Noel Pearson: Address to The Treasury on the Cape York Peninsula Reform Agenda

Noel Pearson: Address to The Treasury on the Cape York Peninsula Reform Agenda

Let me first acknowledge the traditional owners of Canberra, the Ngunnawal people. I wish to thank Secretary Ken Henry for his kind invitation to speak today.

Let me say at the outset that in pursuit of our reform agenda in Cape York Peninsula, our partnership with the Commonwealth Treasury is critical. The Cape York Institute benefited immeasurably from the stewardship of Subho Banerjee, who is with us today, and whose excellent work in both getting our organisational capacity up to impressive speed and helping us to hammer out our reform agenda, I want to acknowledge. I also want to acknowledge the excellent contributions made under theTreasury?s secondee program, by Bryn Battersby and Robert Philpott. Bryn?s workon developing a framework for thinking about the viability of remote communities I in particular want to highlight – because I think it is work of the highest standard andwide relevance. Robert Philpot?s work on social capital will actually result inpractical implementation with the current development of a People Action Network trial, as an enabler of voluntary action in the community of Hope Vale. Of course we are now joined by Sam Reinhardt and Ben Crabb who have taken over from Bryn and Robert.

The support and interest of the Treasurer and the Secretary are to my mind, the most critical sources of governmental support for our determination in Cape York Peninsula. I hope that our partnership will be maintained in the coming crucial years of reform design and implementation. This is the first time to my knowledge that the Treasury of the Commonwealth has made a commitment to contribute to and support


indigenous policy reform – by bringing its intellectual and institutional resources to bear on this profound challenge – and I am conscious that we need this partnership if we are going to succeed with reform.


Today I will talk about welfare, passivity and responsibility, and what needs to be done to ensure that welfare and passivity do not undermine responsibility.

Since I started my campaign in 1999, the term „passive welfare? has come intocommon usage. But passive welfare is viewed exclusively in terms of income support.

I agree that income support constitutes an important facet of passive welfare. But this is only part of the problem. Also contributing to collapsed responsibility is passive service delivery, and the assumption by both service deliverers and recipients that such assistance is a natural entitlement. Shifting the passive welfare paradigm is thus more complex than simply reforming payments; it requires that we examine the role of passive service delivery, and be willing to struggle against the entrenched power relations which are inherent to it.

But before I continue with the main theme of my presentation, I would like to reiterate the thinking behind the Cape York Peninsula reform agenda. Disturbed by the deterioration in our home region, my colleagues and I turned our minds to this question: What makes a good society, and how is it possible to achieve this?

What makes a good society?

A good society allows and enables people to lead fulfilling, productive lives, but it also influences and guides the formative years of the young in society to desire and work towards a good future. The most important shift in policy during the last decades has been the triumph of liberal ideas about the importance of markets and of societal institutions conducive to enterprising behaviour. Liberal principles allow and to a great extent enable people to live rich lives.



Liberal democracies are also committed to a social investment in “capabilities” –good health and education being key underpinnings of capabilities. Capabilities are our range of choices, created by the personal and social resources that each individual has and may utilise to improve their lives. People are truly free when they have the capabilities to choose.

The perpetual debate in democratic countries is about the correct scope of government social investment. Excessive government support for capabilities may weaken choice, which is recognised as the main driver of wealth creation.

Young people in Cape York Peninsula are unfree in the sense that they are almost certain to lead unfulfilling lives. We believe that a sustained social investment is necessary to improve their prospects.

But we are strongly convinced about the need for a third aspect of a good society: the importance of social norms. The liberal and social democrat theories, that choice and social investment are necessary, apply to adults; without social norms acquired in childhood, a person will not choose to lead a productive life, and will not benefit fromthe governments? investment in him or her.

We have combined our support for liberal and social principles with our strong belief in norms into a comprehensive social and economic development agenda.

The three components of the agenda are therefore:

  1. restoring social order through functional social and cultural norms
  2. investment in building capabilities
  3. getting incentives right

Taken together, these three components form a metaphorical stair case.

First: a strong foundation of social and cultural norms
The foundation for the stairs of social uplift must be the re-establishment of rules that society expects its members to follow.


Mainstream Australia has social order. This has a visible component, for example, law enforcement. But it also has an invisible component – social norms that influence individual behaviour. An example of this may be found in the attitude of mainstream Australia to school attendance. The visible component is made up of nation-wide truancy laws and disciplinary tactics implemented by schools. The invisible component may be witnessed in the social norm that assumes children should attend school, and the inherent value placed in education.

