WEDNESDAY, 7 NOVEMBER 2018
SUBJECT: Labor's plans to make remittances simpler and fairer.
SAM CROSBY, LABOR CANDIDATE FOR REID: I'm Sam Crosby, I’m the candidate for Reid. Reid is overwhelmingly one of Sydney’s most multicultural communities. We outstrip just about every index in the country or national average in the country for multiculturalism and migrant communities, which are obviously one of the big beneficiaries of this policy or losers under the current system. So when Andrew told me about this I thought what a fantastic idea, what a genuine help for people. So, very happy to be here.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: The basic principle of this policy is that financial institutions shouldn’t make money by bamboozling their customers. Only one in five people now realise that in addition to the flat fee, they also pay an exchange rate spread. That exchange rate spread can be big. One study suggests that if you send a $1000 to a developing country, it costs $77. That’s 7.7 per cent eaten up in transaction fees. That $77 cost is $23 more than people in America pay, it's more than people in Britain and Canada pay.
There was a commitment in 2014 at the G20 Summit to reduce these costs significantly, but we haven't seen that reduction take place, in part because the market isn't working properly. People just aren't able to shop around because they don't know the true cost of transferring money overseas. Labor's policy is a simple one. We will require remittance providers to disclose the full cost of transferring money overseas - the flat rate flat fee and the exchange rate mark up. That will be done in reference to the mid-market rate, a standard exchange rate that's available on Google or Yahoo Finance. The policy has been developed in consultation with money transfer experts and people from the multicultural communities. We’ve held roundtables in Sydney, Melbourne and Brisbane, engaging Pacific Islander, Filipino and African community leaders. This is big bucks for some of the poorest Australians. We're talking $8 billion a year being transferred overseas in remittances. To put that in perspective, that's four times as much as Australia gives in foreign aid, after the significant cuts to Australia's foreign aid program.
So this policy is good for transparency, good for productivity, good for competition and good for reducing inequality in Australia and around the world.
MOHAMMAD AL-KHAFAJI, FECCA: Thank you very much, Andrew, for having us here today. The Federation of Ethnic Communities Council of Australia welcomes this policy announcement by the Australian Labor Party. We believe that it is unfair for banks and financial institutions to charge large and often unclear fees when people transfer money overseas to help their families and loved ones. We believe that the Australian Government should adopt the policy that it adopted at the G20 Summit, which calls for a flat rate. And we have seen - because of the current problem, we are seeing members of the communities and migrant communities using unorthodox ways of transferring money overseas. Unregulated, which if God forbid anything happens, there is no protection for them. I think this policy announcement is wonderful because it puts back some confidence in the banking sector and the financial institutions for people to actually use proper financial transfer organizations to organise their international transfers.
SARAH AGAR, CHOICE: Thank you for having me. Sarah Agar, head of campaigns and policy at CHOICE. Labor consulted with CHOICE and other stakeholders in the development of this policy and we are really happy to welcome today's announcement. When we buy anything we expect to be given the price in a way that is clear and upfront. We shouldn't be confused and sending money overseas should be no different. We shouldn't be hit with hidden costs and fees but at the moment that's not always the case. This policy proposal will make the market fairer and more competitive, allowing people to shop around for the best deal in a way that will be much easier. When people send money overseas to their loved ones, they'll be able to find the best deal now. CHOICE welcomes this proposal terrific.
LEIGH: Any other comments or questions?
JOURNALIST: I mean obviously, you know, the people in the past have competed on exchange rates - you know, if you walk around in the arcades in Sydney, you see one will be offering this exchange rate and one another. Just as with exchanging money. Does this create problems for that, because you’ll have to - is there any implications for those who are changing other types of, doing other sorts of current currency exchange?
LEIGH: Matt, I’d hope that we’d see that same sort of competition happening in the online space. You'd have a market which is working the way markets ought to work, where people see the posted prices and they're able to compete to get the best deal. The great thing about competition is when you've got well-informed consumers, you end up seeing those margins fall significantly. That would be a benefit for not only migrants sending remittances overseas, but people travelling overseas, aid agencies who are at the moment are being stung by excess remittance costs. There are indeed some providers who are showing already full the transparency transfer – Transferwise is an example of one that does this - but there's many that don't and they include the major banks, one of whom recently claimed to its customers that ‘when transferring money overseas by the Internet we charge a fee of $20’ and completely failed to mention its exchange rate mark up.
JOURNALIST: So why is it so hard to get a breakdown of who's doing this? You're saying it was difficult to work out who's actually providing these services.
LEIGH: The data on remittances isn’t as good as we'd like and making sure we've got a better handle on the underlying figures is important. But we certainly know that those affected are among the most vulnerable in the community and those who are benefiting from the current confusing system are include the most profitable financial institutions in the land.
JOURNALIST: So what's the plan - is there any timing on this? When would you introduce this if you were to win government?
LEIGH: We’d aim to move speedily on it under a Shorten Labor Government. We think it's really important for consumers and for ethnic communities. It's been a major issue that's come up in the roundtables and it's one where we're keen to see the market working properly for the benefit of all Australians.
Authorised by Noah Carroll, ALP, Canberra.