Indigenous Australians continue down the same 'Sorry' path

Patrick Dodson and Ian Gill Sydney Morning Herald August 17, 2011

Australians, if they reacted at all, could be forgiven either furious exasperation or resigned disgust at news last week that the Commonwealth government spends $3.5 billion a year on indigenous programs, for which the outcomes have been "disappointing at best and appalling at worst".

Spare a thought for Aboriginal and Torres Strait Islanders, who live in what can only be described as a three-speed economy, stuck in the lowest gear on the steepest hill, fanned by ministers and bureaucrats waving money and providing, in the infamous words of former US Secretary of State Dean Rusk, "all assistance short of help".

The news is worse than the Department of Finance's Strategic Review of Indigenous Expenditure would have you believe. Research by Ecotrust Australia reveals, when you add in the expenditures by states and territories, the annual spend is more than $4.2 billion.

That's a lot of government money, but then the government spends a lot of money on all sorts of things. The difference here is that no one else spends any appreciable money on this issue. There is almost zero market capital and negligible philanthropic money that makes its way down to indigenous people.

And yet most innovation arises either in the marketplace, or thanks to donors who provide early-stage investments in ideas outside the conventions of either the market or government funding streams.

If ever there was a need for innovation, surely it is in creating reliable prosperity for Australia's indigenous people.

There is a popular clamour right now for indigenous people to "get off welfare" and get a job. The reductionist conceit of the resource magnates of this country is that, by industrialising, an entire class of people will suddenly step out of the shadow of welfare into the bright future - the Bran Nue Dae? - that other Australians are cashing in on.

The reality is a lot of indigenous Australians want to remain on their land. They want to lead productive lives caring for their country, not digging it up.

To its credit, the Commonwealth already invests in programs - such as Indigenous Protected Areas (IPAs) or Caring for Our Country - that employ indigenous rangers in recognition of their unique knowledge of the land and its cultural and natural resources.

These investments show positive returns in the very areas that otherwise seem to defy the government's best efforts.

In IPA communities, there is evidence of improved diets, more physical activity, greater economic participation, improved early childhood development and reductions in substance abuse. The Menzies School of Health Research, meanwhile, released a study earlier this year on a small community in Arnhem Land where health gains and substantial cost savings in reduced treatment of diabetes, renal disease and hypertension were attributed to "maintaining a connection between people and their country. We know it makes sense from a health point of view. This study shows it makes economic sense, too."

Yet Ecotrust Australia research reveals that the government invests minimally in the one area that delivers the most promising returns. Of that $3.5 billion, just 3.8 per cent, or $133 million goes to natural resource management. These grant programs have no guaranteed future, and IPAs are woefully under-invested in, despite being central to the government's boast about protecting biodiversity and achieving national conservation goals.

Indigenous Australians are capable of producing concrete results and positive outcomes - and not just environmental ones, but in health, education, language, housing, criminal justice, and business development. The problem is that in all these areas, the government stands in the way, paving the road to ruin with good intentions.

We support exploring a radically different option. We propose the creation of an Indigenous Impact Bond (IIB) modelled on the early development, in England, of what are called social impact bonds, or what the Obama administration has called pay-for-success bonds. At its essence, an IIB wouldn't magically make government go away but would put front-end market and philanthropic capital at risk to create positive social impacts, calling upon government to reward investors only if the social impact is achieved. A simple illustration is a pilot program in Britain by Social Finance, a company that has targeted recidivism among young offenders, whose presence in England's jails costs the state thousands of pounds a year per head.

By investing in programs aimed at a target population (youths in custody) and an outcome (lower rates of re-offending), Social Finance can deliver a measurable saving to government, which is bonded to pay investors a share of what it saves.

The critical ingredient here is finding the intermediary partners who can deliver social impacts on the ground. In Australia, it is clear they do not reside in governments and are seldom found among the contractors and consultants who gladly feed at the government trough.

It is our belief that indigenous organisations and entrepreneurs are key to delivering positive social impacts in their own communities - if only they are given the chance.

In Australia, corporates and high net worth individuals profess an eagerness to invest in better outcomes for indigenous people, but they can't find a way in - or more to the point, don't believe there is a way out.

An IIB could unlock this pent up source of capital and good will, providing a structure for attracting capital, managing risk, producing measurable outcomes while at the same time giving government an opportunity to spend our money on real results.

Indigenous Australians deserve an opportunity to help themselves. Some might want a mining job, most do not. Some welcome the ongoing industrialisation of their country, but many think there has to be a better way.

An impact bond is one way to offer more control to indigenous people over investments in their future and for them to participate in the Australian economy on their own terms.

There is risk, but the greater risk is we continue down the same, sorry path we have been on for decades.

Patrick Dodson is the chairman and Ian Gill is the chief executive of Ecotrust Australia.

Ross Gittins is on leave.

About Ecotrust
Ecotrust Australia is a new enterprising non-profit organisation that seeks to make a breakthrough contribution in the areas of conservation, social finance and community development in the Australian north.

Regional and remote Australia, with a particular emphasis on working with Aboriginal and Torres Strait Islander communities across Australia.

Ecotrust Australia's purpose is to promote Reliable Prosperity in Northern Australia. We seek to offer tools and resources to Indigenous and other community-based organisations to facilitate positive change at the intersection of cultural resilience, ecosystem conservation, economic opportunity and community vitality.