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STANDING COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS
10/08/2007
Social Security and Other Legislation Amendment (Welfare Payment Reform) Bill 2007 and four related bills concerning the Northern Territory national emergency response

CHAIR —Thank you for being here, Professor Altman.

Prof. Altman —I am here as the Director of the Centre for Aboriginal Economic Policy Research, but I do want to emphasise that the views that I express are mine alone and not those of any of my colleagues or staff. I should also say that I am also appearing as an adviser to Oxfam Australia, for whom I prepared the submitted report on reforms to land tenure and permanent arrangements.

CHAIR —I now invite you to make a short opening statement, after which we will have questions.

Prof. Altman —Thank you very much. What we have before us is a hastily conceived and enormously complex but intertwined set of laws that will establish a fundamentally new and unprecedented policy framework for addressing undeniable social problems experienced by many of the 40,000 Indigenous people in prescribed communities in the Northern Territory. As someone who has worked in the area of Indigenous policy, mainly in the Northern Territory, over the past 30 years, I am deeply concerned that this hastily conceived emergency response may prove unworkable because of lack of Commonwealth capacity to deliver. Some unnecessary and racially discriminatory measures will generate legal challenge, transaction costs and delays. Worst of all, some measures will result in perverse policy outcomes that will exacerbate community dysfunction and related problems of child abuse rather than ameliorating them. New policy, with the best intentions, will invariably generate some unintended negative consequences, but in the situation before us it is especially worrying that some of these can be predicted prior to their implementation.

Clearly, in the limited time available, I cannot outline all my concerns, so I will highlight just a few. In the Oxfam report it is argued that land rights reform and the partial removal of the permit system are both unnecessary measures that are unrelated to child abuse. I would just note now that the issue of compulsory acquisition of leases and the construction of assets on people’s land that they will not own at lease expiry will leave a planning and real estate contestation nightmare. Disputation over just terms compensation should be avoided by appointing independent arbiters of negotiated fair compensation rather than allowing the take it or leave it, adversarial approach currently proposed.

The welfare law reforms are especially worrying. I would draw the committee’s attention to recent research by Professor David Ribar, an American economist currently visiting the Australian National University, who notes that the United States of America’s measures to control the spending of welfare payments have had a high cost and limited benefits. In particular, he highlights the issues of fixed establishment costs and diseconomies of small scale in the proposed Australian measures. In the USA, such measures are applied to 26.7 million people. In Australia we are talking initially of 30,000 to 40,000 Indigenous people in 73 dispersed communities. These welfare reforms are also non-discretionary for Indigenous people, and hence discriminatory when compared to the general population. It is assumed that all Indigenous parents who are welfare recipients are feckless spenders whose incomes must be quarantined and controlled. At the very least, on grounds of equity with the broader community, we must amend the proposed laws here. We should assume that all Indigenous parents are good parents and allow welfare authorities the discretion to quarantine payments only if the opposite proves to be the case, as with other Australians from 1 July next year.

Many perverse outcomes are likely, most driven by the belated proposed abolition of the CDEP scheme that targets the most productive areas of communities. This one measure will turn 7,500 employed workers into trainees and Work for the Dole participants. Only an optimistically estimated 2,000 will eventually gain mainstream employment in home communities. The abolition of CDEP will place many community enterprises, including community stores and currently viable businesses, in immediate financial jeopardy. It will see the collapse of outstation resource agencies and the possible influx of up to 10,000 residents of 560 outstations into already overcrowded townships. CDEP abolition will see enhanced passivity that many argue is at the heart of dysfunction. This measure must be urgently reconsidered.

Nearly $600 million has been committed to the NT emergency intervention this year—a financial commitment of an appropriate scale. But how much of this is committed to bricks and mortar and to practical, as distinct to process, measures that will see the immediate building of houses, schools, medical facilities, youth centres and aged accommodation in communities where the latest, 2006, census data shows that there are between 12 and 14 persons per house on average? It is likely that an influx of outsiders to undertake a host of identified tasks will not only undermine local employment opportunity, but will also place additional strain on already strained housing and infrastructure. The suite of measures that we are considering seem to be an extreme overreaction to what is an undeniable and deeply embedded problem in Northern Territory Indigenous communities, as well as elsewhere in Indigenous and non-Indigenous Australia.

