Friday, 31 August 2018

Swirling bulldust: recent developments in the remote housing fiasco

Or, if there were a sympathy in choice, War, death, or sickness did lay siege to it, Making it momentary as a sound, Swift as a shadow, short as any dream; Brief as the lightning in the collied night, That, in a spleen, unfolds both heaven and earth, And ere a man hath power to say ‘Behold!’ The jaws of darkness do devour it up: So quick bright things come to confusion.
A Midsummer Night’s Dream, Act One

On 19 June 2018, The Brisbane Times reported (link here) that
Mayors from across Australia have taken the Turnbull government to task for failing to stump up cash for housing in remote Indigenous communities.
…"Refusal to provide funding will have catastrophic impacts on the social, educational and health outcomes including increased mental health and family violence in these communities."
Mr Lacey said about 10 per cent of Palm Island residents were on the waitlist for a home. "There's overcrowding, you don't need to be Einstein to work it all out," he said.
Mr Lacey said funding provided by the Queensland and federal governments over the past decade fell short of the demands of a growing population.

On 9 August 2018 the ABC News ran a report by Felicity James: ‘Arnhem Land community awaits housing rebuild three years after Cyclone Lam destruction,’ (link here ).

On 25 August, the ABC News in WA ran a story “WA remote families left in limbo as Ministers trade insults over housing cash’ (link here). That report quoted Federal Indigenous Affairs Minster Scullion as stating:
The only thing affecting progress on reaching a deal in Western Australia is Peter Tinley’s racist approach to Aboriginal people and his willingness to play petty politics with their homes and their lives.

On 29 August in Perth Bill Shorten and Mark McGowan fronted the media in Perth (link here). The following exchange took place:
JOURNALIST: Thank you. If I could just ask do you think that Tony Abbott is the right man for the Indigenous envoy role?

SHORTEN: I think I will rely on Western Australia's Senator Pat Dodson and quote him, or requote him. He said First Australians have asked for a voice and they got Tony Abbott; a clear disappointment. 

Listen, he is clearly interested in Indigenous affairs but while he and Mr Turnbull were in power there were a lot of cuts to services. I think if he is going to be a fair dinkum envoy for Indigenous Australia go and convince Mr Morrison, who was the Treasurer who wouldn't properly fund remote housing, I think Mr Morrison and Mr Abbott, if they want a reset on treating First Australians with some degree of decency, Mr Abbott and Mr Morrison need to reverse their cuts to remote housing (emphasis added).

On 30 August, Perth Now ran a story headed ‘Remote housing feud descends to insults’ (link here).  

It is worth reading both the ABC and Perth News reports in full.

So what are the facts?

The Commonwealth spent $540m over each of the past ten years in supporting the construction and upgrades of remote housing, primarily in WA, NT, SA and Queensland. This was delivered through the ten year National Partnership on Remote Indigenous Housing established in 2008, and which ended in June 2018. The Government delayed announcing its intentions in relation to the renewal of the National Partnership until December 2017, when departmental officials informed the states that the National Partnership would not be renewed, and instead, transitional bilateral funding agreements would be negotiated which would require matching state contributions.

My February 2018 Inside Story article “Tactics versus strategy in Indigenous housing (link here) lays out the extent of housing need in remote Australia, the rationale for continuing Commonwealth involvement and investment, and explores the scope for new innovative approaches to addressing the quite huge needs which exist and are getting larger.

Minister Scullion denied that the Commonwealth was walking away from remote housing, but the figures speak for themselves. In the NT, where the incoming Labor Government has already committed to a ten year billion dollar investment in remote housing before its election in 2017, the Commonwealth agreed to provide $110m over five years. In WA, the Commonwealth is offering $60m over three years. In SA and Qld, consistent with the deliberate lack of transparency from the Commonwealth, we do not know what is being offered, and if it has been finalised. But is seems highly unlikely that it exceeds the funding made available to the NT which comprises around half the remote hosing need. On this basis, the Commonwealth appears to have made cuts in excess of $250m per annum to its longstanding contribution to remote housing, savings which will rise in quantum over time. If we look forward ten years, thus comparing a renewal of NPARIH with actual funding commitments made for 2019-2018, the Governments decision appears to involve cuts of around $4bn over the ten year forward estimates.

In the light of funding cuts of this magnitude directed at the most disadvantaged citizens in the nation, the tactics of Minister Scullion in resorting to personal abuse and allegations of racism directed at his political opponents should be seen for what it is: a hypocritical attempt to divert attention from the Commonwealth’s unilateral funding cuts and to reframe the issue as just another fight between the federal government and the states over funding. The reality is that the Commonwealth took the decision to cut remote funding because they wished to minimise the apparent size of the deficit over the coming decade in their perpetual quest to portray themselves as competent economic managers. The remote housing funding was an easy target, because it is channelled through the states, there is no national peak body for indigenous housing, and Indigenous voices which do speak out are rarely taken seriously in the broader electorate. In short, the Government did it because it could.

