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Westcombe, Roger --- "Bad Money Business" [1991] AboriginalLawB 30; (1991) 1(50) Aboriginal Law Bulletin 6


Bad Money Business

by Roger Westcombe

A car is bought and long after it gasps its last, the Aboriginal purchaser finds that he still owes a considerable sum on it despite no longer having use of the vehicle. An arrangement is made to pay his family allowance directly into the Credit Union account. When he realises this does not even cover his interest payments he is distressed at continuing to go backwards financially despite completely handing over his income. The repossessed car is later sold by the Credit Union for less than its true value.

A woman in her 60's was distressed over constant harassment by creditors and subsequent visits by the sheriff. She believed she would be sent to gaol as a result of being unable to pay her debts. When the sheriff delivered a summons she believed it signalled criminal proceedings. She had no idea of the laws of bankruptcy and felt there was nothing available to assist her.

Outside a large NSW country town a young man turns his car over to the finance company within months of purchasing it for $5000 as he can not meet the repayments. He estimates it is still worth between $3000 and $4500. The finance company claims, despite his denials, that the car's condition has run down and puts it up for public auction, promptly buying it back for themselves for $2300! His father had been the guarantor, and seven years later they still are not on speaking terms.

Although credit can cause difficulties for anyone struggling on a low income, the problems faced by Aborigines take on particular characteristics. Arising out of cultural, demographic and related factors, credit is a cause of growing concern in Aboriginal communities. Advances in such key areas as health, housing, education and employment can be undermined by over-committment or ironically, lead to new debts.

These are broad observations. Unfortunately, there is virtually no research or statistical information on patterns of Aboriginal financial activity and commercial experiences. The colonial concept of 'terra nullius' has been joined by a data nullius' which makes targeting specific areas very difficult.

Place Makes a Difference

Geographic location has emerged as a factor in both the type and severity of the problems that arise. Research tends to confirm that Aborigines in small country towns are harder hit economically than the urban and more remote outstation dwellers. Small town dwellers are caught between two poles, less able to fall back on traditional supports but also not fully accepted into the socio-economic patterns of wider society.

The Federal Bureau for Consumer Affairs' Flash Attack project, targeting Aborigines, bears this out. As Norm Becker, the Bureau's Director of Information and Education, states:

"In country towns there is greater contact with whites, and this greater interaction may weaken the social structure."

"Urban dwellers can use white society; there's less kin support but less confusion in dealing with systems."

Low Incomes and Kinship

Income levels of 30%-50% of the national average, unstable work conditions and low employment continue to be the reality for the majority of Aborigines. Rates of unemployment, illiteracy, and imprisonment are often multiples of the national average, while there are still areas where 'Third World living conditions' is the only accurate summation of the shameful levels of chronic poverty being endured.

The unique social system of 'kinship' often underpins money values and circulation patterns in Aboriginal economies. A pioneering report by South Australia's Department of Community Welfare (DCW) in 1989 contains the following description of kinship systems in An Aboriginal Perspective by Veronica Brodie:

"Aboriginal people have a system unlike non-Aboriginal people, which arises from kin, friends and the family structure."

"Traditionally in Aboriginal culture, it was the custom that when the hunters returned from their kill, the food was shared among the tribe. This system helped Aboriginal people survive, and down through the years the same system still operates."

The increasing urbanisation of Aboriginal people in response to economic opportunities has eroded some ties but, even in the cities, kinship systems continue to function to an extent.

Low incomes, combined with a communal system of shared obligations "has the effect of causing hardship for all families concerned", says the DCW report. "Budgeting is impossible".

The Culture Gap

The process of financial planning has to be understood against vastly different, and sometimes non-existent, concepts of "the future". Such problems are rarely recognised or understood by non-Aboriginal people and institutions.

Norm Becker's central Australian Flash Attack research revealed that some cultural divides require entirely new ways of thinking:

"The concepts don't exist. They didn't understand how you could put a verbal agreement on paper. There was nowhere to store a copy of a contract, even matters like that. To say 'you need a contract' is a total nonsense."

Concepts such as 'interest', 'contract', 'warranties', 'redress', 'credit rating, can be major hurdles for some Aboriginal people, but cultural sophistication cuts two ways. Aboriginal languages are not provided for in business transactions, let alone their conceptualizations, experiences, expectations or kinship obligations. Without Aboriginal consultation it is impossible to know the extent to which their ideas and cultural arrangements are captured by English language usage.

Misleading Practices

Some problems are a direct result of misleading practices in the credit industry. Credit providers still often fail to assess people's ability to pay, a critical issue for a community whose employment is typified by seasonal or short term work.

Aboriginal Legal Services (ALS) and financial counsellors see credit products misrepresented with misleading claims and inadequate disclosure of terms and conditions. As well, there is pressure for questionable 'extras' such as mortgage and credit insurance, and the role of guarantor can be distorted sufficiently so that people are led to believe it's anything from 'co-borrower' to 'referee.

In strongly family oriented Aboriginal communities the damage caused by such practices is not limited to the borrower's balance sheet but extends into the social fabric.

Sue Finucane of the Victorian ALS Cooperative says she has sighted several loan contracts granted to people on social security benefits, and a case where a client on unemployment benefits was granted a credit card and then had his limit raised from $500 to $2000.

For people struggling to make ends meet, income supplements and 'top-ups' can lead to consolidation loans, new loans for old debts and other practices identified in Redfern Legal Centre's 1988 study, More More More.