Too much of what is being proposed is based on a blind faith that it will work, but no mechanism has been proposed to independently assess if these interventions will succeed. Recent Commonwealth experience from the COAG trial sites at Wadeye in the Northern Territory suggests that such monitoring is crucially important. One cannot help feeling that at a different point in the electoral cycle a far more measured approach would be taken. Despite the current rhetoric of bipartisanship, I suspect that whoever forms the next federal government will look to walk away from this massive planned intervention, and the legacy will be another failed and costly experiment in Indigenous policy.

There is another way possible: empower and work with communities, support what is working and build on it, address the deep backlogs that are a result of past policy and not Indigenous failure, and learn from international experience where there has been much more success than in Australia. Elsewhere I have suggested that sustained outcomes will require an investment of between $4 billion and $5 billion over five years and the building of an economic base at remote communities. But such multiyear financial commitments and philosophies of sustainability and community enterprise, ownership and governance, as distinct from external control of communities, are all unfortunately absent from what is being proposed.

Senator CROSSIN —We have not concentrated very much today on organisations that will be affected by the abolition of CDEP. We have not been able to take any evidence from what are known as CDEP organisations, even though they have put submissions in. Have you had a chance to look at clause 68 of the national emergency response bill? It talks about directions relating to assets. Do you have a view about whether or not this would entitle the minister to seize the assets of CDEP organisations and what that might mean?

Prof. Altman —I think the intention of the clause is that the minister will have the power to seize the assets of any CDEP organisation that has received Commonwealth funding. But I suspect that CDEP organisations, particularly some of the bigger, more powerful ones, may legally challenge that. Many of these organisations have built up significant assets over many years based not only on their operating surpluses and profits but also some of them currently have built up assets with commercial loans. That is something that has not of course been considered in the context of that clause. If the Commonwealth does want to seize assets—and I know in particular of one asset in one community, which is a community store—they may also find that they are picking up a fairly significant loan from a commercial source. There are many CDEP organisations that have built up significant asset bases which have been partially funded by the Commonwealth and, in my view, as those communities are off and running highly successful commercial and service providing enterprises they should be allowed to maintain those assets. But that obviously would have to go hand in glove with also maintaining CDEP, because there is no point, for instance, in having a community store if you do not have resources to employ staff to work in the store.

Senator CROSSIN —We note that there are about 7,000 people in the Territory on CDEP and about 2½ thousand real jobs—if you do not think that CDEP is a real job, and that is probably not an argument for today. Have you had a look at what you think might happen or what the consequences will be for the other 4½ thousand Indigenous people?

Prof. Altman —I have done some work on the maths and I should say that it is hard to get information from DEWR on the exact number of CDEP participants in the Northern Territory. Certainly the latest official source at hand is 7½ thousand. I should also say that the number of so-called ‘proper jobs’ that are deemed to be available are mainly based on a survey that was done by the Local Government Association of the Northern Territory in August last year that identified 1,600 jobs held by non-Indigenous people in the 73 prescribed communities—although LGANT did not visit all those communities.

I think that you can say a number of things here. The first thing I would say is that the day you abolish CDEP you are probably pushing the unemployment rate for Indigenous people in the Northern Territory from 15 per cent to over 50 per cent. CDEP workers are employed and they will go onto Work for the Dole or into STEP programs and, hence, move out of employment either into training or into Work for the Dole, which is classified as being unemployed.

I think that the figure of 1,600 to 2,000 that may eventually get proper work will take years to achieve. I think that it is quite disingenuous to suggest that overnight 1,600 to 2,000 people will move into proper jobs. I have made the point in other material I have written that I am very happy to make available that the day you do that you are turning these 73 communities into all-Indigenous communities and that seems to me to be very counter to some of the other measures which are about opening up these communities both to non-Indigenous Australia but also to the free market.

