Site navigation

Change font size: SmallerLargerReload

Aboriginal & Torres Strait Islander Social Justice navigation

Native Title Report 2006

  • Back to Contents

    • Chapter 2: Economic Development Reforms on Indigenous land

    Back to Report Home (TOC)

    Chapter 1 << Chapter 2 >> Chapter 3

    Introduction

    In 2006 the Secretary of the Department of Prime Minister and Cabinet made a revealing statement about Indigenous affairs. He argued that his own government’s policy performance in the Indigenous portfolio had been a failure. He went further to say that while well intentioned, the policies and approaches of the past 30 years had contributed to poor outcomes for Indigenous people.

    I am aware that for some 15 years as a public administrator too much of what I have done on behalf of government for the very best of motives has had the very worst of outcomes. I and hundreds of my well-intentioned colleagues, both black and white, have contributed to the current unacceptable state of affairs, at first unwittingly and then, too often, silently and despairingly.[1]

    This statement was made in the context of the Australian Government’s ambitious reform agenda aimed at significantly recasting Indigenous policy in remote Indigenous Australia. During 2005 and 2006 the Government implemented legislative and policy reforms that will change the face of Indigenous communities located on communally titled land. The Government argued that communal tenures prevent Indigenous people from improving material wealth and economic circumstances. According to the Government, individual property rights will allow Indigenous Australians to accumulate assets and participate in market economies. The Government’s reforms are designed to emphasise the individual as an agent in economic self development through ‘building wealth, employment and an entrepreneurial culture.’[2] According to the Minister for Indigenous Affairs:

    It is individual property rights that drive economic development. The days of the failed collective system are over.[3]

    This Chapter will focus on the Government’s economic reform agenda with discussion about the following:

    The government policy framework

    The Australian Government’s policy agenda is contained in the 2006 Blueprint for Action in Indigenous Affairs(hereon referred to as the Blueprint). The Blueprint defines the Government’s intention to replace protectionist, welfare-based approaches to Indigenous affairs with market-based approaches to land, housing, enterprise development and employment. This means opening up Indigenous land to the wider Australian public and creating more interaction between remote communities and the Australian economy. The discourse that accompanies the Government’s policy reforms defines a need to ‘normalise’ Indigenous communities through mainstreaming service delivery and creating market economies.

    We will need to remove barriers to economic opportunity. But we are not proposing to use government programs to create artificial economies. It doesn’t work. We are talking about creating an environment for the sort of employment and business opportunities that exist in other Australian towns...

    Land tenure changes will be progressively introduced, subject to the agreement of traditional owners, to allow for home ownership and the normal economic activity you would expect in other Australian towns.

    In places like Wadeye, Cape York and Groote Eylandt this is just beginning to happen. We want to get to the point where people living in these remote communities are not solely dependant on community or public housing. They should be able to buy their own homes. Those who don’t should make a fairer contribution in rent.[4]

    In 2005 the Australian Government announcedlegislative amendments to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (hereon referred to as ALRA). One significant addition to the ALRA was a provision that permitted Governments to negotiate 99 year headleases over Northern Territory townships under Indigenous communal land rights tenure. The headleases would then be divided into sub leases for individual tenants, home purchasers, businesses and government service providers.

    Accompanying the tenure reforms in 2006 were proposed changes to the ALRA permit system. The ALRA permit system currently requires all visitors, non Indigenous residents and non residents to obtain a permit to enter and stay on Indigenous land. The Australian Government’s aim in reforming the permit system is to liberalise land access so that the providers of goods and services can enter Indigenous land without restriction.

    Integral to the government’s ‘normalisation’ strategy are proposed changes to the Indigenous housing system and housing markets. The intention is to increase home ownership and reduce reliance on government subsidised rental accommodation. According to the Government, these reforms are dependent on 99 year leases. The Minister for Families, Community Services and Indigenous Affairs has determined that funding for home ownership schemes will be contingent on the states and territories amending their land rights legislation to make provision for 99 year headleases.

    Finally, the Blueprint sets out the Australian Government’s intention to limit the supply of services and financial support to small ‘unsustainable’ Indigenous communities. If Indigenous people on homelands and outstations want to access health and education services they will have to move to the larger townships.

    The precursor to the Blueprint is the 2003 Council of Australian Governments report, Overcoming Indigenous Disadvantage, Key Indicators (The COAG Report). The Report is the framework on which the Indigenous reform agenda has been developed. The COAG Report has a dual focus. It maps the extent of Indigenous disadvantage using 2001 census data and it provides a framework for the focus of government action. ‘Economic participation’ is the apex of the tripartite COAG framework, along with creating healthy families and early childhood. The COAG Report recommends: ‘improved wealth creation and economic sustainability for individuals, families and communities.’[5]

    A key finding of the Overcoming Indigenous Disadvantage Key Indicators
    2003 Report is that economic development is central to improving the well-being of Indigenous Australians.

    A strategic goal of the Australian Government’s Indigenous policy is to increase Indigenous economic independence, through reducing dependency on passive welfare and stimulating employment and economic development opportunities for Indigenous individuals, families and communities.

    The COAG Report aims to implement ‘economic participation and development’ through seven specific areas for action. These are contained in the COAG strategic areas for action and include the following:

    The COAG Reports on Overcoming Indigenous Disadvantage will be issued on a two yearly basis and will be formulated from a range of data sources including the Australian Bureau of Statistics (ABS), the Australian Institute of Health and Welfare and the Productivity Commission as well as government departments. Successive Reports will be used to evaluate the reform agenda.

    Progress will be monitored through the Overcoming Indigenous Disadvantage reports, which measures key indicators in Indigenous social and economic well-being from a whole-of-government perspective. In particular, the increased participation of Indigenous Australians in employment and increased wealth of Indigenous Australians—collective and individual—will be monitored. In addition, improvements will be continually monitored through agencies measuring their contributions against each initiative in the strategy.[7]

    Indigenous land tenures

    The Australian Government’s reforms must be considered with full knowledge of the location, infrastructure, and legislative parameters of communally titled Indigenous land. As of June 2006, Indigenous Australians held communal rights and interests to land encompassing almost 23 percent of the Australian land mass.[8] While there is no doubt that the Indigenous ‘estate’ is now considerable, most of the land that has been returned to Indigenous people since the 1970s is remote, inhospitable and marginal. The process of colonisation over two centuries ensured that the best land was granted, taken or purchased by non-Indigenous Australians. The Crown land that was still unallocated by the 1970s remained so for good reason. However, in recent times some of the remote, coastal land under Indigenous tenure has become attractive to developers, governments and non-Indigenous residents. This trend is likely to continue as residential markets spread along the Australian coastline. Land in the central desert belt of Australia is unlikely to attract residential markets, now or into the future.

    There are three ways that Indigenous land has been returned to Indigenous people. It has been allocated by governments through statutory land rights, claimed under the native title regime, or purchased on behalf of Indigenous people with funds established to provide land to the dispossessed. Indigenous Australians have also purchased land as individuals, in the same way as non-Indigenous Australians and through land councils in some states. Land that has been returned to Indigenous Australians is largely unallocated Crown land. The majority of the land is located in very remote desert regions with limited or no infrastructure, roads or utilities.

    Native Title

    Indigenous traditional owners have varying rights and interests to just over 8.5 percent of the Australian land mass as a consequence of native title determinations.[9] By June 2006 there were 60 determinations that native title exists. However, in the majority of cases the traditional owners do not have exclusive possession of the land. Traditional owner rights to land are limited to the same customary activities as those that were practiced centuries ago and recorded by the ‘first contact’ non-Indigenous colonisers. The claimable land that exists under the native title regime includes unallocated Crown lands, some reserves and park lands, and some leases such as non-exclusive pastoral and agricultural leases, depending on the state or territory legislation under which they were issued.

