Thursday, 23 March 2017

Policy issues arising from communal and inalienable Indigenous land tenure.



Following my previous post, I had a number of after-thoughts and reflections along the lines that perhaps I had not dealt with the issue as comprehensively as I might have. In particular, I worried that some readers might have gained the impression that I was giving precedence to cultural over economic aspirations of Indigenous land holders. To the contrary, my view is that both are legitimate aspirations deserving of equal support from policymakers. This post is an attempt to rectify that omission, again as far as possible in non-technical language.

But first an update on the Native Title Amendment (Indigenous Land Use Agreements) Bill. The Senate Legal and Constitutional Affairs Legislation Committee has now issued its final report: link here. As predicted in my previous post, the Committee has recommended the Bill be passed, with Labor and the Greens critical of the rushed introduction of the Bill and limited consultation. Labor supports the Bill whereas the Greens oppose it and issued a minority report setting out their reasons.

Stakeholder responses have been muted and largely positive. The Minerals Council and related bodies in Queensland and Western Australia issued a media release welcoming the ‘considered report’: link here. An Aboriginal group involved in opposing the Adani Coal mine issued a media release critical of Labor for supporting the Bill: link here. The National Native Title Council, the Indigenous peak body on native title issues have remained silent, with no media release on their website (they supported the Bill).

The Government will consider a number of minor adjustments proposed by the Committee and may make amendments. The Bill will likely pass the Senate with Labor support and thus amend the Native Title Act once the House of Representatives reconsiders any Government amendments.

As argued in my previous post (and in my own submission to the Committee: link here) I am concerned that the proposals in the Bill open a pathway to the undermining of communal decisions over land management, and thus to the very nature of communal title itself.

I turn now to the issues of inalienability and communal title. The High Court in Mabo acknowledged that native title continues to exist in Australia as part of our common law, and that the rights involved were not able to be bought and sold (that is it is inalienable) and were held by all members of the relevant land owning group according to Indigenous tradition (that is it is a communal property right).

My previous post made an argument in favour of respecting the diversity of Indigenous approaches to managing their country, and against imposing arbitrary decision rules based on western notions of fairness (such as majority voting) in relation to management of Indigenous land. In particular, I was concerned that changes to decision rules (such as have been proposed by the Government in the current Native Title Amendment Bill) might have the effect of creating a opportunities for undermining the communal nature of native title.

I didn’t make the argument, but given the capacity of claimant groups to agree to the extinguishment of native title in return for other benefits, one might argue that a similar opportunity to undermine inalienability might also be created. Certainly, in the context of the Native Title Amendment Bill discussed above, the Committee discussed and appeared to accept that this is a real issue when it stated at paragraph 2.74:
Moreover, the Commonwealth should examine the proposals to amend the Act, so that where ILUAs involve particularly significant consequences for native title holders (such as the surrender of native title rights), then the minority viewpoint is given due consideration, perhaps through a higher threshold for decision-making.
Unfortunately, this sentiment was not included in the Committee’s recommendation.

The arguments against communal and inalienable title have a long history in conservative circles, and essentially boil down to concerns that they impact adversely on economic incentives, and thus inhibit economic development; that communal title is akin to socialism, and inhibits individual enterprise, and that inalienable title is not able to be used to secure debt finance (as a bank cannot step in and sell the land involved where a borrower defaults on a loan, and thus will not lend in the first place) and that this too is an inhibition against economic enterprise and thus economic development. For those interested in considering and assessing these arguments (amongst others), a good place to start is with Helen Hughes book Lands of Shame, published by the Centre for Independent Studies in 2007: link here.

Interestingly, a more progressive analyst, barrister David Yarrow, has also made an argument against the notion of inalienable native title from a perspective which highlights the alleged inequality and disadvantage inherent in the constraint of inalienability; refer to his article ‘The inalienability of native title in Australia’ in Brennan et al ‘Native title from Mabo to Akiba’ published by the Federation Press in 2015: link here.

My own view (contra Hughes and Yarrow) is that while there is logical merit to these arguments, they ignore the issue of respect for Indigenous cultural values and the core elements of Indigenous land ownership.

Moreover, there is a policy solution based on the use of long term leases which both protects the core ontological and cosmological integrity of Indigenous notions of land and ‘’country’ and rebalances the opportunities for economic development. Properly designed, such mechanisms protect the underlying title while allowing individual or corporate enterprises and commercial or residential developments to proceed with security of tenure and a capacity for lenders to step in and repossess if necessary.

Clearly, under the various statutory land rights models in place, there needs to be specific provision for such arrangements. The NT land rights legislation has always had provision for leases (section 19) and since 2006 has had provisions related to so-called ‘township leases’ (section 19A).

The Native Title Act has general agreement related provisions, but no specific provision for native title holders to issue leases over determined native title. It is arguable that native title holders with exclusive possession have the capacity now to issue leases over their land. Nevertheless, the recent Northern Australian Development White Paper did include the idea of making provision for leases (or what they refer to as ‘transferable interests’) on native title tenure as part of its long term policy agenda; link here: refer to pp 18 to 26..

There are at least four further constraints on the leasehold policy ‘solution’ as a driver of economic development; but these constraints also apply, to a greater or lesser extent, to the conservatives’ preferred model of freehold tenure.

The first is that the design of the lease mechanism is crucial; in particular, transaction costs can easily outweigh the benefits which might be expected to flow from a particular lease. The second is that the existence of other legislative or technical constraints unrelated to tenure can often inhibit the operation of economic incentives in remote contexts. One example in the NT is the planning laws which require subdivisions (funded by developers) to be in place for leases in excess of 12 years. A third constraint is that there is a clear policy relevant distinction to be drawn between appropriate rangeland tenure and that necessary within communities or townships. Communal and inalienable tenures are more compatible with rangeland tenure options than in townships. And finally, the financial costs to government to move from current native title tenures to freehold tenures, given the just terms provisions in the Australian constitution, are enormous.


The bottom line is that economic development in remote contexts is much more than changing the characteristics of land tenure, and indeed, the other factors at play (and I haven’t mentioned the tyranny of distance; or poor transport and communications infrastructure; or ineffective and patchy government service provision; or demographic factors) are arguably of much greater significance in constraining economic outcomes than tenure.

In conclusion, there are sound pragmatic and philosophical reasons for supporting the existence of inalienable and communal forms of Indigenous tenure. They align with Indigenous cultural traditions and precepts, and in any case would be enormously expensive to remove.

Nevertheless, Indigenous groups also have economic aspirations, and communal and inalienable tenures are not optimal in underpinning these aspirations. Accordingly, policymakers should seek to facilitate mechanisms which allow Indigenous landowners to freely decide to establish subsidiary forms of tenure which are long term, potentially tradable, and involve low transaction costs. These mechanisms should not however pose a threat to the underlying Indigenous tenure.


And finally, policymakers and others should not fall into the trap of suggesting that Indigenous tenure is the only constraint to economic development in the Indigenous policy domain.