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The Australian National University

Indigenous Australians and competition and consumer issues: A review of the literature and an annotated bibliography

Working Paper 12 / 2002

Abstract

This working paper is based on a literature search conducted to identify and review relevant Australian and overseas research that is of relevance to Indigenous competition and consumer protection matters. The focus of the literature search has been on matters of relevance to Indigenous communities throughout Australia related to the Trade Practices Act 1974 (TPA). Results of the literature search suggest that most research conducted to date has focused on issues associated with Indigenous community stores and consumer banking. In addition, the geographic focus of past research has been predominantly on remote and regional Australia, areas where the structural impediments associated with remoteness may impede competition. Further, although the research has included some discussion of competition in Indigenous communities, it has mainly focused on consumer issues.

This working paper identifies a number of issues of importance in assessing TPA-related matters, mainly in remote Indigenous communities. These are:

  • Structural impediments, location and transport costs

Structural features may explain the high prices charged in remote localities: these include restrictions on competition (i.e. closed markets); the nature of enterprises (not for profit and potentially inefficient) and the small populations of many isolated Indigenous communities and associated diseconomies of small scale (Legislative Assembly of the Northern Territory 1999).

  • Store quality, range of goods, health implications

Health researchers have generated much of the literature about high prices in remote Indigenous community stores. The standard argument is that currently a high proportion of dietary intake is store based (most often the figure quoted is 90–95%). Consequently it is argued that there is a need for a supply of healthy food as well as consumer education about what food is nutritious. However, this work is challenged by researchers such as Harrison (1991) who suggests that there are more complex cultural reasons for poor nutrition, beyond the supply of food at stores.

  • Multiple roles of stores

The absence of other commercial institutions in remote Indigenous communities means that stores often have multiple roles. In the absence of institutions providing essential services stores must take on the role of providing these services. This is especially the case with stores that have been established as charitable organisations or social clubs and thus have a commitment to return any profits for community benefit. The multiplicity of functions provided by community stores creates difficulties and tensions in running commercially viable enterprises, in that each additional function increases the costs of running a store, and can place enormous pressures on management and staff (Bagshaw 1993).

  • Commerce and culture

The cultural context within which stores are established combined with their corporate structure often creates enormous pressure for stores to operate in a way that is not strictly commercial (Bagshaw 1982). This tension between the commercial and the social is an issue that is reiterated in much of the literature and seems to represent the experience of community stores regardless of location and governance structure.

  • Governance and capacity building

In relation to community stores, management is of crucial significance to Indigenous competition and consumer matters. Central to this analysis is the understanding that different governance structures can have major implications on the prices faced by Indigenous consumers in remote communities. Similarly, George (1996) notes that while good management can have a positive impact on store pricing, poor management can result in stores incurring debts which are then paid for with higher prices.

  • Indigenous-specific ACCC investigations

While the number of publicised investigations about Indigenous consumers and the TPA is limited, those that do exist indicate that the law can work to protect Indigenous consumers against breaches of the TPA.

  • Poor consumer information

Consumers need to be aware of the TPA and the obligations it imposes on businesses before they can take action if there has been a breach. In the literature there is a general view that Indigenous people, and particularly those in remote communities are not aware of their consumer rights (see Aboriginal Consumer Education Project 1994; Dee 1991; Department of Fair Trading 1998; Dodson 1995†).

  • Specific Indigenous consumer issues

Specific Indigenous consumer issues identified by the literature may raise implications for the TPA in terms both of market structures which inhibit competition and of unconscionableness. Thus it may be that regulatory solutions should consider not just the education of Indigenous consumers but also structural reform to address issues of market failure.

  • Access to banking facilities

In the context of a rapidly changing Australian financial sector, evidence is emerging that the availability of banking and financial services in rural and remote Australia is on the decline (HRSCEFPA 1999; McDonnell & Westbury 2001). The removal of banking services from remote and rural communities has particular welfare implications for the relatively large, and increasing, Indigenous population of these communities.

  • Book-up

Book-up is the practice of running up a tab (or book) with a store or merchant. One interpretation of book-up practices is that they result in exploitation of Indigenous consumers’ lesser bargaining position and as such may be unconscionable. However, another possible interpretation of book-up is that it provides an essential service to Indigenous people who otherwise would not have access to credit. Thus it is possible that in some cases book-up has the potential to benefit Indigenous consumers.