The costs will be borne primarily by remote Indigenous citizens. Women and children will be particularly vulnerable. The impacts will include poor health, domestic violence, poor educational outcomes, mental health issues, suicide, alcohol and drug abuse, to name but a few.

In all these circumstances the preparedness of Minister Scullion to allege racism on the part of Western Australian Ministers Wyatt (links here and here) and Tinley are irredeemable.

The comments by Bill Shorten are the clearest signal yet that an incoming Federal Labor Government will reverse the LNP cuts to remote housing if they are returned to office. The arguments in favour of doing so are incontrovertible, both in terms of addressing deep disadvantage in the Australian community, but also in terms of minimising future social costs on remote citizens and economic costs on taxpayers.

Of course, there is a significant difference between calling on the Government to reverse a cut, and committing to reverse the cut if and when you are returned to the government benches.

Let’s hope that Labor understands that addressing remote housing is not just an opportunity to criticize the Government in the lead up to the next election, but will be an imperative if they are returned to Government and wish to make any inroads in reducing the increasing levels of social and economic dysfunction across remote Australia over the coming decade. The surest way to signal that they do understand this would be to make an unequivocal commitment to reversing the current Government’s cuts to remote housing in full.

Monday, 9 July 2018

Horizontal Fiscal Equalisation: a window into the Indigenous policy maelstrom

What we do determine, oft we break.
Purpose is but the slave to memory

Hamlet Act 3, scene 2.

The Productivity Commission report on horizontal fiscal equalisation (HFE) was released last week, along with a Government announcement that it would not adopt the Commission’s recommended approach and instead would be revising the HFE system to establish a floor of 70 and then 75 cents based on the injection of a billion dollars a year of extra funds to ensure that no jurisdiction would be worse off. While the Commission’s report was largely an exercise in devising a technical solution to the issues raised in its terms of reference, the Government’s decision is largely driven by political considerations. There has been plenty of media analysis, but this piece in The Conversation by John Freebairn is a good and succinct summary (link here).

In relation to Indigenous issues, the Commission’s draft report made brief reference to the issue in its last chapter, and recommended a process be initiated by COAG to allocate clearer responsibilities across the federal government and the states and territories, and in this context, to make clarity of responsibilities in relation to Indigenous policies a priority.

In response, I made a brief submission (link here) and included it in a November 2017 blog post (link here). I raised two broad issues: first that the nature of Indigenous disadvantage differed across the country and thus needed to be taken into account by the Commission in addressing HFE, and second, that there were structural impediments driving Indigenous disadvantage which meant that fiscal equalisation was not in itself sufficient to drive better outcomes for Indigenous interests. An example is the fact that there is no link between the adjustments made to address Indigeneity within each jurisdiction and the spending outcomes of each jurisdiction; a matter also raised by the Yothu Yindi submission to the Inquiry (link here). A second, and in my view more significant structural impediment is that while HFE addresses recurrent fiscal capacities between jurisdictions, there is a significant capital / infrastructure deficit in remote regions which is not addressed by HFE and which reinforces Indigenous disadvantage. To take just one simple example, many NGOs and Indigenous organisations do not have access to staff housing and this is the major constraint on their ability to deliver effective services.

In its Final Report (link here) the Commission made virtually no change to its draft report recommendations on Indigenous matters (refer pages 275-278 for the relevant discussion). In a discussion at the end of section 6.1 (pages 165-166), the Commission appears to argue that there is inadequate accountability on jurisdictions at present, that greater accountability is required and it makes a number of suggestions in section 6.5, but concludes that ultimately greater accountability will require more fundamental reform of federal financial relations.

Section 9.3 of the Commission’s Final Report is titled ‘Broader reforms to federal financial relations’, and has headings such as ‘A complex policy environment’ and ‘A web of Commonwealth transfers to the states’ reinforcing the general theme that jurisdictional accountability for the delivery of services is confused and blurred (to use terms which appear in the report). The Commission goes on to discuss a number of options which have been advanced by various players (such as replacing the indigeneity disability factor in the HFE process with specific purpose payments to the states), but ultimately falls back on the proposition that greater clarity of responsibilities between the Commonwealth and the states is required within a context of broader reform. In its last paragraph, the Commission concludes:

Reforming HFE in isolation will only go a small way to improving federal financial relations. Without addressing this broader environment, the system is likely to come under further strain. The sustainability of the GST pool as a source of funding for States will likely come under increasing pressure, due to Australia’s changing consumption patterns. Like many inquiry participants, the Commission considers there is a need to revisit the broader operating environment in which HFE takes place, and to renew efforts to reform federal financial relations in the broad.

