Pious Action: the Closing the Gap Refresh

               With devotion’s visage

And pious action we do sugar o’er

The devil himself.

Hamlet Act 3, Scene 1

The Government has launched a public consultation process related to the projected refresh of the Closing the Gap targets adopted by COAG in 2008. A new web site (link here) provides access to relevant background resource materials, and invites submissions which are due by 31 March 2018.

The webpage provides access to a Discussion Paper (link here) and outlines a proposed framework built around the notion of ‘prosperity’ which identifies four components: economic, individual, community, environment (link here). This framework is implicitly contrasted with the existing framework which is allegedly deficit based, and thus fails to acknowledge adequately the success and achievements of First Australians.

The current targets were always designed to be milestones along a longer pathway:  the mortality target is aimed at 2031, and the education and employment targets are aimed at halving, not entirely closing, the gap in those particular metrics. The Closing the Gap targets thus implicitly recognised that achieving structural equality between Indigenous and non-Indigenous Australians would be a long term process.

Notwithstanding the attempt to make the targets realistic and long term, Australian governments have been unable to meet the targets originally set. The Discussion Paper admits that of the seven high level targets, only one is on track.

The adoption and utilisation of targets as a policy tool is not entirely straightforward. By definition it focusses attention on a select number of measureable criteria. It runs the risk that governments will focus on these to the exclusion of other important issues. And to the extent that the targets are poorly specified it can allow governments to claim success where it is not warranted, or lead to resource misallocations which might not otherwise occur.

On the other hand, the case for targets is that it creates a specific focus on issues which are for one reason or another considered to be important and deserving of explicit attention or which might otherwise be neglected. Targets can assist governments to sustain policy attention on issues beyond the normal electoral and policy attention spans determined by legislated electoral terms, and/or the tenure of particular ministers or governments. This has been particularly the case with the Closing the Gap process as the requirement for the Prime Minister to publish a progress report at the start of each Parliamentary year has meant that the high level issue of continuing Indigenous disadvantage has received significant attention above and beyond what would have occurred without the targets. The symbolic importance of this Prime Ministerial involvement has been particularly significant.

The Closing the Gap process has always had its critics, with some commentators arguing that it was effectively based on assimilationist assumptions that all Indigenous citizens aspired to be like most other Australians. One can argue that such assumptions underpin much government policy in the Indigenous affairs domain. In my view, an alternative interpretation is that driving for longer Indigenous lifespans, improved health, educational and employment outcomes is fundamentally ‘choice enhancing’ policy. Longer lifespans, better education, improved health, and employment all enhance Indigenous choices. The radical critique of Closing the Gap as inherently assimilationist is in my view difficult to sustain.

However a second critique, with much more force, is that the Closing the Gap framework suffers from a serious flaw, namely that there is no explicit program logic which links the design and delivery of specific program interventions to particular targets. Instead, the Closing the Gap targets are unattached to particular program activities, and it was always unclear which levels of government were responsible for progress against particular targets. That said, governments are able to make informed decisions when considering particular programs and their funding allocations linked to the annual progress on particular targets. Thus education initiatives aimed at improving outcomes are no doubt informed by the metrics associated with the relevant Closing the Gap framework, and similarly for some other targets. But to maximise the effectiveness of targets, something more than a loose connection between programs and outcomes is required.

There is thus clearly a case for strengthening the effectiveness of the current Closing the Gap framework. Unfortunately, the current refresh proposals appear designed to weaken the framework, not strengthen it.

Minister Scullion in his media release (link here) announcing the refresh discussion paper merely asserts that a refreshed process will lead to better outcomes:

However, it is clear that the Closing the Gap agenda can be better designed and more effectively delivered. This is a view shared among Aboriginal and Torres Strait Islander people, governments and the broader community.

In 2008, the original Closing the Gap targets were developed without consultation from Indigenous Australians and without the direct involvement of state and territory governments – which meant targets were not as effective or as well directed as they should have been.

Apart from the fact that he is prejudging the consultation process, he offers no evidence for these assertions, and only his point about consultation with Indigenous Australians is unequivocally correct. He then goes on to state:

A new approach to Closing the Gap must value the aspirations, strengths and successes of First Australians. Importantly, it must be built on meaningful conversations with Aboriginal and Torres Strait Islander Australians.

New Closing the Gap targets will drive better outcomes for Indigenous communities because, for the first time, state and territory governments will establish targets in areas for which they are responsible and all targets will be designed to drive change, with specific action plans to support targets.

The problem with this argument is that the Minister is conflating the Closing the Gap targets with the policies which underpin it. It is the policies which ought to be built on meaningful engagement. The gaps implicit in each target will continue to exist whether or not there is a target, and these gaps cannot be fixed by focussing on Indigenous strengths (important as such a focus is). And shifting policy focus and responsibilities to state and territory governments is, in my humble opinion, a recipe for non-delivery and non-accountability. The Minister’s proposals provide no indication that either COAG or the Commonwealth itself will hold governments to account for lack of progress against the targets. The current Government has overseen the dismantlement of the COAG reform council which monitored progress against COAG targets across the board, replacing it with a ‘dashboard’ and a suggestion that the Department of Prime Minister and Cabinet would have ‘interim responsibility’ for monitoring the performance of governments (link here).

If the Government wished to focus on Indigenous aspirations and strengths, there is nothing to stop it establishing a policy framework, resourcing it, and pursuing it enthusiastically. But using this rationale as a cover for dismantling the Closing the Gap framework, is in my view not only retrograde, but involves an attempt at deliberate policy deception.

To cut to the chase, the Closing the Gap process is an embarrassment for the Federal Government. It provides regular and tangible evidence the Government’s Indigenous affairs policies are not working; that its policy rhetoric is not aligned with the reality of its actions on the ground; and that Indigenous citizens, particularly in remote regions, remain severely disadvantaged in comparison to most other Australians.

Instead of re-evaluating its underlying policy settings (including funding allocations), the Government appears to have decided that it is better to shift the goalposts. It would prefer to muddy the policy waters rather than improve its own performance.

There may well be a case for ‘refreshing’ particular targets, and there is a case for strengthening the link between the Closing the Gap framework and the underlying programs. However the Government’s proposed consultations are based around an extremely vague and rhetorically slanted discussion paper, with no indication of the sorts of targets it is considering, no commitment to providing information on the specific feedback it is receiving in the consultations to date, no recognition that there needs to be a stronger link between targets and programs, and no acknowledgment that the independent oversight arrangements for COAG activities has been abolished.

The bottom line is that at its core, Closing the Gap is not about the Indigenous community, but is about the commitment of the wider Australian community to support policies which remove structural disadvantage.

Rather than leading a national debate on removing structural disadvantage, and supporting policies which would facilitate such outcomes, the Government appears to be pursuing a policy of focussing on the rhetorical aspiration of ‘prosperity’ (who can object to that?), and shifting the policy focus from the Commonwealth Government to the states.

Add to this a sustained attempt to argue that the problem of continuing Indigenous disadvantage is largely down to a lack of good program evaluation and lack of access to Indigenous data by Indigenous citizens (links here, here and here) and the strategy confection is complete.

The deeply cynical strategy appears to be to direct the spotlight onto the legitimate aspirations of Indigenous citizens for their successes and achievements to be recognised while using the shadows outside of the glare of the spotlight to mischievously shift the Closing the Gap goalposts to avoid the necessity to make substantive policy and program commitments (like resourcing remote housing: link here) which will underpin and drive improved Indigenous life opportunities. 

