These overseas developments hold important lessons for Australia. At the very least they severely test some of the myths about the supposed inability of Australian banks to maintain social and community obligations whilst generating corporate profit for shareholders. Not only does this Australian banking myth run contrary to the commercial experience of some of their overseas counterparts, its net effect runs counter to the spirit and intent of banking regulatory frameworks that apply in that true bastion of the free market—the USA. I am not arguing that all the initiatives identified in this paper are immediately transferable to Australia. However they do, at the very least, raise serious questions about many of the readily cited justifications for continuing inequities in the delivery of financial and baking services to Indigenous Australians in regional and remote areas.
Overseas experience also points to a need for governments, financial institutions, and Indigenous interests to seriously examine and consider new and innovative methods of ensuring that commercial loan and capital funds can be made available to Indigenous communities. Options developed overseas include using community block grants as collateral, community councils acting as guarantors and setting aside community investment or royalty funds as collateral, and the use of tax incentives to encourage economic activities in remote communities. Consideration should also be given to how tax and other incentives could be applied to facilitate improvements in financial literacy and individual asset accumulation. The McClure Report on welfare reform (McClure 2000) remained strangely quiet on these issues, especially given the North American experience in welfare reform where the role of financial institutions and IDAs are seen as critical factors in promoting asset accumulation for low and moderate income earners.
In the USA and Canada connecting poor people in poor communities with the financial mainstream is a key plank of government policy, as are the provision of funds for financial education, and tax incentives to promote savings. In Australia, we are yet to translate those clear connections into the necessary regulatory, policy, and program incentives needed to help deliver real and sustainable reductions in welfare dependency.
In the light of highly restricted (and worsening) Indigenous access to banking services in Australia, and given these overseas initiatives and best practice, a number of practical steps could be taken in this country.
It is recommended that the Commonwealth government examine the impact and relevance of the US Community Reinvestment Act 1977 to Australia, with a view to ensuring equitable access to credit and appropriate financial services for all Australians, especially those on low and moderate incomes.
Consideration should be given to the conduct of an Indigenous lending study in Australia, modelled on the one commissioned by the US Congress and undertaken in the USA. The study should investigate and make recommendations aimed at eliminating barriers to and developing incentives for private sector lending, investment and provision of banking services on Indigenous lands and other lands held in trust for Indigenous Australians.
The Commonwealth government should give active consideration to the potential relevance of IDAs as a key element of any policies aimed at reducing welfare dependence.
Finally, a comprehensive program of financial education needs to be promoted and supported by the Federal government in partnership with Australia’s banks and ATSIC.