It goes on to recommend:

Improvements to the HFE system can only go so far. The Commonwealth and State Governments, through the Council on Federal Financial Relations and recently formed Board of Treasurers, should work towards meaningful reform to federal financial relations.

 In the first instance, the process should:

· assess how Commonwealth payments to the States — both general revenue assistance and payments for specific purposes — interact with each other, given the significant reforms to payments for specific purposes that have occurred in recent years

 · develop a better-delineated division of responsibilities between the States and the Commonwealth and establish clear lines and forms of accountability. Policies to address Indigenous disadvantage should be a priority. (emphasis added)

Following this, options to address the vertical fiscal imbalance should be considered and advanced.

While the Commission’s analysis has some merit, it reflects the overwhelming bias towards incrementalism not only in day to day public policymaking, but also in the approach to ‘reform’ in public policymaking circles. Moreover, there is real doubt as to whether it is possible in today’s complex world to entirely differential the policy responsibilities of sovereign jurisdictions. While policy incrementalism has much to recommend it in terms of social and economic certainty and order, it becomes an almost insurmountable hurdle for interests who are not beneficiaries of the status quo such as Indigenous citizens.

One of the points that John Freebairn makes in his analysis mentioned above is that the losers of the GST compromise adopted by the Government are unknown, and as he puts it, are ‘left to the imagination’. One obvious set of losers are interests whose existing programs are being cut, and past readers of this blog will be unsurprised when I note the likely cuts of up to $300m per annum in remote housing by the Commonwealth provides an indication of at least one set of losers from the GST deal.

Saul Eslake in a 2017 Conversation article (link here) made a persuasive case for the proposition that the HFE system was not broken insofar as Western Australia was concerned. The key paragraphs in Eslake’s analysis are these:

Despite the sharp decline in its share of GST revenues, the WA government’s total revenue per head of population in 2015-16 was just A$67 (or 0.7%) below the average for all states and territories. By contrast, by 2015-16 the WA government was spending over A$1,000 (or 10.5%) more per head of population on “operating expenses”, than the average of all states and territories.
WA’s present fiscal woes are the result not of a flawed system of distributing revenue from the GST among the states and territories, but rather of its inability to control its own spending.

The Commission itself pointed to this issue in its report. See in particular pages 137-140, and in particular the Box 4.2 on page 139 which makes clear that the Barnett state Government ignored the advice of its Treasury and made an assumption at a political level that the HFE system would be changed in the future to justify continued spending beyond its means. The key paragraphs are these:

Consistent with this notion, the then WA Treasurer (Porter 2011, p. 3) stated in his 2011-12 budget speech:

What we reasonably anticipate is that in 2013-14 the CGC will have brought in a new GST system. We expect it will produce a floor of about 75 per cent of our population share of the GST. Therefore we expect extra revenue of $1.8 billion in 2013-14 and $2.5 billion in 2014-15. These amounts will allow for reduced borrowings and will be used to progressively reduce existing debt to less than $18 billion while maintaining strong infrastructure investment. … If that change does not occur in that year, the State Government will then have no choice but to wind back infrastructure investment to decrease debt.

In the 2011-12 budget papers, the WA Government’s spending over the forward estimates (2011a, p. 33) did not explicitly include additional GST revenue from the anticipated relativity floor. However, the asset investment program in the key budget aggregates (p. 6) is identical to that shown in the assumed budget aggregates if a floor of 0.75 were introduced (p. 64). This suggests the State was on a higher course of spending than would be the case if there was no expectation of a floor. A recent inquiry into WA Government expenditure (Langoulant 2018) reached a similar conclusion (p. 54), stating that ‘if the warnings Treasury provided that the policy settings of the day would cause major difficulties in the future had been heeded, it is highly likely that the State’s current budget and debt positions would have been mitigated, and in a material manner’ (p. 55).

So in 2011, the then West Australian Treasurer (and current federal Attorney General), Christian Porter ignored Treasury advice and blew the WA budget. Interestingly, his justification was that there was a ‘reasonable anticipation’ of a ‘fix’ effectively identical to the arrangements announced by Treasurer Morrison (ie a 75 cents floor on GST redistributions). Ironically, it was the huge fiscal disaster visited upon WA by those decisions which ultimately led to Porter’s anticipated changes occurring.

