Opening Statement by Westpac CEO Anthony Miller: House of Representatives Standing Committee on Economics
Today, I'd like to cover four areas that are central to Australia's economic and social progress: the state of the economy, productivity, our payment system, and regional Australia.
Economy
Australia's economy remains strong and is showing signs of improvement in the face of global uncertainty.
Recent interest rate relief has provided welcome support to households and contributed to consumer sentiment reaching its highest level in seven years.
Larger businesses are reporting improved trading conditions. However, small and medium-sized enterprises continue to face headwinds, especially around the availability and cost of labour.
Westpac is well placed to support our customers through this period. Our capital position is strong, providing a solid foundation to navigate these times and support lending to the economy.
Encouragingly, 90-day mortgage delinquency rates have declined to 0.73 percent on our mortgage book of over 1.6 million customers.
Pleasingly, 75 percent of our customers who enter a hardship situation move out of hardship within three months with support from the bank.
We have seen hardship applications slightly down year on year, which is a positive indicator of the easing cost of living pressures.
Productivity
One area of challenge in our economy is productivity. Without its improvement, we cannot lift living standards or remain competitive on the global stage.
Addressing this challenge requires a coordinated national response with government, business, and community working together to unlock the next wave of growth.
We need to prioritise and tackle the key drivers of this next round of economic growth: increasing housing supply and affordability, investing in regional Australia, and embracing new technology by training our workforce, and ensuring Australians have the skills, the confidence, and tools to innovate and adapt.
Payments
Turning to payments, Australia has a world-class payment system that delivers real-time payments for individuals and helps ensure that small businesses benefit from near-instant availability of funds.
This is the result of significant investment by domestic institutions, making our payments system fast, safe, and dependable.
As we consider the future of payments regulation, it is essential that we take a holistic view - one that considers both domestic and international players.
Our regulatory framework needs to create a level playing field for all participants, so that value generated within our system continues to benefit Australian consumers and our economy.
I would like to recognise and thank the Reserve Bank Governor's recent decision to extend the review of merchant payment costs and surcharging.
We have publicly noted our concerns with the proposed reduction in interchange fees. The proposal only targets Australian payment service operators and provides a free pass to global giants participating in our system. This approach would simply send more payments revenue and tax out of Australia.
With the amendments to the Payments Systems (Regulation) Act now passed, the RBA has the opportunity to consider the full domestic and international payments ecosystem, and we look forward to working with them through the next phase of consultation.
I expect payments will be a topical subject during these hearings, so along with this opening statement, I have tabled two slides on the payments ecosystem, that I may refer to.
Regional Australia
In closing, I would like to update the Committee on the regional banking announcement we made.
Regional Australia is a national asset, home to one-third of our population and responsible for around 30 percent of GDP. Strong regional communities are vital for a strong Australia, and we want to make sure these areas have access to the banking services they need to prosper and grow.
That is why we announced an extension of our regional branch closure moratorium through to 2030. This will give us more time to develop and improve the way we provide sustainable banking services in regional Australia. We are thinking differently about how to serve communities in an increasingly digital age, while still providing people with someone to talk to when they need it. We aim to serve the customer where and how they want to be served - digitally, in person, or virtually.
We will be opening new banking Service Centres in regional Victoria and Tasmania - following the recent opening of our Moree Service Centre.
We will also be launching a new Community Banking Service pilot. The pilot will see Westpac establish a part-time face to face banking service in three regional towns, with a banker working from a local government office or a local community organisation.
I am pleased to confirm that we have spoken with the Dungog and Tamworth Councils, and our trial will start in the Dungog, Manilla, and Bulahdelah communities in New South Wales.
This model has been successful for Services Australia and Services New South Wales, and we will trial it to provide banking services for communities without major bank branches. Assuming this model proves successful, I will roll it out to every state in Australia through 2026.
It is important to note that success, or otherwise, of this trial will be driven by the community's take-up of our service. We cannot offer services where there is no customer demand or where there are other challenges such as employee availability and safety.
We have made some mistakes in the past when it comes to closing regional branches without exploring other options to serve the community. We acknowledge that, and we are fixing it.
That said, I am confident we have a good plan in place - and by partnering with local governments, we are well placed to build strong partnerships with these communities.
