Rivers of Money Flow into the Sand

Every year, $100,000 of our taxes is spent for each remote indigenous Australian. In 2008-09 Australian government indigenous expenditure reached $22 billion. If these funds were ending the shameful dereliction of remote communities, they would be money well spent. But high spending has barely reduced extremes of dysfunction. On balance, it is perpetuating indigenous disadvantage. Trawling through government expenditures is not riveting, but if the festering sore of remote communities is not to go on and on, how public funding contributes to the culture of grog, ganja and gangs must be understood.

The 2010 Indigenous Expenditure Report was prepared by the Productivity Commission for a Steering Committee of bureaucrats in charge of federal, state and territory indigenous policies. For the first time, we have an accounting of indigenous expenditure. In 2008-09 Australian governments spent $17 billion on indigenous persons accessing mainstream services and $5 billion on indigenous-only services. The report shows that every year this translates to an average of $40,000 for each indigenous Australian compared to $18,000 for each non-indigenous Australian. But these per capita figures conceal rather than reveal real indigenous expenditures.

More than 60 per cent of indigenous Australians—some 330,000—work in major cities and regional towns side by side with other Australians.[i] When they become unemployed, they find another job within a few weeks, like most other Australians. They send their children to public and private schools and these children go on to work and further education. Currently more than 70,000 young Aborigines and Torres Strait Islanders are enrolled in TAFE and vocational courses and more than 9000 are enrolled in universities.[ii] Almost all these are the sons and daughters of working families. Nearly 70 per cent of working Aboriginal and Torres Strait Islanders, not far from the 72 per cent non-indigenous home ownership rate, own or are buying their own homes.[iii] These Aborigines and Torres Strait Islanders play sport, join clubs and participate in civil society. They pay taxes. Like other Australians each also only accesses $18,000 of government services per head, so that when indigenous expenditure is adjusted for them, the per capita figures change dramatically.

About 215,000 Aborigines and Torres Strait Islanders are dependent on welfare. Most of these—about 140,000—also live in major cities and regional towns. Most have dropped out of, or never entered, the labour force, so they receive single parents’ and disability rather than unemployment social security payments. These welfare-dependent indigenous Australians live side by side with non-indigenous welfare-dependent Australians and mostly receive the same benefits and government services.[iv]

Most indigenous funding is for the 75,000 indigenous Australians in remote communities. When allocated across to these remote indigenous Australians, government expenditure is more than $100,000 per person per year—$400,000 per family of four. In three years, this amounts to more than $1 million per family. For such sums an indigenous family could pay rent in Toorak or Vaucluse and send its children to a posh private school. 

Early child development, education and training

Take two very remote Northern Territory schools with students from Year 1 to 12. They are twenty minutes drive apart. The indigenous school (more than 80 per cent Aboriginal students) receives $33,000 per student from the government. Only 6 per cent of its Year 5 students achieved national minimum reading standards. The non-indigenous school received $20,000 per student, yet 88 per cent of its Year 5 students met national minimum reading standards. These results are representative of these two schools’ reading, writing and maths results in all years.

In both schools bright kids rush into the gate on the first day of school in Year 1. Twelve years later, most of the non-indigenous teenagers are in jobs and TAFE classes, on their way to $100,000-plus a year jobs in the large local mine. A few have left for private boarding schools down south and some have hung on through Year 12 to go to higher level TAFE and university. In the indigenous school, because almost all the students are failing abysmally by Year 5, most drop out during secondary years. They spend their days idling. A prize-winning student who completed Year 12 in the indigenous school was devastated when she went to Darwin and found she could not get a job because she lacked basic literacy and numeracy.

The difference in performance is not due to indigenousness. Children from urban working indigenous families in mainstream schools have similar literacy and numeracy pass rates (90 per cent plus) to non-indigenous children. Remoteness imposes costs, but does not account for the high additional expenditure on indigenous schools.