My point in traversing this depressing ground in a blog about Indigenous policy is to make two points:

First, the Barnett Government’s spending spree was not directed towards structural reform, and in particular was not directed to Indigenous structural reform. A cursory perusal of the Langoulant Review (link here) makes plain that instead, it was directed to significantly increased recurrent expenses in the roads, health and education portfolios, and huge increases in borrowings were used to fund a series of capital projects (refer pages 152 to 164). While Indigenous citizens would have benefitted to an extent from increased mainstream services, remote communities saw little of the ‘boom dividend’, and there was no explicit effort to ‘lift’ the state’s most disadvantaged citizens to a higher level.

Second, the West Australian budget experience points to the ubiquity of political motivations in driving policy processes, and the toxic combination of political hubris, absence of countervailing accountability and the absence of transparency in producing policy outcomes which are not in the public interest.

In other words, Indigenous interests (and particularly remote communities) failed to benefit during the WA boom when the state was in the best position to drive structural reforms. Now the Commonwealth Government is bailing out West Australia for its mismanagement and once again Indigenous interests are positioned at the margin of the debate, with little prospect of structural reform emerging, and are amongst the most prominent losers in terms of the funds found to ensure no state is worse off.

If, as the Commission suggests, reform of HFE on its own will not be adequate in driving greater jurisdictional accountability and thus addressing Indigenous exclusion in public policy outcomes, and fundamental reform of federal financial relation is required, the question becomes, what would effective reform look like?

 I have two practical suggestions:

First, the current Thodey Review of the Australian Public Service should take a close look at the Western Australian experience as laid out in the Langoulant and PC Inquiries, and in particular explore options to introduce greater transparency into the policymaking process generally, but particularly in relation to Indigenous affairs.

The Langoulant review identified (among others) the following systemic issues in play in WA between 2008 and 2017:

• temporarily high recurrent revenue growth was used to pay for permanent expenditure promises, leaving behind structural budget deficits;
 • decision makers lacked the capacity to act upon signs of unsustainable growth in net debt;
• the quality of financial information supporting Cabinet Submissions deteriorated;
• capability gaps emerged in the public sector especially around project planning and evaluation; and
• the Government defaulted to confidentiality around major projects rather than transparency (page 8).

Fifty years ago, Bill Stanner in the 1968 Boyer Lectures, After the Dreaming, referred to a ‘history of indifference’ in attitudes to Aborigines. In other lectures, he referred to a ‘cult of forgetfulness’ and a ‘cult of disremembering’ in relation to the nation’s history. Australia continues to shift Indigenous issues to the margins, and to conveniently overlook our incapacity to address deep disadvantage. The lack of a culture of transparency plays a large and under-appreciated role in allowing such indifference and forgetfulness to flourish, to the point where it becomes impossible to mount a persuasive case in favour of the fundamental structural reforms which would be in the public interest.

Second, there is a pressing need to develop a detailed reform agenda focussed on structural changes to the broader Australian political and policy systems which will reverse the embedded nature of Indigenous disadvantage. In this context, it may be time for a comprehensive review of the structural underpinnings of Indigenous disadvantage. While increasingly Indigenous leaders are pointing to the need for structural change, the complexity of the Australian public policy realm is such that there is a need for rigorous analysis and understanding of how the nation might proceed if reform is to be effective. While a parliamentary inquiry might be considered, or perhaps the Productivity Commission, the best model might be a Commission of Inquiry along the lines of the Coombs Royal Commission into Australian Government Administration which was established by the Whitlam Government with four or five Commissioners and expansive terms of reference.

It is past time the nation understood and ‘remembered’ that Indigenous disadvantage is a product of the complex array of mainstream institutional and policy structures which either explicitly or implicitly drove dispossession and extermination, then assimilation, later child removals, welfare dependence, and the inter-generational transfer of disadvantage into the present where we have adopted the rhetoric of closing the gap, but as a nation have failed to design and resource the policy to ensure it makes a difference.

Monday, 2 July 2018

Remote Housing Watershed: rampant political chicanery.

The ten year National Partnership on Remote Indigenous Housing, renamed the National Partnership on Remote Housing has completed its ten year course, and expired on 30 June. I won’t present a barrage of statistics, as my previous posts have done all that (link here and here) but will merely assert that the National Partnership over its ten year life made a substantial difference to the levels of overcrowding, community infrastructure and quality of housing in scores of remote communities and town camps on the edges of major towns across remote Australia.

The Commonwealth has failed to renew the ongoing financial investment directed at improving social housing for the most disadvantaged citizens in the nation. Instead, it decided to cut a deal with the NT Government where it allocated $110m per annum for five years to match the NT Government’s earlier decision to commit a billion dollars over ten years. The Minister has apparently been in negotiations with South Australia, Queensland and the Western Australian Government, but so far no agreements have been announced.

The WA Government has recently mounted a public campaign directed at gaining the Prime Minister’s attention (link here) but the likelihood of a major breakthrough appears low.

