Latest news with #Armaguard
Yahoo
25-05-2025
- Business
- Yahoo
Armaguard move set to enshrine cash as essential service amid looming deadline
Beleaguered cash transit company Armaguard is getting a helping hand to ensure it can stay alive beyond a funding deal set to run out on June 30. Deloitte has reportedly been called in to develop a new pricing model for Armaguard, and could help recognise moving cash around the country as an essential service. 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. Aussie 'cash crisis' averted ahead of major Armaguard deadline: 'Significant liability' Most in-demand tradie jobs paying nearly $3,200 per week amid crisis: 'Shining a light' Major backflip from world's most cashless country as Australia mulls money law 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 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.
Yahoo
17-02-2025
- Business
- Yahoo
1,400 Aussie jobs in limbo as looming cash deadline approaches: 'Stop the squeeze'
The Transport Workers Union (TWU) is concerned about a looming deadline for Australia's cash transport industry and what it will mean for hundreds of employees. Armaguard was given a 12-month lifeline mid-last year, and questions are being raised about what will happen when that deal expires. RMIT's finance expert Professor Angel Zhong told Yahoo Finance that the beleaguered cash-in-transit company will likely be saved by the same industry stakeholders that propped it up in 2024. But, the TWU wants assurances sooner rather than later that that will happen. 'For years, workers in the cash-in-transit industry have borne the brunt of cost-cutting, from job insecurity to pay cuts and plummeting safety," TWU national secretary Michael Kaine said. RELATED Aussie 'cash crisis' averted ahead of major Armaguard deadline: 'Significant liability' $3,000 superannuation boost Aussies urged to cash in on: 'More money to retire on' Cleaner's $1,270 struggle reveals huge cost-of-living problem faced by millions: 'Can't get ahead' "Customers like the banks and retailers have had a direct impact on that through their unsustainable contracts with Armaguard." The Australian company is estimated to employ roughly 1,400 people, who now hang in the balance until another deal or arrangement can be organised. The TWU is also concerned that essential services in remote and regional areas of the country that still depend on cash, like grocery stores and fuel stations, are at risk too. The TWU made an application to the Fair Work Commission (FWC) on Monday and is using the government's new supply chain laws to ensure a new deal is organised to protect Armaguard's staff. There has been a series of discussions recently between Armaguard and its backers about what will happen when the $50 million deal runs out in June. The agreement was funded through the Commonwealth Bank, ANZ, NAB, Westpac, Coles, Woolworths, Bunnings and Australia laws set minimum standards and entitlements for all employees engaged in a company's supply chain, and the union is hoping to use the legislation to ensure it has a seat at the table while these discussions take place. The TWU's application can help the FWC call an urgent conference for Armaguard's stakeholders, and force these supply chain clients into future long-term deals "The cash-in-transit industry is in crisis with declining safety standards, unsustainable operating models and declining rates of remuneration and funding, a significant amount of which can be attributed to contracting pressures from their largest customers, including the major banks," the TWU said. "There is an urgent need for a long-term solution given the continued necessity for cash in the Australian economy, and this must be properly funded by the company's large customers like banks and retailers." Kaine added that a new deal will give peace of mind to more than 1,400 workers as well as those who rely on the availability of cash in their community. 'We need to see a reliable and safe operator while cash is still part of our society, and that means banks and retailers must stop the squeeze to ensure Armaguard remains viable into the future," he said. It's unclear whether that $50 million funding arrangement will be repeated in June or if a different deal will be brokered. Zhong told Yahoo Finance that it's a very delicate tightrope for everyone to walk. "I would say that is more likely for an agreement of collaboration to happen," she said. "For example, all the major banks could collectively support Armaguard and share the cash distribution burden. "But any new agreement will also require approval from the ACCC. So it is a complex, complicated situation and a fine balance between competition concerns and also the need to maintain a critical piece of financial infrastructure." Westpac has also reportedly been pushing for a shared arrangement with its fellow Big Four banks, as the current setup sees it solely responsible for all the notes and coins in Armaguard's depots before they are distributed across Australia. "It's an unusual model because it actually places significant balance sheet liability on Westpac, while at the same time, other banks benefit from the distribution network without carrying the same financial burden," Zhong said. That 20-year legacy agreement ends in mid-July this year. Westpac told Yahoo Finance that while it can't comment directly on the discussions, the bank "recognises the importance of cash to all Australians" and "will continue to support our customers and community to ensure the circulation of cash through the economy". If no new deal can be brokered to support Armaguard in the future, Zhong predicts the government will have no choice but to step in and provide the funding.
