ABA CEO Simon Birmingham interview on ABC Adelaide with Sonya Feldhoff and Spence Denny

E&OE
Radio Interview
Interview on ABC Adelaide
1 October 2026

Topics: Interest rates; Hardship support from banks; Card surcharging ban

Sonya Feldhoff: Simon Birmingham is the CEO of the Australian Banking Association. He’s also a former SA senator and finance minister. So, all of these things have been very much in his purview for a long time. Simon Birmingham, good morning.

Simon Birmingham: Good morning. It’s good to be with you, Sonya and Spence.

Sonya Feldhoff: Now, before we talk about these credit card surcharges, can we just mention and talk about interest rates? What’s your understanding of how that has been passed on by at least the major banks?

Simon Birmingham: Indeed, so, I think all have now made the announcement that they are passing on, as indeed is expected and is pretty much commonplace. In the end, the cost of finance, the cost of money goes up when the Reserve Bank makes those decisions, and so banks make the decision to pass that on, as indeed the Reserve Bank is intending. The first thing I’d always say in these sorts of interviews nowadays is for people who are in real hardship, who think they will have difficulty in being able to meet their finances and may slip into potential default or look at other refinancing options, get in contact with your bank as soon as possible. There are hardship teams that you can talk to, and there are practical options where it’s really necessary that banks can look at to help people in terms of different restructuring or changes, we know, on the whole, Australians enter this with some resilience, and that actually 85 per cent of Australian households are ahead in their repayments, and in fact around one in three, more than two years ahead. So, for those with mortgages, a lot of households do have some buffer that they go into this difficult period with, but there’s no denying that interest rates at the highest level in 15 years will cause some pain in some households. And if you’re one of those households where the pain is real and it could create real financial difficulties, talk to your bank ASAP.

Spence Denny: Simon Birmingham, did the inflation figures that were released yesterday play a part in the decision of banks as to whether or not they’re going to pass on the full extent of the rate rise?

Simon Birmingham: No, those inflation figures themselves wouldn’t have a significant impact in the end. The Reserve Bank action, as I said, increases the costs to banks of financing, and so the Reserve Bank knows full well when it’s doing that that it is increasing those costs and expects them to be passed through. The inflation figures certainly had some impact in terms of market expectations of where future interest rate increases may go, and they tempered a little bit yesterday. I’m not in the business of predicting rates myself, but I can read the markets and the forecasts. And obviously, there are some still forecasting another rate increase this year, but the market reduced the chances of that a little bit yesterday.

Sonya Feldhoff: You mentioned the measures that banks have to sort of help people through this if they really are struggling, but Simon Birmingham is the harsh reality of this that the idea is for some people to fall by the wayside in terms of home ownership to try to address those inflation concerns.

Simon Birmingham: I don’t think the Reserve Bank would say the intent is necessarily for people to fall by the wayside in home ownership, but certainly the Reserve Bank has been clear, and Governor Michele Bullock, that the intent is to ease demand in the economy, that they see supply constraints, that we lack the productivity growth to be able to grow as fast as an economy as we would like, and that is what’s fuelling inflation. And so, they’re wanting to see people with less disposable income. They’re wanting to see people spending less to reduce that demand and to reduce some of the inflationary pressures and the very blunt tool that the Reserve Bank has at its disposal is to increase interest rates, increasing these costs on mortgages, which means for those households they do end up with less disposable income. Now the difficulty is for those sitting already very much at the margins, it will make it very tough, and it does run the risk that a small number of Australian households could enter real hardship, real difficulty, potentially even default circumstances. And as said before, that’s certainly where those households should be talking to their bank sooner rather than later. The longer these things build, the harder they are to come up with any means to help people through them.

Spence Denny: Seventeen past seven is the time. The voice you are listening to is that of Simon Birmingham, former South Australian senator, now CEO for the Australian Banking Association and you’re listening to 891 ABC Adelaide Breakfast with Spence and Sonya. Can we turn our attention, Simon Birmingham, to the significance of today, and the way that retailers can no longer pass on surcharges, which banks charge for the ability to have access to customers paying via credit card or via a debit card, and of course changes to the rewards programs from credit cards. How do you anticipate retailers will respond to having to absorb the costs that banks are still going to charge them?

Simon Birmingham: So, I think Spence there will be a mix from retailers. The Reserve Bank estimates that only around one in six businesses applied surcharges previously, so we’ve got potentially five in six whose circumstances don’t change aside from the fact that the bank component of card fees may well go down for those businesses, so for five out of six businesses, it may well be a little bit of good news for them in terms of seeing those bank fees potentially come down as part of their card.

Spence Denny: One in six is that, is that a quantifiable figure. Because just everywhere I go and I use a card, I get a surcharge passed on?

Simon Birmingham: Well, I mean, I could just off the top of my head, the major supermarkets certainly don’t pass on surcharges, and I think there are many other businesses, look, I’m only going off of Reserve Bank estimates there. I know certainly it’s the little transactions that I think people do definitely see it and feel it. So, the cup of coffee, the sandwich bar, those sorts of places where it’s become very prominent, where you think you’re buying something for $6 and it ends up costing you $6.18 when you look at your card afterwards, and it’s a real bugbear for people.

Now, those businesses who do surcharge obviously face a choice. We were talking about inflationary pressures just before. They’ve got many different cost pressures, and this may be a trigger for some to put their prices up, but concurrent with the end of surcharging, the Reserve Bank has reduced the amount that banks can charge as part of those card fees through small businesses and that’s estimated to generate savings of between six and $900 million of reduced bank fees to those small businesses.

Sonya Feldhoff: Okay, as a head of banking association, do you think this is a positive step forward or not? Because the surcharge still applies, doesn’t it? It’s just about who pays.

Simon Birmingham: Well, indeed, there are costs in terms of running card systems. Australia’s got one of the safest, most secure card systems in the world, but that doesn’t happen without some investment. So, there are some fees. There are, of course, costs that come to businesses in terms of cash transactions as well. The cash handling, the banking, it’s much more time-consuming to handle cash in a business, and as long as you’re paying tax and declaring it, it comes with its own cost base. But the reality is, businesses will make their own decisions. For consumers, I think most people will see the end of an irritant and a bugbear. It’s not necessarily going to change their cost base or their savings dramatically, but it does mean that the price they’re quoted, the price they see on the shelf, is the price they will get charged, and I think that will be welcome to everyone.

Sonya Feldhoff: Simon Birmingham, look, thank you for joining.

Ends

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