When $33,000 per student delivers a 94 per cent failure rate, lack of expenditure is not the cause. Despite additional funding, 150 indigenous schools have the lowest literacy and numeracy of Australia’s 9500 schools. Failure is due to separate “Aboriginal” curriculums and a lack of focus on classroom teaching. Instead of phonics to target weak English foundations and arithmetic drills to build basic numeracy, extra funding is spent on supernumeraries and special indigenous programs. Consultants flourish, but teaching days, weeks and years are shorter than in mainstream schools. Commonwealth-funded “Community Festivals for Education Engagement” take students out of school for two to nine days to learn that “it’s fun to be at school every day”. Meanwhile, they are not learning history, geography and science.

Excessive funding is contributing to high failure rates. 

Healthy lives

A young man in his twenties strips off his shirt for a game of football. Open heart surgery, the result of severe childhood rheumatic fever, has scarred his chest. His dad comes out to watch him play. Following a heart attack, he too has heart surgery scars, yet he lights up a cigarette as he joins the crowd watching the game. They laugh when chided for smoking because, they say, “We are not going to live long enough to die of cancer.”

In remote communities life expectancy is twenty to thirty years shorter than in mainstream Australia. “Closing the gap” spin claims a life expectancy difference of eleven years between indigenous and non-indigenous Australians, but this average masks mainstream health in the indigenous working population and abysmally high illness levels in remote communities.[v] Palm Island, off the Queensland coast, has a life expectancy of fifty years compared to eighty years for the whole of Australia.

The underlying causes of ill health are lack of education, appalling housing, unemployment and welfare dependence. High scabies infection rates, for example, persist because five or six people sleep on mattresses on the floor in every room in houses with no proper washing facilities for people or clothes. The Intervention’s alcohol restrictions and income sequestration and the consequent improvement in diets and reduction of alcoholism have led to only limited health benefits. Mainstream health outcomes cannot be delivered in a slum, whether in Kolkata or in remote Australia.

Medical intervention—per capita indigenous health expenditure is five times mainstream— struggles against the consequences of fractured communities and is saddled with the high costs of inefficient, separate indigenous medical services. Aboriginal Community Controlled Health Organisation services (ACCHOs) have not made substantial inroads into diseases of children despite generous funding. A National Eye Health Survey in 2009 found a 60 per cent incidence of trachoma (eliminated in mainstream Australia) in remote communities. Otitis media (glue ear) has ten times the mainstream incidence.[vi] A study of hospital admissions in the Northern Territory found rates of pneumonia among central Australian indigenous children to be the highest in the world, exceeding Gambia, South Africa, Fiji, Uruguay and Pakistan.[vii]

Health funding supports the inefficient duplication of services. ACCHOs are not only funded in remote communities, but also alongside mainstream medical services in major cities and regional towns.[viii] High funding and their preferential role mean they do not have to be efficient. Indigenous Health Workers are an extra step between patients and doctors. Despite the Nhulunbuy region having three indigenous health care providers, many indigenous patients prefer to use the mainstream hospital as their first medical provider. 

Economic participation

Ironically, the principal expenditure under “Economic participation” is on welfare. Although over 60 per cent of indigenous Australians are working, 25 per cent are welfare-dependent in major cities and regional towns, and the other 15 per cent are virtually all welfare-dependent in remote communities.

Disincentives to work, including welfare incomes higher than entry level wages and high effective marginal tax rates, affect all welfare recipients regardless of where they live or their ethnicity. For indigenous welfare recipients in remote communities, however, there are additional barriers. They receive less education, more welfare and have the option of “pretend jobs”, but there are no private sector jobs. Perhaps 45,000 of the 75,000 people living in remote indigenous communities are aged fifteen to sixty-four, that is, of working age. Of these some 5000 are, or should be, in full-time education, leaving perhaps 40,000 in the labour force. Fewer than 3000 have real jobs. High unemployment is not due to remoteness. Across Australia, total unemployment rates are lowest in remote areas where indigenous unemployment is highest.

Thanks to thirty years of separate education, remote indigenous Australians are illiterate and non-numerate. They cannot pass the written test for a driving licence or read occupational health and safety warnings. They are not just unemployed, but unemployable.

