The first case study was conducted in central Australia for ATSIC and Centrelink. It focused on the relationship between Aboriginal people’s lack of access to banking and financial services and the continued payment of social assistance by cheque. While most Australians receive their Centrelink payments electronically, as at May 1999, 30 000 people Australia-wide were still paid by cheque (Westbury 1999). Just under 47 per cent of these cheque payments are made in northern Australia, comprising nearly 42 per cent of the total amount paid by this method. Of these welfare recipients 90 per cent are Indigenous, and Indigenous people are therefore highly dependent on payment by cheque (Westbury 1999).
The retention of welfare payment by cheque reflects the harsh reality of Indigenous people’s lack of access to banking and financial services. The Commonwealth Ombudsman has concluded that this practice has led Indigenous people to be dependent on third parties such as storekeepers and taxi drivers to cash cheques and fill out complex correspondence. The result is that many people are caught in exploitative situations and are captive to exorbitant fees (Westbury 2000). In remote communities the result can contribute to a vicious circle where families have difficulty maintaining a cash flow to purchase foodstuffs over the fortnightly period between welfare cheques. Even in Alice Springs, where all the major banks are represented, Aboriginal people are experiencing major difficulties in adapting to electronic banking. They tend to rely on the goodwill of the banks to keep pass books in safe custody, or rely on third parties to cash cheques (Westbury 1999).
The case study found that in direct response to these problems a number of Aboriginal communities in the Top End of the Northern Territory banded together to establish the Traditional Credit Union (TCU), which now boasts over 5000 members. It operates six branches, five of which are supervised by an Indigenous staff member. Of its 32 staff, 25 are Indigenous.
In remote communities, TCU branches are the only financial institution providing over-the-counter banking services. Staff at community branches also speak the language of community members, many of whom have English as a second language. The TCU also has a loans scheme with a maximum loan of $5000 allowed to members, repayable over five years. A significant proportion of loan recipients are women. A member must save a specified amount on a regular basis over a three-month period to be eligible for a loan. This loan program has worked well to date, with only one loan written off, and arrears are subject to a personal one-on-one follow up by TCU staff or directors. The TCU reports that 70 per cent of loans are being repaid in advance. The evidence suggests that these loans have made a significant contribution to improving people’s standard of living (e.g. by making possible the purchase of refrigerators to store food, and washing machines and furniture and fittings for housing), with repayments reflecting people’s level of income and capacity to repay (Westbury 2000).
The second case study was conducted in five country towns in north-west New South Wales. It was commissioned by ATSIC, and its purpose was to examine a proposed joint venture between the Murdi Paaki Regional Council and five local shires to establish a credit union. In contrast to central Australia, the vast majority of Aboriginal people in the region receive their welfare and CDEP wages payments electronically into accounts held with the major banks. But despite the fact that people have made the transition to utilising electronic services, the research highlighted a number of obstacles that effectively worked against their ability to equitably access banking and financial services.
Because of the comparatively low incomes of Indigenous people, the high levels of bank charges have had a disproportionate impact and serve as a disincentive to maintaining bank savings accounts. Also, Aboriginal people consistently complained about their inability to access small-scale loan finance via the banks, despite having long-term employment histories under CDEP or as salaried employees. This allegedly often resulted in subsequent referral to private finance companies who charge exorbitant interest rates.
As a result of these charges and the withdrawal or refusal of services, a number of Aboriginal CDEP organisations provide de facto banking services. These range from Christmas Club Savings accounts and payroll deduction services to meet water and electricity payments, to the provision of wage advances to meet family emergencies (this was further highlighted by the fact that in north-west New South Wales, as in central Australia, approximately 90 per cent of welfare recipients utilise the annually available $500 Centrelink advance to meet emergency needs).
Aboriginal people place high value on being able to access face-to-face banking services. People strongly objected to the lack of privacy and the embarrassment associated with accessing services through agencies such as newsagents. These services often serve as a replacement for bank branches that have been withdrawn or closed down.
CDEP organisations constitute at least one of, or sometimes the major employer in many country towns in north-west New South Wales, but the management of these organisations argued that they nevertheless found it difficult to access commercial loan funds from the banks. Similarly, citing a lack of local bank competition, CDEP organisations asserted they were unable to secure bank fee concessions despite their collective annual multi-million dollar budgets (Westbury 2000).
Both research reports made a number of short and longer-term recommendations, including those listed below.
That Centrelink pay welfare benefits weekly rather than fortnightly as a direct incentive to those recipients who transfer to electronic payments.
That the Rural Transactions Program be enhanced so it can respond to regionally based applications for assistance. This program currently focuses on individual community applications rather than on those that are regionally based. This operates as a disincentive to Indigenous communities, which invariably lack the infrastructure to support stand-alone banking services. The lack of Indigenous representation on the Advisory Board that advises the relevant Minister on applications also hinders the operation of the program.
That an investigation be conducted into the feasibility of supporting the expansion of the TCU’s services in remote communities. The TCU has saved the Commonwealth hundreds of thousands of dollars by enabling cheque recipients in six remote Aboriginal Top End communities to receive their payments electronically.
That the banks develop best practice policy approaches in service delivery, employment, and education that specifically address the needs of Indigenous customers.
That ATSIC should co-operate with other major Indigenous organisations in combining their financial muscle to leverage a beneficial commercial agreement with one of the major banks that would include initiatives aimed at improving the availability of financial services to Indigenous Australians.
Finally, that a pilot project be conducted in Alice Springs with the objective of assisting existing welfare recipients to transfer to electronic payments.
As a result of these recommendations a pilot project has commenced through a partnership involving the Tangentyere Council in partnership with Westpac and the DFACS. This project has the objective of assisting current welfare cheque recipients to transfer to electronic accounts, with appropriate financial and budgeting education. Westpac has also recently joined the Commonwealth Governments Corporate Leaders for Indigenous Employment Project (see Shergold, Ch. 8, this volume).