    Across Australia, just over 96 percent of all native title land is classified as very remote by the Accessibility Remote Index of Australia (ARIA), the most widely used standard classification and index of remoteness.[10] In terms of the size, Western Australia has by far the largest areas of native title land of any Australian jurisdiction. Ninety two percent of the area of native title determinations is in Western Australia (WA). A large proportion of native title land in WA is in the Gibson, Tanami and Great Sandy Desert regions as well as in the Kimberley. In the other states and territories native title rights and interests have been recognised over smaller parcels of land. In Queensland land under native title is in the ‘very remote’ Cape York region and in the Torres Strait. In South Australia native title interests and rights have been recognised in the ‘very remote’ north central region of the state which is partially located within desert regions. In the Northern Territory native title interests and rights have been recognised over land and seas in ‘very remote’ regions and in Alice Springs, classified as an ‘outer regional’ by ARIA. In Victoria, native title land is located ‘remote’ and ‘outer regional’ areas and in Tasmania there are no successful native title claims to date. By June 2006, New South Wales was the only jurisdiction that successfully achieved a native title determination in an ‘inner regional’ area. The land parcel is very small comprising 0.1 square kilometres on the New South Wales Coast.

    Overall, the land over which native title interests and rights have been recognised is some of the most marginal and inhospitable land in Australia. Chart 12 shows the location of Indigenous land under native title by remoteness.

    CHART 12: NATIVE TITLE DETERMINATION AREAS MAPPED AGAINST REMOTENESS - 2006
    NTR2006_ch200.jpg
    Source: National Native Title Tribunal 2006

    Indigenous land rights statutes

    Indigenous lands granted under state, territory and federal statute constitutes 14.4 percent of the Australian land mass.[11] Land under statute has been granted or purchased by governments for Indigenous people since the 1970s. Like land under native title tenure, while the land area is extensive, the vast majority of it is marginal, located in desert regions or in remote locations in the north of Australia.

    Chart 13 demonstrates that the land under statutory land rights is overwhelmingly represented in the central desert regions of Australia. Vast tracts of Indigenous land traverse Western Australia, the Northern Territory and South Australia. There are also large tracts of Indigenous land in the remote north eastern regions of the Northern Territory, in the coastal regions of Western Australia’s northern belt and the coastal Cape York areas of Northern Queensland.

    The high commercial value of the land in New South Wales (NSW) provides an exception to the trend for land to be remote and marginal. While the land granted to land councils in NSW is in many small parcels rather than large areas of country, some of it is very valuable in terms of its potential for development, both residential and commercial.[12]

    Chart 13 shows the location of Indigenous land under statutory land rights.

    CHART 13: STATUTORY LAND RIGHTS AREAS MAPPED AGAINST REMOTENESS - 2006
    NTR2006_ch201.jpg
    Source: National Native Title Tribunal 2006
    Note: This map does not include Indigenous land purchased by the Indigenous Land Corporation

    Other Indigenous communal land tenures

    In addition to native title and land rights tenures, Indigenous land has been purchased on behalf of Indigenous people by the Indigenous Land Corporation (ILC) since June 1995. Indigenous Australians can apply to the ILC for purchase of land under the categories of cultural, social, environmental and economic benefit. Applicants must identify the ways in which the land purchase addresses dispossession. They must also define a specific purpose for the land under one of four categories and set achievable milestones and outcomes.

    Land purchased by the ILC covers over 5.5 million hectares and cost almost $170 million by June 2006. Since 1995 the ILC has made a total of 201 land acquisitions, 27 have been acquisitions in urban locations[14]

    The size and location of Indigenous communities

    The 2001 census data identifies a total of 458,520 Indigenous people in Australia. Of these 121,163 were residents in remote and very remote regions.[15] There are 1,139 discrete communities in remote and very remote regions, of which more than half (577 in total) have populations of less than 20 people.[16] In most cases, larger communities represent Indigenous living areas formerly constituted as government and mission settlements. The smaller populations are outstations or homeland communities.

    [O]utstation communities... had their origins in voluntary and spontaneous resettlement of Aboriginal country commencing the 1970’s. These settlements are found predominantly in central Australia, the Kimberly, the top end of the Northern Territory and the Cape York Peninsula.[17]

    Chart 14 provides information about the number, population size and location of Indigenous communities.

    CHART 14: NUMBER OF DISCRETE INDIGENOUS COMMUNITIES BY SETTLEMENT SIZE AND REMOTENESS REGION, 2001

    Settlement Population Size
    Major Cities
    Inner Regional
    Outer Regional
    Remote
    Very Remote
    Total
    1-19
    0
    0
    6
    33
    577
    616
    20-49
    0
    1
    8
    36
    228
    273
    50-99
    1
    7
    13
    17
    64
    102
    100-199
    3
    5
    12
    9
    51
    80
    200-499
    1
    6
    11
    11
    77
    106
    500-999
    0
    0
    0
    1
    17
    18
    1000+
    0
    0
    3
    2
    16
    21
    Total
    5
    19
    53
    109
    1,030
    1,216

    Source: Australia Bureau of Statistics, Housing and Infrastructure in Aboriginal and Torres Strait Islander Communities, 2001[18]

    Economic development limitations of Indigenous land

    The Indigenous land base is not comparable with land in urban environments and large regional townships. In remote Indigenous communities almost all services are provided by governments or by church organisations. The land is inhospitable, and usually cut off from markets and cities by distance and poor road infrastructure. The tropical north is inaccessible by road during the wet season which can extend to four months each year. The climate, soil and weather are not conducive to cultivation, and tourist markets are limited in the majority of the desert regions. It is therefore difficult to develop and maintain significant enterprise ventures on Indigenous land.

    Experience in remote Australia suggests that a goal of developing under-developed Indigenous-owned land will not of itself be the driver of private-sector finance availability. On its own terms, whether this land was freely alienable or not, much of this land is in the poorest land classes and is remote from markets.[19]

    Economic opportunities are further limited by the fact that land rights regimes in Australia provide only the most minimal rights to subsurface minerals. The New South Wales Aboriginal Land Rights Act 1983 (NSW) provides rights to minerals though significantly excludes rights to gold, silver, coal and petroleum. In Tasmania under the Aboriginal Lands Act 1995 (Tas), minerals other than oil, atomic substances, geothermal substances and helium are the property of Indigenous people to a depth of 50 metres. No other land rights regime in Australia provides rights to subsurface minerals. Indigenous land holders have to apply for licences for mining activity in the same way as anyone else. While for the most part Indigenous Australians have no mineral entitlements, the existence of a mining tenement can provide royalty payments to traditional owners. Information outlining mineral rights under the land rights legislations of all Australian jurisdictions is provided at Appendix 1 of this Report.

    Although commercial rights are not specifically excluded from the Native Title Act 1993 (Cth), sections 211(2) and (3) indicate that native title interests and rights are generally expected to encompass traditional activities. These include hunting, fishing, gathering, participating in spiritual or cultural activities and acting for the purpose of satisfying personal, domestic, non-commercial or communal needs.

    The case law that has defined and interpreted the Native Title Act 1993 (Cth) clarified that subterranean minerals and petroleum are the property of the states and held this property right is sufficient to extinguish native title rights. The High Court judgement in Ward[20] determined that native title entitlements should be characterised as a ‘bundle of rights’ rather than an ‘underlying title to land.’ The practical effect of Ward is that the potential economic entitlements of the claimants are severely restricted. The ‘bundle of rights’ interpretation limits the legal recognition of economic and resource rights. Only exclusive possession under native title vests land ownership rights in traditional owners, including the right to exploit mineral resources within the existing restrictions and caveats of Australian law.

    Economic development has never been primary aim of land rights legislations. If it were, valuable mineral rights would have accompanied the return of the land as it has in countries with treaties such as Canada, the USA and New Zealand. In these countries the treaty relationship means that governments have an obligation to negotiate in good faith and recognise their fiduciary duties to compensate for dispossession. This has led to large scale financial compensation settlements that have provided indigenous peoples with a solid foundation for economic development.
    The real value of land returned to Indigenous ownership under Australian land rights legislation has always been strongly connected to its potential to compensate for dispossession, restore Indigenous peoples’ spiritual relationship with the land, and recognise the right to self-determination. These findings are strongly reinforced by the findings of HREOC’s survey of traditional owners in Chapter 1 of this Report.