Senator SIEWERT —I know you have done some work, because I have read it in the past, on the link between so-called ‘private ownership’ of houses, economic development and private ownership of land which shows that that is a misnomer. Is my understanding of that work correct?

Prof. Altman —Your understanding of that work is correct insofar as what will be offered in Indigenous communities either under section 19 or section 19A—99-year leases—or now under compulsory leasehold will not be anything like private ownership of housing. It will be a second- or third-tier form of individual subleasing of housing. So it is certainly nothing along the lines of what you and I might envisage as being freehold. I would like to emphasise that in the Northern Territory you do have freehold title in places like Darwin and Alice Springs, unlike in the ACT, where a 99-year lease is the equivalent of freehold. So you do understand me correctly. But, having said that, it is very unclear at the moment what will happen with compulsory five-year leases because the indications are that all the assets on those leases and any new assets will be owned by the Commonwealth, not by the people who live in those houses. I think what is being delivered is actually more like public housing than private housing.

Senator SIEWERT —Is there any experience from overseas where this has been shown to work for indigenous communities overseas—where communal title has essentially been taken away and they have gone to leasehold or private ownership? Are there examples overseas where this has worked to provide economic benefits?

Prof. Altman —There are certainly examples internationally where one has moved from—I am not comfortable with the term ‘communal title’; I think we might be better to talk about group ownership.

Senator SIEWERT —Okay.

Prof. Altman —I think there are certainly cases where you can move from group ownership to private ownership of houses or businesses and have success. But, equally, there are cases where it has not made an impact. I do not think there is any conclusive evidence from international research that individual titling is the key to a success, either in home ownership or in economic development. I think that a crucial issue is competitive advantage, but there are other issues as well, like access to capital, people being job ready, and people having opportunity. I think we have already heard today—certainly in some of the comments that Marion Scrymgour made—that there has been some enormous success in the Northern Territory through community enterprise, through the arts industry, where you have community based organisations that are owned and run by artists which are publicly funded but nevertheless provide enormous employment, economic and income-earning opportunities to literally thousands of artists. Many of those artists, coincidentally, also receive some income support, often from the CDEP scheme. But what will happen in terms of their arts practice when you take those artists off CDEP and put them on Work for the Dole is a really good question.

Senator PAYNE —On your observations on the CDEP changes: I am confused. I think there is some value in trying to create an environment where there are real jobs, where people are adequately trained for those jobs and so on. That is certainly the background as I understand it and that is the minister’s intention—the government’s intention—in that regard. I do not get the feeling from you, though.

Prof. Altman —I should make it quite clear that, as CDEP has been operating, CDEP organisations have had to have key performance indicator targets to exit participants into real work—what is called ‘real work’ or ‘proper jobs’. And many Indigenous CDEP participant communities have in fact done that; that is a condition of their funding. The question, I think, is: how many people can you exit into proper work in a remote Indigenous community? I would say that the remoter and smaller the community, the less the prospects of getting full-time jobs.

The other thing I would say is that the statistical evidence we have from the National Aboriginal and Torres Strait Islander Social Survey 2002 shows that one in five CDEP workers work more than 35 hours per week. So CDEP organisations have actually been extremely successful in turning 15 hours subsidy from the state into full-time work and full-time income for one in five of their participants.

Senator PAYNE —I understand that. I suppose I am still trying to appreciate the direction you are coming from vis-a-vis the acknowledged, I think, ambitious basis of some aspects of these reforms and these initiatives, which it seems to me endeavour to open up communities to provide greater opportunities as well as matching at the same time the changes around this aspect of the policy in particular.

Prof. Altman —I think there is no problem having a diversity of ways of getting employment. There is obviously no real problem with stretching goals if they are realistic. But I do think I need to draw your attention to the fact that there are a number of Commonwealth programs, like the Indigenous Protected Areas program, that are CDEP dependent. The Department of Environment and Water Resources has declared Indigenous protected areas in the Northern Territory that cannot be run and managed without CDEP labour. While there is a new Working on Country program, that will only have 100 positions Australia wide in 2007-08. So many of those IPA and other Caring for Country projects that are funded under the Natural Heritage Trust funding regime will in fact fold if CDEP participation is cut off after 1 October this year.