Together, social norms and values ensure that in mainstream Australia, bad behaviour– such as truancy – has consequences. In contrast, Cape York is operating at a social order deficit, largely due to a breakdown of social norms.

But what is needed to build and sustain positive social norms? I would argue that there is a need to develop ongoing connections between Commonwealth-funded income support, State-based service delivery, and Indigenous people able and willing to take on emerging leadership roles. Establishing such connections would mean vesting power in Indigenous communities and individuals, thus embedding social responsibilities in both high-level and local Indigenous decision-making processes.

Current work along these lines is already being developed in the idea of a Families Commission, an impartial local body with authority vested by both State and Commonwealth governments. With the support of government, a Families Commission would address underlying family dysfunctions which place children at risk – both by recommending that individuals and families take up programs such as income management, parenting education, counselling and rehabilitation, and where such individuals and families fail to take up their responsibilities, by imposing sanctions and ordering participation in support programs. For example, the Commission would be able to place pressure on parents to ensure their children were attending school, by linking school attendance to families payments and income support. The Commission would thus give substance to State legislation which mandates school attendance, as well as helping to build positive social norms around parenting responsibilities and education. Importantly, these social norms would be reinforced through an articulation of local responsibility, but with the support and backing of all levels of Government.


Second: a generous investment in capabilities supports
On the foundation of social norms, we need to build the capabilities of Cape York people so that they are in a position to exercise meaningful choices.

To combat the lack of capabilities in Indigenous communities, policy has traditionally targeted the most obvious source of incapability, namely the lack of income. This has been done primarily by providing welfare payments to those individuals who are unable to work or find employment. Yet as Amartya Sen has pointed out, poverty needs to be understood as more than a lack of income. It is more fundamentally a lack of opportunity to exercise meaningful life choices.

Approaches that rely primarily on redressing lack of income, will never be successful while other constraints on opportunities remain unchanged. The Cape York Institutehas addressed this concern in all its projects. To focus on education once more, CYI?sHigher Expectations Program does not simply fund students from Cape York to attend top ranking boarding schools across Queensland. It provides mentorship, counselling, school support and parental support – recognising that there are multiple constraints to these children receiving a comprehensive education in this environment. Similarly in the Welfare Reform Project currently being developed, much attention is being paid to the social, cultural and environmental context which will determine the success or otherwise of payment reform.

Only by challenging the existing parameters of service provision are we likely to start building capabilities. But the solution to this issue is clearly not to cut support. More, not less must initially be spent in order to redesign governmental support in such a way that it helps build capabilities rather than reinforcing passivity

Third: a reformed set of incentive steps
The third component of the staircase is to make sure that effective incentives are in place. For this to happen, the capability investments need to be priced so that people choose to ascend the staircase. If these incentives are rational, people will make choices that build their lives.


The current structure of income support payments in Cape York has set up a poverty trap where perverse incentives actually encourage people towards welfare, and away from real employment. I call this the pedestal welfare trap. While individuals are receiving more or almost as much on welfare than by participating in the mainstream employment or getting an education, there is little or no incentive to seek a job or to study.

Being on welfare, individuals have few opportunities to develop capabilities which would allow them to seek employment further up the staircase. The benefits of working on the lower levels of employment are in the development of capabilities that allow a person to climb that staircase. On the welfare pedestal, people are neither gainfully employed, nor developing capabilities that would allow them to take on more attractive jobs.

The current pricing of choices causes responsibility and initiative to collapse. Welfare payments and service delivery must instead be structured to support and encourage responsibility for earning and learning.

Passive Service Delivery

I would now like to return to the main theme of my talk, passive service delivery by governments (and their delegated NGO service providers). As I mentioned at the beginning of this talk, there is growing recognition that income support constitutes a key pillar of passive welfare, and that current income support mechanisms must be reformed if we are to promote responsibility. However very few people view social interventions and service delivery in the same light. Governments in particular have focused on income support at the expense of passive service delivery.

One of the reasons for the failure to address the problem of passive service delivery, is that there are elements of service delivery in the welfare state that do not constitute passive welfare. They include legitimate public services such as infrastructure, transport, law and order services, and health and education services.

The problem lies in identifying those government services which do amount to passive welfare. The test for this is to ask; does this service seek to undertake or



support a responsibility which would normally be assumed by individuals, families or communities? Such services constitute passive welfare, and their primary effect is to displace responsibility from individuals, families and communities, and place it into the hands of the deliverers.

The interveners develop an entrenched interest in the continued displacement of responsibility from individual, family and community. A second consequence is that clients and interveners develop an interest in preserving their mutual dependency.

Responsibility & Power

I believe that the question of how to shift these mutually reinforcing interests comes down to three things.