Most remote Aborigines and Torres Strait Islanders receive Austudy at age sixteen, followed by unemployment, single parent, disability and other social security payments. These are often topped up by CDEP (Community Development Employment Projects), the indigenous work-for-the-dole program that cost $520 million in 2008-09.[ix] “Newstart” unemployment obligations to accept available jobs or take part in training are not enforced in remote communities.

Without private property rights side by side with communal property rights as in the rest of Australia, remote communities are in effect communist enclaves. Dreary communal stores sell food, petrol and perhaps a few take-away meals. There may be a government-funded art centre. Even in large townships there are no competing stores, motels, caravan parks, cafes, food outlets, hairdressers, hardware stores, accountants or other businesses. In most remote communities existing jobs are in communal shops and in public administration, teaching, health, early childhood, youth and other programs that substitute for education and employment. They are filled by non-indigenous staff. For example Amata, a community of some 300 in the Anangu Pitjantjatjara Yankunytjatjara lands in South Australia, has some thirty non-indigenous employees. Ten work in the communal cattle enterprise that in 2007 still had not one indigenous worker.[x] In the hot summer months, some families move to Port Augusta, while non-indigenous staff soldier on. In Wadeye, one of the largest Northern Territory townships, with an Aboriginal population of about 1700, there are more than 200 non-indigenous employees. A visitor to Wadeye reports: “A smiling Lithuanian backpacker serves ham, cheese and tomato sandwiches.”[xi]

Although the failings of CDEP have been recognised, it is being replaced by a proliferation of publicly funded “pretend” jobs that include assistant teachers, indigenous health workers, Aboriginal community police officers and rangers. Their separate, inferior qualifications do not meet national standards. They will not be able to transfer to mainstream positions. Young men and women are being cheated of real career opportunities.

Affirmative action policies offer well-remunerated “Aboriginal” public service positions with prospects of rapid promotion to fill racial quotas. Bright young graduates are deflected from private sector opportunities to become bureaucrats in agencies where they write “mission statements” on increasing indigenous entrepreneurship.

Expenditure on indigenous job creation is on pretend jobs for the unemployed and affirmative action jobs for the already employed. Government expenditures are directly responsible for low labour force participation and stratospheric unemployment. 

Home environment

Visit Tom and his wife, son and two daughters who occupy one of the three bedrooms of a dwelling that houses three families. There is no bathroom, toilet or kitchen; an outside lean-to has a cold-water shower and a bench with a cold-water tap and cement sink. The bedroom floor is covered with foam mattresses, there is a television and an electric kettle. There is no room for a wardrobe, cupboard, table or chairs. The three bedrooms front on a veranda which provides some shelter in the wet, though when it pours the families have to retreat to the bedrooms. Cooking is on an open fire in front of the house. Tom’s family is better housed than several neighbours. Not one house in Tom’s community would be certified as fit for occupation in mainstream Australia. This is public housing in an outstation. In townships, where most (85 per cent) remote Aborigines and Torres Strait Islanders live, most houses are somewhat better, having kitchens and bathrooms.

China, Russia and even Cuba have private housing. Only in North Korea and on Australia’s indigenous lands can no private homes be built. Although surveys show that many remote indigenous households want their own home and that 15 per cent could immediately afford it[xii], governments have focused almost exclusively on public housing. By 2007, however, they had only provided 13,000 houses for more than 22,000 remote households. A renewed public housing effort spent $842 million on indigenous public housing in 2008-09. In remote areas, the cost of public houses—refurbishments and new construction— averages over $600,000 per house.[xiii] Private houses of similar quality are delivered in remote locations for $300,000.

The Remote Indigenous Housing Program is spending $5.5 billion over ten years on refurbishments and new houses, mostly in remote townships. When this program is completed, 10,000 indigenous families will still be sharing houses. Bob Beadman, the Northern Territory Coordinator General for Remote Services concludes that, “Even with this massive investment in public housing, the chronic and acute overcrowding in many Growth Towns will not be fully addressed. It is absolutely vital that private home ownership and development starts to take off in our remote towns to help address the shortfall.”

