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Grass Roots Capitalism

Speech by Federal Employment Minister Tony Abbott to Corporate Leaders for Indigenous Employment Conference, 25 September, 2002

The mythical outback settlement has a pub, a service station and a general store. The fact that Australia north of the Tropic of Capricorn produces some 30 per cent of our exports with just five per cent of our population reinforces this impression of a land dedicated to commerce without people. But along with these “whistlestop” settlements, usually well of the beaten track, the outback is dotted with quite large towns, sometimes characterised as people without commerce.

These towns have, at most, one shop and one service station but otherwise completely lack the normal commercial services associated with settlements of 1000 or more people: no newsagent, pharmacy or video store, no café, car yard, or light industry and certainly no pub – except, perhaps, for a heavily secured canteen open a few hours a day. Very few people have full-time jobs, there’s virtually no private sector economy and the main industry is providing services for residents.

It’s in these settlements that life expectancy, housing quality and literacy levels, along with school attendance and the maintenance of public order, often approach third world standards. It is these settlements, more than anything else in the tangled relationship between the first Australians and the rest of us, which pluck at our consciences and drive the urgent resolve that things must change.

It’s tempting to conclude that this is entirely the consequence of dispossession and racism. We have to acknowledge the history but we can’t undo it. We need to open our hearts to indigenous Australians but also to understand how helping people can turn into controlling them, no less now than in mission times. As a society, we have been guilty of a collective failure of imaginative sympathy towards some of our own. For much of our post-contact history, we have been more conscious of the wrongs of Ireland and the passions of the Middle East than the pain of Australian indigenous people. It’s important to recognise this and to make amends but not to become trapped in the past and its failed “solutions”.

In under 100 years, remote area Aborigines have passed from a subsistence hunter gatherer economy, to a subsistence mission economy (sometimes associated with low-paid work in mines and cattle stations), to a subsistence welfare economy. In the less settled parts of Australia, the organising principle of an economy, the notion of accumulating surpluses, has seldom taken root. Concepts central to contemporary civil society such as exclusively personal property and individual rights and responsibilities have rarely been taken for granted, except, perhaps, grafted-on in mission times. These are settlements where individuals have a strong sense of family and clan but little sense of the day to day economic co-operation with others which constitutes so much of the social fabric. They are communities whose inhabitants generally have a stronger sense of identification but a lesser sense of daily purpose than the residents of the most anonymous city suburb.

Since the mission times ended, federal and state governments, and more recently ATSIC and community councils, have tried hard to create local economies and to ensure that local jobs are filled by local people. In many places, Aboriginal residents now work in home maintenance teams and road gangs. Many communities have successful galleries with some outback artists commanding thousands of dollars for their work. Some communities have established carpentry, mechanical and sewing shops to provide locals with marketable skills as well as affordable furniture, clothing and car repairs. A handful own and run their own airlines. Even so, without the Community Development Employment Programme (an Aboriginal work for the dole scheme started by the Fraser Government), the unemployment rate in many remote Aboriginal communities would approach 90 per cent.

Many Aborigines are understandably reluctant to enter a materialistic “rat race”. On the other hand, substance abuse, crime, domestic violence and suicide are pandemic in communities where people have nothing much to do and little hope for a better future. Unless a significant part of most days is filled with purposeful, co-operative activity, individuals tend to feel unfulfilled and antagonistic to each other. Communities whose members don’t have a sense of meaning in their lives (whether generated by looking after children, tending gardens, creating art or playing sport as much as working for wages) tend to become no-go zones – regardless of the race or culture of their inhabitants. Australian society is far from prejudice-free (and still has a strong tendency to typecast people) but the problems of Aboriginal communities owe at least as much to welfarism as racism.

The immediate economic benefits of employment are comparatively minor compared to the improvement in physical and mental health and reduction in crime which accompanies the shift from welfare to work. Given the history of dispossession, a sense of Aboriginal entitlement is understandable and justifiable. The problem for all rentier classes, however, whether it’s low rent on welfare or high rent on royalties, is that aimlessness which tends to breed alienation, despair and self-harm.

Two years ago, Noel Pearson opened a new debate on the importance of economic participation if Aboriginal people are to regain their self-respect and autonomy. This is vital to the reconciliation process, less, perhaps, because Aboriginal people will continue to resent lower incomes, on average, than other Australians but because the general public will find it hard to see past an “Aboriginal problem” as long as too few Aboriginal people have “real” jobs. A sure sign that reconciliation has been achieved will be the presence of Aboriginal people as leaders of non-Aboriginal organisations. Reconciliation will have occurred when outstanding indigenous lawyers, doctors and business executives are no more surprising than indigenous artists and sports stars.

This aspect of reconciliation is more important than gestures such as treaties, apologies and constitutional acknowledgements. Symbolism should reflect what people hold in their hearts. Australians naturally warm to people who are doing it tough but having a go. That’s why Pearson’s message has struck such a chord. Pearson has stressed Aboriginal distinctiveness but not Aboriginal separateness. He’s not happy about the past but he’s not bitter either and wants to ensure that Aborigines are fully Aboriginal and fully Australian with the ability to be at home in the bush or the boardroom or both.