The Commonwealth has successfully framed this issue as a fight between the Commonwealth and the States. In its most recent manifestation, Minister Scullion’s reaction has again been to play the man and not the ball (link here) and provide the Western Australian media with a media release directed squarely at WA Treasurer and Minister for Aboriginal Affairs Ben Wyatt and titled ‘Little Wyatt lies on remote Indigenous housing’. Dated 29 June 2018, as of today (2 July, 3.30 pm) it has yet to appear on Minister Scullion’s media release web site. I cannot remember seeing a ministerial media release which included such personal and vitriolic abuse, which literally attempted to belittle the Western Australian Minister and merely succeeded in squandering the little credibility Minister Scullion retains. As a public service, I have transcribed it in full in the previous post (link here).

To his credit, Minister Wyatt has gone public and called out the Minister on his bullying behaviour. See the Guardian article on the issue by Calla Wahlquist (link here).

But turning to Minister Scullion’s media release, it is a long time since I have seen a media release so redolent of flagrant hypocrisy, disingenuousness, and outright policy chicanery. Of course we haven’t seen the relevant correspondence, but according to the West Australians, the Commonwealth ‘offer’ is for $60.9m over three years, down from the $360m it would have received from the Commonwealth had NPARIH been rolled over. Minister Scullion states:

 As I have always said, the Commonwealth remains committed to future investment in remote Indigenous housing,

The pathetic combination of a ‘commitment’ to some unspecified level of future investment is breathtaking in its hypocrisy. Here is a minister who has allowed a $550m per annum ten year program to lapse and replaced it with a $110m per annum commitment for five years in the NT, and ‘ongoing negotiations’ with three other jurisdictions claiming the moral high ground. His rhetoric is disgraceful. As I have previously noted, given that the NT represents about half the outstanding remote housing need, the Commonwealth appears unlikely to offer more than $220m per annum in total, and not for ten years. Such an outcome would represent a $300m per annum cut to the Commonwealth’s remote housing funding.

Minister Scullion’s media release goes on to cite as evidence of Commonwealth effort vis a vis State efforts, the Commonwealth investments over ten years which were committed and allocated by the Rudd / Macklin administration, and which he spent years attacking in Senate Estimates. As I have stated before, the area of social housing is a joint federal/state responsibility, but it is the Commonwealth which is moving to abrogate its responsibility. The comparisons made in the last two paragraphs of Minister Scullion’s media release, where he accuses the WA Government of racism for not using mainstream funds from the Commonwealth and thus not pulling its weight in remote communities ignores two salient facts. The first and most obvious is that the state allocated mainstream funds to urban and regional social housing which itself includes higher than pro rata levels of Indigenous tenants. In a situation where a remote housing program existed, it was not inappropriate for the states to allocate mainstream funding to urban and regional centres.

Second, the largest housing assistance expenditure program in the nation is Rent Assistance. It is administered by the Commonwealth and totals $4.4bn per annum. It assists low income tenants in private rentals and community housing. In remote Australia, this program has very little traction for the simple reason that there is a very limited private rental housing market. The result is that remote Indigenous citizens are effectively excluded form the Commonwealth’s largest housing assistance program. This fact in itself provides a substantive policy rationale for the continuation of the remote housing program by the Commonwealth.

Minister Scullion’s criticism of the State and its Minister is not only unwarranted and thus unfair, but applies to the Commonwealth and arguably to the Minister himself, since notwithstanding much rhetoric, he has made virtually no headway on land reform which would facilitate the expansion of a private ownership and community housing options in remote communities, and thus open up access to the Rent Assistance program. For Minister Scullion to accuse the Western Australian Government of ‘racism at its worst’ is both wrong, and deeply ironic given the actions of the Commonwealth on this issue to date.

Of course what is lacking from the Commonwealth is any considered and cogent explanation for its decisions on remote housing. It has been a rolling maul of delays, misinformation, non-information, promises, threats, and now straight out abuse. Why is it too much to ask that a Commonwealth Minister lay out in a considered and careful manner the basis for the Government’s decisions, and how they see those decisions contributing to closing the gap?

Minister Wyatt’s comments as to the ‘unsuitability’ of Minister Scullion to resolve these issues appear to be well directed. One might even go further and ask whether a person who directs accusations of racism at the WA Government while seeking to explicitly belittle an Indigenous man and political opponent is up to the job of Minister for Indigenous Affairs in the Commonwealth Government.

To sum up, I will merely set down a letter I sent to the Prime Minister earlier today:

Prime Minister
Your Government's decision to substantially cut funding for remote housing following the cessation of NPARIH /NPRH will impact the most disadvantaged citizens in the nation. It will cause ongoing social, economic and health stress for individuals, families including children, and whole communities.