Senator PAYNE —Why is it out of the question that programs such as that would be able to review the way they operate and adjust to the situation accordingly?

Prof. Altman —I do not think there is any problem there, but I do not think you have the budget allocation in 2007-08 to fund proper employment in IPAs and other programs that have historically been funded by CDEP. In some of the work I have done in costing what I have termed the normalisation phase, I have provided some estimates of what it would cost to convert 8,000 CDEP positions into proper jobs, and it is quite a significant investment that is needed. But there is nothing in the $587 million allocated this financial year that will switch CDEP positions to proper jobs.

Senator PAYNE —I understand that. I have read and heard of some of the material that you have been working on in that regard. This morning there was some discussion with departmental representatives about those funding issues. I hope they can assist us with some answers to questions on notice that make that a little clearer for us. Thanks, Professor.

Senator BARTLETT —On that issue, you have given us a copy of a piece you did towards the end of June, not long after the announcement, estimating the likely cost to be around $4 billion, at a time when we were still in the tens of millions from the government side of things. Have you had a chance, a month or so down the track, to firm that up anymore in light of any further clear information? Now we have a figure of $500-plus million for this financial year—we did have some questioning on that this morning. I have not looked at the PBS myself, but it sounds like a lot of that money is not going to the sorts of things that you costed, such as housing et cetera. I was wondering whether there is any update of the costs that you think would be required.

Prof. Altman —The only updating of that $4 billion over five years has been provided by the Northern Territory government, which has a higher estimate of the cost of meeting housing and infrastructure shortfalls. A different figure was published by the Australian Financial Review. It suggested that the figure should be $5 billion. But I am careful, in my costing of $4 billion, to emphasise that that does not include the cost of the stabilisation intervention that we are seeing at the moment. What I was looking for was for some semblance of economic equality to be developed in the four areas of health, housing, education and employment over a five-year time frame. Most of my estimates were based on official government sources—the one exception being the Oxfam-AMA costing on health shortfalls.

But I have to say also—and I am quite happy to say it here—that I wrote to Senator Minchin on two occasions, because he was highly critical of my costings, and asked him to perhaps tell me where I had gone wrong. I think he had suggested that I was in error and that I was double-counting. I have not had a response yet. All he said was that he would stick to the Prime Minister’s figure of tens of millions of dollars and not my figure of $4 billion to $5 billion over five years.

Senator BARTLETT —The other question I want to ask, given the time constraints, is to do with the permit system. You said in the documentation that was published earlier this week for Oxfam that there is no evidence that child abuse is any higher in communities where the permit system exists, as opposed to outside. That was also clearly stated by the department this morning. I suppose I am turning that question around. One of the things we have not had an opportunity to really establish is how much detail there is about the incidence of child abuse in general. We know it is there as a problem, but, in terms of quantifying it, I want to know whether there is any evidence to say anything, really. What do we know, one way or the other? There may not be any evidence to show that it is worse or better in areas without permits, but we actually do not know enough about how much there is anywhere to make any sort of comment on it. Are you able to throw any extra light on that scenario?

Prof. Altman —I will make one comment on that, because it has amazed me how little reference there has been in this debate to a publication entitled Child protection Australia 2005-06, by the Australian Institute of Health and Welfare. That was published earlier this year. I think there has been some media coverage of it. In terms of reported substantiations, sex abuse et cetera, the Northern Territory rates lower than a number of other states. Also—and I hinted at this in my presentation—this is not an issue that is limited to Indigenous Australians. I will make the point that where you see the highest rates for Indigenous Australians per thousand children, in terms of substantiations, is in places like Victoria and the Australian Capital Territory. They are obviously jurisdictions where there is no permit system.

CHAIR —Professor, thank you for your evidence today.

[3.58 pm]