In outstations/homelands, it has been sensibly decided that no more public housing will be built, but the crowding out of private housing by the focus on public housing means that there is in effect no program to bring indigenous housing to mainstream standards. As a result of Mal Brough’s initiative as Minister for Indigenous Affairs, sixteen ninety-nine-year leases for private housing have been issued on the Tiwi Islands. This was the high point of private housing. Jenny Macklin reduced lease terms to forty-plus-forty years. On Groote Eylandt, if a landowner took a thirty-year loan and built a house today, seven years after paying off the mortgage his house could become the property of the Commonwealth government for $1. All indigenous lease provisions are much less favourable than those that govern all housing in the Australian Capital Territory.

Commonwealth and Queensland private housing discussion papers issued in May 2010 showed that governments do not recognise that the denial of secure title in the form of long-term leases on indigenous land is the real barrier to home ownership.[xiv] In May 2010, the Home Ownership Indigenous Housing Program diverted an unused $56 million allocated for remote private home ownership because there were no long-term leases and hence no applicants for these funds. A year of dozy consultations has elapsed since the issue of the two home-ownership Discussion Papers, but facilitating secure titles so that indigenous families can start building houses on indigenous lands is not in sight.

The failure of housing follows the flawed return of indigenous lands. Since the 1970s, 20 per cent of Australia—equal in area to the twentieth-largest country in the world—has been returned to Aboriginal and Torres Strait Islander ownership and control. Lands were returned to land trusts and councils, but individual landowners were never identified. Unlike a strata title body corporate, these councils do not have a membership list of owners. Private property rights side by side with communal property rights—a condition of modern prosperity—have not been considered. In the rest of Australia, we own our own homes but drive on public roads and picnic in public parks. On indigenous lands the result is a giant scam, under which the landowners are apparently land-rich but remain poor and do not have the land rights that other Australians take for granted. Even Justice Woodward of the 1974 Royal Commission into Aboriginal Land Rights recognised late in life that “with the wisdom of hindsight, he might not have made the same recommendations”[xv]. Because these indigenously owned and controlled lands are not productive, taxpayers paid $500 million in 2008-09 for services that residents in the rest of Australia cover directly or indirectly. Throughout Australia farmers control weeds and feral animals on their lands. Urban residents pay rates and taxes for rubbish collection, local road maintenance and other local government services. 

Safe and supportive communities

This classification of expenditure is surely satirical. Beautifully located Galiwinku on Elcho Island, off the eastern tip of the Northern Territory, is targeted for rapid development under a federal, territory and state Remote Service Delivery program. The township has improved somewhat since the Intervention ended legal alcohol sales and introduced welfare income sequestration, but there is still no private business, and public sector jobs are almost all for non-indigenous employees. Indigenous life is centred on gambling, drinking and smoking ganja. Nicolas Rothwell, doyen of reporters on remote communities, writes: 

The bedrooms are … are dark and fetid. The sacred clan emblems each family treasures are stored under half rotted floor mattresses, cockroaches and rats swarm about; indeed, patients with rat scratches are common and one diabetic woman appeared at the clinic with several of her toes gnawed off … The World Health Organization would place a sovereign country on its emergency lists.[xvi] 

In 2008 more than $6 billion was spent on indigenous communities—over $2.6 billion of that on “public order and safety” but not on enforcing existing laws essential to civic behaviour. Responsible Service of Alcohol rules have not applied in remote indigenous communities. Inebriated indigenous pregnant women can still get served in remote pubs. People have been killed and eaten by remote community dogs whose owners were never prosecuted. There is no policing of late night noise or controls on dumping rubbish on the street.

The most dysfunctional communities are the largest townships. These originally belonged to one clan, but as missions and government stations were established, they came to house many. The traditional clan members, now vastly outnumbered, look for ways to assert their authority and entitlements over other residents. With no lists of landowners, intermarriage, and no mechanisms to resolve ownership and other issues, it is not surprising that disputes and violence are endemic.

