Aboriginal Law Bulletin
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by Greg Crough
Many Aboriginal people believe that the funding of programs and services for Aboriginal people by State and Territory governments is inadequate, inequitable, and largely ineffective in reducing the social problems faced by Aboriginal people.
The Commonwealth Grants Commission (CGC) is presently reviewing the methodology by which Commonwealth funding of the State and Territory governments is assessed. This funding provides these governments with the financial capacity to deliver a significant proportion of their services and programs for Aboriginal people.
Until now Aboriginal people and their organisations have had minimal input into the CGC's deliberations. This is changing, as a number of Aboriginal organisations have recognised that the CGC has the potential to play a major role in assessing the funding requirements of evolving forms of Aboriginal self-government.
Apart from the government responses to the recommendations of the Royal Commission into Aboriginal Deaths in Custody, an important response to the problem of inadequate commitment to Aboriginal issues on the part of the State and Territory governments has been a report endorsed by the Australian Aboriginal Affairs Council (AAAC) in August 1991. This report, despite extensive criticism by a number of Aboriginal organisations, was endorsed at the Heads of Government meeting in May 1992.
I do not intend to discuss this report in detail here, since I have provided a critique previously[1] (see AboriginalLB 54/17), however it is sufficient to say that the implementation of the recommendations of this report will result in all of the operational aspects of, and the funding for, the Aboriginal and Torres Strait Islander Commission's (ATSIC) Community Housing and Infrastructure Programs (CHIP) being handed over to the State and Territory governments. ATSIC's role will be to determine the policy framework for the expenditure of the funds.
I believe that the implementation of the recommendations of the AAAC Report will reduce the ATSIC Regional Councils to the role of advisory bodies, with little effective power. While ATSIC's role will be determined by the content of the agreements entered into with the State and Territory governments, the substantive executive power will be at the national, rather than the local level. Some. State governments have already indicated that at best they will take account of ATSIC's views, but will not allow the ATSIC Regional Councils to determine the priorities of their housing and infrastructure programs.[2] This should come as no surprise.
Further, ATSIC's own Office of Evaluation and Audit was very critical of ATSIC's lack of policies regarding its grants to the state and Territory governments – the majority of which are under CHIP:
‘In the absence of a stated policy it is the view of the evaluation team that ATSIC no longer provides grants to States in a way which ensures payments are directed to areas of Commonwealth concern for designated purposes as provided for in Section 96 of the Constitution. Currently, State/Territory agencies are encouraged to develop programs, to their own agenda, and submit applications for funding. The process has the effect of the States/Territory directing Commonwealth funds to areas of activity where the State/Territory government may have a particular interest or concern, or is unable or unwilling to fund.’[3]
The recommendations of the AAAC Report are one way of dealing with this problem But are there realistic alternatives to the policy approach of the Report? ATSIC and the Minister for Aboriginal Affairs are right to be critical of the State and Territory governments Perhaps bilateral agreements between ATSIC and these governments, as envisaged by the Report, will improve the situation. But why does there seem to be so little discussion of the Commonwealth funding that is already provided to the State and Territory governments each year as a . result of the Premiers' Conferences? This funding is based on the recommendations of the CGC. Considerable amounts of this funding are for the delivery of programs and services to Aboriginal people
This paper discusses how the CGC processes could be used to achieve 'more effective outcome which:
The CGC is a statutory body established in 1933 to report upon applications by the States to the Commonwealth for special assistance under s.96 of the Constitution. Under s.96, the Commonwealth Parliament can grant financial assistance to the States on terms and conditions it thinks fit.[4]
The CGC does not decide the size of the payments to the States and Territories. This is decided by the Commonwealth each year when it formulates its budget. The role of the CGC is to make recommendations on the distribution of the grants between each of the States and Territories An important point to note is that its recommendations derive from a formula-based assessment process, refined over the past 60 years and regarded as being above party-politics.
To get an idea of the size of the payments that are annually assessed by the CGC, in 1991-92 General Revenue Assistance and Hospital Funding Grants to the States and Territories by the Commonwealth totalled $17 400 million.[5] These are untied grants which are meant to assist these governments meet their recurrent outlays.
The first Report on the General Revenue Grant Relativities was published in 1978, and the assessments applied the principle of fiscal equalisation for the years from 1975. ‘Fiscal equalisation’ is intended to ensure that all Australian citizens have access to a comparable range and quality of government services. In the words of the Secretary of the CGC:
"The underlying objective of the fiscal equalisation principles governing intergovernmental revenue sharing arrangements in Australia is to equalise the overall capacity of each State or Territory to provide a standard range of government services to all of its citizens – including Aboriginals and other ethnic groupings which happen to make up the population."[6]
However because the General Revenue Assistance payments are untied, the priorities for the expenditure of these funds are determined by each of the State and Territory governments. This is the difference between General Revenue Assistance payments and Specific Purpose payments, which as their name implies, must be spent on specific functions and services.
