Business must help with social reform: Ken Henry

, - October 22, 2016

Former Treasury boss Ken Henry has called on corporate Australia to help wean indigenous communities off welfare and not leave the job to the state.

The man who held the purse strings for a decade for Coalition and Labor governments says “nothing has worked” to make more indigenous people finan­cially independent, despite the billions of dollars ploughed into programs to lift employment and living standards.

“Despite a lot of goodwill on the part of a lot of good people … nothing we tried as a country converted the state of dependence indigenous people have on government to a state of independence from government,” he said.

Dr Henry has joined other banking, business and investment leaders in an initiative driven by Noel Pearson to forge change in indigenous communities on Queensland’s Cape York peninsula. Mr Pearson calls it a “new model” to break the welfare cycle with boardroom nous.

“We have been working on welfare reform with government but if that is not complemented with economic ­development we will ultimately fail to provide the full solution,” the indigenous leader said. “What we need is for people to get into jobs and for jobs to be created through enterprise development.

“When you have a regime that obliges people to look after their children, send them to school and to take whatever job opportunities there are, that has to be matched … by the availability of work.”

Under Mr Pearson’s Cape York Partnership program, former Leighton Holdings chief David Stewart chairs CYP’s Cairns-based building and landscaping business Bama Services. In two years, turnover has increased sixfold to an ­anticipated $9 million this financial year and the mainly indigenous workforce has grown from 19 to 50.

Venture capitalist Mark Car­negie kicked in seed money for the Cooktown sawmill business Cape York Timber, chaired by Rob de Fegely, the chairman of Forestry Tasmania. Annual revenue is on track to break the $1m mark.

Private equity kingpin David Jones oversees the private venture capital side of the CYP operation, Cape York Enterprises, and is a non-executive director of CYP, along with former Westpac chief and current chair­woman of cruise ship operator Carnival Australia, Ann Sherry. Managing partner Danny Gilbert, of law firm Gilbert + Tobin, is CYP chairman.

Dr Henry, the board’s latest recruit, said he wanted to help new indigenous businesses on Cape York manage risk and become ­financially resilient. Since bowing out as Treasury secretary in 2012 he has been appointed to head the board of National Australia Bank.

He backs an enterprise-led ­approach to indigenous affairs, saying that for most Australians autonomy comes from running a business or working for one.

“For this to work, the Cape York Partnership is going to need significant support from corporate Australia, particularly in capability building — imparting knowledge of how businesses can be run for commercial success,” he said. “The things that successful businesses do, such as building asset sheets, knowing how to access funding on good terms with reliability, how to go about employing people with the capabilities … they need” don’t just happen.

Delivering the Sir Keith Murdoch Oration in Melbourne on Thursday, Mr Pearson slammed “vampire industries” that had colonised indigenous communities through outsourcing of welfare services. This had happened under the banner of reform and its “dead end” was child protection. “The profit motive now exists in the space that separates lost children from their mothers’ bosoms”, he said, creating industries “whose sole rationale is the existence of social problems”.

He said the “ultimate short circuit” to the transmission of poverty was a job: “Our whole agenda has to match social reforms with economic development,” he told The Weekend Australian.

Mr Gilbert said access to ­finance was a barrier for Cape York people trying to start a business: “That speaks to one of the problems that you have with making available to indigenous people the opportunities that exist elsewhere.”

Mr Pearson said the financial grunt added to the CYP management had put “rigour” into the ­operation.

“They help us solve the challenges we have in raising ­investment, in situations where there is not necessarily a government solution,” he said of the big-name directors. “They treat it like the money is theirs.”