Yahoo
06-02-2025
- Business
- Yahoo
Huge cash change coming to Australia as Big Four banks avert 'crisis'
There's been a big development in how cash is handled across the country behind the scenes. Big stakeholders involved in propping up Armaguard have met this week to work out whether to renew the deal inked last year to keep the beleaguered cash-in-transit company afloat. Part of those discussions reportedly centred around whether Westpac should continue to hold the responsibility for all the cash in Armaguard's vaults or if that should be shared across the Big Four banks. RMIT's Professor Angel Zhong told Yahoo Finance that this arrangement had been around for decades. "It's an unusual model because it actually places significant balance sheet liability on Westpac, while at the same time, other banks benefit from the distribution network without carrying the same financial burden," she said. Time running out for cash users to weigh in on major money change: 'Crucial' Jetstar worker's salary for 12-hour days leaves Aussies stunned: 'Not nearly enough' Major superannuation warning as hard-working Australians can't afford to retire: 'Growing crisis' "So it's quite a reasonable push that, especially with the declining usage of cash, Westpac wants a more equitable distribution of responsibility. "I think it also reflects the growing unease with the outdated structure around cash usage and the declining profitability of cash distribution." Under the 20-year deal, the Reserve Bank of Australia (RBA) owns responsibility for all notes and coins it issues until it reaches Armaguard. Once that happens, even though it's being stored by the cash-in-transit company, the liability, which is worth hundreds of millions of dollars, is on Westpac. The Big Four bank has to manage that risk until Armaguard delivers the money to bank branches and other retailers like Coles and Woolworths around the country. This arrangement, which is called the cash distribution agreement, will finish on July when most contracts come to an end, some stakeholders might want to see a shake-up before another deal is organised. According to the Australian Financial Review, Westpac has been pushing for the load to be shared across itself, Commonwealth Bank (CBA), NAB and ANZ. CBA reportedly agreed with Westpac when the Big Four met on Wednesday to discuss the looming deadline and there was "broad support" for the idea of dividing up responsibility for Australia's cash. The finer details haven't been arranged yet but if it's fully implemented under this setup then it will help ensure notes and coins continue to be delivered to Aussies who use it. There were concerns amongst cash advocates that if Westpac couldn't secure a new agreement with CBA, ANZ, and NAB, then it could walk away altogether, sparking a "cash delivery crisis". Yahoo Finance has reached out to the Big Four banks, as well as the Australian Banking Association (ABA), for comment. Last year in June, the cash-in-transit business was given a $50 million lifeline to stay afloat for 12 months. The deal was organised by CBA, Westpac, ANZ, NAB, Coles, Woolworths, Bunnings and Australia Post. But questions remain about whether that funding boost will be repeated this year. Zhong told Yahoo Finance that it would be a "complex" process. "I would say that it is more likely for an agreement of collaboration to happen, for example, major banks to collectively support Armaguard or to share the cash distribution burden," she said. "But then again, any new agreement we also require approval from the ACCC, so it is a complex and complicated situation. "It's important that there is a fine balance between competition concerns and also the need to maintain a critical piece of financial infrastructure." If the Big Four don't come to the table again, the federal government could be forced to prop up Armaguard for the foreseeable future. Back in August, the Australian Competition and Consumer Commission (ACCC) allowed the ABA, its member banks, and other participants to formulate a collective scheme to ensure businesses and communities wouldn't be without cash if Armaguard collapsed after the funding finishes in the middle of 2025. The ACCC was initially worried about Australia's biggest financial institutions working together for a cash backup plan, however, the regulator decided to let collaboration continue under several conditions, as the availability of physical money is a big concern for many.