‘Fiscal equalisation’ results in a transfer of taxation revenue from NSW and Victoria to the other States and Territories. This reflects the fact that Qld, WA and the NT have less well developed infrastructure, more dispersed populations, and narrower taxation revenue bases. These two states and the NT also include more than 56% of the Aboriginal population, a significant proportion of which lives in very remote areas.
‘Fiscal equalisation’ has at times been the subject of very heated argument and controversy. The principle has been publicly criticised in recent months by senior Victorian and NSW politicians who argue that the smaller states no longer require such a high level of Commonwealth financial assistance, and since Victoria and NSW generate the bulk of the country's taxation revenue, they are entitled to a larger share of the financial benefits.
The Commonwealth Treasury has also Questioned whether fiscal equalisation undermines ‘economic efficiency’. The Treasury suggested that concern about the relationship between equity and efficiency has been due to:
“...the increasing focus, in recent years, on the need for microeconomic reform and efforts to improve Australia’s international competitiveness.”[7]
The operation of the principle of fiscal equalisation may be substantially modified during the next few years if Australian economic policy makers continue their obsession with relatively narrow economic concerns. There is no doubt that the situation in rural and remote areas of Australia would be very different if strict principles of economic efficiency were applied to intergovernmental funding arrangements.
One further point needs to made about the arguments of NSW and Victoria and it relates to the Commonwealth funding of local government. Unlike the general revenue funding, which applies the principle fiscal equalisation, this principle is not applied to local government funding. The existing distribution is based on equal per capita payments. If fiscal equalisation were applied to the distribution of local government grants, the funding for local governing bodies in NSW and Victoria would fall dramatically. The CGC's assessments for the funding of local government, based on the application of the principle of fiscal equalisation, have not been adopted because of the political difficulties they would produce.[8]
The social and economic characteristics of the Aboriginal population can have a significant influence on these assessments. The influence shows up most clearly in the NT, even though numerically there are more Aboriginal people in Qld, WA and NSW. Because Aboriginal people comprise about one quarter of the NT's population, and because of the existence of social and economic problems amongst the Aboriginal population, including unemployment, inadequate infrastructure and remoteness, the NT Government receives a significantly higher level of per capita funding than the States.
For example, in 1991-1992, the NSW Government received $824.54, and Victoria $811.80, of general revenue assistance from the Commonwealth for each person in those States, while the NT received $4,843.27.
The Chairman of the CGC stated that in the case of the NT Government:
“...a substantial amount of its general revenue funding reflects the disabilities it faces in providing service to Aboriginal people”[9]
There is however, no guarantee that the level and quality of services will actually be equalised. Despite years of higher per capita funding, there is little evidence that the standard of service provision in the NT has been equalised between Aboriginal communities and the major urban areas In saying this, of course, it is not intended to suggest that many Aboriginal people living in Darwin or Alice Springs have access to an adequate level and range of government services. However, they do have access to a wide range of mainstream government services that are not available to the residents of the remote communities.
The application of the principle of fiscal equalisation is not intended to ensure that access to services is equalised within a State or Territory. Rather, it is intended to provide the financial capacity to each government to provide a level of services similar to the standard of all the States and Territories.
The CGC is presently undertaking its five-yearly review of the relativities - the methodology by which the distribution of funds between the States and Territories is determined. The CGC will complete its final report in April 1993, which will then be considered by the Financial Premiers’ Conference.
Although the review does not exclude general public participation, normally only representatives of Australia's governments are involved, with most of the input provided by the treasury departments of the State and Territory governments.
This time, however, a number Aboriginal organisations produced submissions, including the Central and Northern Land Councils, the Chairperson of ATSIC and the Aboriginal Town Camper's Advisory Committee. In one sense the Land Councils and the town camp organisations, could be seen to be asserting a form of sovereignty. By dealing with the CGC directly, they are suggesting that Aboriginal people should be treated as another level of 'government'.
The NT Treasurer, Mr Coulter, criticised some of these submissions in the Legislative Assembly - branding them 'anti-Territory' - and he went on to say that the Land Councils:
' ... want to snatch for themselves the reins of the Grants Commission funding despite the fact that this whole matter is quite properly the province of a democratically elected government representing the interests of all Territorians. It is, at the very essence, racism"[10]
There would be many people in the NT who would strongly dispute the assertion that the NT Government governs in the interests of all Territorians.
The two major NT Land Councils argued that the objective of Commonwealth funding for Aboriginal programs and services should be to provide Aboriginal service organisations and Aboriginal local governing bodies with the financial capacity to provide an equitable level services to Aboriginal people, rather than providing this financial capacity to the NT Government.
