Banning School Banking Programs

Today Abigail moved a motion that would ban predatory school banking programs currently run by the big banks in our public schools.

Ms ABIGAIL BOYD: I move:

That private members' business item No. 998 outside the order of precedence be considered in a short form format.

Motion agreed to.

Ms ABIGAIL BOYD (23:00): I move:

(1)That this House notes the report by the Australian Securities and Investments Commission, Review of school banking programs, dated 15 December 2020, which found that:

(a) "School banking programs claim to help children develop long-term savings habits, however, providers were unable to demonstrate that these programs in and of themselves improve savings behaviour";

(b) "Payments to schools for implementing school banking programs incentivise schools to encourage greater participation in the programs";

(c) "Young children are vulnerable consumers and are exposed to sophisticated advertising and marketing tactics by school banking program providers"; and

(d) "School banking program providers fail to effectively disclose that a strategic objective of these programs is customer acquisition.".

(2)That this House notes that:

(a)as a result of ASIC's review of school banking programs:

(i)a number of institutions have now terminated their school banking programs; and

(ii)the Victorian Minister for Education has announced that school banking programs will be banned from Victorian schools from early 2021.

(b)school banking programs will be banned from schools in the Australian Capital Territory from July 2021, following a Greens motion which passed the ACT Legislative Assembly on 10 February 2021.

(3)That this House calls on the Minister for Education, the Hon. Sarah Mitchell, MLC, to ban school banking programs in New South Wales schools as soon as possible.

 

As a child in the 1980s I had a Commonwealth Bank of Australia [CBA] savings account set up for me through my school. Every week I would bring in $1 of pocket money and deposit it in a little envelope and hand it to my teacher. It is a memory that I am sure I share with many people across the State. There is no doubt that there is a need to promote financial education in schools. But unlike in the 1980s, when the Commonwealth Bank of Australia was wholly government owned, the school banking programs being run in our schools now are set up and operated by profit‑seeking private banks. It is private banks competing for a share of the highly valuable first‑saver account market, to be the bank in which children set up their first account. These are private banks that understand well that over one-third of people are still with the bank they had their first account with.

Following the CBA Dollarmites scandal, where bank tellers were caught fraudulently activating kids school accounts to make targets and earn bonuses, and calls to ban banks from schools, the Australian Securities and Investments Commission [ASIC] conducted a review of school banking programs, saying that it wanted to "better understand" the motivations and behaviours around school banking programs. ASIC's report, handed down in December last year, is absolutely damning. It found that claims that school banking programs increase student understanding of money and savings were not substantiated. It also found that commissions paid by banks to schools based on student participation in a school banking program may create an actual or perceived conflict of interest for those schools. Furthermore, ASIC found that:

A key strategic objective in offering school banking programs is for commercial gain—signing up new customers at a young age.

And that young children are relatively defenceless against the marketing tactics of school banking program providers. ASIC further found that banks marketed in schools benefit from consumers having a lasting sense of trust in those brands, which the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry proved beyond a shadow of a doubt is entirely undeserved. Since ASIC's findings were released, a number of banks, including Bendigo Bank, IMB Bank, South West Credit and Northern Inland Credit Union, have wound up their school banking programs. However, it was not those banks, but the Commonwealth Bank of Australia, riding high on its former status as a government bank, that holds the lion's share of the school programs market, holding 97 per cent of school banking accounts.

The Victorian Government took swift action to ban school banking programs following the release of ASIC's report. The Australian Capital Territory has now followed suit. We cannot allow this predatory behaviour of the banks to continue in our New South Wales schools. In 1991 Australia lost its only public bank. We have been at the mercy of private operators to provide the essential public service of banking ever since. We would not be having this conversation if we had a quality government bank running our school banking programs. As we look back over the past 30 years, it is clear that it was a mistake to sell off the Commonwealth Bank of Australia.

Thankfully there is a growing understanding around the world of the benefit of State-owned banks, and The Greens will be pushing for a New South Wales public bank to be established sooner rather than later. School banking programs like Dollarmites are not altruistic or educational: They are disingenuous schemes that exploit children as future sources of private banking revenue. Until the people of New South Wales have a publicly owned and operated bank, whose objectives are for the benefit of the people rather than their own pockets, the New South Wales Government must ban school banking programs from preying on our kids. I commend the motion to the House.

 

For the full transcript see Hansard here.

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