Three strikes and you’re…..

The Commonwealth decision on remote housing

In a number of posts over the past seven weeks, I have discussed the way the Commonwealth was positioning itself in relation to an announcement on the future of the National Partnership on Remote Housing. Just two days ago in a post on MYEFO, I commented on the likelihood the Minister would deliver an acceptable remote housing program for Indigenous remote citizens, and noted: ‘whether he has the capability or intrinsic motivation to ensure something substantive is done about it will become clear over the coming six months’. Little did I know that the question would be answered within two days, and on both counts, it appears to be a resounding ‘no’.

Information emanating from both South Australia and Western Australia indicates Commonwealth officials have informed the state governments of WA, SA and Queensland that Cabinet has decided to cease any funding for remote social housing from July 2018 when the current National Partnership ceases. The fourth jurisdiction currently part of the National Partnership, the NT, is apparently going to continue to receive funding, though it is as yet unclear at what level and over what terms.

The West Australian Minister for Housing has issued a media release on the matter (link here) and the South Australian social housing minister has made public comments critical of the decision.

This decision will be a disaster for remote Indigenous citizens, will place at risk the current asset stock of housing in remote communities, will effectively waste the previous Commonwealth investment in remote housing as housing asset lifespans are reduced, will exacerbate the demographic shift from smaller remote communities to larger towns, placing further pressure on the states’ mainstream social housing systems, and other social support structures.

Questions which remain to be answered include what is the rationale for maintaining funding in remote NT communities, but not remote housing in adjacent jurisdictions? What is the total allocation going forward for remote social housing, and will it be over a ten year term or some shorter period?

This decision represents a watershed in Commonwealth policy towards remote Indigenous Australia. The Commonwealth is turning away from seeing a role for the public sector in underpinning investment in basic infrastructure. While its rationale will be that these are areas where the states should step up, this ignores the reality that the Commonwealth has the most significant tax base, that the GST distribution system provides no incentive to the states to invest in remote Aboriginal regions (notwithstanding the existence of an Indigenous relativities factor in the equation), and that the Commonwealth has been involved in remote housing for at least forty years precisely because the response from the states was inadequate.

Most importantly, the decision ignores the reality that the most, repeat the most disadvantaged sector of the Australian community are remote Indigenous citizens. For all the rhetoric about refreshing the Closing the Gap metrics (link here), this decision represents a deliberate and deeply tone deaf decision to further marginalise remote residents.

The political calculus underlying this decision includes the Government’s overarching focus on addressing the budget deficit, the fact that because it is a renewal of a longstanding National Partnership, there are no forward estimates allocated and there is no requirement for Parliamentary approval to harvest these savings. Moreover, remote citizens have limited political influence, particularly in the states where the relevant Federal seats affected are dominated by towns servicing non-Indigenous mining populations. In the NT where Aboriginal votes are more significant, the Commonwealth has backed off. In other words, the Government is punishing remote Indigenous citizens because they can.

The Government’s extreme sensitivity over this decision is patently obvious, reflected in the fact that it has been dropped out two days before Christmas, and that there has been no ministerial announcement or correspondence to the relevant state governments.

This decision completes the trifecta for Minister Scullion. He has overseen the disaster of the roll out of the inherently non-transparent Indigenous Advancement Strategy (refer to the ANAO critique of the IAS here, and my post on the topic here); he has driven the rolling disaster associated with the Community Development Program (see the ANAO critique of the program’s establishment here, and my post on the issue here, and a media report on a recent Senate Committee report on the scheme here). And now we have a fundamentally retrograde and highly damaging decision to cease funding the remote housing program in three states.

Three strikes, and you’re ……Minister for Indigenous Affairs.

Unanswered Estimates Questions on Notice

One of my purposes in writing this blog is to address in my own modest way what I consider to be a poor record of transparency by governments generally in relation to public policy generally, and in particular Indigenous affairs policy. Poor transparency increases the likelihood of accountability lapses by and within governments, and undermines the capacity of citizens to hold governments to account.

On 27 October 2017, Senator Scullion fronted the Senate Finance and Public Administration Estimates Committee. The transcript can be found at the link here.

During the Hearings or immediately thereafter, over 40 Questions on Notice were lodged by Senators relating to the responsibilities of the Department of Prime Minister and Cabinet in relation to Indigenous affairs.  A call to the committee Secretariat elicited that the deadline for the submission of answers was 8 December 2017.

The Committee web page (link here) lists the Questions on Notice arising from the most recent Estimates Hearings, and provides an indication of their status (ie answered or unanswered) and where answered provides a link to the answer.

The normal process for dealing with questions on notice is for the Department to draft responses and provide them to the Ministers Office for approval prior to submission to the Senate Committee.

As of today (20 December 2017), over 40 questions relating to Indigenous policy form the Department of Prime Minister and Cabinet remain unanswered, almost two weeks after the deadline.

There appears to be three possible explanations: departmental incompetence, ministerial incompetence, or a deliberate strategy to withhold these answers until the holiday season is well underway. If the latter, one might wonder just what information is so embarrassing that the Minister is reluctant to release it in a timely fashion?

One would hope that the Opposition and the Greens would seek an explanation from the Minister at the next Estimates Hearings, including seeking from the Department the dates that answers were provided to the Minister’s Office.

MYEFO and Indigenous Funding

The Treasurer and Finance Minister released the Mid-Year Economic and Fiscal Outlook yesterday (media release here; link to MYEFO here).  The headline message was an improvement in the expected deficit for this financial year, and a transition to a surplus by 2020-21.

In terms of Indigenous funding, MYEFO had very little to say. It reported on minor modifications to a loan from the Indigenous Land Corporation to one of its subsidiaries, Voyages Indigenous Tourism Pty Ltd, with a current outstanding balance totalling $308m (refer pages 256 and 261 of MYEFO). This loan is itself partly funded by borrowings, from both the private sector and the Commonwealth Government. The Federal Government allocated up to $65m in the 2016 budget (link here and media article here) to assist the ILC in refinancing its borrowings arising from the acquisition of the Ayers Rock Resort.

Here is not the place to trawl over past history in detail, but the bottom line is that the purchase of the ARR in 2010/2011 was contentious and highly problematic (link here) and while the acquisition has undoubtedly been beneficial for those Indigenous people who have obtained employment at the resort, it has severely constrained the ability of the ILC to undertake its statutory functions relating to land management and land acquisition for large numbers of communities across Australia in subsequent years. The acquisition which appears to have the support of Minister Scullion is one of the most expensive job creation programs ever undertaken by the Indigenous affairs portfolio in the Northern Territory.

The Minister recently announced the reappointment for 4 years as a Director of Indigenous Business Australia of the former Chair of the ILC, Ms Shirley Macpherson, who oversaw the decision to purchase the Ayers Rock Resort (link here).

The second and potentially more significant issue relates to remote housing. The first point to note is that contrary to the Minister’s advice to Senate Estimates a year or so ago, but consistent with his dodging and weaving on the matter in the most recent Estimates Hearings (link here), the MYEFO makes no provision for the renewal of the National Partnership on Remote Housing (formerly known as NPARIH). This National Partnership, which provided $5.5bn over ten years to states with significant remote housing requirements, expires in June 2018.