  • –  power: and its relationship to responsibility
  • –  risk management: which lies behind many government-funded social


  • –  accountability: which will be necessary to ensure that both governments

    and Indigenous peoples maintain responsibility. My focus today is on the first of these three elements – power.

    Power and responsibility are closely linked, since in order to convey or encourage someone to develop responsibility, the power to make decisions for that person must be relinquished. When we talk about redistribution in the context of welfare reform, it is critical to recognise that redistribution refers not only to a redistribution of money, but also a redistribution of responsibility. In this way, the onus to reconnect with a working life and the mainstream economy, and the responsibility to take up opportunities to build capacity would be on the individual, family unit or local community.

    The current dichotomy between Commonwealth funded income support, and State- driven service provision is a constant barrier to reform in this area. More problematic, is the fact that the dichotomy itself is obscured by both levels of government



continuing to devise and annually fund a vast array of ineffectual programmes aimed at supporting families and neighbourhoods in dealing with social problems.

Neither State nor Commonwealth has drawn the crucial links between income support and social order, and neither has examined its programs sufficiently to recognise that a chief outcome of most interventions is the displacement and alienation of responsibility.

In order to address this, the Commonwealth must revisit prevailing thinking about„welfare services? to Indigenous Australians and remove the passive welfare modeinherent in current programmes.

Indeed, the Commonwealth has been trying to reform its programmes for several years. In Cape York Peninsula, we have both supportive and critical viewpoints about these reforms.

The reforms can be broadly divided into three categories:

  • ?  Whole-of-government reforms,
  • ?  Shared Responsibility Agreements, and
  • ?  Reforms to CDEP.

    I will discuss advantages and disadvantages of those three kinds of reforms in turn.


    The current whole-of-government approach to Indigenous affairs assumes that the disparities in living-standards between Indigenous and non-Indigenous Australians may be addressed simply through implementing social interventions. This assumption ignores the fact that in functional mainstream Australian communities, there are a number of tasks for which families and/or individuals always take responsibility. Indeed the problem of governmental over-reach contributing to the Indigenous passive welfare paradigm is such that both State and Commonwealth governments in this country are routinely and structurally committed to indigenous passivity – not, as is needed, to re-building responsibility.



Co-ordination, whilst desirable, is not reform.

Shared Responsibility Agreements

SRAs do attempt to re-build Indigenous responsibility, as the name indicates.. However, a number of SRAs which have attempted to address irresponsible behaviour, have failed to recognise where responsibility for those behaviours is best located. Providing a community-based incentive for what amounts to an individual and family derived behaviour is unlikely to be a consistently successful policy.

Reforms to CDEP

There are many good elements in the recent reforms to CDEP. The pressure on CDEP providers to transition participants into real work is imperative.

The principle of contestability is also indispensable, requiring indigenous organisations and councils to change. There is a role for profit-making organisations in the rebuilding of functional and healthy Indigenous communities.

However, I see three problems with the Government?s current CDEP policies.

First, there is an inherent distrust of almost all Indigenous organisations in the post- ATSIC era. It is true that many Indigenous organisations have not performed. However, low expectations are the most debilitating circumstances an individual or organization can be placed in.

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I believe that the recent conflicts between the Council of Old Mapoon, which lost its CDEP programme to a private company, and the Commonwealth bureaucracy, was more an example of this distrust, than legitimate reform imperatives. It is a great tragedy that the Mapoon episode came to characterise the CDEP reform directions in our region: because the motivations underpinning the decisions and the manner in which they were made in this case, were highly suspect.

Whilst I accept contestability as an important tool for CDEP reform, I do not necessarily think the present method of introducing contestability is the best way of



going about it. It goes without saying that the exercise should not simply be about propping up the viability of private labour market program providers.

I have criticised governments? distrust of Indigenous organisations. However it is notuseful to swing to the other extreme, and argue that community control will provide all the answers. Community-control advocates seem to suggest that there is anautomatic and „given? good to be gained from community control or decentralisation.This can be an equally simplistic and unhelpful approach to a complex situation.

The second problem with the Government?s current CDEP policies is that there is at present no regard for the practical consequences for community service when contestablity leads to the extreme consequence that a reasonably competent Council loses its capacity to deliver on its local government functions. The concern of the Council at Mapoon was that it had invested in the employment capabilities of its local services workforce – and would be losing their best workers to the Weipa and the Comalco Mine because of the requirement that they transition people into fulltime work. The dilemma facing the Council was this: we want our people to obtain better jobs and more income outside of the community, but we also need good workers for our community to function. A system which raids the Council of its best workers, leaving them with the non work-ready – was not acceptable to the community?sleaders. Comalco and the job network providers should invest in building the employment capabilities of the non work-ready.