What exacerbates this decision is that your Minister has deliberately set out to obfuscate, to confuse, and to blame rather than set down a set of reasoned and rational explanations for the Government's decision.

I call on you to reverse the Government's decision and reinstate a substantial ten year program to underpin the provision of social housing in remote communities.

sincerely Michael Dillon

I think that says it all. I am not holding my breath for a substantive reply.

Personal Disclosure: I worked as an adviser to Indigenous Affairs Minister Jenny Macklin between 2008 and 2011.

Lies, damned lies, and remote funding statistics

The following media release was issued in Western Australia by the Commonwealth Minister for Indigenous Affairs on 29 June 2018.  As it has not so far been placed on the Ministerial media release web site by the Minister’s Office, I have posted it here. 

The following post provides a critique of the Minister’s actions in issuing this media release.


Senator the Hon. Nigel Scullion
Minister for Indigenous Affairs

 Little Wyatt lies on remote Indigenous housing
 Friday, 29 June 2018

Ben Wyatt’s lies on remote Indigenous housing show that the McGowan Labor Government is more interested in playing politics than delivering outcomes for Aboriginal people in Western Australia.

 Ben Wyatt said on radio this week that I have stopped responding to questions from the State Government.

This is not correct. It is wrong. These are more Labor lies.  

 As I have always said, the Commonwealth remains committed to future investment in remote Indigenous housing.

 I have always been the Minister responsible and have had carriage of the remote housing negotiations on behalf of the Commonwealth.

I wrote to Minister Tinley on 24 May with an offer of Commonwealth investment and I welcomed Minister Tinley’s response on 11 June that this offer reflected our positive discussions and that he would take it to Cabinet.

 Negotiations with Minister Tinley were progressing well but unfortunately it seems Ben Wyatt has now got involved.

 A day after Ben Wyatt’s media release I received a new letter signed by Minister Tinley but clearly written by Ben Wyatt that takes a whole new approach – one in which the Western Australian Government is willing to walk away from the Commonwealth’s investment we want to provide to residents of remote communities.
 I have since responded re-stating the Commonwealth’s commitment and asking for proper discussions to commence.

There is no truth in the statement that I am not responding to the Western Australian Government.

 I am concerned Ben Wyatt is more interested in walking away from the Commonwealth investment on the table to support his push to close remote Indigenous communities.

 I will not stand by and allow Ben Wyatt to do that.

The Commonwealth is committed to providing new investments in remote Indigenous housing in Western Australia on the condition the Western Australian Government also commits funding, just as other governments have done.

 I call on Peter Tinley to re-engage with me, re-engage in good faith and directly with me, not via the media and to get a deal done so Aboriginal and Torres Strait Islander people in Western Australia can benefit from the funding that the Commonwealth has put on the table.

 Since 2008 the Commonwealth has invested $1.16 billion to build 854 houses and 1,705 refurbishments in Western Australia across 94 communities. During this same time the WA Government has invested virtually nothing.

Over the past decade, and outside of the remote Indigenous housing deal, the Commonwealth has also invested $1.502 billion to address housing and homelessness in Western Australia through Special Purpose Payments for social housing as well as through the National Partnership on Homelessness and it appears WA Labor have no intention of utilising these significant funds for their remote Indigenous citizens. This is racism at its worst.


 Media Contact: Brett Chant, 0477 744 614

Tuesday, 26 June 2018

Transparency and accountability: theory and practice

The ANAO today released a report into Primary Healthcare Grants under the Indigenous Australians’ Health Program (link here).

The report identified a range of shortcomings, more misdemeanors than major issues. I don’t propose to provide a summary or detailed analysis as the report largely speaks for itself. I particularly commend it to readers interested in Indigenous health administration issues.

Notwithstanding its critical content, I confidently predict that the various issues identified, the ANAO report will garner very little media coverage or even Senate scrutiny.

In reading the report, however, one particular issue caught my attention, and it sparked an observation which is perhaps worth noting since it opens a window on to a much larger dynamic which can operate in the APS. This dynamic is where Ministers push the boundaries, public servants don’t see a way to hold the line, and ultimately it is Departments which are exposed as not meeting appropriate accountability norms.

Amongst its various findings, the ANAO uncovered the following issue. Included in comments on the lack of value for money assessments on a billion dollar round of funding, the ANAO also noted at para 16:

The department was also unable to provide evidence it had undertaken a value for money assessment regarding the $114 million grant to the Northern Territory Government. In virtually all cases, risk assessments formed part of the assessment process.

