Treasurer Jim Chalmers announces $6.3m in funding to stop banks closing in the Pacific
Treasure Jim Chalmers has called on major Aussie banks to continue servicing Australia’s closest international neighbours, pledging $6.3m to help.
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The Albanese government has called on major Australian banks to continue operations in Pacific countries, amid fears the withdrawal of services would allow China a way in to increase its influence in the region.
The importance of continued operation and multilateral collaboration between Australia and the Pacific will be addressed by Treasurer Jim Chalmers in his keynote address at the Pacific Banking Forum on Tuesday, calling on the private sector to do its bit.
“We know how critical these services are for local communities,” he will say.
“Which is why we have been actively talking to all the major Australian banks to let them know how important a continued Australian banking presence in the region is to the government.”
His comments come as Pacific countries are facing the fastest withdrawal of banking services globally, which prohibits their banks and populations from accessing cross-border payment services, global financial systems and funding for essential projects.
Workers in Australia are also unable to send money to their home countries.
This has prompted fears of increased influence from the Chinese Communist Party, with its state-owned bank already highlighting intentions to operate across Papua New Guinea, after establishing a presence in the capital Port Moresby.
Dr Chalmers will also announce a $6.3m funding boost to help boost systems and law enforcement processes so that banks are incentivised to continue their operations.
The funding is split into three initiatives including $2.9m to the World Bank to help develop inclusive and secure digital identity infrastructure, $1.7m to the Asian Development Bank to boost compliance on anti-money laundering and counter-terrorism financing requirements, and $1.7m to help criminal justice and law enforcement efforts which will be administered by the Attorney-General’s department.
He listed five goals for Australia, including the intent to reverse declining services, alleviate immediate pressure on the local institutions, attract new private investment into the markets, and improve the integrity measure to boost market confidence.
“Ensuring all Pacific countries have access to safe, secure and stable banking is one of Australia’s highest priorities in the region,” Dr Chalmers will say.
“You can bank on Australia to work with you to keep the Pacific connected to the global financial system.”
Dr Chalmers will also announce on Tuesday that he will be attending the Pacific Islands Forum Economic Ministers meeting, which will take place in August in Suva, Fiji, where he will update the ministers on the progress to date.
On Monday, ANZ boss Shayne Elliott said it was difficult and risky for banks to operate in the Pacific areas because of the smaller economies and business conditions.
ANZ has the largest reach out of any other Australian bank in the region, with 19 branches, however it has closed 10 branches, excluding Papua New Guinea, in the past five years.
It also exited American Samoa and Guam in 2022.
“Each country has its own laws, regulations, customs and tax. While it’s important that each country charts its own course, this can create costs for businesses that want to operate across the region,” he said.
He said banks would find it easier to operate if Pacific countries adopted common laws, implemented “consistent regulation” and enhanced “regional financial crime efforts”.
“High-cost and high-risk countries that don’t offer scale have become less attractive for banks to serve,” he said.
“While the Pacific is not unique in facing this challenge, it is an area that is badly affected by it.”
Originally published as Treasurer Jim Chalmers announces $6.3m in funding to stop banks closing in the Pacific
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