Submission to Treasury’s Consultation Regulation Impact Statement on Paper Billing

CPSA's response to the Treasury’s Consultation Regulation Impact Statement on Paper Billing. 

More information about the inquriy can be found on the Treasury website, along with CPSA's submission

CPSA's submission

CPSA welcomes the opportunity to provide comment on Treasury's regulatory impact assessment of paper billing fees. As an organisation representing pensioners and low income retirees, CPSA strongly supports the right of every person to choose how service providers communicate with them.

CPSA often receives phone calls from our members and constituents concerned that they have to pay a fee to receive a paper bill or statement from their service providers. Charging people to receive paper correspondence disproportionally affects pensioners and low income households, as these vulnerable groups are less likely to be able to access the free electronic alternative. CPSA therefore supports a prohibition on paper billing fees, as it is the option that guarantees vulnerable consumers will be protected from these unfair charges. This submission will lay out an argument in support of policy option 2: banning paper billing fees.

Recommendation 1: That all Australians are given the choice of receiving important information through their preferred delivery option, digital or paper, without a fee.

Vulnerable consumers and internet access

The latest ABS data revealed that 7.7 million Australian households have internet access at home.1 While this may be the majority of households, there are still 1.3 million households without access to the internet.2 That is roughly over 3 million people who are not online.3 The Digital Inclusion Index found that low income households, people over 65 and people with disability are overrepresented amongst those that are not online.4 In particular, the digital inclusion gap between older and younger Australians is widening by approximately 0.5 every year.5

These groups and individuals still face barriers to accessing the internet, including, fear, lack of understanding or support and unreliable internet connection. But for many it simply comes down to affordability. The cost of internet in Australia remains high compared to the rest of the world, ranking 57th out of 139 countries for internet affordability.6 Accordingly, internet use and access is directly related to household income.

Despite the significant shift away from paper billing in recent years, not all Australians have the option to access electronic billing. It is in fact predominately disadvantaged groups that are penalised by fees for paper billing. Receiving bills to pay for services is not usually optional therefore people who are offline have no choice but to pay for paper bills. Charging fees for paper statements discriminates against these groups who are not able to respond to 'price signals' and compounds the hardship they already experience.

In addition to those with no internet access, there are also many Australians who do not have access to the appropriate technology or infrastructure to enable them to conveniently receive electronic bills. More than 1 in 5 Australians access the internet solely through a mobile device; they are typically low income households, with lower levels of education and unemployment.7 Mobile only internet use can limit a person's capacity to access electronic bills; for example, mobile phone screens are smaller and harder to read and downloading bills requires data which can be expensive to purchase. Furthermore, Australia's rural citizens, around 30% of the population, continue to experience significant digital disadvantage due to unreliable internet connection.8 These groups are also unfairly penalised by fees for paper bills as they too face significant barriers that prevent them from accessing bills online.

Fee frequency, costs and impacts

Charging consumers fees to receive paper bills and statements is increasingly becoming common, particularly amongst essential services such as telecommunications, utilities and banks. For example, Commonwealth Bank, Telstra and AGL all charge their customers fees to receive paper bills. These are services which all households require and should not have to live without. This means that households who do not have the option to receive electronic bills cannot opt out of receiving these services to avoid paper billing fees.

The number of paper bills that households receive can vary greatly. Considering that most essential services charge fees for paper bills and by nature people necessarily consume essential services, households are potentially receiving at least 3 or 4 a month. The frequency of these bills and therefore fees could also be higher for low income households, as many essential services offer monthly or fortnightly payment plans to households that cannot afford large quarterly or yearly sized bills.

CPSA has heard from consumers paying anywhere between $1.75 and $2.75 to receive their bills via the post, additionally, over the counter payments at Australia Post cost from $1.90 to $2 for some customers. Compounded by the frequency of these fees, this adds up for vulnerable households who spend all their money on essential goods. Research by the NSW Council of Social Services reveals that low income households frequently forego essential services such as electricity, food and dental care because they can't afford them.9 Fees charged for paper bills are unnecessary and contribute to the hardship experienced by households already struggling to keep up with the cost of living. CPSA supports a ban on fees for paper bills as it is the most comprehensive way to ensure that vulnerable households are not at risk of paying for paper bills.

The annual cost to business of banning paper billing fees is estimated to be between $80 and $93 million dollars.10 Grattan reports that banks, telecommunications, internet service provision and energy retailer are some of the largest highly concentrated sectors in Australia's economy and where only a few firms dominate markets, they tend to earn higher profits.11 Australia's major banks reported a cash profit after tax of $29.6 billion for 201612 and the three major energy retails reported profits of over a billion dollars combined in 2017.13 The cost to business of sending out paper bills, compared to the profits these key industries make isn't high, particularly relative to the financial pressure that these fees put on vulnerable consumers. The cost of delivering paper power and gas bills, phone and internet bills, bank statements and so on, have all traditionally been absorbed by business. CPSA recommends that the costs associated with generating and sending a paper bill should once again be incorporated into the overall cost of providing goods and services.

