At a recent business lunch, the people on my table were discussing how to create commerce in Indigenous communities. After a while, an Aboriginal mate of mine who owns a cattle station spoke up, saying “We’re always talking about communities doing this and communities doing that. Communities don’t conduct business. Business is about individuals making money.”
Indigenous Australians have valuable assets, including land rights and compensation funds. Most of these assets are communally owned through statutory or community bodies. The systems underpinning these bodies are based on principles applicable to semi-nomadic, hunter-gatherer societies operating as a collective. They aren’t designed for individual prosperity and, therefore, economic development. More often than not they create structural barriers that frustrate Indigenous participation in the real economy.
Take private home ownership. Currently there’s a fierce political debate about property taxes and negative gearing. Listening to this debate it’s obvious how important home ownership is to the financial security and prosperity of most Australians. Traditional Indigenous lands are the only places in Australia where private home ownership is not legally (or practically) allowed. In most Indigenous communities, people live in social housing owned by government or Indigenous bodies. Many Indigenous Australians simply don’t have an opportunity to build financial security through home ownership in their own community.
Statutory and community bodies aren’t designed for commercial activity. Sure, they can own assets and businesses and generate income. Sure, their assets and income theoretically belong to the community. But community members have no way to directly access those assets or decide how money is spent. They aren’t shareholders entitled to dividends. Wealth generated by the organisation either remains within it or is spent, frequently paid to people outside the community.
Here’s an illustration. Say a community organisation implements a multi-million dollar tourism project. Sounds like an economic development opportunity, right? Not necessarily. Projects like these can happen with no economic development for the community whatsoever. How? The organisation hires outside contractors to build the infrastructure and employs non-community members to work in the operation. Because locals don’t have the skills. Many of the organisation’s own management and staff may be from outside the community too. What remains after paying wages and contracts can’t be distributed to members, so the organisation spends it on, say, a community health program, also staffed by professionals from outside the community.
And that’s how you deliver a multi-million dollar community project with no economic participation by community members.
Here’s a different example. An individual establishes a small business taking tourists camping and bushwalking. The business grows and takes on staff. Another individual sees an opportunity to set up a mobile coffee and food van. Another offers art and cultural tours. Another takes the tourists fishing. Another sets up a small accommodation lodge. And so on.
Ironically, this small initiative driven by a few individuals would generate more economic participation by locals than the multi-million dollar project.
Economic development doesn’t require massive projects. And it certainly doesn’t require community-based initiatives. Most economies in the world have been built by individuals making a go of it and starting small.
This Commonwealth government has introduced two major policies to encourage Indigenous employment and business – the Indigenous Procurement Policy, which assists Indigenous-owned businesses to win government contracts, and the Indigenous Enterprise Development Fund, which matches commercial lending to fund commercially sustainable businesses.
These policies have enormous potential to support Indigenous economic development, particularly in remote areas. However, both policies are open to not-for-profit organisations and social enterprises. It’s the wrong approach. The point of these policies is to encourage enterprise and entrepreneurship and help Indigenous people build livelihoods. This can only happen through for-profit businesses. That’s why I’ve advised government that both initiatives should be closed to charities, social enterprises and other not-for-profit organisations, including land councils.
As these examples illustrate, developments deliver little for Indigenous communities if they don’t create jobs for local people. So I’ve also advised government that the procurement policy require businesses have a minimum of 25% Indigenous employment to qualify for concessions. And that any company with 75% or more Indigenous employment should qualify for the concessions, regardless of who owns it.
The government has made a good start with these two policies. It must also remove the structural barriers to commerce and private ownership, starting by implementing the recommendations of the Investigation into Indigenous Land Administration and Use Report to COAG released in late 2015.
World history tells us that economic development is achieved in systems that allow commerce, a free market, private ownership and using land as an economic asset. It may seem counter-intuitive, but economic development at a community level mostly occurs when people aspire to build prosperity at a personal level. Pursuing prosperity for ourselves and our families is how we create strong communities.
Community development stems from personal prosperity
24 February 2016
By Nyunggai Warren Mundine