Some credit rorts prey uniquely on Aborigines. The 'bookdown' system is found in some stores serving remote communities or workers on pastoral stations. Benefit cheques or wages are signed over in exchange for goods. Over-buying is encouraged, locking people into a real dependency on that store with their future payments. "It's taking us back to the tea and sugar days", says Darryl Pearce of the Institute for Aboriginal Development in Alice Springs.

The Debt Spiral

Credit has a wide reach in the Aboriginal community. Examples of the Victorian ALS Co-Operative's credit casework include store credit cards, insurance, tax bills, school fees and utilities charges. High replacement rates of essentials like basic appliances also often drive budgets into the red.

Debt can often result when employment takes a long time to achieve. On top of the immediate loss of benefits and concessions, keeping a job takes money for clothing, transport and childcare and debts can develop in order to maintain the income.

The same problem arises when people manage to secure housing. The South Australian Department of Community Welfare report argues that new tenants "may then have to go into considerable debt to adequately furnish their home".

Glimmers of optimism exist. Brenda Mailing of the South Sydney Community Aid Co-operative notes several successful NSW department stores accounts with limits of $200-$500 and Sue Finucane has seen successful challenges in the Credit Tribunal that "provide a positive role model for the rest of the community".

What about Consumer Affairs?

So why have Aboriginal people not mustered their consumer power? For a start, Consumer Affairs Departments across the country are not seen by Aboriginal people as meeting their needs. An Alice Springs woman told the ACA that people "having nothing in common with Consumer Affairs, don't know assistance is available and find the ALS more accessible."

The current deregulatory fashion of 'self-help' and 'negotiation' with traders rather than direct departmental intervention does nothing to encourage Aboriginal people to use such avenues either.

Sue Finucane says a satisfactory working relationship could be reached but she also sees problems with today's approach to dispute resolution;

"When products fail, the departments suggest people act on a conciliatory basis. It's not helpful to say 'negotiate', when people don't have the necessary social skills. It's more helpful to advocate."

Legal and Social Ramifications

Before the establishment of the ALS there was little use of legal aid by Aborigines. The virtual absence of Consumer Affairs departments in the dispute resolution process not only significantly increases the burden on the ALS but has the disastrous effect of allowing initially approachable problems to fester and grow into crises which can only be dealt with through the courts.

Like many people on low incomes affected by credit problems, shame and embarrassment are major reasons that Aboriginal people do not seek help.

According to ALS solicitor Pat Van Steenwyk, people often do not approach the ALS until it is too late, despite writs, letters of demand and bailiff action. The DC W report suggests that people may be too proud to seek financial counselling and adds "Aboriginals don't like to talk about money business."

Nevertheless, in remote central Australia, women in particular, are expressing anger over situations where white people had taken advantage of them. The result is that a lot of Aboriginal debts end up in court. According to the South Australian DCW report as much as 50% of cases heard in the Debtors Court concern Aboriginal debt, with 25% of Aboriginal civil casework being debt related.

Recommendations

The overriding priority for any response is that it should be based on grass roots, community-derived programs to determine needs and appropriate action, rather than be externally imposed. Control of information needs to be in Aboriginal hands.

What little research exists is sporadic and dated. However, non-Aboriginal groups should be mindful of the differing perceptions of research. As Norm Becker argues:

"Aboriginal people have seen lots of researchers poking and prodding about their communities but too often nothing comes of it".

"Research carries the implication that something will follow..."

The DCW report calls for preventative education to develop skills in exercising rights and provision of ongoing financial aid services. Changes to the credit environment would be best formalised in a Code of Practice, which would provide for easy to understand contracts and repayment schedules as a priority measure.

Darryl Pearce believes the Department of Community Services and Health would be a better starting point than Consumer Affairs departments. He suggests a community education program in community languages would both empower consumers and "totally change" the attitudes of business.

The Draft Credit Bill now being circulated presents an opportunity for Aboriginal groups to address related issues in an active way. Opportunities to have contracts varied due to unconscionable conduct or inadequate assessment of ability to pay are more explicit in this Bill.

Such legislative protection is only as good as its delivery through adequately resourced financial counselling services in country areas. This could include a forum, perhaps through the ALS or the Australian Financial Counselling Service and Credit Reform Association, to co-ordinate Aboriginal financial service providers.

The State-Commonwealth Organisation of Consumer Affairs Ministers is the appropriate forum for Consumer Affairs departments to consider their service delivery to the Aboriginal community, an evaluation that must be based on community consultation and input.

The question of benefit cheques versus direct payments is not as cut and dried in remote communities as it is in cities. You need an alternative before you can boycott rip-off merchants such as those employing the bookdown' system, but since such exploitation survives only because the merchants are reliable 'service providers' it points to a gap in government services in the first place.

For the consumer sector, the challenge is to balance a commitment to follow through, with an awareness that whatever policies are advocated must be generated by Aboriginal people themselves.

References:

1. Huntsman, Carolyn, (1989) More, More, More: Lending Practices and Overcommitment, Redfern Aboriginal Legal Centre, Sydney.

2. Federal Bureau of Consumer Affairs, (1989) Flash Attack.

3. South Australian Department of Community Welfare, (1989) Review on Aboriginal Financial Counselling.

This article first appeared in Consuming Interest, June 1990.


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