Instead of dealing with these underlying causes of dysfunction, governments fund an endless procession of initiatives, engagements, agreements, pathways, overarching architectures and consultations. Gary Johns concludes: 

Communities are consulted endlessly—it is part of the income of communities that either elders are paid to attend meetings or their organisations are paid to organise them. These meetings, if anything, seem to be in lieu of anything ever being decided; indeed, they seem to be a ruse to ensure that nothing is ever decided.[xvii] 

Writing reports is a principal activity of the fly-in bureaucrats that complement the thousands in place in remote communities. “Community structure plans” for Anangu Pitjantjatjara Yankunytjatjara communities read like the planning documents of a conscientious Communist Party secretary for villages in the Omsk oblast in the USSR. Nicolas Rothwell writes that official documents “catch little of the mood of discontent and cynicism that has spread though the communities”.[xviii]

Spending money on intangible programs has not delivered tangible results. In the wet, inspectors fly to remote communities to check vegetable availability in their shops, but there are no funds for an all-weather road to deliver vegetables. Money is available for “virtual early childhood integrated service hubs” but in Palumpa, a community split by a billabong, children risk crocodiles if they wade to school in the wet season. There is always funding for another round of consultations, but none for surveys that would facilitate housing leases and resolve ownership issues. 

Other expenditures

More than half—perhaps 55 per cent—of indigenous funds are absorbed by the “Aboriginal industry”. This covers salaries, houses and four-wheel-drives for the army of federal, state and territory bureaucrats, non-indigenous administrators and other remote community staff, contractors earning higher than private sector margins on government tenders, academic and other consultants and the staff of NGOs that receive public funding. A vast “Aboriginal industry” outnumbers remote Aborigines and Torres Strait Islanders.

Taxes forgone, such as exemptions on remote salaries, are the principal items not included in the accounting of indigenous expenditure. To understand total indigenous resources, however, mining and other royalties and not-for-profit funds should also be added. For example, the Northern Territory Aboriginals Benefit Account that collects some of the royalties due to Northern Territory indigenous lands averaged $200 million income per year for the last two years and has $380 million in the bank.[xix] Distributed to individual landowners these funds would pay for a lot of mortgages.

Thousands of not-for-profit organisations are involved in specifically indigenous programs. Often, taxpayers are paying twice. An example is Generation One, which turns unemployable illiterate men and women into successful job candidates. Scholarships that send children from remote communities to mainstream boarding schools also make up for the failure of remote education. The Fred Hollows Foundation initiated eye health programs necessitated by the failure of government health funding.

Most significant is the income forgone from virtually 100 per cent welfare dependence in remote communities. In next year’s accounting the Steering Committee should estimate the large savings in social security payments and the significant increase in personal income and tax revenues that would ensue if remote communities had real economies. 


Current welfare to individuals and communities debilitates their capacity to take decisions and use their initiative. People who used to be responsible for their lives now sit under trees, play cards, and wait for “the government” to provide. Millions of dollars are on offer, except to resolve unaddressed land ownership issues and measures such as long-term leases for home ownership.

The excuse that “fixing indigenous problems is too hard” is used as an excuse for lack of progress. But we know that a mix of communal and private property rights and private enterprise delivers prosperity in mainstream Australia. And we know that no society in the world has achieved prosperity without these. Introducing private property rights side-by-side with communal property rights, mainstream education, enforcing the same civic standards as in the rest of Australia and reducing excessive welfare would rescue remote communities. It would also be far cheaper than continuing to fund existing failed policies. 

Emeritus Professor Helen Hughes is a senior fellow at the Centre for Independent Studies and Mark Hughes is an independent researcher. 




Government per capita expenditure 2008-09

                                                                 Remote indigenous*       All indigenous         Non-indigenous

     Early childhood development,

     education and training                                     $14,900                      $6000                          $2500

     Healthy lives                                                    $17,400                       $7000                          $3600

     Economic participation                                    $20,100                       $8100                          $4600

     Home environment                                          $10,400                       $4200                          $1800

     Safe and supportive communities                    $28,000                     $11,300                          $2800

     Other government                                               $9200                       $3700                          $3100

     Total                                                             $100,000                     $40,200                      $18,400


     Population                                                        75,000                    545,000                   22,500,000


                                                                 * Authors’ estimates


Source: Indigenous Expenditure Report Steering Committee,

2010 Indigenous Expenditure Report, Productivity Commission, 2011.

[i] The 2010 Indigenous Expenditure Report has a population of 545,192 Aborigines and Torres Strait Islanders. Authors‘ estimates of working, welfare dependent urban and welfare dependent remote Indigenous populations are based on education, employment, housing and location information for 517,000 Aborigines and Torres Strait Islanders in the 2006 Census extrapolated to 2010.

