RBA urged to guard guest workers from bank fees
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Expense: Expert says a lack of internet banking is partly to blame. (ABC News: Giulio Saggin)
There has been a call for the Reserve Bank (RBA) to make sure Pacific Islander guest worker wages are not eaten up by bank transfer fees.
Finance ministers and central bank governors from around the Pacific are meeting in Sydney for a two-day conference on financial literacy.
The Governor of the Reserve Bank of Tonga, Joyce Mafi, says remittances or money sent home from Tongans working abroad make up 40 per cent of Tonga's Gross Domestic Product, or $200 million a year.
She says some bank transfer fees are exorbitant.
"It is very expensive, up to 25 per cent of the cost of their wages," she said.
Director of the International Monetary Fund's Pacific Technical Assistance Centre, Susan Adams, says New Zealand's Reserve Bank is helping its guest workers from Vanuatu.
Ms Adams says Australia has a chance to help its seasonal workers from the Pacific Island nations of Tonga, Vanuatu, Papua New Guinea and Kiribati, which are due to arrive for a pilot scheme by the end of the year.
She says Australia's Reserve Bank and the Australian Prudential Regulatory Authority could look at schemes similar to New Zealand, "to reduce the fees to create even incentive schemes for remitters to send money in for example for special savings accounts".
Ms Adams says a lack of internet banking is also to blame, with many Pacific Islanders not able to access their accounts electronically.
The RBA's assistant governor for banking and payments, Keith Hall, opened the conference this morning, saying its important for all levels of an economy to understand how finance works.
Mr Hall told the conference that the events in the United States and the subprime mortgage crisis showed many people did not understand the impact of getting into such high levels of debt.
He said understanding how credit worked was an important part of financial literacy for all people, in both developed and developing countries.
Mr Hall said transparency was an important feature for a vibrant economy, with people making informed decisions about their finances.
He said a website introduced earlier this year, allowing migrants from eight South Pacific island nations to compare all remittance services to their home country from both Australia and New Zealand, is playing a crucial role in helping consumers shop around in the Pacific.
