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The Australian National University

The spatial context of Indigenous service delivery

Working Paper 16 / 2002


As with all economic activities that consider proximity to a client base as part of their locational decision-making, the geographic distribution of banking and financial services has, until quite recently at least, been determined largely by a spatial calculus of market demand and supply. In this estimation, market thresholds dictated by population (client) potential have been an overriding factor. Historically, because of the face-to-face mode of service delivery, the consequence was a widely distributed banking infrastructure reaching down the settlement hierarchy to the smallest of rural service centres.

Over the past 15 years this has dramatically changed. As demonstrated by the House of Representatives Inquiry into Regional Banking Services (Commonwealth of Australia 1999), and as summarised by Beal (2002), market dynamics have induced a restructuring of the banking and financial services sector involving a shift away from face-to-face service delivery, due to branch closures, towards electronic modes of customer interaction. This, in turn, has undermined the link between population distribution and service distribution, at least in its classical form as a close relationship throughout the settlement hierarchy. At the same time, it could be argued that rationalisation of the system has an entirely demographic rationale—as a retreat of infrastructure to the larger centres of population with enhanced economies of scale and profitability. According to one submission to the House of Representatives Inquiry, individual banks review the trends in an area, look at what has happened to their business over the long term, and make projections as to what is likely to happen (Commonwealth of Australia 1999: 20). If the answers point to reduced profitability, then decisions are made to downgrade or foreclose.

According to the findings of the inquiry (Commonwealth of Australia 1999: 27), the withdrawal or downgrading of banking services can impact on individuals in a number of ways.

  • Individuals suffer the inconvenience of having to travel to do their banking. This can have security implications if large amounts of cash are involved. This also adds to the cost of banking through fuel costs, wear on vehicles, and time expended.
  • Savings are reduced due to the disruption of regular savings patterns and the increased cost of banking.
  • Cash withdrawals are larger to compensate for loss of daily access to banks, which also has security implications.
  • Loss of investment income.
  • Difficulty in obtaining credit from banks.
  • The increased need for credit from local businesses in lieu of cash.
  • Difficulties in cashing cheques; and
  • Lack of access to financial advice.

As for the impact on businesses and other corporate entities, similar effects in regard to increased travel are obviously felt, but the inquiry specifically notes the following (Commonwealth of Australia 1999: 28):

  • an increase in the demand for cheque-cashing services;
  • the loss of cash sales due to consumers shopping in larger towns that have banking services;
  • the accumulation of excess cash due to an inability to deposit takings on a daily basis;
  • an increase in bad debts due to the need to extend credit to local customers who do not have regular access to cash; and
  • delays in depositing cheques, which then delays the honouring of cheques.

From the perspective of Indigenous individuals, families, households, community organisations and enterprises, these impacts must be considered against a background of relatively low economic status and a financial cycle in many localities that is best described as one of feast and famine (Westbury 1999). Thus the essential framework for an appreciation of appropriate policy responses to recent changes in banking infrastructure is a combination of spatial and socioeconomic contexts—who is in touch with what services, who is not, and where?

This paper seeks to provide such a framework by outlining the nature of Indigenous population and settlement distribution. Comparison with the majority non-Indigenous population is made as it is the market power of the latter which provides the stimulus for decision-making regarding the spatial allocation of mainstream services. A second aim is to provide summary standard indicators of relative Indigenous socioeconomic status, particularly those that may have some bearing on options for the provision and delivery of appropriate banking and financial services.

It should be understood that the emphasis in this scene-setting is on issues to do with the physical access of Indigenous people to services as determined by their geographic proximity, and to a lesser extent by their economic capacity. Behavioural influences on service access, such as might flow from social and cultural practice, are not considered, even though it is recognised that these may often hold great sway. Also to be noted is a distinction drawn between personal banking services in the form of personal accounts, loans and financial advice, and commercial or corporate banking services that handle monies administered by organisations and enterprises. Because of a lack of data with which to quantify demand for the latter services, this paper is mainly focused by default on issues related to personal banking services.

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