    Strategies for economic development on Indigenous land must therefore be made in full cognisance of the limitations of both the land itself and the land rights legislative frameworks. The topographic and location limitations of Indigenous land are integral to any considerations or policy approaches to improve economic outcomes for Indigenous people. Strategies that work in cities or on resource rich land are not applicable to the remote, marginal country that characterises much of the Indigenous ‘estate.’ Governments must look to approaches that have worked in environments that broadly approximate those for Indigenous Australians.

    99 Year headleases over Indigenous townships

    During 2006, the Australian Government began implementing land reforms in the Northern Territory where the land rights legislation is the jurisdiction of the Commonwealth. Underpinning the land rights reforms was the 2005 National Indigenous Council’s (NIC) Land Tenure Principles which were discussed extensively in last year’s Native Title Report 2005. The NIC Principles supported the maintenance of inalienable, communal tenure rights for Indigenous land, but argued to amend land rights legislations ‘in such a form as to maximize the opportunity for individuals and families to acquire and exercise a personal interest in those lands, whether for the purposes of home ownership or business development.’[21]

    In 2006 the Australian Government added a new section 19A to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (ALRA) to provide that with ministerial consent a Land Trust may grant a 99 year headlease over an Aboriginal township to an approved entity of the Commonwealth or the Northern Territory Government.

    The 99 year leasing provision of s 19A of the ALRA has the practical effect of ‘alienating’ Indigenous communal land. While a lease is not alienation in fact, it will have the same effect in practice. Ninety nine years is at least four generations. With potential to create back-to-back leases, there is a high probability that the leases will continue in perpetuity.

    Amendments of the nature of the ALRA are likely to be replicated in other Australian jurisdictions. During 2006 the Australian Government announced that it intended to encourage other states and territories to make similar amendments to their land rights legislations through home ownership funding incentives and bilateral agreements.

    I hope these changes (amendments to ALRA) motivate other state governments to amend their Indigenous land legislation to facilitate similar opportunities for Indigenous Australians who reside on community land,’ Mr Brough said.

    The 2006-07 Budget sees the allocation of $107.5 million towards the expansion of the Indigenous Home Ownership on Indigenous Land Program.

    The new tenure arrangements contained in the Bill will enable Aboriginal people in the Northern Territory to access this new program.[22]

    Obtaining consent for 99 year headleases

    The 99 year lease agreements are voluntary. In order to establish a 99 year headlease, section 19A(2) of the ALRA provides that governments must consult with the wider Indigenous community of the township, and obtain consent for the headlease from traditional owners through their representative Land Councils. The provisions for 99 year headleases are as follows:

    A Land Council must not give a direction under subsection (1) for the grant of a lease unless it is satisfied that:

    (a) the traditional Aboriginal owners (if any) of the land understand the nature and purpose of the proposed lease and, as a group, consent to it; and

    (b) any Aboriginal community or group that may be affected by the proposed lease has been consulted and has had adequate opportunity to express its view to the Land Council; and

    (c) the terms and conditions of the proposed lease (except those relating to matters covered by this section) are reasonable.[23]

    Section 77A of the ALRA specifies the circumstances under which traditional owners can give consent as a group.

    Where, for the purposes of this Act, the traditional Aboriginal owners of an area of land are required to have consented, as a group, to a particular act or thing, the consent shall be taken to have been given if:

    (a) in a case where there is a particular process of decision making that, under the Aboriginal tradition of those traditional Aboriginal owners or of the group to which they belong, must be complied with in relation to decisions of that kind – the decision was made in accordance with that process; or

    (b) in a case where there is no such process of decision making – the decision was made in accordance with a process of decision making agreed to and adopted by those traditional Aboriginal owners in relation to the decision or in relation to decisions of that kind.[24]

    Under traditional or agreed decision-making processes, a minority group may be able to consent to a 99 year headlease on behalf of the majority. Given what is at stake, it is essential that agreement and consent processes are documented and authorised by the wider traditional owner group prior to any negotiations for a headlease. Agreement about what constitutes traditional decision-making, or agreed decision-making, should be decided in a separate and documented process. Unfortunately the ALRA does not contain a provision that specifies a discrete process to authorise decision-making. The step to authorise decision-making is a crucial check and balance. Given that 99 year headleases provide pecuniary benefits to traditional owners, there is potential for money matters to override traditional considerations. Therefore, traditional owners must have certainty about who has authority to make decisions, and how those decisions should occur. This will also ensure that traditional owners control the pace of decision-making and cannot be rushed into giving consent by governments who operate on different timetables and imperatives.

    The Commonwealth Native Title Act 1993 (Cth) affords greater legislative protections to claimants and native title holders in negotiating consent for land use. The authorisation process for native title Indigenous Land Use Agreements (hereon referred to as ILUAs) provides a relevant threshold. Before an ILUA can be registered, the Registrar of the National Native Title Tribunal must be satisfied that all reasonable efforts have been made to ensure persons who hold, or may hold, native title in relation to land or waters in the area have been identified, and that all persons so identified have authorised the making of the agreement.[25] Authorisation can occur through a traditional decision making process, or through an agreed process by all persons who hold common or group native title rights.[26] The National Native Title Tribunal provided the following explanation of the authorisation process:

    The authorisation of the native title group may be given in one of two ways:

    In looking at whether an agreement has been appropriately authorised the courts have considered:

    Provisions of this nature should be adopted under the ALRA to ensure that Indigenous communities and traditional owners are able to give free, prior and informed consent to 99 year headleases.

    The amended ALRA also provides that under section 21C a new Land Council can be established on a slim 55 percent majority vote of people in a Land Council region or ‘qualifying area.’[30] Previous to the 2006 amendments, a substantial majority was required to establish a Land Council.[31] The 55 percent majority is of particular concern for traditional owners of large townships. Due to dispossession, the mission movements, and the centralisation of government resources in larger communities, many Aboriginal townships are regional hubs that accommodate large numbers of Indigenous people, many of whom are not the traditional owners of the town area. Therefore, there are many townships where traditional owners would not constitute a 55 percent majority.

    The following example demonstrates the potential problems of setting 55 percent majority. The Wadeye region is home to over 2,300 people, though population numbers vary.[32] The Kardu Diminin people are the traditional owners of the Wadeye township area. They share their town with members of 19 other clan groups of the broader Thamarrurr region. Members of regional clans first began to move to the Wadeye township in the 1930s with the establishment of the mission. This has caused, and continues to cause, tension in the region. The traditional owners in the region do not constitute a majority of the people on the township. Hypothetically, if a vote to establish a new Land Council was to occur in the Wadeye Thamarrurr region, the traditional owners would not have the numbers to override a community decision to establish a new Land Council. Should such a Land Council agree to a headlease and fail to appropriately consult with traditional owners, under s 19A(3) of the ALRA, this would not nullify the headlease agreement.

    Alternative lease models

    The Australian Government will not consider alternative lease models to its 99 year scheme and in 2006 rejected an alternative 40 year lease proposal from the Wadeye Thamurrur Council. The Wadeye proposal would vest the land title and governance with the Wadeye Thamurrur Council. The traditional owners argued that the 40 year model was preferable because it gave them ongoing decision-making authority over land. According to the CEO of Wadeye's Thamarrurr Council:

    The concept of a Town Corporation controlled by the traditional owners, the Diminin people, is a critical aspect of the lease... The community had a right to govern itself, and would continue to oppose federal government plans.[33]

    The Wadeye proposal was prepared with expert legal advice, though the Minister for Families, Community Services and Indigenous Affairs rejected it on the grounds that banks would not provide finance for mortgages and business proposals on 40 year lease tenures.[34]

    It's been rejected on economic grounds, it's simply unsustainable...You don't get, and will not get, banks to back the sort of financial investments that they may be asked to make in regards to substantial businesses.[35]

    Despite differing views on the views on the financial viability of lease terms, the Minister will have the last word on this matter as $9.5 million in housing funding for Wadeye is contingent on the Thamurrur Council agreeing to a 99 year headlease.

    [T]he Minister is using as a bargaining chip, money that has already been allocated to Wadeye. He's held up $9.5 million in housing funding,... Initially he said he was holding it up until our people stop fighting and we're told the day before yesterday that the $9.5 million that's been frozen in a trust account in Darwin won't be freed up until this lease is signed.[36]

    The Australian Government’s intransigence over the Wadeye proposal is evidence that it will not take a research-based approach to land reform by trialling different land tenure schemes such as the one proposed at Wadeye.

