A study of the Tangentyere Bank Pilot Project is important, as it is often cited as a ‘best practice’ model of financial service provision and financial literacy training (see McDonnell and Westbury 2002). For this reason, this report focuses on aspects of the Tangentyere project that may be applied to other Aboriginal communities in central Australia.

Banking and financial services offered by the Tangentyere Council

There are three major banking and financial services offered by the Tangentyere Council. First, the delivery of face-to-face, over the counter banking services to Westpac clients. Second, an extensive financial literacy program designed to facilitate the transition of individuals from cheque-based to electronic banking. Third, a strategy to overcome the fortnightly feast-and-famine cycle in the Tangentyere town camps. These aspects are discussed in terms of their relevance to remote Indigenous communities in central Australia.

The Tangentyere bank branch offers a range of face-to-face services for town camp clientele. As of October 2002, the Tangentyere agency had operative bank accounts for 888 customers. The financial structure of the agency means that it costs Tangentyere approximately $190 per annum to provide services to a customer. This is not taking into account the costs that have been subsidised by Westpac, or payments from other agencies in conjunction with the trial. A number of recommendations have been put forward as ways to reduce the costs to Tangentyere Council of running the agency.

Recommendation 1

That the Tangentyere agency shift to on-line, electronic access to Westpac.

Recommendation 2

That Westpac consider giving Tangentyere staff the opportunity to work in its Todd Mall branch.

Recommendation 3

That Westpac consider initiating a program with the Tangentyere agency similar to its program in Cape York.

Recommendation 4

That the Tangentyere Council and Westpac explore the possibility of applying for funding from the Commonwealth government’s community partnership scheme to underwrite their on-going relationship.

Financial literacy programs

The formal and informal surveys conducted as part of this research indicate a large number of Aboriginal people in the Alice Springs and central Australian region have very low levels of financial literacy. Accordingly, many Aboriginal people have encountered problems in moving from cheque-based to electronic banking. These difficulties include:

• understanding how to obtain a key card
• understanding how to replace lost or damaged key cards
• understanding how to obtain a new Personal Identification Number (PIN)
• securing key cards and key cards breaking
• remembering pin numbers
• using ATMs
• accessing and understanding bank balances, and
• understanding bank fees and how to minimise them.

This report recommends a number of steps that may be useful in dealing with these problems.

Recommendation 5

That Centrelink work in conjunction with financial institutions to develop a solution to the problem of fees incurred as a result of direct debits. One solution to this problem may be that, where it is obvious to bank staff that a large proportion of a customer’s income is being spent on fees as a result of direct debits, efforts will be made to discuss with the customer strategies for them to cancel their direct debit. This solution seems to be an extension of provision 19 of the Banking Code of Practice.

Recommendation 6

That Centrelink work in conjunction with financial institutions to develop a solution to the problem of fees incurred as a result of the type of account customers operate. One approach is for banks and other financial service providers to ensure that Indigenous people on low-incomes, and especially Centrelink customers, are signed on to whichever account minimises the fees they will pay. This approach seems consistent with provision 14 of the Code of Banking Practices.

Recommendation 7

That the Australian Securities Investment Commission consider developing a strategy to deal with book-up related fraud associated with electronic banking.

In terms of a long-term strategy, the level of financial literacy a person has is the key factor in determining whether they will easily make the transition from cheque to electronic banking.

Recommendation 8

That the Department of Family and Community Services consider the roll-out of aspects of the Tangentyere financial literacy project to other communities in central Australia.

Finally, the financial literacy project has also identified that there are a number of Centrelink clients who, regardless of the financial literacy training provided, will never make the transition to electronic payments.

Recommendation 9

It is recommended that Centrelink introduce a waiver policy that recognises the insurmountable problems faced by some Centrelink clients in transferring to electronic payments.

Indigenous communities in central Australia have very limited access to banking and financial services. Most of the communities surveyed (44 communities) only have access to money via Electronic Funds Transfer at Point of Sale (EFTPOS) at the community store, local roadhouse or pastoral station store. However, in nine communities there is no access to even basic EFTPOS facilities.

Communities identified a large number of problems in accessing banking and financial services where only EFTPOS facilities are available. These problems are:

• an inability to check account balances;
• difficulties in transferring funds—this is particularly of concern as Aboriginal people often need to transfer money to relatives in other communities;
• risk of loss, or actual loss, of EFTPOS service due to damage to optic fibre networks that services are dependant on; and
• use of EFTPOS is often dependant on people buying goods from a store or roadhouse which are overpriced.

This report proposes a number of strategies to better deliver face-to-face banking and financial services to remote Indigenous communities. One strategy is the development of a regional, central Australian Rural Transaction Centre (RTC). A number of recommendations flow from this strategy.

Recommendation 10

That Tangentyere Council look to pursuing partnership with either the Traditional Credit Union or Westpac to aid in the provision of financial services as part of a central Australian Rural Transaction Centre hub.

Recommendation 11

That Tangentyere Council look to pursuing partnership with Giropost to aid in the provision of financial services as part of a central Australian Rural Transaction Centre hub.

Recommendation 12

That Tangentyere Council investigate a partnership with Centrelink to aid in the provision of financial services as part of a central Australian Rural Transaction Centre hub.

Recommendation 13

That Indigenous organisations, including the Aboriginal and Torres Strait Islander Commission and the Central Land Council, consider ways of providing financial institutions with incentives for being involved in a central Australian Rural Transaction Centre hub.

Recommendation 14

That the Department of Family and Community Services (DFACS) consider funding Tangentyere Council to provide a mobile financial literacy program for other communities in central Australia.

The cost to the Department of Family and Community Services (DFACS) in delivering a financial literacy program in central Australia should be offset against the large cost savings it has in moving people from cheque-based to electronic banking. Using an estimated cost saving of 73 cents per transaction made electronically (a conservative estimate), the current cost saving to DFACS in central Australia of making electronic payments rather than issuing a cheque is over $1.8 million over a five-year period.

The ‘feast-and-famine cycle’

Many Indigenous families face a ‘feast-and-famine’ cycle caused by low personal incomes, distinctive cultural patterns of immediate expenditure often for a wide social network, combined with a lack of access to accumulated savings (McDonnell & Westbury 2002). Recently, DFACS has conducted a trial which uses weekly payments as a way of ameliorating some of the problems caused by the feast-and-famine cycle in remote Indigenous communities. The initial results of the trial seem positive.

Recommendation 15

It is recommended that the trial of weekly payments be expanded throughout the central Australian region. However, mechanisms must be put in place to ensure that people are not coerced into the trial by administrators who wish to reduce costs and that people do not face difficulties in switching back to fortnightly payments, should they wish to do so.

ISBN: 0 7315 4920 1

ISSN: 1442 3871