weekly Update: 21.10.22

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“No one wants a financial system that resembles the Wild West. Laws and regulators protect the community by reducing the probability of bad outcomes and limiting the impact when they occur. But there are limits to what can be achieved. Consumers of financial services still need to take a degree of responsibility for their decisions. Indeed, there are benefits to stability, competition and efficiency when they do.”

–    Wayne Byres, outgoing APRA Chair, FINSIA, 19 October 2022

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Parliamentary Update:

• Employment and Workplace Relations Minister Tony Burke announced that the Federal Government will introduce its ‘Secure Jobs, Better Pay’ Bill next week. The Bill will be the first tranche of the Albanese Government’s workplace relations reforms following the Jobs and Skills Summit.
• The Prime Minister announced that ADF personnel will assist flood recovery efforts in NSW and Victoria. Additional support for Victorians was also announced, on top of previously announced measures for communities across Victoria, Tasmania and New South Wales.
• Treasurer Jim Chalmers sought to frame the upcoming Budget with a number of media appearances, including a key joint press conference with Minister for Emergency Management Murray Watt, warning of the economic challenges created by floods and international headwinds.
• Foreign Affairs Minister Penny Wong announced further actions in response to Russia’s illegal invasion of Ukraine, including extending tariffs on goods imported from Russia and Belarus.
• Assistant Minister Andrew Leigh delivered a speech on 30 years of National Competition Policy at the University of Sydney, outlining the effects of competition reform and what present-day reformers can learn.

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Communications Update:

• The ABA will launch a print and digital campaign supporting bank customers impacted by floods across southeast Australia. The ABA previously made two announcements on industry support for customers impacted by floods.
• Anna Bligh gave a speech at UDIA in Brisbane, on banking industry support for the development, construction and housing industries.
• The ABA gave a positive public response to the Federal Government’s National Plan to End Violence against Women and Children 2022-32, highlighting the industry’s ongoing work to support customers experiencing financial abuse.
• Anna Bligh spoke at the BCCC Forum in Sydney, on the consumer protections of the Banking Code.
• Anna has also given a number of media interviews this week on a range of issues including floods, domestic violence, and the closure of bank branches following the release of APRA’s Point of Presence report. She appeared on ABC Radio (read full transcript) and on ABC TV (read full transcript).

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“But I don’t think we’re going to see branches disappear anytime soon. And I do think we’re going to see an increase in the activity that Australia Post and the Australia Post outlets conduct for those customers who continue to want those face to face services.”

– Anna Bligh, ABC Radio 20 October 2022 

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Policy Update:

• The ABA has published its response to the BCCC Banking Code Review. It supported 8 of the 9 BCCC recommendations. Regarding the one recommendation not supported, ABA CEO Anna Bligh said “the BCCC has existing powers to publicly name banks that have breached the Code without the need for Banks to repeat this information on their own websites.” 

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Regulatory Update:

• APRA released its points of presence report. It shows a reduction of 309 bank branches across Australia in the 12 months to June 2022.
• ASIC released a report on the six largest audit firms on ‘root cause analysis on negative audit quality findings’ which includes better practice recommendations.
• The RBA published its minutes of the 4 October 2022 Monetary Policy Meeting where it raised the cash rate by 25bps. “The arguments for a 25 basis point increase rested on the risks to global and domestic growth, and the potential for inflation to subside quickly.”
• Wayne Byres gave his last speech as outgoing APRA Chair at FINSIA, after eight years in the role. “The idea that the pursuit of stability must come at the cost of competition is a furphy.”
• APRA also released its Annual Report 2021-22. “During the year, APRA finalised significant capital reforms to cement and reinforce the banking system’s strong capital position. The new bank capital framework, which comes into effect from the beginning of 2023, has been designed to embed ‘unquestionably strong’ levels of capital.”

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Economic Update:

• Unemployment remains at 3.5%. The ABS calculated an increase of 9,000 unemployed people in September 2022. Underemployment was at 6%, 2.7% lower than March 2020.
• NZ inflation hit 7.2% this quarter, higher than the 6.5% forecast, but lower than the 7.3% for the previous quarter. A 17% spike in fruit and vegetable prices is behind the rise. The RBNZ is expected to raise the OCR by 75bps in November and February, after raising it by 3.25% in the past 12 months.
• The ABS has released ‘Back in My Day’ figures comparing the rate of home ownership between Millennials (55%), ‘Generation X (62%) and Baby Boomers (66%) when they were 25-39 years old. The ABS compared the characteristics of Millennials, the 25–39 year age cohort, in the 2021 Census with characteristics of Generation X and Baby Boomers when they were the same age using data from the 2006 and 1991 Censuses. The 25–39 year old Baby Boomers in 1991 were three times more likely than the 25–39 year old Millennials in 2021 to own their home outright. 

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Read the full update online

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