The Reserve Bank of Australia prints pallets of the stuff, Australia Post is flying it to the furthest parts of the country at huge expense, and the Australian Competition and Consumer Commission is reportedly sniffing a new monopoly distributor to see if they are holding out on supplying banknotes.

Yep, we’re talking about cash.

If you’re finding it harder to get your hands on good old-fashioned machine-washable polymer in its physical form, it could just be because banks are putting the squeeze on businesses, consumers and regulators to be allowed to exit the business of dealing with legal tender and pass the allegedly loss-making exercise back to taxpayers to prop up, or let it fall over altogether.

Like physical branches, paper bills, statements, letters and cheques once put in the mail, the increasingly parlous state of printed money in Australia has again come into full public display courtesy of last week’s senate estimates committee hearings.

The first stop was Australia Post’s evidence which, when not bogged down in explaining its executive structure (note: bring printed org charts next hearing), awkwardly let slip the cost of supplying cash to regional communities where the banks have left town. It was wincingly expensive.

Australia Post has a problem in that, aside from its Universal Service Obligation that requires it to provide services to the community, it’s just having trouble finding people to run the post offices it owns and runs let alone franchising them out as a business. That’s before the price of cash delivery.

“We are seeing a demographic shift of a lot of our licensees,” Australia Post managing director Paul Graham told the Senate Environment and Communications Legislation Committee.

“I have been out visiting a lot of them in regional and rural areas. They are in their twilight years looking to retire after decades of fantastic service to that local community.

“Unfortunately, the community and people who are business people know that is a sunset business and it’s not financially viable. Therefore, it makes it very difficult to attract people to take over that licence.”

The real cash burn for communities is when the banks leave town but Post can’t find an operator for its business. It essentially has to buy the business back and prop it up, at a major loss. Graham said Post now spends “upwards of $430 million a year fulfilling our community service obligation”.

“We take that incredibly seriously. We will work with that rural and remote community to ensure that essential services are provided. Likewise in those towns where we are the only banking service in town, we would work with that community to ensure that the basic services are provided,” Graham said.

“But it will become increasingly difficult in terms of finding people to actually work in those places.”

Graham said Post was now “billeting people down on a three-month secondment basis” from Darwin to Katherine to maintain services.

“We are very mindful, particularly where we have a Bank@Post operation and we are the only Bank@Post in town. We will find a solution to ensure that the community gets access to the provision of cash. I think it is part of the broader change we’re seeing in regional towns,” Graham said.

When the banks leave town, that means flying cash in at a big cost to the taxpayer.

“In a number of regional towns at the moment, we are flying cash in on our ticket, so to speak, our dime, but that’s not sustainable. In the town of Coober Pedy, for example, it is about $4,000 a week that we’re spending flying cash in to make sure that town has a provision of cash,” Graham said.

“That’s not what we were set up to do. The banks need to be cognisant of their community responsibility and work with us to ensure that communities that do have a need for cash – and it will be some time before that need extinguishes – have those services available.”

The banks, now in the midst of reporting season, are clearly happy to let cash go and have been for more than a decade. Australia’s initial electronic payments network, including ATMs, is now more than 40 years old. But nobody wants to own ATMs anymore.

Enter the ACCC and its green light to the banks to allow now Linfox subsidiary Armaguard and its recent rival Prosegur to merge and form a cash-in-transit distribution monopoly.

On the back of the same senate estimates hearings, the Australian Financial Review recorded that “the competition watchdog is looking into concerns Australia’s monopoly cash carrier Armaguard-Prosegur is not meeting legal undertakings that last year allowed the two major players to join forces”.

There’s clearly a regulatory stink on, but the question many stakeholders are asking is whether the creation of a cash distribution utility is a cheap way for banks to dump a loss-making channel back onto taxpayers.

Given the big positive margins banks make on electronic transactions and the lack of mark-up on cash, there are clear incentives.

Cash, until recently, was actually used to attract a subsidy payable to merchants where a bank paid a merchant to release cash to consumers, rather than the bank stinging the merchant to accept the payment from consumers.

That same mechanism could be shoved so it’s banks who bear the cost of cash availability rather than solely the taxpayer or the merchant. Their account, your money etc.

The issue with charging account access fees, transaction fees and account movement fees is that they are all deliberately geared towards a systemic lock-in that favours incumbent operators and discourages competitors. Think global card schemes.

Cash may have issues, but they are fewer than its utility, hence the regulatory pile-on for the last three decades.

This debate still has a way to run yet.

This article was first published by The Mandarin.