The failure to allocate renewal funding injects a high level of uncertainty into the remote social housing system, and will inevitably lead to a hiatus in construction of new dwellings across the interregnum. This is despite the issue of providing long term funding certainty being one of the key messages of the Remote Housing Review commissioned by the Minister and made public in October this year. My two earlier posts on these issues (link here and here) provide the background on these issues.

One new piece of information to emerge from MYEFO is the advice that the Commonwealth holds over 1800 housing leases in 43 Northern Territory communities which will expire over the forward estimates period (refer pp 243 and 252 of MYEFO). The Department’s latest Annual Report notes that it was not aware of any contingent liabilities at 30 June 2017, so this matter has only recently come to the Department’s attention. These leases have been subleased to the NT Government, and MYEFO notes that if the subleases are not renewed, then the Commonwealth will be responsible for the delivery of property and tenancy management going forward. The Department claims that the cost of the contingent liability is unquantifiable.

This new information is relevant for two reasons. First of all, it provides the NT Government with a greater degree of leverage than other states in any negotiations related to the renewal of the National Partnership. This will go some way to offset the policy leverage the NT gave up when the new Labor Government unilaterally committed a billion dollars for remote housing (link here).

Secondly however, these lease agreements create a direct line of responsibility for the delivery of adequate property and tenancy management to the Federal Minister. Even where the Commonwealth has contracted a third party to deliver these services, the Commonwealth has a clear political and legal responsibility (and presumably legal redress available) where the third party fails to deliver the property and tenancy services. As it happens, there have been widespread reports over the past year of the failure of Territory Housing to deliver these services in many remote locations (here is a link to the most recent fiasco), so the question must be asked: what has Minister Scullion done to ensure that the NT is meeting its landlord obligations under the subleases?

The shortcomings in the delivery of remote social housing programs are well known and serious. They play into the extreme levels of disadvantage confronting the vast majority of remote indigenous citizens. Minister Scullion campaigned hard on remote housing issues from Opposition. He was responsible for cutting $95m from the remote housing program allocations for property and tenancy management in 2015. It is therefore impossible to believe that he is not aware of the issues facing the remote housing sector. Whether he has the capability or intrinsic motivation to ensure something substantive is done about it will become clear over the coming six months.

The lead up to the next budget will be crucial for the remote housing sector. The focus evident in MYEFO in bringing the deficit under control will give the Government every incentive to find ways to fudge the issue. Unfortunately, housing is central to so much else, from early childhood health, school attendance, maternal health, job readiness, and more. A failure to invest in remote housing assets and infrastructure is a short cut to widespread and deeper social problems in the future.

Declaration: I am a former CEO of Northern Territory Housing (2002-6), an adviser to then Minister for Indigenous Affairs Jenny Macklin (2008-2011) and a former CEO of the Indigenous Land Corporation (2013-15).

Indigenous Procurement Policy review

In 2015, the Government released its new Indigenous Procurement Policy aims at expanding the take up of government contracts by Indigenous business. The policy is outlined on the PMC website, which provides a very useful introduction to the key objectives, targets and background documents. Link here. 

As an aside, this web page is admirable for its succinct synthesis of the policy, key data and a sense of what the policy is seeking to achieve. Unfortunately, the same cannot be said for all of the Department’s program web pages.

The Department of Prime Minister and Cabinet has recently published the Year One review of the Indigenous Procurement Policy (link here). This policy appears to be one of the stand out successes of the current Government‘s policy approach in Indigenous affairs.

The review documents significant progress across the board in allocating government contracts to Indigenous businesses, which total close to a quarter of a billion dollars a year,  and confirms that progress has been extremely positive over the past two years. The first two paragraphs of the Executive Summary state:

The detailed analysis of the raw data, in conjunction with the qualitative interviews and surveys, has found that the IPP, in its first 12 months, has exceeded its planned outcomes. The clear majority of contributors expressed a motivation to continue to contribute to the success of the policy objectives, indicating strong alignment with governments’ commitment to Closing the Gap on economic outcomes for Aboriginal and Torres Strait Islander Australians.

All portfolios met the original 2015-16 target of 0.5%, and in total the year one target was exceeded by a significant margin, with 1,509 contracts actually awarded to Indigenous businesses. The original first year target was 256. This is an increase from a total of 78 contracts awarded to Indigenous business in 2014-15.

The Executive Summary goes on to identify a number of potential issues worth considering further. In particular, it notes that the level of achievement across some 19 Commonwealth portfolios was not consistent, that relational approaches to procurement were most effective, that while the average value of contracts issued to Indigenous businesses was around $188k, the median value was $19k, and that there were a very high number of contracts given valued at less than $10k. Finally the summary noted that the profile of Indigenous businesses structures was opaque and there was scope to dig deeper in understanding how they related to outcomes. The heading in the text that ‘Business structure requirements are in alignment with the needs of stakeholders’ does not reflect the text, signalling to me that there are potential issues here.

Finally the report foreshadows an evaluation of the IPP in 2018, and usefully list a range of issues which ought to be taken up and examined as part of the evaluation.

While the story here is largely positive, and the Government’s policy aspirations are clearly worthy of support, there are two high level policy risks which will need to be managed carefully over the coming five years or so.

The first relates to the finding that relationships play a key role in driving better IPP outcomes. The report mentions the focus which suppliers put into building relationships with procurement teams in Canberra and elsewhere, and sees this as a positive. However, there is always the risk that stakeholders and relevant procurement officers will drift into inappropriate activities and even fraud or corruption. Prudent risk management suggests that rigorous fraud mitigation frameworks should be in place in all portfolios.

Second, it is clear that the potential for non-Indigenous businesses to structure activities with an Indigenous ‘front’ or joint venture partner to win government business is a real risk. This is often referred to as ‘black-cladding’ and was part of the review’s terms of reference. The review hints in various places that this may be an ongoing issue, but doesn’t provide any real line of sight to how much of an issue it is, or could become. Again, this is an issue which the forthcoming evaluation of the IPP ought to delve into in considerable detail.

At a much broader level, it seems clear that the IPP is part of the government’s philosophical approach which is aimed at raising the profile and importance of the private sector over the public sector in Indigenous affairs. Clearly Indigenous interests are significantly under-represented in private sector activities, and there is nothing intrinsically wrong with such a philosophical predisposition. Where there is a risk however is in creating private sector expansion by squeezing the public sector, and in particular, the community sector. There may be an ‘infant industry’ argument for supporting Indigenous private sector activities off the back of the public sector, but ultimately, the vast bulk of emerging Indigenous businesses need to sink or swim in the private sector. These are balances and trade-offs which are virtually impossible to objectively assess, but one which nevertheless have important policy consequences over the medium term and deserve our attention.

No Sugar

Hide not thy poison with such sugar'd words;
Lay not thy hands on me; forbear, I say;
Their touch affrights me as a serpent's sting.

King Henry VI, Part Two, Act Three, Scene 2.

I recently spent some time in Western Australia, and came across a copy of Jack Davis’ short 1985 play No Sugar in an op shop (link here).

Davis (link here) was born in 1917, and led a varied life as a stockman, writer, playwright, activist, and spokesman for Aboriginal people. As a young fella, Davis spent a couple of years at the Moore River Settlement near Mogumber just north of Perth, an experience which clearly informs his political and literary activism. By the end of his life in 2000, his plays had achieved international acclaim, and he had been recognised with an OBE, and Order of Australia, and various state and federal Board memberships.