The 2001 ABS figures put Aboriginal unemployment, at 24 per cent, or nearly four times the national average. This suggests significant improvement since 1994 (when measured indigenous unemployment was 28 per cent) but significant deterioration since 2000 (when measured indigenous unemployment was 18 per cent). These statistics need to be treated with caution: first, because of the comparatively small survey sample used; second, because of the problems associated with surveys based on self-identification: and third, because too much Aboriginal employment has an element of “make work”.

Any way it’s examined, Aboriginal unemployment is disastrously high even after three decades of well-funded, well-meaning attempts to give Aboriginal people more participation in a modern economy. More so than with general unemployment, bringing Aboriginal unemployment down involves new attitudes as well as new jobs. It’s too common to find very high unemployment in remote Aboriginal communities even when there’s a mine with high staff turn-over just down the road. Boosting Aboriginal employment means persuading employers to abandon old prejudices. It also means persuading Aboriginal people to leave what’s sometimes the comfort zone of working with indigenous organisations.

In cities and larger towns, the Job Network is helping Aboriginal people to find work. Aboriginal job seekers usually have access to Intensive Assistance which means that Job Network members have up to $10,000 to invest in each individual. In 1999, the Government introduced an additional $4000 wage subsidy for new, previously unemployed Aboriginal workers. As part of the Australians Working Together policy, Aboriginal people in Job Search Training or Intensive Assistance have access to an additional $800 training credit. Aboriginal people comprise 6 per cent of Australia’s unemployed and (after a slow start) now comprise 8 per cent of Intensive Assistance commencements but only five per cent of Intensive Assistance outcomes. In addition, Indigenous Employment Centres are now being set up to help CDEP workers find mainstream jobs.

By contrast, in many remote areas, the challenge is to create an economy rather than place Aboriginal people into existing jobs. The Indigenous Employment Programme is designed for labour markets with a handful of employers where the Job Network can’t effectively operate on its own. By far its biggest component is the Structured Training and Employment Programme which provides tailored training packages worth up to $10,000 a year for remote-area businesses prepared to employ and mentor previously unemployed Aboriginal people. Other components of the programme are designed to help CDEP to become a transition to mainstream employment, provide expert professional and volunteer advice to Aboriginal business ventures, and develop Aboriginal managerial ability. More than 50 per cent of STEP participants are still working three months after STEP assistance finishes and, since 1996, the percentage of STEP participants in the private sector has increased from under 50 to more than 80 per cent.

Still, as official visitors to remote indigenous communities know, very few residents have unsubsidised jobs while there is usually no shortage of think big schemes for local business development. As well as the perennial question about the existence of a sustainable long-term market, Aboriginal entrepreneurs have to overcome two further hurdles: first, finding a dependable workforce (which is not easy in communities where few people have recent experience of sustained work); and second, obtaining capital (which is almost impossible in communities where hardly anyone has significant private property or accumulated assets).

Some communities have a no work, no pay policy for CDEP. This is an important step in developing a work culture but is dauntingly difficult to enforce against kinship obligations and the welfare system’s entitlement mindset. Even in the best-run Aboriginal communities, everything seems to revolve around “funding”: the seemingly limitless but often capricious capacity of government to pay. “We’d like to do this, but can’t get the funding”; “we were doing that but then the funding ran out” is the standard response to self-help suggestions in communities which rely on government the way feudal villages depended on the lord of the manor.

Probably the most encouraging sign in years is the willingness of significant Aboriginal leaders to expect more of their own people at the same time as they ask more of government. Noel Pearson’s analysis of the impact of sit down money on the people of Cape York and his critique of welfare dependent communities and the polices which create them has been an object lesson in national leadership. Richie Ahmat (his successor at the Cape York Land Council) has courageously supported him and many other Aboriginal leaders are now thinking beyond pieties and truisms. At one level, the Pearson analysis confirms long-held scepticism about government programmes hence the challenge for government is to respond creatively to this new thinking rather than just say “I told you so”.

A responsible government has to take these overtures seriously. The “whole of government” initiative to be announced today is an important change prompted by the Pearson critique. Rather than a range of government departments all hyper-actively pursuing their own portfolio initiatives, the Federal Government will give specific departments lead agency status for programmes in Aboriginal communities in designated parts of Australia. This is designed to avoid the seagull syndrome (as Aboriginal people see it) where every other day, it seems, different groups of government officials fly in, fidget around and fly off.

Cape York is one of ten regions selected to pilot this initiative. On the Cape, the Department of Employment and Workplace Relations will be the lead agency with the Secretary of the Department responsible for ensuring that Federal programmes complement each other and the communities they are supposed to serve. As Aboriginal people know, there’s no point running schools and workshops if people are too tired or drunk to participate. They know from experience that a functioning economy is impossible without the givens of a civil society. They know that the segmented service delivery unavoidable in a complex pluralist society can easily miss its target in small communities without much social capital. In Cape York, the Employment Secretary will have authority to co-ordinate federal resources and manpower according to local needs and to make operating guidelines suit communities rather than the other way round.