Exemption programs

Some businesses advertise that they are willing to waive the fees for their most vulnerable consumers however there are a range of barriers that make these exemptions difficult to access. Firstly, eligibility for exemption programs varies widely between businesses. For example, the Commonwealth Bank offers a fee waiver to people under 18 years old, people with a disability and those who receive the Age Pension. Telstra exempts customers who are registered for Telstra's Pensioner Discount or Disability Equipment Program or who hold an Australian Government Health Care Card. AGL waives fees for customers registered with them for a concession. These descriptions are quite vague about who actually is eligible and they don't explain exactly how to access the exemption. This limits the capacity of vulnerable households to access and benefit from exemption programs.

CPSA is concerned that awareness of the exemptions programs among eligible households is low, which also impedes access. CPSA hears from pensioners who are not aware that they are eligible for fee exemptions and who accordingly have not been receiving them. Exemption programs are often advertised online and because pensioners and low income households are less likely to be online they are unlikely to come across this information. Many of these exemption programs rely on the consumers inquiring or directly asking about them when they communicate with their provider. So without access to information or knowledge of the programs available, they are unlikely to benefit from fee exemption programs. Eligibility can sometimes be identified over the phone without prompting; however, this isn't an effective way to make sure that all eligible people have access to the exemptions they are entitled to. Additionally, even if an eligible person does have access to the internet, they may not have much experience using the internet or know how to navigate through several webpages to find information on fee exemptions. This limits the capacity of exemption programs to protect vulnerable people from paper billing fees.

Similarly, the inability to communicate online with these vulnerable consumers, who are often isolated, would impact the effectiveness of policy option 1: the status quo, with an industry led consumer education campaign. An effective consumer education campaign would necessarily have to be print based and ongoing, which defeats the purpose of cutting down on paper billing costs for industry.

Essential Services

CPSA is concerned about how effective policy option 3: ban on essential service providers charging for paper bills, would be at protecting all vulnerable people. The definitions of essential services provided in the consultation paper don't include many services that Australians would consider essential, such as internet services or health insurance. People require different services depending on their age, gender, income, geographic location and health. Therefore, it would be difficult to devise a definition of essential service that captures such a diversity of needs.

References 

[1] ABS (2016), ‘Household Use of Information Technology, Australia, 2014-15’, catalogue number 8146.0, available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8146.0Main+Features12014-15?OpenDocument

[2] Ibid

[3] 2.6 people on average per household x 1.3 million households is equal to 3.38 million. ABS (2016) ‘2016 Census QuickStats’ available at:  http://www.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/036?opendocument

[4] Roy Morgan Research (2017) ‘Measuring Australia’s Digital Divide’ https://digitalinclusionindex.org.au/wp-content/uploads/2016/08/Australian-Digital-Inclusion-Index-2017.pdf

[5] Ibid

[6] World Economic Forum (2016) ‘The Global Information Technology Report: Innovating in the Digital Economy’ available at: http://www3.weforum.org/docs/GITR2016/WEF_GITR_Full_Report.pdf

[7] Roy Morgan Research (2017) ‘Measuring Australia’s Digital Divide’ https://digitalinclusionindex.org.au/wp-content/uploads/2016/08/Australian-Digital-Inclusion-Index-2017.pdf

[8] National Rural Health Alliance (2017) ‘Demography’ accessed at: http://ruralhealth.org.au/book/demography

[9] NCOSS (2017)’Turning off the Lights: The cost of living in NSW’ accessed at: https://www.ncoss.org.au/sites/default/files/Cost-of-Living-Report-16-06-2017-FINAL.pdf

[10] The Treasury (2017) ‘Consultation Regulation Impact Statement: Paper Billing’ pp. 20 accessed at: https://consult.treasury.gov.au/small-business-and-consumer-division/fees-for-paper-bills/supporting_documents/Fees%20for%20paper%20bills%20%20Consultation%20Paper.pdf

[11] Grattan Institute (2017) ‘Competition in Australia: Too Little of a Good Thing’ pp. 13 accessed at: https://grattan.edu.au/wp-content/uploads/2017/12/895-Competition-in-Australia-Too-little-of-a-good-thing-.pdf

[12] KPMG(2016) ‘Major Australian banks: Full year 2016 results snapshot’ accessed at:  https://home.kpmg.com/au/en/home/insights/2016/11/major-australian-banks-full-year-2016-snapshot.html

[13] Sydney Morning Herald (2017) ‘Origin, AGL and Energy Australia’s profits under government scrutiny’ accessed at: http://www.smh.com.au/small-business/finance/origin-agl-and-energy-australias-profits-under-government-scrutiny-20170824-gy3r8y.html