No Sugar, set in the region surrounding Perth in Western Australia during the great depression in the early 1930s, tells the story of the fictional Millimurra family and their interactions with the ‘protective’ state government of the day.

While I knew of Davis by reputation, I never met him and had never seen his plays nor read any of his writing, so reading No Sugar was an opportunity to begin to close a gap in my own appreciation of the depth of the Indigenous contribution to Australia’s cultural life.

Davis’ achievement with No Sugar extends beyond crafting a work of considerable artistic and literary merit, which brings to vivid life the challenges of the depression for many Australians, but in doing so rips the band aid off the raw wound which lies at the heart of the history of race relations in Australia. His genius lies in bringing to life through the narrative of a single family the brutal ongoing reality of the interface between the settler state and first peoples over 100 years after the initial colonisation of their lands. Davis also throws light on the deeply human responses of Aboriginal people, the ways in which the state laws operate to drive different responses to injustice, both among Aboriginal people and wetjalas, the Noongar term for white fella or the English language.

Indeed, one of the pleasures of No Sugar is the inclusion of a significant amount of Noongar language and colloquial expression in including Aboriginal humour in the dialogue, and the Currency Press edition which I found includes a very helpful glossary of Aboriginal terms at the end.

The reason for including an account of No Sugar in this blog is that it struck me that Davis had a lot to say about the ways in which policy and public administration was used to reinforce the politics of exclusion. His accounts of the ways in which control was exercised by the Superintendent of the Moore River settlement, the interactions between the legendary Chief Protector of Aborigines, A O Neville and the local town police, the legerdemain used to persuade and cajole the Millimurra family to leave their settled camp in Northam and the unsettling exposition of the bureaucratic imagination in full flight to justify the unjustifiable is a tour de force in policy analysis, albeit via the play’s semi-fictional narrative.

I say semi-fictional, because the removal of the Millimurra family in No Sugar mirrors the actual forced removal of 90 Aboriginal people from Northam to Moore River Settlement in late 1932. The then Premier’s own electorate was Northam, his Government faced an election in April the following ear, and his popularity was on the wane. Local community antagonism to Aboriginal people was rife. See the insightful account of this episode (and much more) in Anna Haebich’s excellent account of Aborigines in southwest Western Australia, For Their Own Good, published in 1988 by UWA Press.

The point of No Sugar is not merely to recount or explicate the effects of a shameful and discriminatory period in our past. It celebrates the resilience of Aboriginal people and their cultures and languages notwithstanding sustained attempts to obliterate their presence metaphorically and actually. It raises questions about the propensity of our liberal democratic system to hypocritically ignore our widely accepted commitments to the right to life, to freedom of speech, to freedom of movement, to liberty and security, to due process under law, to freedom of thought, belief and expression, to freedom of assembly and association, to the right to marry and begin a family, and to the right to be free of discrimination.

A further important point of No Sugar is to raise questions about our current approaches to policy development and implementation in Indigenous affairs. While the levels of deep exclusion of Indigenous people which were practised in 1930s Western Australia are no longer evident in Australian politics and policymaking, one would have to be blind to believe that all is well, that exclusion is no longer practised or prevalent, and that the sentiments espoused in 1944 by Chief Protector Neville are not still alive and well in some parts of our state and federal policymaking domains. Neville stated then:

The native must be helped in spite of himself! Even if a measure of discipline is necessary it must be applied, but it can be applied in such a way as to appear to be gentle persuasion…the end in view will justify the means employed (quoted by Haebich 1988:156)

Anyone who plays a part in developing or implementing Indigenous policy in Australia should take the time to read No Sugar.

Davis’ play takes its name from the ironic parody of a hymn ‘There is a Happy Land’ sung by the cast members portraying inmates at Moore River:

There is a happy land,

Far, far away

No sugar in our tea,

Bread and butter we never see,

That’s why we’re gradually

Fading away

But as Bernadette Brennan points out in her essay on No Sugar (link here), the title also references Aboriginal rejection and renunciation of the bureaucratic strategy implicit in Neville’s advice to Jimmy Munday in Act One of the play: ‘sugar catches more flies than vinegar’. As Brennan states: ‘Aboriginal people will not play sweetly, they will not be meekly charming and play by the rules of the imposed game’.

Policymakers have much to learn from Davis’ No Sugar, and from the insights it offers into the nature of unthinking bureaucratic process, the ways such processes can support exclusionary policies and the ways unthinking policy can undermine human lives and dignity.

The structural underpinnings of remote disadvantage: some reflections on federal financial arrangements and Indigenous disadvantage

My two previous posts dealt with the vexed issue of future funding for social housing in remote Indigenous communities. One of the issues discussed was the suggestion by the Review commissioned by the Government that the states and the Northern Territory should share any future funding allocations 50:50 with the Commonwealth. This view was backed up by the Prime Minister’s Indigenous Advisory Council, and strongly pushed by the Minister.

For my part, while I have no problem with efforts to encourage the states to do more, I am deeply suspicious that the line of argument is being used as a distraction to divert attention from a likely reduction in Commonwealth funding. We will presumably know what the Commonwealth intends and thus obtain a readout on my concerns in the next few months. I sincerely hope that I am wrong.

For Indigenous people on the ground, looking up to three levels of government above them, it is a daunting task to seek to hold governments accountable for the effective delivery of services. Taking just the single issue of social housing provision and management, there is a complex interaction of functional responsibilities between the three levels of government. This often leads to calls for a clearer and more definite allocation of responsibilities: eg ‘the states should be responsible’; or ‘the states should match the Commonwealth funding’ (both of which the Minister has advocated in recent months).

Yet the complex reality is that the allocation of responsibility is inexorably intertwined with the financial arrangements which underpin the federation, and that without consideration of reform to those arrangements, suggestions for changes to the allocation of functional responsibilities will fail or go nowhere.  One of the issues with the Remote Housing Review commissioned by the Minister (seemingly without explicit terms of reference) is that it failed to consider and analyse the impact of the current GST distribution arrangements on various options for future management of the remote housing program.

So it was pleasing to see that the Productivity Commission, in its most recent draft report on Horizontal Fiscal Equalisation (link here), made explicit (albeit very brief) reference to the interaction between federal financial relations, functional responsibilities of different levels of government, and Indigenous disadvantage.

The Productivity Commission, in Chapter 9 of its Draft Report on the scope for future reform made the following suggestion:

In the Productivity Commission’s view, reforming HFE in isolation will only go a small part of the way to improving outcomes within federal financial relations. 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.

Governments should develop a process, led by the Council on Federal Financial Relations, to work towards this as a longer–term goal. This process should assess how Commonwealth payments to the States — both general revenue assistance and payments for specific purposes — interact with each other.

The process should also consider a well‑delineated division of responsibilities between the States and the Commonwealth, and accompanying accountability and performance arrangements. In particular, responsibilities and accountabilities for Indigenous policy — a policy area where there continues to be little improvement despite significant expenditure — should be given priority (page 209; emphasis added).

My reaction to this recommendation was broadly positive, but in my view it failed to appreciate the need to distinguish more carefully between the policy requirements for addressing disadvantage in remote and non-remote contexts. Whether the Council on Federal Financial Relations (which comprises the Commonwealth Treasurer and his/her state and territory counterparts) is well placed to drive reform of responsibilities for Indigenous disadvantage on its own is also a moot point, but beyond the scope of this post to consider.

