How the Consumer Data Right Ignores Economic and Social Rights

By Kat George | 15 Apr 19

It’s difficult not to worry about the future of human rights in a consumer-centric world. Increasingly, our social welfare is becoming a consumer product, not only through the privatisation of essential services like energy, but because of the immense amount of data that is collected about us by our essential services providers. Indeed, in order to access the services that are required for social and economic participation—banking, energy, health, telecommunications and transport—we must we willing to put our valuable personal data in the hands of large corporations, in the absence of practical alternatives to accessing these services.

This raises questions about consent and self-determination, as industry-based oligopolies govern the way citizens enact economic and social participation in contemporary society. The Australian Government’s proposed Consumer Data Right (CDR) represents a very real danger to economic and social rights, and to consumers already marginalised by complex marketplaces that put the onus on consumers to exercise ‘choice’ in order to reap the benefits of privatisation.

What is the CDR?

The CDR will enhance the ability of consumers to access and transport their own data in order to make more informed consumer choices, in turn promoting innovation and competition in the marketplace. The CDR will initially apply to the finance sector (from 1 July 2019 banks will be expected to begin the process of ‘open banking’ with a fully functioning system available to consumers by February 2020), and will eventually roll out to cover energy and telecommunications.

Under the CDR, it’s imagined that a consumer will be able to use their data to compare, for instance, their bank’s interest rates and fees against other offerings in the marketplace. That consumer could then choose to change banks, and would have the right to take their data from their existing financial institution to a new one. In theory, this would then force competition in the marketplace, as these informed, empowered consumers would be using their data to make better choices, and in turn businesses would have to offer better and cheaper services in order to capture this army of well-informed, mobile consumers.

But what happens to the consumers can’t, or don’t want to engage with the marketplace? And should they have to, when it comes to accessing essential services?

Essential Services and Human Rights

While the right to a bank account, electricity and gas, or internet, are not codified in any of our international or domestic human rights instruments, universal access to reliable and affordable essential services is absolutely necessary for the exercise of rights that are codified in law. For instance, under the International Covenant on Economic, Social and Cultural Rights (ICESCR), Article 11 provides for ‘the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.’ As technology advances and influences our interactions with society, the full realisation of Article 11 requires access to financial institutions (for a bank account into which one is paid for work, to develop a credit rating, apply for housing loans, collect superannuation, pay taxes), energy (to maintain adequate living conditions in the home, including heating and cooling, storing food, and light) and telecommunications (for phone and internet, which not only promotes social inclusion but is often the only gateway to find work, apply for social services and receive a full education).

Outside of Article 11 of the ICESCR, there many other rights that require the use of essential services for their fulfilment, including the right to freedom of expression, education, physical and mental health, and public participation. Underpinning them all is the right to privacy, and foundational rights like dignity and self-determination. At the time when human rights were codified, drafters may have not anticipated the advent of big data, technology and the internet, and the critical role these would one day play in economic and social participation. But human rights are living concepts—as time forges on and technology improves, what is necessary to protect human rights will also change. And as technology demands that our social welfare needs are dominated by consumer interactions with businesses, universal access to affordable and reliable essential services have become increasingly indivisible from the most basic human rights.

To participate in Australian society, consumers have limited choices when it comes to their essential service providers—there are only a small number of operational banks, energy and telecommunications companies, all with very similar rates and policies, which creates a quandary for choice-based systems, like the CDR, when there is no ‘opt-out’ alternative for consumers. Compounding this are the challenges that many consumers find in navigating complex marketplaces. Recent research by the Thriving Communities Partnership (TCP), in collaboration with the University of Melbourne, reiterates that real choice is essential for consumers to exercise their basic human rights in modern marketplaces, but that barriers to access are created when consumer autonomy is bulwarked by poor or complicated service provider communication. So in cases where consumers are unable or unwilling to engage with the marketplace, promised benefits become inaccessible. A failure of the government to turn its mind to these implications during the drafting of the CDR means that the CDR could potentially infringe on Australian consumers’ enjoyment of their economic and social rights.

How does the CDR ignore economic and social rights?

The CDR Explanatory memorandum includes a ‘Statement of Compatibility with Human Rights’. This acknowledges that the CDR has implications for privacy rights, however, does not mention the impact the CDR could have on economic and social rights, despite Australia being a signatory to ICESCR, and the The Human Rights (Parliamentary Scrutiny) Act 2011 requiring governments to turn their attention to compatibility with ICESCR when drafting legislation.

The history of privatised essential services in Victoria has shown us that consumer ‘choice’ is an unreality. The notion of ‘consumer empowerment’ is often used as a tool for regulating marketplace competition, while actually resulting in adverse outcomes for consumers as large corporations gain greater control. The privatisation of the Victorian energy market, for instance, promised increased competition and lower energy prices, but in order to access those benefits, consumers would have to ‘shop around’ for better deals. Recent data from Victorian Energy Compare suggests that cheaper energy prices are available to 7 out of 10 Victorians, however around 15 to 20 percent of Victorian households are paying more than necessary for energy, fortifying the cycle of poverty and disadvantage. This is largely due to the complicated price bundling of electricity and gas plans, along with the thousands of energy offers on the market (which change day-by-day), and difficult to understand tariff structures, which are all barriers to participation in a market which asks consumers to apply sophisticated knowledge to decipher often cryptic tariff structures, discounts and usage data. The disastrous results of putting the onus on consumers to exercise choice in order to promote competition and drive down prices has has an overwhelmingly negative impact on Victorian consumers—and in particular, those who were already facing social and economic exclusion.

As the CDR does not turn its attention to how and in what format data would be provided to consumers, there’s a risk that its proposed implementation will fail the average consumer, and have dangerous consequences for consumers already struggling to keep up with the marketplace. Financial Counselling Australia, in a submission on the CDR, raised concerns that the CDR, counter to its intention, would lead to a minimisation of choice for consumers by adding yet more complexity to already confusing marketplaces, intensifying economic inequality and financial exclusion, and enabling information asymmetry, predatory marketing and other unconscionable practices in essential services industries. Ultimately, consumers will be made to bear the burden of the CDR ignoring economic and social rights.

Protecting human rights in the big data era

The CDR relies on the assumption that all consumers have the capacity and inclination to interact with the personal data held by their essential services. It puts the onus for consumer welfare squarely on the individual consumer. The CDR does not provide contingency for consumer hardship, and revolves around the premise that all consumers are capable of and willing to access and use their data to make choices in the marketplace. While seemingly concerned with data security and privacy, the CDR ignores notions of substantive equality, and will ultimately result in unequal outcomes for consumers, based on the individual consumers’ ability to understand and use the CDR in a meaningful way.

The CDR is rattling ominously towards its adoption into Australian law, and will come into being as a shockingly incomplete instrument for consumer protection and rights promotion. While it allows consumers to access and travel with their data, it does nothing to ensure that all consumers, regardless of circumstance, will be able to do that easily and in a way that results in a real benefit to their interests in essential services.

As new legislation is inevitably introduced over the coming years to plug the holes left in the wake of the CDR, it seems ever-more pressing that the Australian government should turn its mind to a Bill of Rights. Perhaps, if our basic human rights were codified in a visible, national context, law and policy makers would begin to take the interests of citizen seriously—and not be so willing to subject social welfare to the whims of the marketplace.