    In fact, there are many alternative options to 99 year leases. In my Native Title Report 2005 I provided evidence that it is currently possible to set up leases under every piece of land rights legislation in Australia except one (the Victorian Aboriginal Lands Act 1991). Leases can be for both residential and commercial purposes. Under land rights statute, leases require traditional owner consent, and depending on the length of the lease, Ministerial consent may also be required. Under the native title regime, leases may be issued by governments if the native title representative body agrees through an Indigenous Land Use Agreement.[37] In many Indigenous townships these leases are currently operating on communal lands. The benefits of these leases are that traditional owners retain decision-making control over the land. Under the Government’s 99 year headlease plan, the ‘established entity’ will make the decisions affecting all future development on Indigenous land.

    International Experience

    Perhaps one of the most compelling arguments against the Australian Government’s individualised land lease scheme is that it is not based on successfully evaluated models elsewhere in the world. In fact, international evidence demonstrates poor outcomes for Indigenous people when communal tenures are individualised. While individual title may provide appropriate structures for asset management and accumulation in Western urbanised economies, it is not a model that is readily transferred to economies based on communal rights. There is ample evidence from New Zealand, the United States and the World Bank confirming these shortcomings.[38]

    I covered this issue extensively in last year’s Native Title Report 2005 providing detailed examples of the problems associated with this approach. It is difficult to comprehend the Australian Government’s determination to implement a strategy that has been trialled, tested and shown to be flawed in other OECD countries. In fact, due adverse outcomes, the United States, New Zealand and World Bank are reversing past policies that facilitated individual titling. During the 1970s, the World Bank evaluated individual tenure reforms and found that they led to:

    Recent research about similar reforms in Kenya in the 1950s corroborates the findings from New Zealand, the United States and the World Bank.[40] The findings from 40 years of individual titling in Kenya demonstrate no real economic benefit and limited economic leverage opportunity. In fact, formal, individual title made the land more vulnerable to bank foreclosure to recover debt. Some of the recorded disadvantages include:

    The idea of utilising the ‘dead capital’ of communal land is an argument put by many modern nations struggling to economically engage indigenous populations. Some of the arguments that promote individual title come from the difficulties encountered by Maori and Australian Indigenous corporations in attempting to use communal land as security for business development.[42] Hernando de Soto’s documented research into the formalising land title in Peru is perhaps at the forefront of arguments advocating individual land title.

    [B]ecause the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow circles where people know and trust each other [and] cannot be used as collateral for a loan.[43]

    At a Land and Development Symposium in August 2005, these theories for the use and registration of customary land were discussed in relation to the Asia Pacific. Academic representatives from the Asia Pacific School of Economics and Government, the University of the South Pacific and the Australian National University promoted the formalisation of customary title, arguing for secure individual title.[44]

    [C]ustomary land is dead capital, the declining productivity of land would cause higher poverty and insecure access to land had dissuaded long-term investment into fixed infrastructure.[45]

    Arguing against this position was the Papua New Guinean Land Titles Commissioner, Josepha Kanawi, who put forward an argument for the registration of land to protect customary title. Along with other PNG representatives, he argued that customary title provides security, that the registration of customary land should be voluntary, and that customary titles should be able to be used as security for bank loans.[46]

    Customary land ownership...[provides]...security for the people, but ... it is under pressure from social and economic change, and therefore must be protected by registration.[47]

    Banks in Papua New Guinea and Kenya have rejected the use of customary lands as security for loans. PNG banks ‘made it clear that they would not accept customary land as security for loans until it was converted to either freehold or state land.’[48] In New Zealand banks indicated that ‘business proposals involving Maori land might be of lower priority for institutions able to obtain easier business elsewhere.’[49] However, while communal title has been rejected by banks to leverage loans, formal title on small land holdings has not necessarily convinced banks of sufficient loan security. For example in Kenya, ‘banks tend to shun small scale (particularly rural or agriculture-dependent) land holders [and land title] does little to change these biases.’[50] The associated potential for loss of the land asset through loan default is further disincentive to using land title for collateral.

    It is essential that governments ensure that all stakeholders in lease negotiations are well informed of potential pitfalls as well as benefits and opportunities. Ultimately traditional land owners should be well armed with information and able to give informed consent to whichever economic model suits their purposes. There may be groups of traditional owners who decide to give consent to 99 year leases once they have considered all available evidence about its likely impacts. The concern under the current ALRA provisions is that the consent threshold is too low and it lacks the necessary checks and balances. In a non-Indigenous context, such standards for negotiation and consent over land title would never be tolerated. It is essential that the Australian Government provide the highest level of protections for traditional land owners.

    Use of the Aboriginal Benefits Account to pay for Government 99 year headleases

    A further concern about the administration of 99 year headleases is that they are to be funded, at least initially, from the Aboriginal Benefits Account (ABA). The ABA is an account that contains Aboriginal mining royalty monies. The only express direction on the use of ABA is that it is to be used ‘to or for the benefit of Aboriginals living in the Northern Territory.’[51] Under the amendments to ALRA, a new s 64(4A) states that payments must be debited from the ABA to be used for acquiring, administering and paying rents on 99 year leases.[52] To quote Minister Vanstone:

    The scheme is designed to be self financing in the longer term with sub-lease rental payments covering the costs. Until then all reasonable costs will be met from the NT Aboriginals Benefit Account (ABA), subject to consultation with the ABA Advisory Committee.[53]

    Northern Territory Land Council estimates expect head leasing to costs up to $15 million over 5 years. Other commentators suggest that this is a conservative estimate.[54] This is a significant portion of the ABA which provides approximately $30 million in royalties per year. Spending ABA money to pay for headlease rental will significantly reduce the overall amount available for Land Councils and the range of land management and other programs that are funded through ABA. Minister Brough’s Second Reading Speech for the ARLA Amendments Bill ominously observed that ‘in future, Land Councils will be funded on workloads and results.’[55]

    The use of ABA funds to pay for headleases is contrary to its purpose. The purpose of the ABA is to provide benefit to Indigenous people above and beyond basic government services. The administrative costs of land leasing are basic government services. Furthermore, the use of the ABA for headleases is targeted distribution of funds to communities that sign to the leases, while others will not benefit at all.

    By taking control of Indigenous land and the ABA funds, the Australian Government is limiting the capacity for Indigenous Australians to be self determining and self managing. On the one hand the Government has argued that it is promoting a culture of Indigenous economic independence through amending ALRA, and on the other it takes away the discretionary funds and control of land that provide the capacity to do so. In 1999, the House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs report Unlocking the Future recommended:

    As a reflection of its core principles, the Committee agrees that Aboriginal people should take as much responsibility as possible for controlling their own affairs. This applies too, for the administration of the... (ABA).[56]

    Modifications to the permit system

    Under the current permit system in the Northern Territory, traditional owners can regulate and restrict access to people entering Indigenous land. Visitors require a permit in writing from the relevant Land Council or traditional owners.[57] However, in 2006, the Minister for Families, Community Services and Indigenous Affairs responded to a question in Parliament by announcing that it was time to remove the permit system.[5] Within a month the Minister issued a media release calling for written submissions in response to an Australian Government discussion paper on the permit system in the Northern Territory.

    ...the permit system has created closed communities which are restricting the ability of individuals to interact with the wider community and furthermore to participate in the real economy.

    The permit system has not acted to protect vulnerable citizens, including women and children, and in fact makes scrutiny over dysfunctional communities more difficult.[58]

    The Governments Permit Discussion Paper[59] contains five options for action. In summary they are:

    1. authorise access for people with estates or interests granted under section 19 of the ALRA ;
    2. provide open access to communal or public space and maintain the current permit-based system of restricted access to non-public spaces;
    3. widen the current permit-based system by expanding the categories of people eligible to enter Aboriginal land without being subject to permission.
    4. reverse the current restrictive permission-based access system to a liberal system with specific area exclusions. Access to Aboriginal Land would not require a permit unless a particular area was designated as restricted; and
    5. remove the permit system altogether and replace with the laws of trespass, with any necessary modification for Aboriginal land.