This would mean applying the principle of fiscal equalisation to an Aboriginal community or Aboriginal local governing body, or area of Aboriginal land, rather than giving the NT Government the funding to provide the services, which it may or may not decide to provide.
The Land Councils pointed out that despite years of fiscal equalisation, the gap between Aboriginal communities and those where non-Aboriginal people are in a majority remains very large, and may even be getting bigger. The Land Councils questioned why large amounts of Commonwealth funding is provided to the NT Government, which then continues to direct a large proportion of this funding to providing services to the non-Aboriginal residents of the major urban areas The infrastructure deficiencies of Aboriginal communities, including housing and roads are the obvious signs of the NT Government’s distorted priorities.
The Land Councils advocate, as was also suggested by the House of Representatives Standing Committee Aboriginal Affairs in its report Our Future Our Selves[11], and the National Report of the Royal Commission, that block funding for Aboriginal organisations and communities be introduced. However, unlike the Commonwealth's responses to the Commission recommendation, the Land Councils have suggested an approach that I believe is more consistent with Commissioner Johnston's reasoning in his National Report.[12]
The Land Councils suggest that the CGC should undertake a national review to establish' the appropriate levels of funding which 'would enable Aboriginal service organisations in Aboriginal communities to `provide adequate, and significantly improved, levels of services. Without actually saying so, what the Land Councils are referring to in their submissions is the provision of funding that could ultimately lead to various forms of Aboriginal self-government. For the CGC to undertake assessments of this type, a change to its own legislation would be required.
The fact that a submission was prepared for the Chairperson of ATSIC is surprising since ATSIC, and its predecessors, have limited their involvement in previous CGC reviews. It is somewhat disappointing that the., submission is so brief, but this probably reflects both the lack of expertise within ATSIC, and the inability of senior ATSIC staff to devote much time to the issue because of their other responsibilities.
The usefulness of the ATSIC submission is significantly compromised by its commitment to the recommendations of the AAAC Report. It also reflects the unwillingness of ATSIC to contemplate, and then advocate, a major change in the way that the Commonwealth funds the State and Territory governments. For example, ATSIC's Office of Evaluation and Audit, in commenting on the administration of ATSIC's grants to these governments, stated:
"In summary, the present approach to the administration of grants by ATSIC reinforces a highly unsatisfactory state of affairs, whereby the States only provide infrastructure to remote communities where the Commonwealth provides funding, yet where the extent of Aboriginal needs far exceeds the capacity of the Commonwealth to finance."[13]
In assessing the extent to which the final statement in this quote is a true reflection of the situation, the questions raised in the ATSIC submission are important. The submission asks how much funding is provided to the State and Territory governments for Aboriginal programs and services by the Commonwealth, and what is the accountability of these governments in applying the amount allocated?
The problem is that given ATSIC's commitment to handing over much of its own funding to the State and Territory governments, why would it care how much funding is provided to these governments as a result of the CGC's deliberations? Perhaps it is indicative of the obsession ATSIC seems to have about quantification and measurement.
Adding up how much money is spent on Aboriginal programs and services, such as is done in the Commonwealth Budget Paper (with the bizarre title Social Justice for Indigenous Australians[14]), may actually undermine the position of Aboriginal people. It is already quite common to hear comments about the millions of dollars of taxpayers' money wasted on Aboriginal people.
Much of the spending recorded in this Budget Paper is actually money that should properly be regarded as citizenship entitlements, not Aboriginal-specific spending. For example, the spending on the Community Development Employment Projects scheme, which is an ever-growing part of ATSIC's budget, is really citizenship entitlements (unemployment benefits) under another name.
The amount of money spent by governments should not be the main criteria for judging social justice. In general, Aboriginal people have little control over how the money is spent, much of it is controlled by the State and Territory governments and much of it is spent on programs that were not designed, controlled or managed by Aboriginal people.
Some would argue that ATSIC has changed this situation. However for many Aboriginal people the establishment of ATSIC seems to have made little difference. A major part of the reason for this attitude relates to the staffing of ATSIC. It is not coincidental that of the 339 recommendations of the Royal Commission into Aboriginal Deaths in Custody, the only recommendation not to receive support related to the staffing of ATSIC. As Rowse has argued:
“This response sidestepped the intellectual challenge: of considering how best to resolve the tension between the rights of staff and ATSIC's legislative commitment to empower Indigenous people It chose to recognise Aboriginal and Torres Strait Islander Interests in a rather different way: in the career development opportunities of Aboriginal public servants.[15]”
To give an indication of how fiscal equalisation for an Aboriginal community might work in practice, take the example of any of the larger Aboriginal communities in the NT which are on Aboriginal land. The following discussion is meant to be general, and of course there are many complexities that would need to be resolved. The situation of Aboriginal people living in urban areas is one issue that would need to be resolved.