Later in the report, the ANAO provided more information:

2015 Northern Territory government grant
3.13 The Northern Territory government had been funded under pre-IAHP grant programs for the provision of primary healthcare to Indigenous Australians, mostly through clinics in remote areas. As part of seeking Ministerial approval about the funding process under the IAHP, the department advised the Minister that it would only make a formal offer of a grant following receipt of a specific grant proposal and undertaking a value for money assessment against the ‘deliverables’ in the proposal. The Minister approved this approach in mid May 2015.

3.14 No specific departmental assessment plan or selection criteria was developed for the Northern Territory grant. The department contacted the Northern Territory Department of Health on 26 June 2015 to request that it provide a proposal. Departmental records indicate that a formal offer of a $114 million funding agreement to the Northern Territory Government was made on 6 August 2015, before the proposal was received on 15 August 2015. A funding agreement was signed in October 2015. The department was unable to supply the ANAO with evidence that it had undertaken value for money or risk assessments of the proposal.  

The ANAO, whose remit is the operations of Departments and not Ministers, leaves the impression that this was largely an oversight on the part of the Department.

My own experience working within Government tells me that Departments rarely take decisions on these sorts of matters without clear authority from Ministers. There may or may not have been evidence on the file, but it would be a severely career limiting move for a public servant to act without ministerial authority on a grant to a subsidiary jurisdiction such as the NT. Instead, what we have is a ‘mistake’ by the Department, and when caught out by the ANAO, the Department expresses contrition, agrees with the ANAO recommendations, and resolves to do better in the future.

If my supposition is correct, (and I emphasise, it is merely supposition), this would tell us a number of things.

First that the NT Government of the day was apparently so incompetent that they could not develop a timely funding proposal making the case for Commonwealth funding.

Second that there may have been formal or informal signals from ministers to ‘just get on with it’.

Third, that in such circumstances the senior bureaucrats in the Health Department at that time may have felt unable to stand up to the Minister. The provision of frank and fearless advice seems increasingly rare in the highly politicised (with a small p) world of public policy administration in Australia, and this may well have been another instance.

Fourth, that there may have been electoral considerations in play as the timing of the decision to grant the funds to the NT was in the year before an NT election. The then CLP Government, headed by Chief Minister Adam Giles, was closely aligned with the Nationals. The Federal Health Minister at the time was Peter Dutton; the Assistant Health Minister was Nationals Senator Fiona Nash.

Fifth, that if the Senate Estimates Committees are doing their job, we could expect that there would be direct questions at the next hearings directed to determining whether there was ministerial involvement in the Department’s decision to prematurely offer the funds to the NT Government. And if not, what action was taken to counsel the officers involved in making the premature offer without a value for money assessment.

To sum up, what we appear to have with this audit is a good degree of transparency, courtesy of the efforts of the ANAO, but limited or non-existent accountability. There was merit in the traditional Westminster notion that Ministers are responsible for the actions of their Departments. Ever since that notion lost effective traction, accountability standards within Government have gone downhill. And the voting public and taxpayers are the losers. In theory we have accountability, in practice we don’t.

Friday, 22 June 2018

Addendum to previous post on financial exclusion

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has released a further Background Paper titled ‘Aboriginal and Torres Strait Islander consumers of financial products’ (link here).

The Background Paper provides a useful but basic overview of the available data on Indigenous access and use of financial products. The Paper emphasises that data on this topic is limited as most providers of financial services do not collect data on the Indigenous status of their customers.

The Paper provides, in section 5, an account of policy reforms since 2010 to address financial exclusion of Indigenous people. I don’t propose to undertake a detailed critique or commentary, but suffice to say the information provided is rather thin gruel. Closing the Gap would improve financial inclusion, but the gap is not closing. Indigenous Business Australia is an important statutory entity, but its impact on financial inclusion is rather diffuse. The other issues mentioned are all positive, but the depth and breadth of their impact is likely to be minimal in my view, although I hasten to add that no-one knows for sure, because none of these initiatives have been reviewed or evaluated to assess their impact on Indigenous financial inclusion.

Notwithstanding the negative tone of the comments above, they are not directed to criticising the Royal Commission. Indeed, the Commission is to be commended for identifying the issue and seeking to document what is happening in relation to Indigenous use of financial products and services.

However, nothing in this Paper leads me to revise my overarching observations in the previous post.

One further idea worth considering would be for the Government to initiate a Parliamentary Inquiry into financial exclusion amongst Indigenous citizens. This in turn might lead to further academic research and a higher profile amongst both public and private sector agencies for these issues.

Tuesday, 19 June 2018

Indigenous financial exclusion and the Banking Royal Commission

‘He that dies pays all debts’
Tempest, Act 3, scene 2

It is a while since I wrote anything on financial literacy (link here and here)

Last week the Banking Royal Commission, or to give it its full name, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (link here) published a Background Paper titled ‘Some Features of Financial Services in Regional and Remote Communities’ (link here).

