Wrapped in red tape and denied the flexibility to grow

In the Northern Territory and Western Australia, policymakers and advisers are acknowledging what the residents of remote Aboriginal communities already know: the system of governance in communities has failed.

Senior indigenous affairs officials Neil Westbury and Michael Dillon wrote in The Australian Financial Review that the failure of governance in remote Australia was "akin to a failed state within Australia".

In October, NT Minister for Local Government Elliot McAdam announced that 50 per cent of councils in the territory were high risk or dysfunctional, so much so that his department had made 17 major interventions in the preceding six months.

In July, Peter Newman, the chairman of the WA Government's Sustainability Policy Unit, told a national conference that local councils were not properly directing hundreds of thousands of dollars in federal funding earmarked for essential services in indigenous communities.

The WA Law Reform Commission dedicated chapters in its September report on customary law to the need for Aboriginal community governance reform.

There is a pressing need for a new governance framework for remote indigenous communities. A strong governance structure that has the respect of residents is essential for any healthy, functional and viable society. When governance structures fail or are corrupt, the whole community suffers. But we need to be very clear about why the present framework is not working and how a new framework would work.

There are three main reasons why the framework is not working. There are too many local governing bodies serving too small a population. In the NT, 63 local government bodies serve a population of only about 200,000. These small governing bodies have difficulty engaging and retaining professional staff, and the regular turnover of executive management makes it difficult to implement strategies.

There is conflict between administrative structures and the duplication of responsibilities. Local governments and land councils in the NT can have overlapping roles in land ownership and management under territory and commonwealth legislation, and this causes perennial disputes.

Land councils act as a brake on the development of commercial operations. They can skirt around the commonwealth land rights legislation that should prevent their direct involvement in commercial operations by establishing separate companies of which their councillors and trustees are directors. Land councils can also use the permit system to prevent enterprising residents from operating businesses freely and thereby protect their monopoly businesses.
What can be done? McAdam is entirely correct to suggest that a simplified, amalgamated system of regional shires is the way forward. But the devil is, of course, in the detail.

The new regional shires should operate as local councils under the territory's local government legislation. The amalgamation of existing governing bodies into larger regional shires would bring about significant economies of scale and prevent much of the present confusion and conflict.

The regional shires should retain responsibility for ordinary local government services (such as local roads, zoning, rubbish collection). Regional shires should also retain transitional authority for services supplied by central government that need local supply because of remoteness (such as power generation, transport and communications) and for commercial enterprises for which economies of scale are too small to be privately competitive and profitable (shops and petrol stations).

Over time, these commercial enterprises would become open, privatised and competitive.
Land councils, meanwhile, should be limited to a land management role. Although they do not have any local government functions, some have assumed such control through their power over land leases.

Transition to the new regional shires model must be carefully implemented. Before any regional shire is established, there must be agreement on an administrative structure, strategy, and an open and transparent financial reporting regime. For this transition phase an administrator should be appointed.

After the systems and structures are established, there should be ordinary local government elections conducted by the Australian Electoral Commission. These elections should ensure a fair representation from the communities, together with trustees, traditional owners and land council members. Sitting fees should also be abolished, in favour of the same sort of annual allowance paid to elected members of local government bodies across Australia. Attendance at meetings should be accepted as a normal responsibility of elected members.

The problem, as Westbury and Dillon point out, "lies in the complex array of institutions, policies and programs which govern policy outcomes in Australia and the fact these operate differently in relation to indigenous affairs compared to most other issues". Now is the time to give remote communities the same kind of democratic governance systems that have allowed the rest of the country to prosper.

John Cleary is a former Tasmanian MP and one-time chief executive of the Tiwi Islands local government. Kirsten Storry is a policy analyst on the indigenous affairs research program at the Centre for Independent Studies. Cleary's paper, Indigenous Governance at the Crossroads – The Way Forward, was published last month and is available online.