Lands where no one can feel at home

Over the past 50 years, 20 per cent of Australia has been returned to Aborigines and Torres Strait Islanders. These indigenous owned and controlled lands are equivalent to the 20th largest country on Earth. But few Australians know that on these lands Aborigines and Torres Strait Islanders cannot own their homes. Russia, China, and even Cuba encourage home ownership.

When lands were returned, individual owners were not identified and land councils became the communal owners. Indigenous communities became communist economies with drab communally owned supermarkets but no cafes, motels, caravan parks, retail shops, hairdressers or the other services found in mainstream country towns. There are no suburbs of prosperous homes. Access is guarded by permits.

Traditional owners were deprived of ownership benefits and ownership responsibilities. The result: you need a permit to visit because indigenous lands are private property, but it's the government's job to build houses, roads, and control feral animals.

In the rest of Australia, private property exists side by side with communal ownership. Most of us work in the private sector and own our own homes, but we drive on public roads, send our kids to public schools and picnic in public parks. Public sectors are funded by taxes provided by the much larger private sectors. Utopians dream, but nowhere in the world has a high level of prosperity been achieved without a mix of private and public ownership. Without it, remote Aborigines and Torres Strait Islanders are land rich but the poorest people in Australia.

Most royalties go to land councils rather than to individuals. The Northern Territory Aboriginals Benefit Account has $380 million in the bank and income of $200m a year over the past two years. Distributed to individual landowners, this would fund mortgages for every remote indigenous family in the NT. Royalties could be sequestered in individual accounts, say superannuation. Land councils own extensive property in Darwin and Alice Springs while their landowners live in hovels.

Not identifying individual landowners contributes to social breakdown. Townships where most remote Aborigines and Torres Strait Islanders live grew from missions and government stations. Land that traditionally belonged to one clan now houses people from several. Traditional clan members look for ways to assert their authority and entitlements over other residents. It is not surprising that disputes and violence are endemic.

Much has been written about cultural determinants of remote indigenous poverty and dysfunction. But poverty and dysfunction are not cultural. They are the product of 40 years of counterproductive government policies. Anywhere in the world, communities deprived of individual property rights and education, showered with welfare and denied civic norms, would become poor and dysfunctional.

Most – 85 per cent – of the 550,000 indigenous Australians live in capital cities and regional towns. While some 140,000 are welfare dependent, the majority – 330,000 – live and work with other Australians. Their children attend public and private schools, TAFE and university, and go on to meaningful jobs. Nearly 70 per cent are home owners. It is the remaining 75,000 on remote indigenous lands – 15 per cent of the total indigenous population – that account for most of the poverty and dysfunction.

By the mid-2000s, the Howard government realised that existing policies had failed. They identified the absence of individual property rights as a major cause of disadvantage. The Home Ownership on Indigenous Land fund and amendments to the Aboriginal Land Rights (Northern Territory) Act were intended to facilitate home ownership.

Mal Brough, then minister for indigenous affairs, was offended by the state of remote communities. Brough understood that the failure to enforce civic norms contributed to the collapse of remote communities. Hence the NT intervention. Queensland, South Australia and Western Australia took complementary measures. Jenny Macklin, the Labor Minister for Indigenous Affairs, continued the intervention and extended welfare quarantining to mainstream Australia.

Because the intervention only targeted "community norms", it could not lead to mainstream prosperity. For that, communities also need individual property rights, education, and employment. The Remote Service Delivery program, intended to turn remote townships into mainstream country towns, will also fail without individual property rights.

Vast expenditures on remote communities – $7.5 billion or $100,000 per person per year – are wasted on programs that do not work. Money is available for a procession of initiatives, engagements, agreements, pathways, overarching architectures and consultations, but not for all-weather roads. Governments build expectations that everyone will receive public housing. People who once took responsibility for their lives now sit under trees, drink and smoke, play cards, and wait for the government to provide. Only on Cape York, with Noel Pearson's leadership, has a Family Responsibility Commission mustered elders to restore community norms.

Although the right to own your home is fundamental to other Australians, on indigenous lands public housing is the only option. It has failed. By 2007, public housing had provided only 13,000 dwellings for more than 22,000 remote households. Most houses are sub-standard, dilapidated and crowded. The Remote Indigenous Housing Program is spending $5.5bn over 10 years on remote public housing. The average cost – refurbishments and new construction – is more than $600,000 per house. Private houses of similar quality are delivered in remote locations for $300,000. When this program is complete there will be 17,000 houses for 23,000 households; 12,000 indigenous families will still be sharing houses.

Denied home ownership, remote Aborigines are unable to build assets like other Australians. They are deprived of home-owner grants and tax-free capital gains on the family home. The Territory government has recently announced a "grant of $10,000 for homebuyers who build or purchase a new home". As they say in the bush; "when a white man dies his family gets the house, when a black man dies, the government gets it".

To ensure that indigenous land ownership is retained, long-term housing leases are a practical option. Bob Katter, when Queensland minister for Aboriginal and Islander affairs, introduced long-term leases. Only a few hundred were issued before a change of government brought "Katter leases" to a halt. In the NT, the commonwealth's head leases over Aboriginal lands are flawed. Only the Tiwi and Anindilyakwa (Groote Eylandt and Bickerton Island) Land Councils have given head leases over their communities to the commonwealth's Office of Township Leasing. Although these permit housing sub-leases, just 16 housing leases have been issued on the Tiwi Islands since 2007. This was the high point of private housing. Jenny Macklin reduced head lease terms from 99 to 40 + 40 years.

If a Groote Eylandt landowner takes a loan today, builds a house and pays off his mortgage over 30 years, seven years later the commonwealth government could take ownership of his house on payment of $1.

In contrast, the Australian Capital Territory's private housing on renewable 99-year leases provides secure individual titles.

Three current discussion papers (the Commonwealth's Indigenous Economic Development and Indigenous Home Ownership and Queensland's Indigenous Home Ownership) fail to identify pathways to private housing and private business. The commonwealth and Queensland governments show no urgency. The commonwealth's Indigenous Home Ownership paper was issued in May 2010. Responses closed last December. They have yet to be posted online.

Housing lease terms should be at least equal to ACT leases. To ensure communities retain control over their land, "accepted by the community in which they live" should be the criterion for applicants for housing leases and conditions of sale and inheritance.

In small communities, individual traditional landowners are known. They can create landowner lists and apply for leases, subject to community approval. In townships, conflicts between the traditional landowning clan and other residents must be resolved.

Housing on indigenous lands is dire. There is no land shortage. Existing income flows are sufficient for mortgage funding. Introducing individual property rights side by side with communal ownership is essential for prosperity in remote communities. Other policies – mainstream education, civil society norms, reduction of excessive welfare – are also necessary. But individual property rights receive the least attention.

Helen Hughes is a Senior Fellow and Sara Hudson is a Research Fellow at The Centre for Independent Studies. Mark Hughes is an independent researcher. They are the authors of Private Housing on Indigenous Lands.