Transcript – Interview with Nadia Mitsopoulos, ABC Radio Perth
2 March 2024 Topics: Armaguard, ACCC, Regional Banking Inquiry E&OE Nadia Mitsopoulos Dean Smith is a WA Liberal Senator. He has some questions to ask about this in parliament. Senator, good morning. Dean Smith Good morning to you Nadia. Nadia Mitsopoulos How do you see the situation that Armaguard is in now? Dean Smith Well, I suspect we’re at the beginning and not the end of this issue. I think it is important to reassure West Australians, your listeners, that it’s the Reserve Bank of Australia’s view that there must be cash in the Australian economy and there must be access to that cash. So, people do not need to sort of unnecessarily worry that there might be restrictions on the availability of cash at post offices or at Coles or Woolworths or at the local ATM. But there are a couple of issues to be answered here. Armaguard and Prosegur, which is the other merger partner, went to the ACCC in 2022 asking for special permission to merge together in what we call cash in transit services. The ACCC gave them that special approval as a special authorisation because as you have identified, it created a monopoly service provider in this new merged entity. Part of the ACCC’s process was to forensically examine whether or not the financial viability of this merged entity could be met and sustained. And on the basis of that, the ACCC gave permission for the merged entity to operate. And very shortly after that, the merged entity then put up their hand and said things are much more severe than we thought they were. We can’t run the business with a viable financial structure. And then went to Coles and the supermarkets and banks and others looking for a very significant cash injection originally of $190 million over three years to make the entity viable. So, for me, a couple of important questions: Why did the ACCC find it necessary to allow the merge structure to exist given the necessary authorisations? If we are going to find ourselves in a situation where we did last week where there was a risk to cash delivery services in the economy? Nadia Mitsopoulos At the time that permission was given, did you accept the reasoning that the ACCC was given giving and the reassurances? Dean Smith Yes, in February of this year at the Senate estimates, I had the opportunity to ask the governor of the Reserve Bank, but also the ACCC chair, whether or not this merger proposal was properly founded in the ACCC’s merger process. They reassured me that they had gone through all the necessary due diligence and satisfied themselves that the new entity would be viable. But that doesn’t make sense now, because we know that last week Lindsey Fox made a personal injection of $10 million. That’s after he asked others to make a $26 million injection. Nadia Mitsopoulos Which he then rejected. Dean Smith Which he then rejected because, because the banks and Coles and Woolies and others asked to see Armaguard’s books Nadia Mitsopoulos And he said no. Dean Smith And he said no. Nadia Mitsopoulos So, what do you read into that? Dean Smith I think that there is something going on here that deserves much greater scrutiny. In the last week of parliament prior to Easter, I had the opportunity again to inquire with the ACCC and the RBA where negotiations were up to. And they were particularly cagey with me, not wanting to reveal or respond to some of the questions that I had asked in public in Canberra. So, when we return back to the regional banking inquiry on the 16th of April, these are the same sorts of questions that I’ll be asking the RBA and the ACCC because I think there’s a very significant question to be answered here. Nadia Mitsopoulos What is going on? Dean Smith is my guest this morning Liberal Senator for WA what do you specifically want to know? Dean Smith I want to know what authorisations have actually been met. So, the ACCC in granting the merger to proceed would have asked Armaguard and Prosegur to comply with a number of undertakings and authorisations. I want to know, have they all been met? If they haven’t been met, why have they not been met? Secondly, I’m keen to understand what level of confidence the banks currently have, but also big retailers and organisations like Coles and Woolies and others, whether or not they are confident that cash in transit services can be sustained over the medium to longer term in this country. Because there’s a very, very important issue for many people in Australia, despite the very significant uptake in digitization and digital payments. There are still many in our economy, people living in regional communities, the elderly, that use cash. 15% of people in Australia use cash for 80% or more of their transactions still. We also know that access to banks has been declining with bank closures. Nadia Mitsopoulos And ATMs! Dean Smith And ATMs closing, we know that the level of withdrawals from ATMs is also fallen significantly. So, there’s absolutely a change happening in the economy in terms of how cash is used. But as the RBA has made very, very clear, there must still always be access to cash available to people. And that’s, I suppose, at the end of the day, what am I seeking to achieve: a greater level of certainty and security that cash will be available on a day-to-day basis to people throughout the Australian economy. Nadia Mitsopoulos Senator Dean Smith, do you have confidence that Armaguard is viable moving forward? Dean Smith Well, I’ve not seen the books. I’ve not seen the books and they are really the questions for the RBA and…