Most of these Aboriginal communities already have Aboriginal councils which are formally recognised as local governing bodies. They usually also have outstation resource centres, and a variety of other Aboriginal service organisations. There are also various Commonwealth and Territory funded services in these communities.
The local governing bodies, such as Maningrida Council or Yuendumu Council, and the outstation resource centres, already undertake a wide range of governmental functions, albeit with totally inadequate funding. Many services in the community and the outstations are provided by the Councils and the resource centres, either directly or as a result of contractual arrangements with NT and Commonwealth government departments and authorities.
These local governing bodies already receive direct Commonwealth funding through the NT Local Government Grants Commission, and other Commonwealth funding through the NT Office of Local Government. The Councils are already assessed by the NT Local Government Grants Commission according to its own principles of fiscal equalisation.
I do not believe it is unrealistic to expect that the funding for all of the services and programs in these communities could be assessed by the CGC, and provided directly by the Commonwealth. The decision about who actually undertakes the road works, or runs the schools, or the health clinics, could then be determined by the community.
That is, the total funding for a community would be assessed by the CGC, so that the Aboriginal organisations in the community would have the financial capacity to provide a level of services to the residents at a level approaching that enjoyed by people living in urban areas. These organisations, or the community through some appropriate government-type body, could then assess whether they wanted to run their own services, or wanted to contract out these services to others. Some communities may not be prepared to take over all service functions at the present time.
One of the advantages of applying the principles of the CGC to Aboriginal communities is its formula-based assessment approach. The methodology used is open to public scrutiny, and can be modified to suit particular circumstances. Applying such an approach to Aboriginal communities, Aboriginal local governing bodies and outstation resource centres, could remove many of the present uncertainties and inconsistencies in their funding.
The CGC met with Aboriginal organisations at a conference in Darwin in late July. The intention of this meeting was to discuss the review of the relativities, and in particular for the Commission to hear the views of the organisations.
While CGC cannot determine policy, it does have a major ole to play in trying to ensure that the inter-governmental financial arrangements produce equitable outcomes. The recommendations of its present review, and the broader discussions about fiscal equalisation, will influence how funding is divided between the States and Territories for a number of years.
Assertions of sovereignty and demands for self-government continue to come from sections of the Aboriginal population. What some Aboriginal people are beginning to do is to link issues such as land rights, government funding and self-government in a practical community-based context.
A recent manifestation was the formation, at a meeting held in Maningrida in May 1992, of the Yolgnu Government Councils Association. A similar body has been formed in central Australia. These Associations will represent the broader interests of Aboriginal local governing bodies and resource centres. An important objective of the Associations will be to make representations to the CGC, and to seek direct Commonwealth funding for Aboriginal organisations.
Self-government, as indigenous people in other parts of the world have shown,
requires the negotiation of appropriate financial arrangements with the national government. The main danger is that governments hand over the responsibility for service delivery without guaranteeing adequate funding to carry out these functions.
While the CGC will obviously not be in any position, at the present time at least, to recommend how forms of Aboriginal self-government might be funded, new issues in the debate have now been raised. There is little doubt that this will be a significant political struggle for Aboriginal people.
Endnotes:
1.
[1] Crough, G.J., Aboriginal Australia and the ‘New Federalism’ Initiative, North Australia Research Unit, Discussion Paper No.2 December l991.
[2] See for example, Coopers and Lybrand Consultants, Processes and Guidelines for the Development of Regional Plans by Regional Councils, Sydney,1991.
[3] Aboriginal and Torres Strait Islander Commission, Office of Evaluation and Audit, Evaluation of ATSIC Administration of States Grants, August 1991.
[4] For a history of the first fifty years of the CGC, see Commonwealth Grants Commission, Equality in Diversity, AGPS Canberra, 1983.
[5] 'Commonwealth Financial Relations with Other Levels of Government, 1991-92’, Commonwealth Budget Paper No.4, AGPS, Canberra, 1991.
[6] Glasson, A, pers. comm., 18 October 1991.
[7] Commonwealth Budget Paper No.4, AGPS, Canberra, 1991, p.71.
[8] Commonwealth Grants Commission, Report on the Interstate Distribution of General Purpose Grants for Local Government, AGPS, Canberra,1991.
[9] Rye, R, pers comm, 28 August 1991.
[10]Northern Territory Legislative Assembly, Hansard, 12 May 1992, p.117.
[11] House of Representatives Standing Committee on Aboriginal Affairs, Our Future Our Selves, AGPS, 1990.
[12] See Vol. 4 of the National Reports of the Royal Commission into Aboriginal Deaths in Custody, AGPS, Canberra, 1991.
[13] Aboriginal and Torres Strait Islander Commission, Office of Evaluation and Audit, op. cit., p.12
[14] Budget Paper No.7, AGPS, Canberra, 1991.
[15] Rowse, T., 'Top-down tensions", Modern Times, June 1992.
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