The Tip of the Iceberg: Consumer Protection and Financial Literacy in remote communities

It is extremely pleasing to see the ACCC taking action to enforce consumer protection laws in relation to residents of remote communities. There is a long history of ethically challenged individuals taking advantage of the residents of remote communities, and action such as this by the ACCC will assist in sending a message that regulatory oversight occurs and action will be taken.

Of course, lying submerged under the tip of this iceberg is the much larger structural problem that the levels of financial literacy in remote communities are often poor. This is not unexpected given the poor educational outcomes in remote Australia over the past two decades.

The ongoing impact of poor educational outcomes is life-long, and continues to reverberate for decades for individuals, within families and within communities. Poor financial literacy is just one of the adverse outcomes of the nation’s failure to deliver basic services to remote communities.

It is surprising too that there is not more attention paid to addressing poor financial literacy. There have been sporadic spurts of policy attention, but it is a long grind, and the natural constituency guarding against program closures and funding cuts, reallocations, and the like is limited.

Moreover, a large part of the problem is that there are structural constraints on adopting smart personal financial strategies. To take just one example, access to cash in remote communities is limited to ATMs which often charge high fees, and/or the local store which may or may not adopt progressive policies vis a vid their customers. The issues involved in the operation of remote community stores deserve separate attention. I will endeavour to say something about this at a later date.

The Banks have made some efforts on addressing financial literacy over the last decade or so, but Governments cannot expect the private sector to fully address what is by any definition market failure, thus justifying government remedial action.

Given the focus on jobs and economic development in the Government’s current policy toolbox, there would appear to be a strong case for a much greater focus on building financial literacy within remote communities. It is also the sort of issue to which the Parliament and its committees could make a serious contribution to policy.