    Amendments to the permit system are part of the Government’s ‘normalisation’ of Indigenous townships. The Government intends to open up Indigenous land to people who are neither traditional owners nor current residents and thereby increase interaction between remote Indigenous people and with the wider Australian economy.

    At the heart of debate about the permit system is the right of traditional owners, through their representatives, to decide who to include or exclude from entry onto Indigenous land. Along with this is the right to information about who is entering or exiting Aboriginal land. As the Minister for Families, Community Services and Indigenous Affairs correctly observes that:

    given the vastness of the Aboriginal land estate and the consequent difficulties in applying normal laws of trespass, the permit system has operated to respect the privacy and culture of Aboriginal people.[60]

    The permit system operates as a kind of passport system allowing Aboriginal people to exercise property rights on an equal footing with other Australians. The Northern Land Council made this point in its submission to the Reeves inquiry:

    Traditional Aboriginal owners of Aboriginal land, like any other landowners, have as part of their title to the land the right to admit and exclude persons from their land. This is a fundamental aspect of land ownership under the general law and is also fundamental to the achievement of the aims of the Land Rights Act.[61]
    The question of whether a permit system is discriminatory was examined in the High Court case of Gerhardy v Brown.[62] While the High Court found that the permit system established by s19 of the Pitjanjatjara Land Rights Act was a racially discriminatory measure, contrary to s10 of the Racial Discrimination Act, it also found that s19 was a ‘special measure’ pursuant to s8 of that Act and was therefore valid. Consequently, the permit system provides equality before the law and is a special measure to ensure non-discrimination.

    Section 8 of the Racial Discrimination Act 1975 (Cth) is modelled on Article 2(2) of the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) [63] which obliges parties to the Convention to undertake, when warranted, special measures to ensure the adequate development and protection of certain racial groups or individuals belonging to them, for the purpose of guaranteeing them the full and equal enjoyment of rights and fundamental freedoms. Special measures should not bring about the maintenance of separate rights for different racial groups after the objectives of the measures have been achieved.

    The Minister’s argument that the permit system has prevented economic development, and that its abolition will provide economic benefits requires close scrutiny. The FaCSIA Discussion paper, Access to Aboriginal Land under the Northern Territory Aboriginal Land Rights Act – Time for a change? Observes that,

    [m]any Aboriginal communities on Aboriginal land in the Northern Territory are already remote geographically. The permit system has operated to maintain or even increase that remoteness – both economically and socially. It has hindered effective engagement between Aboriginal people and the Australian economy.[64]

    Liberalisation would also bring economic benefits that would help to promote the self reliance and prosperity or Aboriginal people in remote communities.[65]

    The Minister argues that if Indigenous lands are opened to non-Indigenous interests, there is a high probability that outside operators will take the opportunity to develop businesses, especially because the commercial competition in these communities is very limited. However, I believe the economic benefits to the Indigenous community are likely to be minimal. They may include greater choice as consumers and, at most, the ability to secure waged employment with a business operator. Nevertheless, ABS data demonstrates that the private sector is not a good employer of Indigenous people.[66] There is therefore some risk and great cost in giving private operators free reign on communal lands and assuming that they will assist in improving employment outcomes for Indigenous people. By giving private operators access to Indigenous lands, an opportunity is lost for the Indigenous residents. In the case of enterprises involving tourism for example, rather than owning the business, Indigenous land owners become the employees of companies who in turn capitalise on Indigenous land and culture. The most likely consequence of the Government reforms will be the profit of non-Indigenous operators from undeveloped markets.

    To continue the tourism example, an alternative arrangement would be for governments to support the maintenance of the permit system while providing opportunity for Indigenous people to develop or become partners in joint venture tourism enterprises. Maintaining restricted access to the land adds rather than detracts from the unique nature of the tourism experience and ensures that Indigenous Australians don’t have to compete in an open market with highly resourced operators. A strategy such as this one actually achieves the Government’s objective of improving economic outcomes for Indigenous Australians.

    There are also environmental impacts to be considered. The land degradation caused by unchecked tourism and four wheel drive activity would be impossible to monitor in national parks and on Aboriginal lands without a permit system. Open access would require greater vigilance in protecting cultural heritage, sites of significance, and sacred sites. This too is a resource issue and one that is not addressed in the Australian Government’s Discussion Paper. Ultimately, the degradation of the land is the degradation of the most precious asset of Indigenous Australians, both in economic and cultural terms.

    As it stands, the Discussion Paper does not canvass enough options for economic development. It does not consider for example, charging fees for the issue of permits. Currently there are some instances where permit fees are charged to visit areas such fishing spots, (on a per car basis), and art centres.[67] If the Government is concerned about increasing economic opportunity for Aboriginal people, one option under the permit system could be to charge entry to popular sites. Ultimately the Government has responsibility to canvass the widest range of options and to engage Indigenous Northern Territorians in the development of an economic development plan.

    Discontinuation of funding and services to homelands

    As a consequence of the Homeland Movement of the 1970s, thousands of Indigenous Australians moved out of missions and settlements and back onto traditional lands. The decision to return to country was primarily to resume cultural, spiritual and ceremonial connections and responsibilities to land.

    It is estimated that approximately 20, 000 Indigenous Australians live in communities of less then 100 people. The size of homeland communities varies, some with less than 50 people, and others with 100 and more.[68] According to the ABS, 70 percent of Indigenous Australians over 15 years of age recognise homelands or traditional country. Affiliation with traditional country increases with remoteness; 86 percent of people living in remote areas claim affiliation compared with 63 percent in non-remote areas.[69]

    In 2005 and 2006 the Australian Government signalled an intention to reduce or withhold services to homeland communities. The Minister for Families, Community Services and Indigenous Affairs asserted:

    The investment and effort will focus on remote Aboriginal communities or towns that have access to education and health services. This will include many small settlements. However, if people choose to move beyond the reach of education and health services noting that they are free to do so, the government’s investment package will not follow them. Let me be specific – if a person wants to move to a homeland that precludes regular school attendance, for example, I wouldn’t support it. If a person wants to move away from health services, so be it – but don’t ask the taxpayer to pay for a house to facilitate that choice.[70]

    National policy does not determine formulae for health and education service provision. These are determined by the states and territories. For example, education provision in the Northern Territory is based on a student to teacher ratio. A fully qualified teacher is provided when there are 22 attending students aged between six to twelve years of age. Homeland communities are usually serviced by larger ‘hub’ communities. The school at Maningrida in the Northern Territory provides services to 12 ‘satellite’ homeland communities and attracts a teacher formula based on the total number of students attending in region. Teachers visit homelands for varying numbers of days per week depending on the teacher allocation that the homeland attracts under the formula.

    At this stage there is insufficient detail to assess whether homelands and other small communities will be disadvantaged as a result of the Australian Government’s funding agreements. It will be through bilateral agreements that the Australian Government will be able to link funds to preconditions as it is doing with housing.

    Shire councils to replace Indigenous community councils

    Alongside the land tenure reforms is the Australian Government’s plan to reform the Indigenous local government system by rationalising the large number of small local community councils and replacing them with larger regional shire councils. The Australian Government has supported the Northern Territory Government’s plan to reform its community councils and the Queensland Government is finalising the transition to shire council arrangements.

    Currently, across Australia remote communities are governed by local governments or community councils that are based within each community. In the Northern Territory for example, the Government developed a plan to replace its 56 remote Indigenous councils with nine shire councils. The four municipal councils in Darwin, Palmerston, Alice Springs and Katherine will remain unchanged. The Northern Territory Minister for Local Government argued that the shire council model is designed to improve governance and service delivery to remote communities.

    Change will ensure people in the regions have access to the services and experts many of us take for granted in the urban centres...The new local government will create a framework of certainty and better and more reliable services.[71]

    Queensland has commenced a four year transition process to transform Aboriginal Councils into full Shire Councils. The stated intention of the transition is to improve governance. The Shire and Island Councils will be responsible to build, operate and maintain a range of infrastructure and to assist in the delivery of services.[72]

    The transition to shire councils is an effort to rationalise resources and concentrate high level administrative expertise at the regional level. While this may achieve efficiencies in terms of the cost of local government administration it will also impact on Indigenous employment options in remote communities. The removal of community councils, including community housing associations will remove one of the few sources of remote employment.