This was a welcome development and at first blush suggests that the Commission is being proactive in seeking to identify areas of potential concern. The focus of the paper is on the access to financial services of the 6.9m people (or 28 percent of the Australian population) who reside in regional or remote locations. The paper provides a good overview of the issues involved, including the footprint of and interactions with financial services, and the extent and consequences of financial exclusion in regional and remote Australia.

Necessarily in a brief overview, the paper is written at a high level, and makes few references to issues around Indigenous access to financial services. There is a passing acknowledgment that Indigenous citizens are overrepresented in the severely or fully financially excluded group (page 14). There is a brief discussion about limited ATM access and high fees and transaction costs, which while it doesn’t mention Indigenous citizens in the text, relies for its source on a Treasury report from 2011 which examined Indigenous ATM issues (page 19; link here). There is mention of the links between financial exclusion and high cost lenders, but again without mentioning the particular issues associated with remote communities.

The experience in the APY Lands in this regard has had publicity in recent years (link here and here), but it is a widespread and longstanding issue across Indigenous Australia. The Commission paper references a 2003 paper by Siobhan McDonnell (link here) which provides a more academic insight into the issues facing remote Indigenous communities, and references a number of other useful publications and reports from the early 2000s including by my co-collaborator Neil Westbury.

The Commission’s paper prompts a number of observations.

First, the financial literacy issues facing Indigenous Australians and the impact of financial exclusion appears to have gone off the policy agenda in recent years. I haven’t conducted a comprehensive search of the literature recently, but my intuition is that the past ten years have seen a loss of focus on these issues. So for example, a look at the Department of Prime Minster and Cabinet (PMC) website finds no specific mention of financial literacy under its list of current initiatives, and within the focus area of economic development and the most recent Closing the Gap report no focus on financial literacy either.

Of course, there are exceptions; see this 2016 article by Marcia Langton and Josephine Cashman (link here) calling for the Community Development Program to be oriented much more explicitly to financial literacy. Their proposal does not appear to have been taken up by the Government in any wholehearted way.

Second, the Commission’s paper is welcome in focussing attention on financial literacy issues in regional and remote areas, but its focus on a ‘mainstream’ as opposed to an Indigenous–specific lens raises the prospect that the Commission itself is potentially vulnerable to reinforcing Indigenous financial exclusion.

Third, a search of the Commission’s website using the search term indigenous throws up scores of passing references, but very little that is substantive. The most salient reference was to the Australian Bankers’ Association commissioned review of their Code of Banking Practice by Phil Khoury (the Khoury Review). In a chapter on customers with special needs, Mr Khoury recommends that clause 8 of the Code should be rewritten to remove a series of heavy qualifications, to expand the obligation on banks framed by the Principle of financial inclusion, and to apply to all Indigenous Australians and not just those in remote and regional Australia. The Australian Banking Association has a revised draft Code on its website (link here and here) which appears to have taken into account the Khoury Review recommendations (refer to Chapter 13 of the revised Code). Of course, the Code is only the first step, and it depends entirely on the commitment of banks to implement it for its efficacy. There is thus a case for ongoing monitoring of bank actions in relation to their Indigenous customers.

Fourth, and flowing on from the last point, there is clearly a need for a more high profile and active advocacy peak body for the Indigenous financial literacy sector. This could be the National Congress or some other body. It is clearly a gap which needs to be closed!

Fifth, by definition, those excluded from the financial services sector will not be adversely affected by sins of commission (to use a term from my third grade catechism), but rather will be subject to sins of omission. A question for the Indigenous interests and the Royal Commission is how to ensure that sins of omission come onto the Royal Commission’s agenda. One obvious solution would be if affected individuals and organisations which service them were to make submissions. While over 6000 submissions have already been made to the Royal Commission, its website has not published them and accordingly, it is not clear whether there are any Indigenous related submissions. My intuition tells me that it is likely there have been very few. Perhaps the Prime Minister’s Indigenous Advisory Council might consider developing a detailed and comprehensive submission to the Royal Commission.

Finally, there appears to be strong case for a renewed academic focus on Indigenous financial literacy and financial exclusion. Over the past decade, there has been a huge change in digital access and technology, which potentially is a game changer, and cries out for detailed assessment. In particular, there do not appear to be many ‘on the ground’ analyses of the impacts of financial exclusion on Indigenous citizens, their families and communities.

Hopefully the nation’s policymakers will refocus on the issue of Indigenous financial exclusion in the near and medium term. For as Keynes said in his Tract on Monetary Reform: ‘in the long run we are all dead’.

Declaration of Interest: in 2007, along with Neil Westbury, I undertook a consultancy for the NAB focussed on options for improving NAB’s services for Indigenous Australians.