Treasurer Jim Chalmers wants to phase out cheques by 2030

Federal Treasurer Jim Chalmers is unveiling plans for major changes to the way payments are made, aimed at making transactions cheaper and more efficient, including ending the use of cheques by the finish of the decade.

Excepts from a speech he is due to make to the Australian Banking Association on Wednesday show Dr Chalmers taking aim at current arrangements and saying there's a need for reform to help boost the nation's productivity performance.

Regulatory frameworks and infrastructure "have not kept up with big trends and transitions happening in finance," the speech says, and he is calling for the phase-out of costly means of exchange, such as cheques.

In the prepared remarks, Dr Chalmers says current systems are inhibiting the adoption of more modern payment methods, at a cost to consumers, business and the broader economy.

"I see this as an opportunity not just to catch up and patch up, but really try and see modernising payments as central features of our plans for competition, productivity, innovation and growth," the Treasurer says.

The nation's productivity has barely improved in the past decade and has virtually stagnated in the last three years.

Low productivity has been identified by the Reserve Bank of Australia as a significant source of vulnerability for the economy as wages increase. Governor Philip Lowe has flagged the risk of unsustainable pay increases unless they are accompanied by a lift in productivity.

In Wednesday's speech, Dr Chalmers identifies digitisation and other technological developments like artificial intelligence as potentially unleashing a fresh wave of productivity improvements.

"But we recognise that all of this will be incomplete unless we get the policy and regulatory settings right in finance - and especially in payments," it says.

"That's because payments are the tracks on which our economy run."

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Dr Chalmers will say Australians have been among the world's most enthusiastic adopters of cashless and mobile payments, and the government wants to build on this to realise more of the opportunities offered by modern technology.

As part of this, he wants to phase out the use of cheques.

The volume of payments by cheque has plunged by 90 per cent in the past decade and almost all current transactions by cheque could be replaced by internet or mobile banking.

"Leaving cheques in the system is an increasingly costly way of servicing a declining fraction of payments," Dr Chalmers is expected to say.

"Today, we're signalling an intention to wind down the cheque system by no later than 2030, leading the way by moving Commonwealth government departments to new forms of payments by 2028."

The Treasurer said the will government will consult with the public about the move by the end of the year.

Other elements of the government strategy include strengthening cyber security, updating regulations, supporting industry transition to the New Payments Platform, helping rollout an opt-in digitial identification system and piloting a central bank digital currency.