Ideas@TheCentre

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Money well spent?

Helen Hughes AO 1928 - 2013 and Mark Hughes | 11 March 2011

The newly released 2010 Indigenous Expenditure Report confirms that Indigenous disadvantage is not the result of insufficient government expenditure.

In 2008–09, Australian governments spent $22 billion on Indigenous Australians: $17 billion on mainstream expenditure (health, education, welfare, etc) and $5 billion on specifically Indigenous programs. This is an average of $40,000 per Indigenous Australian (compared to $18,000 per non-Indigenous Australian) or $160,000 for a family of four.

But these figures conceal the real scale of Indigenous expenditure in remote areas. More than 60% of Indigenous Australians (330,000) work in major cities and regional towns. They access the same government services as other Australians and pay taxes. When government expenditure is adjusted for this group, the figures change dramatically.

About 215,000 Indigenous Australians depend on welfare. Most (about 140,000) also live in major cities and regional towns. The remainder (about 75,000) live in very remote communities. If government expenditure on Indigenous Australians is divided among the welfare dependent Indigenous Australians, the average per head is $75,000 or $300,000 for a family of four.

But even these figures do not tell the real story. Urban welfare-dependent Indigenous Australians access similar services to non-Indigenous welfare recipients. Most Indigenous funding is supposed to go to the 75,000 Indigenous Australians in remote communities. If government expenditure is allocated to those 75,000 Indigenous Australians, it is more than $100,000 per person or $400,000 per family of four!

Where do these taxpayer funds actually go?

Some reach remote residents as welfare, but welfare is a major deterrent to Aborigines and Torres Islanders taking jobs. Welfare is part of the problem, not the solution.

Some is absorbed by remote education, health, public housing and other services, none of which achieve mainstream standards despite the massive spending. Indigenous schools that receive government funding of more than $30,000 per student (in contrast to national averages of around $10,000 to $12,000) have NAPLAN literacy and numeracy failure rates greater than 90% in contrast to less than 10% for mainstream schools. Remote Indigenous public housing averages $600,000 for a house that can be built privately in the same location for $300,000.

Most of the funds are absorbed by federal, territory and state bureaucrats; additional non-Indigenous administrators; and other staff in remote communities, contractors, consultants, academics, and other members of a vast ‘Indigenous industry’ that outnumbers Aborigines and Torres Strait Islanders.

Indigenous expenditures will continue to be wasted and perpetuate Indigenous disadvantage until key areas – education, private property rights (housing), and welfare – are reformed and there is greater accountability for how funds are spent.

Helen Hughes is a Senior Fellow at The Centre for Independent Studies. Mark Hughes is an independent researcher.