    As the lack of employment opportunity in remote communities is one of the main impediments to economic development, governments must take care to balance policy approaches. If rationalising housing services reduces employment, then one saving will mean another cost. In order to benefit from any home ownership incentives or policies, Indigenous Australians require employment.

    Housing and home ownership

    During 2005 and 2006 the Australian Government announced a number of incentives to increase the rates of Indigenous home ownership and reduce Indigenous dependence on subsidised housing in remote communities. During the publicity that surrounded the initiatives, private home ownership was described as a right for all Australians who can afford this goal. In 2005 the Prime Minister had the following to say:

    I’m a supporter of home ownership for everybody who can afford it, I really am. And I don’t think there should be any distinction between Indigenous people and the rest of the community. I think it’s patronising. I think it’s discriminatory to take the view that somehow or other home ownership is something for the white community but not for the Aboriginal community...Now I’m not trying to undermine the Native Title Act but what I’m saying is that where we can develop methods of private home ownership within Indigenous communities, we should do so.[73]

    Just over 7 percent of remote Indigenous Australians own, or have a mortgage over a home. Australia-wide the rates of Indigenous home ownership are higher at 27 percent.[74] Nevertheless, Indigenous Australians fall well behind the 74 percent of non-Indigenous Australians who are either buying or own their home outright.

    The Australian Government’s remote housing strategy is part of a reform package to encourage Indigenous Australians to embrace a culture of asset accumulation and management with paid employment as its foundation. According to the Government, land tenure reforms on communally owned land have been required in order to make home ownership possible. The Attorney General's Department along with the Department of Families, Community Services and Indigenous Affairs (FaCSIA) and Indigenous Business Australia have collaborated in the home ownership strategy. In fact initiatives for home ownership were released almost simultaneously with the announcement of the proposed amendments to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) in 2005. The home ownership initiatives included:

    While the initiatives are described as ‘Australia-wide measures’ they are exclusively available to states and territories if, or when, they amend their land rights legislations to allow for 99 year leases. To quote the Minister for Families, Community Services and Indigenous Affairs:

    These programs will be available to all States that follow the Australian and Northern Territory government’s lead to enable long term individual leases on Aboriginal land... The Australian Government will consult with the States to promote any necessary amendment of State Indigenous land rights regimes to ensure access to the new programs.[76]

    The Department of Families, Community Services and Indigenous Affairs has committed over $100 million to increase remote home ownership from 2006 to 2010. However the Northern Territory is the only jurisdiction in a position to access this funding to date. Other states are beginning the process of reviewing their land rights legislations and it is not certain whether they will include provision for 99 year leases.

    From 1 July 2006, the Australian Government is providing $52.9 million plus capital of $54.6 million over four years for initiatives to promote Indigenous home ownership on community title land.

    The measure will assist Indigenous families living in communities on Indigenous land to access affordable home loan finance, discounts on purchase prices of houses, and money management training and support.[77]

    The Australian Government has targeted its programs and incentives to a select group of communities in the Northern Territory; Galiwinku, Tennant Creek, Katherine and Nguiu.[78] Forty five new houses will be constructed for private purchase across Galiwinku and Nguiu. Discounts of up to 20 percent on house purchase prices will be available in other communities.[79] The discounts will be available to good renters and there is sufficient funding for up to 160 low interest home loans specifically targeted to remote.[80]

    FaCSIA will also provide money management training and support to the four Northern Territory communities and two Western Australian communities through a MoneyBusiness program. This program is a partnership with the ANZ Bank and is designed ‘to develop skills in budgeting, bill paying and saving.’[81]

    The incentives and announcements of 2005 and 2006 are likely to be a precursor to broader reforms in Indigenous housing. In June 2006 the Minister for Families, Community Services and Indigenous Affairs announced a comprehensive audit of Australian Government and State and Territory Government funding on public housing.[82] Accompanying the announcement were numerous statements about the cost of Indigenous housing and concerns about whether the states and territories were adequately managing and contributing these programs. In 2006 the Government released a discussion paper to raise potential directions for Indigenous housing: Community Housing and Infrastructure Program (CHIP) Review Issues Paper. The Best Way Forward: Delivering housing and Infrastructure to Indigenous Australians (Hereon referred to as the Issues Paper).[83]

    While the Review has not been released, the topics canvassed in the Issues Paper foreshadow the areas of reform. They include the rights and responsibilities of tenants, rent payments and collection, measures to increase home ownership, improved access to mainstream public housing, and strategies to avoid duplication of municipal services and infrastructure.[84]

    The remote Indigenous housing profile

    The dominant housing tenure for Indigenous people in very remote communities is community rental housing. In 2001, 84 percent of all remote Indigenous households were renters. Approximately seven percent of remote Indigenous householders are home owners.[85]

    Community rental housing is built and maintained by governments. Over the past 30 years, somewhere between 500 and 1,000 community rental houses have been built each year in Indigenous communities across Australia. Once built, the houses are vested in Indigenous community organisations for ongoing management and the collection of rental payments. The medium weekly rental payment in very remote regions is $42 per household.[86] Rents are either set at per person or per household rate and are generally lower than rents in larger townships and cities. Rental payments for community housing covers some of the asset maintenance and other recurrent costs.

    The provision of housing in remote communities is failing to meet the demands of the growing Indigenous population. The problems are both with the number and size of houses and the quality of the housing stock. In 2001, 41 percent of remote Indigenous households reported problems with overcrowding. Fifty two percent of the Indigenous remote population reported living in dwellings requiring at least one extra bedroom, compared to 16 percent in non-remote areas.[87] Just over 58 percent of remote Indigenous Australians reported major structural problems of their dwellings at almost double the incidence of non-remote at 32.5 percent. The Australian Bureau of Statistics summarised the problems in remote communities in the following terms: ‘overcrowding and lack of adequate facilities such as a clean water supply and sewerage disposal are particularly problematic in remote areas.’[88]

    Indigenous housing programs and funding

    The responsibility for Indigenous public and community housing is shared between the Commonwealth and the states and territories. However, the Australian Government is the main contributor of funding, providing 73 percent of total funds, while states and territories contribute the remaining 27 percent.[89] The annual contribution of the Australian Government to Indigenous housing is more than $375 million. It is clearly a large commitment and one which accounts for 30 percent of all Australian Government spending on public and community housing.[90] The program through which the funding in administered is the Community Housing and Infrastructure Program (CHIP). In remote regions CHIP provides housing infrastructure and funding to maintain essential municipal infrastructure and sanitation infrastructure.[91] Six hundred and sixty Indigenous community-controlled housing organisations throughout Australia manage funding for local infrastructure and maintenance as well as collecting rental on Indigenous community houses. These entities provide employment for Indigenous people in remote and regional communities, though it is likely that these organisations will be rationalised into regional entities in the near future.

    The Indigenous Business Australia home loans program

    In the 2006-07 Budget the Australian Government announced a $107.4 million package over four years to develop home ownership opportunities on Indigenous land. This funding will be used to build houses and to provide loans to Indigenous people on communal lands where individual leases are possible. The Australian Government’s remote home ownership program is managed through Indigenous Business Australia’s (IBA) Community Homes program.

    IBA will expand its home lending program, Community Homes... and will manage and deliver incentives to assist in overcoming the barriers of the high cost of housing, low employment and income levels in remote areas.[92]

    According to Indigenous Business Australia the additional funds will expand its home lending program, by supporting 460 families or individuals to purchase their own home.[93] Community Homes will provide access to home loan finance in all states and territories where land title enables an individual long term interest on a block of land. IBA will work with the Department of Families, Community Services and Indigenous Affairs (FaCSIA) to provide discounts on the purchase price of houses and financial literacy training for eligible participants.[94] Incentives also include purchase price discounts on existing community rental homes of up to 20 percent for Indigenous families with a good rental record. These incentives are part of the Good Renter Scheme initiative.

