High Court gives the green light to repugnant ‘book-up’ system

The ‘book-up’ credit system doesn’t make the top 100 list of things institutionally wrong with Indigenous affairs in Australia. But that this case ended this way is utterly crushing.

High Court Mintabie book-up(Image: AAP/Lukas Coch)

This week, the High Court delivered a judgment that neatly encapsulates just how far we have to go towards racial equality in this country. It was a four-three split, with the majority squarely on the wrong side of history (in my humble view). It’s a case that rewards a very close look.

Mintabie is a community in the middle of the most remote part of South Australia, 1100km north of Adelaide. It is on Anangu Pitjantjatjara Yankunytjatjara (Anangu) land. The Anangu people have no ready access to banking or other financial services, and they are extremely poor in assets and income.

As is common for many Indigenous communities, the Anangu obtain most of their material needs by means of a “book-up” system. In Mintabie, this system was run out of Nobby’s General Store, operated by store owner Lindsay Kobelt for some 30 years.

Book-up worked like this: the customer handed Kobelt their debit card (into which their wages or Centrelink payments were paid) and PIN. Kobelt would use these to access their account and withdraw all of the money in it, early in the morning on the day the money came in (before the customer would have a chance to access the funds themselves). The customer would be able to purchase from the store on “credit” at Kobelt’s discretion. Sometimes he would refuse to sell them things if he felt they were spending too much; it was all at his personal discretion. He would also issue them with purchase orders to buy stuff from other stores — but again, he would choose the store and the amount.

ASIC prosecuted Kobelt for the illegal activity of “unconscionable conduct” in the running of his book-up system for 117 Anangu customers. It was an important test case because the book-up system operates all over Australia.

For conduct to be unlawfully unconscionable, it must be “so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience”. The law requires the existence of a special disadvantage in its victim, and an unconscionable exploitation of that disadvantage by the perpetrator.

The High Court majority decided that Kobelt’s book-up system was not unconscionable at all.

Much of the judicial discussion centred on the culture, circumstances and wishes of the Anangu people. The evidence made it clear that the Anangu were pretty happy with the book-up system and weren’t agitating for an alternative. They were mostly illiterate, unemployed and long-term welfare recipients. Their standard of living, education and health were extremely poor. Today’s Anangu population had never known any way of buying supplies other than book-up, and one of the advantages they saw in it was that it saved them from “humbugging”, where relatives and others demand that anyone with money shares it around.

What the majority judges saw in this was free choice. The “anthropological evidence” (uh-oh, here we go) “explained … that trusting Mr Kobelt to take immediate control of [their money] allowed his Anangu customers to smooth out the ‘boom and bust’ cycle of household expenditure [between fortnightly payments] and as well allowed them to manage customary obligations to share their resources with their relatives”.

ASIC argued that it was these very factors that made the Anangu customers vulnerable to exploitation, and book-up was designed to cash in on them. It is a system, they said, which “would be patently unacceptable conduct elsewhere in modern Australian society”.

Justice Stephen Gageler, in the majority, struck back; ASIC’s submission, he said, “fails, in my opinion, to afford to the Anangu people the respect that is due to them within contemporary Australian society”. Their choice was freely made and “suited the interests of them and their families having regard to their own preferences and distinctive cultural practices”.

Ah yes, cultural practices. Like the cultural practice — as the minority judges pointed out — whereby small-scale consumer credit is provided to customers on the basis that they must, as security, hand over to the lender “the right to receive the whole of the borrower’s meagre monthly income, with not less than half of it to be applied in reduction of the loan”.

Not to mention the cultural practice of giving the lender 100% personal discretion over how much you spend, where you spend it and what you spend it on. All undocumented too; no receipts, invoices or accounting, such that nobody including Kobelt himself could reconcile the customers’ accounts.

Where else and with what other customer, the minority asked, would this be remotely OK? “It does not alleviate the unconscionability of Mr Kobelt’s book-up system that his customers were so disadvantaged as to regard Mr Kobelt’s offering as acceptable.”

I mean, seriously, are we still having this kind of debate? The logic of so-called “free choice” wielded by the majority has barely advanced from the 150-year-old arguments of slave owners. Surely it isn’t that difficult to recognise that a voluntary selection made by people who literally know of no other option and wouldn’t be allowed it they did, is no choice at all.

The case itself doesn’t matter that much; as repugnant as it is, book-up doesn’t make the top 100 list of the things institutionally wrong with Indigenous affairs in Australia. But that this case ended this way is utterly crushing because the rationale underpinning it is so, so wrong.


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