Grassroots capitalism is a must for remote Indigenous communities

A responsible government has to take these overtures seriously. 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 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 two 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 that 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 payday 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 Scheme has been running for nearly 30 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 that 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.