My brief submission to the Commission is set out below.

This submission deals with the narrow issue of raised in Draft Recommendation 9.3 of the Commission’s Draft Report advocating a reform process for Federal Financial relations which inter alia allocates clearer responsibilities between the states and territories and the Federal Government, and in particular, suggests that policies to address Indigenous disadvantage should be a priority in this regard.

I have no fundamental problem with the intention of this recommendation, but note that for the reasons outlined below, the assumption or use of the concept of an overarching category of ‘Indigenous person’ which does not reflect the specific nature, causes, and current manifestations of the disadvantage afflicting Indigenous citizens may lead to counter-intuitive and unintended outcomes.

The fact that the Commission singled out the issue of Indigenous disadvantage reflects a correct reading that this is an issue which goes to the core of our national character, and has a salience beyond the technical details of HFE. Nevertheless, for the reasons outlined below, the recommendation is in my view not as comprehensive or well targeted as it might be.

My submission focusses on two points which relate to the ways that the HFE process impacts on Indigenous citizens.

First, it is increasingly apparent that the nature of the disadvantage suffered by remote and non-remote Indigenous citizens is different, and accordingly, policies generally and in particular the reform processes advocated by the Commission in relation to HFE and federal financial relations need to take account of those differences. For example, the most recent Census data which is only now becoming available suggests that the levels inequality between the most remote Indigenous citizens and non-remote Indigenous citizens is wider that the spread of inequality within the non-Indigenous population. See for example Dr Francis Markham’s recent seminar at the ANU Centre for Aboriginal Economic Policy: ‘The Geographic divergence of Indigenous incomes: Census evidence 2006-2016’. I understand these results will be published in the near future.

Accordingly, it is increasingly untenable for the HFE process undertaken by the Grants Commission in assessing disability factors to make no distinction between the very different needs of remote and non-remote Indigenous citizens. Moreover, there are increasing indications that the levels of Indigenous identification in non-remote regions may have been increasing, with the potential result that the Indigenous population of south-eastern Australia is increasing not through population growth, but through a broadening of the population base. This has the potential to distort the relativities within the HFE process, to the disadvantage of jurisdictions with remote populations, and thus potentially reinforces the deep-seated structural disadvantage which afflict those populations.

The second issue I raise also impacts most severely on remote Indigenous populations, and arises from the fact that state and territory governments are under no obligation to allocate GST revenues in accordance with the comparative needs identified by the Commission as the basis for calculating their respective allocations. Moreover, the comparatively weak electoral and political influence of remote Indigenous populations means that it is unlikely that they receive a share of recurrent funding which accurately reflects levels of need. Moreover, remote populations face a particular structural disadvantage in relation to capital investment by governments insofar as not only do they not obtain a fair share of current capital investment by the states and territories (and perhaps even the Commonwealth), but they reside in regions which were settled much later in the nation’s history than regional and metropolitan regions, and thus have a historic capital investment deficit.^[1]

The HFE process (as I understand its operation) does not seek to address the structural disadvantage related to capital investments by government, let alone historical capital investment deficits. The combination of these two factors leads to a level of structural neglect in terms of jurisdictions’ funding and investment towards remote populations. Clarifying responsibilities between the Commonwealth and the states and territories will not necessarily address these structural impediments.

One approach which was suggested in a book^[2] I co-authored with Neil Westbury in 2007 would be to create a notional ‘remote Australia’ jurisdiction for HFE purposes and require individual jurisdictions to, at a minimum, allocate the GST revenues received in relation to disability factors pertaining to the notional remote jurisdiction within that notional area in their state or territory.

There may be other ways to address the structural impediment. My submission however is that the structural impediment which leads states and territories to under-invest (in terms of assessed needs) in remote parts of their jurisdictions should be addressed.

I note in this context that historically (following the 1967 referendum) a key driver for the Commonwealth to begin funding Indigenous populations in the states was their deep reluctance to allocate anything more than minimal funding to their Indigenous populations. That is, the shared and confused responsibilities which the Commission has identified as a problem in Draft Recommendation 9.3 are in fact the result of the Commonwealth historically seeking to address an extreme structural impediment. That impediment continues to exist, and while there is a rationale for clarifying responsibilities, if the underlying structural impediment is not addressed, then Indigenous disadvantage in remote regions in particular will continue.

For the reasons outlined above, I suggest that the Commission needs to fundamentally re-think Recommendation 9.3 insofar as it relates to Indigenous disadvantage, and complement it with a recommendation which more effectively addresses the nature of the disadvantage afflicting remote Indigenous citizens.

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[1] Of course, the implication of this point is that Indigenous populations in more settled parts of the nation have suffered the consequences of colonisation for longer, and this may shape different types or degrees of disadvantage which affects them more seriously such as intergenerational trauma arising from dispossession.

[2] Dillon and Westbury (2007) Beyond Humbug: transforming government engagement with Indigenous Australia, Seaview Press, Adelaide.

The next phase of funding for remote Indigenous housing

You take my house when you do take the prop

That doth sustain my house. You take my life

When you do take the means whereby I live.

Merchant of Venice Act 4, scene 1

It is widely accepted common ground that housing is an important element in addressing deep-seated disadvantage.  See for example the AHURI research report released with the recent Remote Housing Review (link here). Australia’ remote Indigenous communities are the locus of perhaps the most concentrated deep-seated disadvantage in the nation.

Since the Second World War, the Commonwealth has played a crucial role in funding social housing nationally, initially through the Commonwealth State Housing Agreement (CSHA) as well as through the development of the Commonwealth Rent Assistance Program. Following the 1967 referendum, the Commonwealth gradually ramped up its own direct investment in Indigenous housing programs both in the CSHA, and in a number of Indigenous specific programs. Up until 2007, the CSHA included an element directed towards Indigenous social housing which was delivered by the states and territories, while the Commonwealth delivered an Indigenous specific housing and infrastructure program with a nation-wide footprint called CHIP (Community Housing and Infrastructure Program).

These Indigenous specific programs funded by the Commonwealth were in specific recognition of the political reality that the states had not been prepared to provide services to their Indigenous citizens, often adopting discriminatory policies of exclusion. While the overt racism of the states’ policies has largely disappeared, the institutional and structural invisibility of Indigenous interests continues to the present day. The discussion below of ‘acceptable’ levels of overcrowding is just one example. The case for ongoing Commonwealth engagement in remote housing policy remains incontrovertible.

A review of CHIP commissioned by Minister Mal Brough in 2007, Living in the Sunburnt Country, found that the program was not focussed on need and recommended greater focus on remote housing since regional and urban Indigenous citizens had access to mainstream social housing options which were not available in remote regions. For example, the virtual total absence of private rental housing options in remote communities meant that Indigenous residents had a structural incapacity to access Commonwealth Rent Assistance, the largest social housing program in the nation.

In its last year in office, the Howard Government made a number of moves to upgrade the funding for housing in remote regions, through a program known as ARIA and later renamed the Strategic Indigenous Housing and Infrastructure Program (SIHIP).

