Armaguard move set to enshrine cash as essential service amid looming deadline
Armaguard was saved from financial ruin last year when industry stakeholders, including the Big Four banks, supermarkets, Bunnings, and Australia Post, pledged $50 million to keep it afloat. However, big questions have been raised about what will happen when that money agreement expires in a few weeks.
The Australian Financial Review reports that bringing the consultancy firm Deloitte on board will determine how much profit Armaguard should appropriately make and how much it needs to keep afloat.
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Essential services like healthcare, electricity, and disability support have their pricing models established by independent bodies.
This ensures they are fair, transparent, and sustainable.
By doing this for Armaguard, it could help set the company up for a long future where cash remains an essential part of society, even though people are using it far less than they used to.
Data from the Reserve Bank (RBA) showed cash made up 70 per cent of all in-person transactions back in 2007. That dropped to just 13 per cent by 2022.
Yahoo Finance has reached out to Deloitte for comment.But time is of the essence as another funding injection could have to be delivered by the large industry stakeholders.
Whether it's another year-long deal worth roughly $50 million like last time or a shorter term is yet to be revealed.
Since the deal was inked in the middle of 2024, Armaguard has been hacking at low-hanging fruit to cut costs.
One avenue was by simplifying the routes it takes to deliver physical money all over Australia.
There is a possibility that if billionaire Lindsay Fox, who owns the cash transit company, walked away from it, industry stakeholders could organise a joint ownership of the operation.
This structure has been seen in some Nordic countries, where big players pool their resources and money to keep cash alive.
It's a setup that has RBA governor Michele Bullock's tick of approval.
Back in 2023, she said major banks and other users of banknotes and coins should have a bigger role in cash distribution.
'The RBA places a high priority on the community continuing to have reasonable access to cash withdrawal and deposit services,' she said.
'These discussions are ongoing, and industry, regulators and government will need to continue to work together to put in place sustainable arrangements for cash distribution.'
However, one major difference between Nordic countries and Australia is size.
Transporting cash from the very south of Sweden to its northern tip is a 2,000 kilometre journey.
That's only 200 kilometres longer than driving from Brisbane to Sydney to Melbourne. There are far many more regional and remote communities in Australia that regularly need cash and they take far longer to reach.
Bullock said one of the biggest challenges in the future of cash delivery was finding "solutions tailored to Australian circumstances".
A poll of hundreds of Yahoo Finance readers found overwhelming support for the idea of industry stakeholders permanently propping up Armaguard.
A whopping 92 per cent backed this idea, compared to 8 per cent who thought taxpayers should foot the annual bill.
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