    The Community Homes scheme will offer loans to low income earners with incomes starting from $15,000. Maximum repayments will vary according to income level, starting at 15 percent of gross income for those on the minimum income level and up to 30 percent of gross income for those on higher incomes. For those on lower incomes, commencing interest rates on loans will start from zero percent per annum incrementing by 0.2 percent each year up to the maximum rate of 6 percent per annum. Grants for co-payments of up to $2,590 each year for the first ten years will assist eligible low income borrowers to repay the loan within a loan term of 30 years. IBA will pay up to $13,000 for loan establishment costs including legal costs, surveys, property valuations, independent legal and financial advice.[95]

    Home buyers in Australia

    Housing affordability is determined by many factors. In attempting to determine whether remote Indigenous Australian will be able to benefit from the Community Homes scheme, it is necessary to consider employment opportunities and earning capacity. A typical Australian home buyer for example, is one who lives in a city and depends on an urban economy to generate work opportunities and an income that will sustain a mortgage over a 30 year period. First home buyers are typically couples aged approximately 35 years. They have a life expectancy up to 78 years for males and 83 years for females.[96] They have above average incomes and in Australia, a growing proportion of first home buyers have two incomes. The majority of owner-occupier households reported gross weekly incomes in the top two income brackets.[97] This is an average weekly income of $612 to $869 or at the highest bracket $870 or more. The first home buyer relies heavily on debt finance and during 2004 and 2005 the average loan for first home buyers was $210,000. The average weekly housing costs for first home buyers were $330.[98]

    A domestic unit with an income of say $60,000 per annum may buy a dwelling and land package for $240,000, and spend $15,000 per annum over anywhere between the next 20 and 30 years in paying off this capital. In addition, such domestic units undertake to meet the recurrent costs of housing maintenance, so that their asset does not depreciate, as well as paying recurrent government taxes and charges, such as annual land rates and infrastructure service fees. Covering these capital and recurrent housing costs can consume as much as one-third or more of income in these household economies, particularly in the early years after entry to the market or when income falls through developments such as child rearing or unemployment.[99]

    The typical remote Indigenous household has an average gross weekly income of $267 per week.[100] The remote Indigenous adult has a 36 percent chance of having a disability or a long term illness which will affect income earning capacity and an average life expectancy 17 years lower than non-Indigenous Australians.[101] The life expectancy for Indigenous males is 59 years and for Indigenous females, 65 years.[102] These circumstances limit the ability of Indigenous householders to service home loans over a 30 year period. According to the ABS, Indigenous adults are four times more likely to report financial stress than non-Indigenous households. ‘Financial stress’ was defined by whether the household could raise $2,000 within a week in a time of crisis. Almost three quarters of remote Indigenous residents reported experiencing financial stress as did half of those Indigenous households in regional areas.[103]

    On a $150,000 loan the weekly repayments over 30 years at an interest rate at 3 percent is $145.37 per week. This is 54 percent of the average gross weekly income of a typical remote Indigenous household. Even at an interest rate of 0.2 percent, the weekly repayments are $98.75. This is almost 37 percent of the weekly income of a remote household. By any measure this level of repayment is not sustainable. Given that Indigenous Business Australia will not lend amounts where the repayments exceed 30 percent of the household income, it is evident that the average remote Indigenous household is in no position to support a home loan, with incentives or otherwise.

    In its 1996 Evaluation of the Home Ownership Program, the Office of Evaluation and Audit the observed that the ‘profile of the Indigenous home owner is quite similar to non-Indigenous home owner in Australia.’ [104]

    Compared to the non Indigenous home owner, the Indigenous home owner is likely to be older and better educated, to have mainstream employment, higher income, and a non-Indigenous spouse, and to belong to a ‘typical’ nuclear family in a neighbourhood with relatively lower rates of social dysfunction. [105]

    This profile of the Indigenous homeowner has not changed in the ten years since this report. According to more recent ABS data, those who are capable of home ownership exhibit many of the demographic characteristics of their non-Indigenous counterparts including geographic location, employment status and income level.[106]

    Remote Indigenous Australians are the most disadvantaged group of any Australian group against every social indicator. The Government strategy to address this situation is to increase the debt burden through a home ownership scheme that will exclude the majority of remote Indigenous householders. While the Government is offering financial incentives to encourage participation, it is likely that owning a home in remote areas will be a financial liability rather than an asset. The ongoing financial burden for all but a very small minority of remote Indigenous Australians may exacerbate poverty in remote communities and highlight disparities between the ‘haves’ and the ‘have nots.’ Notwithstanding, some Indigenous people in remote communities might be able to afford to purchase a home and governments should extend all support and encouragement to facilitate the home purchase.

    Cost, quality and maintenance of Indigenous housing

    In 2006, Indigenous Business Australia put out an Expressions of Interest paper calling for tenders for an ‘Innovative, Affordable Housing Project.’ The winning tenders will ultimately provide the materials and design for houses available under the Government’s home ownership scheme. The functional brief for the ‘Innovative, Affordable Housing Project’ includes three, four and five bedroom house types designed with regard to culturally appropriate living arrangements, security from intrusion and robustness of materials. The Expression of Interest paper specified building code compliance with climatic zone categories including tropical, subtropical, humid-arid, dry-arid, warm-temperate, cool-temperate, alpine and cyclone ratings. Notwithstanding these aims, the Expression of Interest specified the following:

    The single most important design parameter is cost effectiveness. If solutions are not significantly more affordable than prior models, they will not achieve the objective of the Project.

    Skilled onsite labour is hoped to be kept to a minimum so ‘this may be achieved by using...pre-fabricated modular building elements and avoiding the use of materials and finishes which require on-site labour such as in-situ concrete, plumbing, electrical work etc. The potential to use local labour to assist with the erection of buildings is anticipated to reduce the end cost of housing and provide much needed Indigenous employment in remote communities.[107]

    The quality of the houses will be critical to the longevity of the asset and the cost of maintaining it over time. The Australian Bureau of Statistics outlined the following about Indigenous housing.

    Although there are many factors which contribute to the sustainability of housing, the adequacy of design, construction and maintenance of Indigenous housing plays a crucial role. When houses are not culturally appropriate in their design, are poorly built, or where there is no systematic approach to their repair or maintenance, minor problems can escalate over time and shorten the life expectancy of houses. Given the serious backlog of housing need in rural and remote communities, it is important that resources are well targeted and provide the maximum benefit to Indigenous Australians.[108]

    There are indications that the houses proposed for the Government’s home ownership scheme will not be of the quality that governments currently provide. The new homes will be ‘self built’ kit homes that are to be built at less than half of the cost of current Government housing cost in remote. According to the Tiwi Local Government Housing for example, the cost of a government built house on the Tiwi Islands is $320,000.[109] The kit homes earmarked for the home ownership scheme have been costed ex-factory at approximately $150,000 per home.[110] According to the Government they are built to cyclone code.[111]

    [Forty-five] new houses [are] earmarked for home ownership, which [are] to be built on community land... as well as $6 million for innovative housing solutions in remote indigenous communities... it is to look at using self-built type housing construction as a means of more cost-effective housing design and construction in remote communities... it is a reflection of concerns of the high cost of building in very remote communities.[112]

    Up to 12 of the proposed 45 houses will be available to residents in Nguiu on the Tiwi Islands through a land reform program package and the remaining homes are earmarked for Galiwinku on Elcho Island.[113] In an exchange in Senate Estimates regarding the quality of the homes, the Associate Secretary of the Department of Families, Community Services and Indigenous Affairs said the following:

    We know of kit homes that are being used... in other parts of Australia - the Torres Strait for example - that are meeting all of the building requirements in that area and are cyclone rated.

    The Rawlinson’s Australian Construction Handbook 2006 is widely used by industry and governments to cost infrastructure. It sets out the cost of building residential housing per square metre in urban and remote regions of Australia. In addition it provides comparative cost analyses of residential housing in major cities compared with regional areas. For example, the cost of building a house in a city such as Adelaide is the benchmark at 100 percent. However according to Rawlinson, the cost of building the same house in Groote Eylandt is 170 percent due to the freight of materials and the need to bring in tradesmen. In Milikarpiti on the Tiwi Islands the cost is 154 percent. In dollar terms the cost of building a150 sqm house in Adelaide is between $152,200 and $161,200; in Milikarpiti between $226,196 and $239,336; and on Groote Eylandt between $254,750 and $270,050.[114] Given the inflated costs of remote infrastructure, it is difficult to see how governments will manage to build houses of quality for $150,000. If the houses are of poor quality, the maintenance and structural liability will be transferred to the homeowner, most of whom have not had the opportunity of independent advice or choice of design or construction materials.