Following the election of the Rudd Labor Government, in early 2008, the Commonwealth and the States agreed to establish a National Partnership Agreement on Remote Indigenous Housing, known as NPARIH. This was part of a broader reform of Commonwealth – State financial relations. The agreement in effect combined the former CSHA component with the Commonwealth CHIP program and provided for Commonwealth funding of $5.5bn over ten years, a massive increase in previous funding levels for remote housing, with housing construction and tenancy management to be undertaken by the states and the NT. It set specific targets for each jurisdiction related to new builds, refurbishments, and Indigenous employment. Even so, it was recognised that it would not address the totality of outstanding housing needs in remote Australia.

The ten year agreement survived the change of Government in 2013 albeit with a change of name – it is now known as the National Partnership on Remote Housing, or sometimes as the Remote Housing Strategy.

The National Partnership expires in June 2018, and thus raises the question, what will replace what has been the major national investment program in remote Australia (apart from welfare and employment programs) over the last ten years? While I dealt with this topic in a previous post (link here), this post is an update following the publication of the Remote Housing Review.

To pave the way for the Government decisions which will determine the answer to that question, in November 2016, the Minister for Indigenous Affairs, Senator Scullion, announced a review into remote Indigenous housing. In his media release announcing the review, the Minister stated that ‘Overcrowding, homelessness and poor housing conditions in remote Australia remain unacceptably high’. According to the Department of Prime Minister and Cabinet (PMC) website, the Review had two tasks: an analysis of what was implemented in the past and an assessment of what should be effected in the future.

Notwithstanding that the Review suffers from a range of serious analytical flaws which I outlined in my previous post (link here), the review’s findings essentially confirm the Minister’s assessment of the unacceptable state of remote housing.

On 10-11 May 2017, the Prime Minister’s Indigenous Advisory Council was briefed on the review. In their communique dated 19 May, the Council made a number of comments on Indigenous housing and the then unreleased review of remote housing.  They noted, inter alia:

Council acknowledged the findings of the Remote Housing Review and expressed concern that despite significant reductions in overcrowding investment is required to meet unmet need and maintenance of housing stock. Council emphasised adequate housing is critical to ensure positive outcomes are maintained in health, education, employment and community safety...

A link to the Advisory Council’s communique is here. 

Since May there have been a number of development which relate to the next phase of funding. In August, the Minister made a number of comments in an ABC Q&A program at Garma (link here), where in response to a question about overcrowding and the impact on peoples’ lives, he foreshadowed a number of likely policy directions:

We’re deadly serious about this. We’ve invested $5.4 billion over the last decade, and I think everybody would agree we could have done a lot better. We have reduced overcrowding from 52% to 37% – it’s still in the margins, and that took a fair while to do. So, the next rollout, which we are now negotiating with the states and territories about the National Partnership on Remote Indigenous Housing, we’ll be negotiating on the basis of what the communities have asked us to negotiate on.

So, Indigenous employment is non-negotiable. Indigenous procurement is non-negotiable. And we’ll be asking the states to match those funds. Because we need a pulse. Sometimes we can just trickle along and we’ll be just catching up, just getting ahead, but we actually need a significant injection of funds. So, that’ll be the basis of our negotiation with the states. But those houses cannot be built by whitefellas getting off planes with nail bags. Those times have to go.

Prior to the most recent Estimates Hearings relating to the Indigenous Affairs portfolio, the Minister released the Remote Housing Review Report on 26 October 2017 (link here). In the lead up to that release, a government source provided The Australian’s Darwin correspondent Amos Aikman with not just the report, but the earlier May version which had been provided to the states and territories for their comment and input. That source was presumably the Minister or his Office; who else had access to both the earlier draft and the about to be released final version? While it is normal for Ministers to provide the media with advance copies of reports they are releasing, the provision in this case of both versions was clearly aimed at highlighting and undercutting the changes the review panel had made after consultation with the states, and ‘bells the cat’ on the lengths to which the Government has gone to frame the public discussion in the lead up to its decision on future funding for remote housing.

The ‘drop’ to The Australian would likely have involved at least some level of briefing as Aikman’s 26 October story (Blot on $5.4bn indigenous housing) reported on the key changes between the two versions. This related to the extent to which jurisdictions allocated NPARIH funds for non-construction activities such as land servicing, infrastructure provision, and program administration.

The final data is presented in Table 4.2 of the report. While WA spent 33.6 percent of its allocated funding from 2008-2016 on ancillary costs (the source of the 34% figure), other jurisdictions spent less. The average across the four jurisdictions remaining in the scheme was 20.8 percent. While the inevitable inference of the media story was that ancillary costs were somehow illegitimate, the report does not say this is the case, and indeed explicitly states (section 7.1.3) that there was no suggestion these costs were illegitimate, merely that the Commonwealth did not have a line of sight to them. The reality is that houses without access to power, water, sewerage, and access roads are not ‘fit for purpose’. Much of the debate around remote housing over the last decade has overlooked this crucial fact, and instead been simplistically focussed on three key metrics: numbers of new houses, refurbishments, and levels of Indigenous employment. Important as these are, the remote housing system is more than the sum of these three metrics.

Aikman’s lead paragraph also managed to pick up on a subsidiary observation by the Review Panel (‘the scheme is opaque, “complicated by multiple objectives, poor governance and constantly changing policy settings’ and has not fostered home ownership or business growth”) rather than the Review’s headline finding, namely that:

By 2018, the Strategy will have delivered over 11500 more liveable homes in remote Australia (around 4000 new houses and 7500 refurbishments).

This increase in supply is estimated to have led to a significant decrease in the proportion of overcrowded households in remote and very remote areas, falling from 52.1 percent in 2008 to 41.3 percent in 2014-15. The Panel projects this will fall further to 37.4 percent by 2018. (Executive Summary page 1).

In particular, Aikman noted that ‘At an average price of $600,000 per house, estimated from the existing program, the next ten year agreement is likely to cost around $3bn. The report recommended that federal and state governments split the cost equally, but the NT has already demanded more’.  Given the likelihood that The Australian received a detailed briefing on the report (the $600,000 figure appears to be an extrapolation of data provided in Tables 4.2 and 4.4 of the Review, and unlikely to be a figure the journalist would come up with unilaterally), there seems to be a possibility that the $3bn figure may reflect one of the options in the Minister’s bid to Cabinet for a national allocation. Of course, such a notional calculation is fundamentally flawed, as it ignores the potential need for refurbishments as well as new houses, and also the increasing need for Property and Tenancy Management costs (which include ongoing small repairs and maintenance costs)

In a follow up story on 27 October 2017 (Housing loses out as cash diverted), Aikman’s lead paragraph reported that:

States and territories are spending up to 34 percent of federal funds provided for remote indigenous housing on “ancillary costs”, but those governments also blame Canberra for poor living conditions in the bush, arguing it has not committed to ongoing payments.

The story went on to report that the 34 percent figure highlighted in both media stories related just to one jurisdiction. Nevertheless, the headlines and lead paragraphs in the two articles laid out a narrative which painted the states and the NT as mendicants not pulling their weight.

At the most recent Estimates Committee hearings (link here), there was a rather bizarre discussion around the next phase of Commonwealth involvement in funding remote housing. The Minister and his officials made no absolute commitments, but appeared to lay down a few benchmarks which will shape future Commonwealth policy.