An important breakthrough has been the co-operation of State Governments. In Cape York, the Federal Employment Secretary’s State lead agency counterpart will be the head of the Queensland Department of Aboriginal and Torres Strait Islander Policy. If, for instance, local job prospects are hurt by the closure of a quarry for environmental reasons, the Federal Employment Secretary and the State Director-General, between them, will be expected to consider the problem and work out a practical answer. Previously intractable problems won’t be solved overnight but, to the extent that Cape York’s issues are exacerbated through bureaucratic isolationism and “work to rule” thinking, this initiative should make a difference.

Almost by definition, creating an economy means enabling people to make decisions independently of government. In some third world communities, micro-credit initiatives are giving people a life-line out of poverty. In Bangladesh, the Grameen Bank has lifted nearly half its borrowers above the official poverty line and has a default rate of just 2 per cent on loans. Micro-credit is new to Australia but groups such as the Traditional Credit Union in Arnhem Land are now starting to foster grass roots capitalism in welfare dependent communities. With ATSIC help, a group called Opportunity International is trialling a micro-credit scheme in Northern NSW.

In Cape York, my department will shortly call tenders for operating a micro-credit system for local business enterprises which are too small to qualify for ATSIC loans and whose principals would not attract commercial finance. Government will fund a private financial manager to assess proposals and make loans up to $5000 – but the money advanced will be private money to be repaid on a normal commercial basis. Micro-credit enables people to go into business through purchasing a set of tools, a modest boat or vehicle or stock-in-trade. As Pearson says, “our people have a right to take responsibility” so this initiative will make money available at affordable interest rates but there’s no pretence that people are owed a living.

This micro-credit initiative complements the Family Income Management System developed by Pearson’s Cape York Partnerships group. This allows people who might otherwise have nothing left after pay day to quarantine their income into rent, power, food and capital accounts. It’s now operational in three Cape York communities and in Aurukun, for instance, has already allowed some families to purchase major household items such as fridges and washing machines.

Under the right circumstances, Aboriginal people have a proven ability to become economic stakeholders. The Aboriginal Home Ownership programme has been running for nearly thirty years and allows Aboriginal people to borrow at 1 per cent below the Commonwealth Bank’s standard variable rate. The fact that this scheme has helped more than 18,000 Aboriginal families to own their own home suggests that the low (but increasing) indigenous home ownership rate (32 per cent versus 70 per cent for the wider community) is due to lack of opportunity rather than lack of interest.

One of the biggest obstacles to economic advancement is the fact that Aboriginal communities are still largely socialist enclaves in a free society. It’s currently impossible for people living in remote Aboriginal communities to own their own homes. Generally speaking, land subject to native title cannot be sold or subdivided so is incapable of providing security for debt. Without compromising ultimate Aboriginal ownership, it’s time to find ways to allow better economic use of native title land if “land rights” are not to prove illusory. As Neville Bonner once said of the land, “it’s alright those blokes ploughing the fields and taking in the cows for milking but they’re just using it. They can never own it the way I do”. This is the type of issue which might be considered by the new three way partnership on Cape York.

Socialism has failed Aboriginal communities but capitalism will be an equal disappointment unless it’s tailored to the evolving culture and circumstances in which potential Aboriginal entrepreneurs operate. A number of financial institutions (most notably the Bendigo Bank) are considering setting up indigenous venture capital funds. Some form of tax break for these funds (in much the same way that other national priorities such as research and development and the film industry attract help) would turn more Aboriginal businesses into viable propositions. The promoters argue a tax concession won’t involve the usual cost to the revenue because there are now very few indigenous business revenues on which tax might be forgone. This is government facilitating a market economy, they say, rather than Government substituting for a market economy. It’s impossible, they say, to demand “market purity” before there is a market.

Bringing Aboriginal unemployment down is one of the most important tasks facing Australian leaders but it’s an area where progress is more likely to be measured over generations than over terms of government. The Howard Government has been remarkably successful at managing the wider Australian economy but helping Aboriginal people who want to change make the transition from a welfare to a market economy is an altogether different challenge. No-one should expect Aboriginal communities to be clones of otherwise similar white settlements but we will never be comfortable while avoidable squalor co-exists with comparative plenty. The challenge is not to produce identikit Australians but to give all of us access to a similar range of choices.

related links:

• Ministerial website
• Aborigines trapped by dole scheme: professor
  5 October 2002 - The Aboriginal "work-for-the-dole" scheme is widely regarded by indigenous leaders as the principal poverty trap for their families and communities, leading anthropologist and activist Marcia Langton said last night.
• Interview with Noel Pearson
  Noel Pearson is again making people feel uncomfortable. The Right, bitter because of his land rights activism, are unsettled because he now seems to agree with them on welfare. The Left are reeling, out of their comfort zone, because he points out their attitudes may have been simplistic, even wrong. Enigmatic, hard to categorise, Pearson is asking for a paradigm shift in approaches to welfare policy. Is he onto something?

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