Third, there is a real question about the wisdom of replacing one „mass work organiser? (an Indigenous Council) with another „mass work organiser” (a JobNetwork provider). There will always be a significant proportion of people who will remain in the mutual obligation/make-work zone. They are people who are incapacitated by the long experience of passive welfare and substance abuse that has left a legacy of debilitation – and the causes of this self-perpetuating incapacitation are far from being resolved, so the problem will continue. They are people for whom the real jobs are not available, and the focus of policy must be the administration of mutual obligation so that the incapacitation of the current generations is not transmitted to their children. What we must strive for is to break the cycle of inter- generational transmission of dysfunction within incapacitated families.


The danger with current policy is that the Commonwealth ends up creating another set of perverse incentives by engaging private contractors in the task of perpetually managing dysfunction. The outsourcing of the administration of former ATSICprograms to large welfare organizations such as The Smith Family (for God?s sake)illustrates my concern. A passive welfare provider with entrenched interests in managing dysfunction (ATSIC) is replaced with another (a charity or private enterprise). The problem with charities is that predominantly in Australia they are passive service deliverers with an enterprise surface. The problem with private enterprises is that they are singularly motivated to reform where there is profit – and many of the reform actions that are needed are not amenable to profit-making: so they are ignored.

Mandating reform

Inherent to processes I have just outlined, is the transfer of power. In other words, re- building individual and community responsibility necessarily involves a transfer of power. The concomitant is that both State and Commonwealth governments recognise and support individuals? and communities? right to take responsibility,rather than pursuing a policy of passive service delivery which undermines this.

I am well aware that it is easier to talk about transferring power than it is to achieve such a transfer in reality.

This is especially the case given the asymmetrical power relationship between Indigenous Australians and Australian governments. This relationship means that the normal institutions of Australian democracy are delivering short on the rights and responsibilities of Indigenous Australians.

The right to take responsibility lies at the root of any successful reform to address Indigenous dysfunction and that in order to achieve this we must work together to ensure that relevant responsibility is located at the relevant level.

As well as the institutional weakness of indigenous people vis a vis governments, the whole problem responsibility displacement and passivity is that those who have taken



up the responsibilities which indigenous individuals, parents, families and communities have abandoned, indeed have been forced to abandon, will not now relinquish their role. There is a vast bureaucratic, Indigenous NGO sector, non- Indigenous NGO sector, and now increasingly private sector, industry that is premised on passive welfare service delivery. This industry has jobs, careers, fiefdoms, budgets,„leadership?, ambitions, mortgages, promotions, status, grand plans, strategies (andnow with outsourcing of service provision to private sector organisations – profits) at stake – and it resists at every turn any attempt for the intervention to come to and end– and for indigenous responsibility to be restored. This industry, whilst nominallyendorsing notions of “indigenous responsibility” has developed and institutionalised aset of defences against the withdrawal of their intervention, including arguments:

  • ?  That disadvantaged people are entitled to the services provided by this intervention
  • ?  That disadvantaged people lack capacity to take responsibility and there must necessarily be a phase of capacity-building before they are allowed to take responsibility
  • ?  That disadvantaged people will never overcome their internal disputes and differences and will never develop trust within their communities – and neutral, external service providers are therefore needed
  • ?  That accountability for public funds requires external service providers to hold responsibility and any move towards indigenous responsibility is inconsistent with accountability

    The basic reform problem in indigenous affairs is analogous to that which faced the Australian economy in the 1980s and 1990s: the pervasive absence of competitionthroughout too many sectors of the economy, public and private. This was the sclerosis afflicting the Australian economy, and reform required change at all levels, involving all players and binding upon governments, and it involved tectonic changes in assumptions and established practices and ways of doing things. There were vast


entrenched interests in the way of competition reform, not the least governments used to doing things in the old ways. The analogous sclerosis afflicting Indigenous society is the pervasive absence of responsibility at the individual, family and community levels. Every program intervention sponsored by governments must be examined according to this filter: does this program rebuild responsibility in indigenous individuals, families and communities? And the vast majority of passive service delivery programs must be forced to change accordingly.

Now is not the time to put forward my views on the institutional framework that is needed to effect this basic reform. I just wish to reiterate that governments must beobliged to support Indigenous Australians? capacity to take on responsibility and mustresolve to engage in a meaningful negotiation to transfer power to appropriate levels of indigenous society, including enabling indigenous organisations. For although governments are not as a matter of policy compelled to do so, the circumstances in which Indigenous Australians now find themselves demand that this be done.


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