First, the Minister and his officials argued (against accepted wisdom and the history of Commonwealth involvement since at least 1968) that funding for remote housing was primarily a responsibility of the states and territory, and that the Commonwealth’s role was in effect optional or discretionary. As Minister Scullion stated:

Yes we have seen this review and we’ve let the states know about the review. They are aware that this is a national partnership agreement under which we haven’t reached the goals we were supposed to reach, because then it was to go back to the states’ responsibility. This is overcrowding in remote areas. So negotiation still has to happen about in which states this is mostly occurring in. And it’s a matter for the Commonwealth to negotiate with the states about what percentage of the responsibility remains with the Commonwealth. It was the intention that by this stage, the Commonwealth would have no further role and the role would go back, rightly, to the states and territories in this regard. (Estimates transcript 27 October 2017:51).

This statement is factually wrong on a number of levels. There was never an ‘intention’ that NPARIH would be the end of the Commonwealth’s involvement; indeed, it was recognised at the time NPARIH was first negotiated that the targets embedded within it would meet only around half of the outstanding national need. Second, NPARIH largely met its goals, and allowing for substitution of investment between new builds and refurbishments, in fact exceeded its goals. (Refer section 4.3 of the Review report).

One way to interpret Minister Scullion’s statement is that the Minister has yet to obtain a Cabinet decision on the quantum of funding available for the renewal, but recognises that Cabinet is unlikely to allocate a further $5.5bn over ten years. Alternatively, the Minister may have been told that he won’t get a further $5.5bn, and thus he has engineered a review and a set of arguments designed to throw dust in the air to avoid criticism for his lack of capacity to deliver an ongoing program at former levels for Indigenous constituents.

Second, the Minister appeared to rule out the use of a National Partnership going forward, indicating instead that the Government was considering a series of bilateral agreements with each of the four remote jurisdictions (WA, SA, NT and Qld) rather than an overarching National Partnership. The Minister has not laid out a persuasive argument for making this shift, but what is clear is that it will allow him to set up an effective bidding war between the jurisdictions (who now happen to have Labor Governments) based on their preparedness to match Commonwealth funding. A series of bilateral agreements also opens up the possibility of a shift away from a ten year program to shorter bilateral agreements. A further risk in moving away from the National Partnership model is that it increases the scope and likelihood of reductions in investment levels through the ongoing annual budget process since COAG endorsed National Partnerships appear to have a greater (but not total) degree of quarantining from budget revisions during the life of the agreements.

Third, the Minister was quite vague on the timing for an announcement of new funding arrangements. In responses to questions in Estimates previously, the Minister had advised that a decision would be announced as part of the Mid-Year Economic and Financial Outlook (MYEFO) statement, normally brought down around December or January. However in the latest Estimates hearing, he shifted his ground, indicating that discussions with the states and territory were at a very preliminary stage, and that ‘it’s unlikely any announcement will be made prior to MYEFO, but there will certainly be an announcement prior to or during the budget process’. This suggests that the MYEFO budget process will likely be used to decide on the national funding allocation quantum, but that there will then be a subsequent negotiation or ‘bidding process’ undertaken with the four jurisdictions.

Ironically, one of the important and sensible recommendations of the Review Panel was that ‘a minimum five year rolling plan for the program should be established’ (rec.7, page 4). Yet the Commonwealth has allowed a situation to develop where the states and the NT will essentially enter the 2018-19 financial year with minimal lead time to develop a capital works program, thus virtually guaranteeing at least a one year hiatus in capital works and potentially PTM momentum. The review was critical of the National Partnership’s two year capital works cycles, yet the Commonwealth has done nothing to ensure a smooth transition between the current Remote Housing Strategy and the next phase.

So what then should the next iteration of the program look like? As with any policy issue, the answer must take into account a number of issues. In this case the core first order issues are the levels of need across remote Australia, measured by overcrowding; and the necessary investment required to maintain the asset base and maximise asset (ie house) lifespans. These first order issues go the quantum required to address the outstanding housing deficit in remote Australia.

Other issues, such as maximising local indigenous employment and/or Indigenous employment generally; deciding how to best deliver necessary repairs and maintenance; choosing and resourcing the most effective tenancy support models; design/cost trade-offs; new builds versus refurbishment trade-offs; and construction cost versus whole of asset lifespan cost trade-offs; are all important, but second order issues. The second order decisions will be crucial determinants of the effectiveness and efficiency of the resources allocated. Merely listing them provides a sense of the complex decision-making processes embedded within this program, and the overall complexity of the remote housing system. This is further complicated by the fact that two levels of government are involved, and that choices in relation to any one of the second order issues will inevitably impact on the options and choices available on the other second order issues.

Turning to the first order issues, the Review is only of limited assistance. The Panel’s assessment of the outstanding ten year need of 5500 houses is extremely problematic. The Panel itself admits that the estimate relates only to households requiring three bedrooms or more, or to citizens who are homeless. As they note in the text under Figure 3.3, this suggests ‘the overcrowding challenge is likely to be greater’.

Secondly, they note that the estimates are based on modelling of 2011 Census data and as they state in footnote 29: ‘remote housing need requires remodelling when the 2016 Census data is available’.

Third, the Panel fails to include any estimate for houses which reach the end of their effective lifespan. Data on the effective lifespan of the current asset base nationally is virtually non-existent and disappointingly, the recent Remote Housing Review provides no insights into the issue. But if average asset lifespans were 30 years, and the national remote Indigenous community housing asset base was 15,000 houses[1], then we could expect around 500 houses to reach effective ‘end of life’ each year, or 5000 over the next decade.

Fourth, the Panel’s modelling is based on reducing overcrowding from 37 percent to ‘around 25-30 percent by 2028. This level of overcrowding is still 10 percentage points higher than the rate in urban and regional Australia.’ The Panel makes no assessment of the level of outstanding need based on parity in overcrowding levels with metropolitan Australia[2], and indeed, asserts in the Executive Summary of the report that the targets specified above involve reductions in ‘levels of overcrowding to acceptable levels’ without any discussion of what makes them ‘acceptable’ (emphasis added).

Fifth, the Panel ignores entirely the figures on current demand and projected need provided to it by three jurisdictions, which total 7520 houses without including projected need in South Australia and Western Australia (see Box 3.2).

Based on the factors identified above, a more realistic assessment of outstanding need for housing across remote Australia over the coming decade to 2028 would be at least 10,000 new houses and arguably 15000 new houses.[3] Using the figure of $600,000 per house, the cost of delivering 10,000 houses would be $6bn. This would need to be complemented by a program of refurbishments aimed at extending asset lifespans wherever possible, and assuming effective PTM policies are in place, this might involve somewhere in the region of 2 to 5 thousand refurbishments over the next decade. Add say 3000 refurbs at $100k each would cost $300m or $0.3bn.

Finally, the Review Panel correctly emphasised the need for a complementary recurrent program to be funded designed to deliver PTM to the entire asset base. The review’s most insightful conclusion, based on detailed research by NOUS Consulting (link here), was that annual rental revenues covered only between 10 and 20 percent of the actual cost of maintaining the asset base. Much of this extra cost is a function of remoteness. See section 8.1.1 of the Review report also. This suggests that some $2.8bn in additional funds will be required to maintain the existing asset base over the next decade.[4]

These admittedly rough ‘ball park’ calculations suggest that meeting the outstanding housing need in remote Australia over the decade to 2028 would cost around $9bn; $6bn for ten thousand additional houses; $0.3bn for refurbishments; and $2.8bn for PTM. While this quantum is daunting in itself, the challenge is magnified by the fact that it does not include the concomitant ancillary costs of land servicing, essential services infrastructure, and access roads.