    The Australian Government has committed to building quality, healthy houses. In 2005, the Minister for Immigration and Multicultural and Indigenous Affairs introduced the Healthy Indigenous Housing policy aimed at improving the viability and sustainability of Indigenous community housing organisations and the quality of Indigenous housing in rural and remote communities.[115] The aim of the initiative is to:

    Healthhabitat is a non-government organisation with responsibility to improve the health standards of Indigenous housing in Australia.[117] Since 1999 it has inspected over 4,500 houses situated in tropical, rural, remote and urban settings. One of the three Directors of Healthhabitat, Mr Paul Pholeros argues that 'reduced capital cost' housing has a great capacity to pass on infrastructure and maintenance costs to the household through poor construction, inappropriate design and poor materials. For example, a house without roof insulation will be cheaper to build but the costs of cooling the house in a 45°c desert summer, or heating it at night in minus 5°c winter is passed on to the household. These costs increase with remoteness as the cost of electricity increases dramatically. The failure of households to pay the electricity bills can then lead to the power being cut off which in turn makes cooking and food storage exceptionally difficult. Thus, 'reduced capital cost' housing has health implications as well as poor outcomes in terms of the house life-cycle and maintenance costs.[118]

    Mr Pholeros is in favour of strategies which seek to alleviate the Indigenous housing crisis. He stresses this problem can not be solved by providing more poor quality housing, merely because it is initially cheaper for governments. New housing must reflect critical minimum standards in key areas such as electrical safety, water supply and good quality taps to avoid leaks and failures, hot water provision, waste removal with well installed drainage and treatment of sewage. He cites examples of poor choice of materials in communities reliant upon bore water and other areas with high levels of mineral salts which quickly degrade taps and plumbing which may cost up to $2,000 a visit in remote areas to repair a single fault.[119]

    Maintenance of infrastructure in remote areas

    Housing maintenance in remote Indigenous communities is expensive and access to maintenance services is intermittent. Small communities often lack relevant tradespeople, meaning that plumbers, electricians and others need to be flown in to carry out routine maintenance. Given the structural problems with housing stock, and extreme climatic conditions that characterise remote living in desert communities and the tropical north, home maintenance requirements are high. For example, between 2001 and 2002, over 80 percent of Indigenous communities with a population in excess of 50 experienced interruptions to electricity provision. Twenty percent experienced more than 20 interruptions over this period. Sixty three percent of power outages were caused by storms, 59 percent occurred because of equipment breakdown, 42 percent were planned outages for maintenance, and 5 percent were due to system overload. Significantly, vandalism accounted for one percent of all power outages.

    Between 2001 and 2002, 48 percent of Indigenous communities experienced sewerage system overflows or leakage. Rather than poor management or vandalism, the predominant causes were blocked drains at 51 percent, equipment failure at 33 percent and design or installation problems at 28 percent.[120]

    These statistics affirm the claims of Indigenous people and their advocates who observe that the poor quality and unsustainable design of remote infrastructure is the cause of many of the maintenance problems. These figures refute Australian Government claims that infrastructure is not respected and poorly maintained because the asset is not owned.[121] This view was expressed by the Prime Minister in a speech in October 2005 where he observed:

    [O]ne of the reasons... [that the houses are in] appalling [condition] is that people don’t own them. Simple as that... once you own something you value it and you look after it, it’s human nature. That’s been the experience of all societies... home ownership, private land ownership is a key to family and social stability and Aboriginal people are no different from the rest of us.[122]

    CDEP home building and maintenance scheme

    In a policy announcement in October 2005, the then minister for Indigenous Affairs announced the use of the Community Development Employment Projects (CDEP) program to build houses, support home maintenance, and maximise employment and training opportunities in support of the home ownership scheme.[123] To date there has been no national data to outline the size or impact of this initiative.[124] As the Australian Government has not yet collected or collated CDEP housing maintenance and building data, it is only possible to assess progress by individual project. Programs such as Alpurrurulam in the Northern Territory,[125] and the Torres Strait Infrastructure program,[126] are involving small numbers of CDEP recruits in manual labour and apprenticeship placements. The planned housing construction program in Wadeye has also been designed to involve CDEP participants in the assembly of kit houses.[127] The projects include constructing roads and sewage systems as well as apprenticeship programs geared toward community infrastructure support and maintenance.

    Ultimately the quality of the housing construction will impact on the life of the asset and the cost of its maintenance. It will be essential that the highest standards are applied to the development of any asset targeted for the Indigenous home ownership scheme. At this stage the Australian Government is not monitoring the development of the CDEP house building and maintenance scheme and therefore there are some serious concerns about coordination and quality control.[128]
    Australian housing markets

    While not an immediate issue for the remote housing market, wider trends in property prices in Australia will be relevant in the future. The escalating housing market in Australia provides increasing financial impediments for potential home buyers in many Australian cities and coastal areas. In 2006, Australia’s home affordability fell to a level comparable to that reached in 1989 when interest rates were at 17 percent.[129] While interest rates are now at 7.55 percent, it is the increase in the cost of houses as well as taxes that have moved property out of the reach of many. In fact, by international standards, Australia has a dismal rating in housing affordability. According to the 2007 Annual Demographia Survey, every Australian city is rated as ‘seriously’ or ‘severely’ unaffordable in a global study of 159 cities.[130]

    The Demographia survey rates housing ‘unaffordable’ when the median house price passes three times median household incomes. Housing is ‘seriously unaffordable’ when it passes four times median household incomes and ‘severely unaffordable’ when it passes five times median household incomes.[131]

    After Western Australia, the Northern Territory property market had the most rapid growth during 2006. Property prices in Darwin increased by 17.6 percent.[132] The median house price in Darwin is now $344, 000.[133] Interstate investors have been the main contributors to the rising house prices in Darwin. In recent years, investors have moved their attention from the flattened markets of the eastern states of Melbourne, Sydney and Brisbane to more remote markets like Darwin.

    The real concern for prospective Indigenous home buyers is that investors will buy in their remote communities in search of new markets with capital growth. While desert communities are never likely to tempt the investor, remote coastal townships may be attractive given that Australian coastal real estate prices have escalated over past decades. A township like Nguiu in the Tiwi Islands for example, has potential appeal because it is located in an idyllic setting and it offers recreational activities such as fishing in pristine waters.

    The property market trends are ominous for low income earners in remote regions. There is a real risk that the Government’s home ownership strategy will create property markets that will exclude the very people they have been designed to benefit. Even with incentives and low price houses, the cost of housing and the increases in the market will make home ownership very difficult for the majority of remote Indigenous Australians. We may see a situation where non-Indigenous investors and sea-changers buy the absolute waterfront blocks of the many coastal townships where 99 year leases are available. Over successive generations, low income Indigenous families may be relegated to the cheaper back blocks. Should some remote property markets move in the same ways as they have across Australia, the Government scheme will be encouraging the most disadvantaged Australians into a property market that is one of the most impenetrable markets in the world.

    There is great potential for non-Indigenous Australians to benefit from the Government’s long-lease tenures on communal land. Non-Indigenous investors and home buyers will be able to move into emerging remote markets with relative financial ease. This will add additional pressure to the cost of housing for the Indigenous residents as markets are established and prices become competitive. The most probable consequence of the Government’s strategy is that remote Indigenous Australians will be further marginalised in their own communities.

    Summary of concerns and challenges regarding remote Indigenous housing

    The Australian Government’s home ownership policy is poor policy for the following reasons. First, it is not based on an evaluated approach. Rather, the policy is contrary to evaluations of international models which show that similar individual land tenure approaches were seriously flawed and led to a loss of communal lands. Second, the home ownership incentives are poorly targeted and will not be accessible to the vast majority of remote Indigenous Australians for whom the policy is intended. Over time, in some regions housing markets will become increasingly inaccessible and Indigenous people with income