[ii] Vocational statistics are published by the National Centre for Vocational Research and university statistics are published by the Commonwealth Department of Education, Employment and Workplace Relations, The figures quoted here do not include enrolment in ‘remote’ vocational courses that do not require participants to be literate in vocational numbers and 1,000 students in theology and other non-university course that are included in higher education data..

[iii] Authors‘ estimates based on 2006 Census data.

[iv] An additional 25 per cent expenditure has been allowed for urban welfare dependent Aborigines and Torres Strait Islanders in estimates of remote community per capita expenditures.

[v] The 2010 Indigenous Expenditure Report claims that the difference between Indigenous and non-Indigenous life expectancy was 12 years for males and 10 years for females (112). This figure was first published by the Steering Committee for the Review of Government Services, Overcoming Indigenous Disadvantage, Key Indicators, 2009, Productivity Commission 2009 and has been endlessly repeated in official documents. Like most of the other estimates in Overcoming Indigenous Disadvantage it was obtained by averaging the life expectancy of working Aborigines and Torres Strait Islanders and welfare dependent Aborigines and Torres Strait Islanders in major cities and regional towns who have similar life expectancies to relevant groups of non-Indigenous Australians with urban welfare dependent and with remote community Aborigines and Torres Strait Islanders.

[vi] Alison Caldwell, ‘Eye disease a ‘national disgrace’. ABC News, September 29, 2009 and Harvey L Coates, Peter S Morris, Amanda J Leach and Sophie Couzo, ‘Otitis media in Aboriginal children: tackling a major health problem, eMedical Journal of Australia, 2002,177 (4) (177-178).

[vii] William Cresswell, ‘Aboriginal pneumonia rates top the world’, The Australian, 17 May 2010

[viii] Sara Hudson, Closing the Accountability Gap: the First Step Towards Better Indigenous Health, Policy Monograph, 105, Centre for Independent Studies, 2009.

[ix] 2010 Indigenous Expenditure Report, 2011 (143)

[x] Taylor Burrell Barnett Town Planning and Design, Amata Community Structure Plan No 1, Subiaco, Western Australia, February 2008

[xi] ‘A Town like Wadeye’ The Australian, 3 November, 2007

[xii] Mark Moran, Paul Memmott, Stephen Long, Rachel Stacey and John Holt’, Home ownership for Indigenous people living on community title land in Queensland’, paper read to the 2001 National Housing Conference, Brisbane, 24 October, 2001 and Cape York Institute surveys

[xiii] National Partnership Agreement on Remote Indigenous Housing,, accessed 26 April 2011

[xiv] Commonwealth of Australia, Department of Families, Housing, Community Services and Indigenous Services, Indigenous Home Ownership Issues Paper, May 2010 and Queensland, Department of Housing and Homeless Services, Home Ownership on Indigenous Communal Lands Discussion Paper (no date)

[xv] Stuart Rintoul, ‘Homeownership a Natural Step: Land Rights Architect,’ The Australian, 22 February 2008,

[xvi] Nicolas Rothwell, ‘And they call it the failure to thrive’, The Australian, 8-9 May 2010:

[xvii] Gary Johns, Aboriginal Self-Determination: The Whiteman’s Dream, Connor Court publishing, Ballan, Vic. 2011, page 183

[xviii] Nicolas Rothwell, ‘Landscape of despondency as bureaucrats rebuild the bush’, The Australian, 30 -31 January 2010.

[xix] Commonwealth of Australia, Department of Families, Housing, Community Services and Indigenous Affairs, Annual Report 2009-2010, Appendix K, Aboriginals Benefit Account,

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