The prospects that the Commonwealth will allocate anywhere near $9bn to fund remote housing provision over the next decade appears negligible. The level of political and electoral pressure on the Commonwealth is minimal. The daily challenges of Indigenous interests in remote Australia are largely invisible in national political discourse, which has focussed in recent years on constitutional recognition. Moreover, Indigenous interests are spread thin and exercise very limited political influence. Increasingly, the Indigenous community vote spans the political spectrum, which often mean that Indigenous voices cancel each other out. Advocacy is almost non-existent. Nationally, the National Congress of First Peoples does not currently list housing on its list of priority policy issues (link here). In the NT, the Aboriginal Peak Organisations Northern Territory (APONT) has been building its advocacy capability since 2010, and in 2015 facilitated the establishment of Aboriginal Housing NT, a body dedicated to advocating on housing issues for Aboriginal citizens in the NT (link here). AHNT made a submission to the Remote Housing Review (link here) but has not to date built a public profile.

The consequences of underinvesting in remote housing over the coming decade will be devastating on a number of levels. For taxpayers, the value of the investments of the past decade under NPARIH, along with whatever reduced amount is allocated, will in effect be substantially and prematurely depreciated as housing asset lifespans are shortened. The economic impost on taxpayers of meeting the costs of poor health, education and social outcomes will expand. The local economic multipliers which spin off capital works investments will not arise, thus further undermining the prospects for economic development in remote communities. And most importantly, the life opportunities of tens of thousands remote citizens will be irretrievably constrained. The evidence emerging form the latest census is that income levels are worsening in remote Australia, and a pull back in remote housing investment will only exacerbate this trend further (link here).

In short the economic, social and human cost of not investing in addressing the deep-seated disadvantage which derives from poor and overcrowded housing will be substantial, with the most intense impacts falling unnecessarily on remote Indigenous citizens.

Apart from renewing the National Partnership with a significant level of funding, what policy options exist for the Commonwealth (and the states)?

I would propose four possible policy initiatives, though I am sure there are others.

First, the lack of progress in opening up opportunities for private sector investment in remote community housing is a glaring policy failure by the Commonwealth. Lack of progress in advancing land reforms, which to be effective must not lessen the rights of Indigenous traditional owners or native title holders, has been one major impediment. Another has been a lack of innovative policy vision within governments. A third has been the impact of transaction costs and other hidden disincentives which hold back investment even in communities or locations which have made progress in establishing more flexible institutional frameworks (eg the township leases in a number of NT communities). And fourth is a lack of access to capital. The focus by governments on moving straight to higher levels of home ownership is in my view misdirected. Governments would do better to concentrate on building up a rental housing market in remote Australia. It is currently virtually non-existent.

One way to kick start such a shift would be to establish a government owned corporation with commercial powers to borrow in the private sector (and which might joint venture with Indigenous corporations) to build, own and rent out housing within remote communities. Such an initiative would address a number of pressing issues: the shortage of housing assets; the lack of staff housing in remote communities (which acts as a disincentive to attract and retain both locally engaged and external staff); open up new sources of private sector capital for investment in remote locations; and would begin to expand access to the Commonwealth Rent Assistance program to remote Indigenous residents who to date have been structurally denied access.

Second, policymakers could focus on supporting the introduction and expansion of three or four community housing providers across remote Australia to complement the operations of state housing authorities in remote regions. Notwithstanding the fact that the NPARIH reforms introduced institution arrangements which for the first time established formal accountabilities for the owners of social housing, the experience to date has been disappointing with state housing authorities yet to deliver on their responsibilities. The introduction of competing providers may be necessary to demonstrate that poor housing is not an inevitable and endemic feature of remote regions.

Third, given the propensity of the states and the NT to underfund PTM in remote regions, the Commonwealth should move beyond rhetoric and take a much more direct role in either delivering PTM services itself (perhaps by injecting Commonwealth officials into the relevant parts of state and territory housing authorities) or in establishing a new statutory office to monitor, oversight and regulate the provision of PTM services in remote communities. Such a policy initiative might need only exist for ten or fifteen years until new expectations were set and embedded into bureaucratic practice, but would ensure that the substantial capital investments to date, and hopefully the value of the considerable investments into the future by the Commonwealth will be protected from dissipation and accelerated wear and tear arising from poor PTM which shortens asset lifespans.

Fourth, one innovative element of NPARIH which actually worked to improve state and territory performance, and which was discontinued after the change of Government, was the capacity for funding allocations to be varied both up and down in response to state performance in delivering against key metrics. While the Review Panel (section 4.7) argues that the competitive bids process (as this financial incentive system was known) led to ‘undesirable and unintended consequences’, it is salutary to reflect on the fact that the best performing state in terms of value for money, South Australia, was penalised by the Commonwealth for poor performance in the early years of the program. The bottom line si that states and territories will respond to financial incentives, and given the importance of PTM for protecting the Commonwealth’s investment to date, there would be value in giving serious consideration to re-instituting the system with a focus on PTM delivery.

To sum up, the prospects for the renewal of the current levels of Commonwealth investment in remote Indigenous housing do not appear positive. The Minister and his Department appear to be basing their policy development work on a Review Report which is fundamentally flawed, and in particular, which substantially under-estimates the outstanding housing need across remote Australia.

The costs of not addressing this need effectively will be significant and will fall on taxpayers in the future, and importantly, substantially constrain the material life opportunities of thousands of remote citizens over the course of their (shortened) lives. The asymmetry between the short term political benefits of reduced investment and the associated long term social, economic and health costs is driving a decision-making dynamic which is not in the public interest, and certainly not in the nation’s long term interest.

How this issue is resolved will be a test; a test of the institutional capacity of the Australian Public Service to drive good policy, a test of the calibre of our political leaders, and ultimately a test of our national character, and whether we are the land of the fair go.

Disclosure: In the interests of full transparency, I should indicate that I worked as an adviser to Minister Jenny Macklin from 2008 to 2011, and as a senior public servant with responsibility for NPARIH from 2011 to 2013.

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[1] The Sunburnt Country Review in 2007 states there were 21,000 houses managed by Indigenous Community Housing Organisations across Australia, but doesn’t split this between remote and regional areas. NPARIH has built 4000 houses nationally in remote regions, and refurbished 7500, so there are at least 11500 remote houses. The figure of 15000 is my estimate. Achieving effective asset lifespans of 30 years assumes effective PTM policies. In many locations, the effective asset lifespans are likely to be shorter.

[2] I am not in a position to make a detailed analysis of how many additional houses would be required to reduce overcrowding by an additional ten percent. However, NPARIH’s extra 4000 houses reduced overcrowding by 15 percent, and the Review estimates that a further 5500 houses would reduce overcrowding by a further ten percent. It seems likely that at least 5000 houses would be required to reduce overcrowding by a further ten percent.

[3] This figure is calculated based on the Review’s base figure of 5500 new houses to meet existing needs plus population growth, the estimate of 5000 new houses to replace assets which reach the end of lifespan, and the approximately 5000 additional houses required to reduce overcrowding to metropolitan levels.

[4] Table 5.5 of the Review report suggests that average weekly rents are around $90. If we adopt the conservative assumption that rents cover 20 percent of maintenance costs, then average annual maintenance costs will be $23,400 per annum, of which only $4680 is rent. If there are 15,000 houses nationally, then the additional funds required exceed $280m per annum, or $2.8bn over the next decade.