‘He
that dies pays all debts’
Tempest,
Act
3, scene 2
Last week the Banking Royal Commission, or to give it its
full name, the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry (link
here) published a Background Paper titled ‘Some Features of Financial
Services in Regional and Remote Communities’ (link
here).
This was a welcome development and at first blush suggests
that the Commission is being proactive in seeking to identify areas of
potential concern. The focus of the paper is on the access to financial
services of the 6.9m people (or 28 percent of the Australian population) who
reside in regional or remote locations. The paper provides a good overview of
the issues involved, including the footprint of and interactions with financial
services, and the extent and consequences of financial exclusion in regional
and remote Australia.
Necessarily in a brief overview, the paper is written at a
high level, and makes few references to issues around Indigenous access to
financial services. There is a passing acknowledgment that Indigenous citizens
are overrepresented in the severely or fully financially excluded group (page
14). There is a brief discussion about limited ATM access and high fees and
transaction costs, which while it doesn’t mention Indigenous citizens in the
text, relies for its source on a Treasury report from 2011 which examined Indigenous
ATM issues (page 19; link
here). There is mention of the links between financial exclusion and high
cost lenders, but again without mentioning the particular issues associated with
remote communities.
The experience in the APY Lands in this regard has had
publicity in recent years (link here
and here),
but it is a widespread and longstanding issue across Indigenous Australia. The Commission
paper references a 2003 paper by Siobhan McDonnell (link
here) which provides a more academic insight into the issues facing remote Indigenous
communities, and references a number of other useful publications and reports from
the early 2000s including by my co-collaborator Neil Westbury.
The Commission’s paper prompts a number of observations.
First, the financial literacy issues facing Indigenous Australians
and the impact of financial exclusion appears to have gone off the policy
agenda in recent years. I haven’t conducted a comprehensive search of the literature
recently, but my intuition is that the past ten years have seen a loss of focus
on these issues. So for example, a look at the Department of Prime Minster and
Cabinet (PMC) website finds no specific mention of financial literacy under its
list of current initiatives, and within the focus area of economic development and
the most recent Closing the Gap report no focus on financial literacy either.
Of course, there are exceptions; see this 2016 article by
Marcia Langton and Josephine Cashman (link
here) calling for the Community Development Program to be oriented much
more explicitly to financial literacy. Their proposal does not appear to have
been taken up by the Government in any wholehearted way.
Second, the Commission’s paper is welcome in focussing
attention on financial literacy issues in regional and remote areas, but its
focus on a ‘mainstream’ as opposed to an Indigenous–specific lens raises the
prospect that the Commission itself is potentially vulnerable to reinforcing Indigenous
financial exclusion.
Third, a search of the Commission’s website using the
search term indigenous throws up scores of passing references, but very little
that is substantive. The most salient reference was to the Australian Bankers’
Association commissioned review of their Code of Banking Practice by Phil
Khoury (the Khoury Review). In a chapter on customers with special needs, Mr
Khoury recommends that clause 8 of the Code should be rewritten to remove a
series of heavy qualifications, to expand the obligation on banks framed by the
Principle of financial inclusion, and to apply to all Indigenous Australians
and not just those in remote and regional Australia. The Australian Banking Association
has a revised draft Code on its website (link here
and here) which appears to
have taken into account the Khoury Review recommendations (refer to Chapter 13
of the revised Code). Of course, the Code is only the first step, and it
depends entirely on the commitment of banks to implement it for its efficacy.
There is thus a case for ongoing monitoring of bank actions in relation to their
Indigenous customers.
Fourth, and flowing on from the last point, there is
clearly a need for a more high profile and active advocacy peak body for the Indigenous
financial literacy sector. This could be the National Congress or some other
body. It is clearly a gap which needs to be closed!
Fifth, by definition, those excluded from the financial
services sector will not be adversely affected by sins of commission (to use a
term from my third grade catechism), but rather will be subject to sins of
omission. A question for the Indigenous interests and the Royal Commission is
how to ensure that sins of omission come onto the Royal Commission’s agenda.
One obvious solution would be if affected individuals and organisations which service
them were to make submissions. While over 6000 submissions have already been
made to the Royal Commission, its website has not published them and
accordingly, it is not clear whether there are any Indigenous related
submissions. My intuition tells me that it is likely there have been very few.
Perhaps the Prime Minister’s Indigenous Advisory Council might consider developing
a detailed and comprehensive submission to the Royal Commission.
Finally, there appears to be strong case for a renewed
academic focus on Indigenous financial literacy and financial exclusion. Over
the past decade, there has been a huge change in digital access and technology,
which potentially is a game changer, and cries out for detailed assessment. In
particular, there do not appear to be many ‘on the ground’ analyses of the
impacts of financial exclusion on Indigenous citizens, their families and communities.
Hopefully the nation’s policymakers will refocus on the
issue of Indigenous financial exclusion in the near and medium term. For as
Keynes said in his Tract on Monetary
Reform: ‘in the long run we are all dead’.
Declaration of Interest: in 2007, along with Neil Westbury, I
undertook a consultancy for the NAB focussed on options for improving NAB’s
services for Indigenous Australians.
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