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With the sudden reversal of US monetary policy, the word ‘pre-emptive’ appears to have disappeared from the lexicon of monetary policy. The percentage point reduction in US official rates is clearly based on an assessment of current or very recent economic conditions rather than on the danger of too low a rate of inflation in 12 –18 months time. It is remarkable that almost all the commentary is Keynesian in assuming that these reductions will either prevent or abate a US slow down or recession within the next 12-18 months. It won’t. In fact, because of the lagged effect of interest changes, economic activity in most of that period will be slower as a result of earlier official rate increases – as it will in Australia.

That does not necessarily mean a recession, of course. I maintain my previously enunciated view that the lack of serious policy imbalances (and particularly the apparently limited extent of bad and/or speculative lending) make the chance of a US recession slight. My July-August newsletter expounded on this theme (see

Subscribers will recall that I have raised questions about the usefulness of trying to operate monetary policy primarily on the basis of assessments of likely inflation 12-18 months ahead (see my May-June Newsletter). This is particularly relevant in a period of high productivity growth and strong competition (which both the US and ourselves have been experiencing) because they reduce the risk of higher inflation and the usefulness of econometric analyses based on historical data.

Some commentary has suggested that ‘lower than expected’ inflation in both the US and Australia is a bad sign because profits are being squeezed, with potentially adverse effects on investment and employment. But it would be surprising if the period of well- above average growth in both investment and profits had continued indefinitely: while there has not been an old fashioned ‘boom’, it was only to be expected that there would eventually be some slowing.

From Australia’s viewpoint, the tragedy is that our slowing has commenced with (published) unemployment at 6.5-7.0 per cent and the employment rate only fractionally above the previous peaks in 1989 and 1973. This again emphasizes the lack of structural improvement in the labour market.

Keynesianism has also been evident in the swing in US opinion about the large tax cuts proposed by Bush and criticized as ‘inflationary’ by many economists (even though they were to be spread over ten years!). Now, it appears that such tax cuts are desirable! But, as with the interest rate reductions, even if tax cuts are implemented quickly (most unlikely in the US) they will not stop any impending recession or slow down.

This is not to say that tax cuts should not proceed: any reasonable opportunity should be taken to reduce the burden of taxation and the Bush administration could use the Keynesianism to its advantage. There is all the more reason to do so given the size of the projected budget surpluses and the fact that these are based on conservative projections of economic growth (again see July-August newsletter). It now appears that the surpluses should be large enough to accommodate large tax cuts, spending increases and debt reductions.



Attachment A is an article I was invited to contribute to an AFR federation series on what Australia might have been like with different policies. My opponent, Keith Hancock, former Deputy President of the AIRC, published the previous day.

Not unexpectedly, the major continuing difference reflects the misconception that there is a substantive inequality of bargaining power between employers and employees. Government regulatory intervention is thus perceived necessary to protect workers who would otherwise experience lower incomes and worse conditions.

This misconception continues notwithstanding that:

  • There are over one million Australian employers competing with each other and with overseas producers ie employers do not have monopsony power;
  • The regulatory holding up of wages above what they would be in a more deregulated labour market keeps less skilled workers out of a job;
  • More than half those on ‘low’ wages live in higher income households;
  • Australia has relatively generous social security arrangements that protect the living standards of lower income households.

Unless the Coalition develops a policy of substantive reform for the next election (and expounds the justifying philosophy), it will come out of that election (assuming it wins) without any mandate to obtain the necessary legislative changes. Given the appalling reversal of reform in the Opposition’s policies, there is an outstanding opportunity for the Coalition if it ventures to tackle the economic reform most needed in Australia - and most likely to improve economic performance. But, politically, any such reform in workplace relations would need to be accompanied by a social security ‘package’ that provides assurance that those low wage earners who live in low-income households will have their living standards protected.



One glimmer of hope has emerged out of the long-running Federal Court case on BHP’s rights to require its iron ore workers to go onto individual agreements. Justice Susan Kenny’s rejection of union claims that BHP’s individual agreements policy constitutes discrimination is an important step forward, as is clear from the union decision to appeal (which should, however, only relate to ‘legal’ not ‘factual’ issues).

Even so, judicial interventionism remains a serious problem. Kenny took a year to reach her decision and she went through an exhaustive process of examining whether BHP executives really pursued the policy in order to improve efficiency. If every major company trying to introduce individual agreements has to subject itself to such a process (and the Commonwealth Bank will be next cab off the Federal Court’s rank), this will create a tortoise-like process of reform. More importantly, such a process is clearly fundamentally flawed: no outsider has the capacity to measure the costs and benefits of individual agreements to employers and employees.

The Financial Review’s editorial on the Federal Court decision was so good that I have reproduced it in Attachment B.



Unfortunately, in this case editorial opinion did not carry through to one of the paper’s ‘analysts’ of workplace relations, Stephen Long, otherwise known as the AFR’s union rep. Long portrayed BHP as a ‘union buster’ and suggested that the case is really about what it means to be a union member! Continuing the one-sided approach of the Letters Editor, my response pointing out Long’s errors (Attachment C) was not published.



Unfortunately also, the AIRC may have become concerned that the Federal Court has been getting too much of the limelight. It decided late last month that employers in the metals and manufacturing industries should be required to offer ‘permanent’ (full or part-time) employment to those who have been working as ‘casuals’ for six months. Somewhat contradictorily (and certainly very peremptorily), it also decided to increase to 25 per cent the loading most casuals receive for not having entitlements such as holiday, sick and long service leave. The Commission reached the self-serving conclusion that ‘We consider a compelling case has been established for some measure to be introduced … to discourage the trend towards the use of permanent casuals’.

Why, one might ask? The typical union answer is that the casual employee is ‘insecure’ and needs protection. ACTU President, Shane Burrows, immediately indicated that an attempt would be made to extend the metals and manufacturers decision to all casuals.

However, casuals do not necessarily have an insecure job: a recent Productivity Commission study shows that 95 per cent have an implicit contract for ongoing employment, only 4 per cent have a job which their employer regarded as short term, and more than a third also receive regular earnings. As the PC points out, "where the concern is about so-called ‘precarious’ employment, analysts need to identify such employment on the basis of work arrangements rather than the type of employment contract".

While most casuals are in a low skill occupation, the PC study reveals that it is difficult to define satisfactorily what constitutes a casual employee. More than 10 per cent of ABS casuals are owner-managers, for example. On the PC definition, about 18 percent are casual employees compared with 23 percent under the ABS definition. But the employment characteristics of even PC casuals vary quite widely.

The real problem (sic) is that the casual ‘market’ is less regulated and employers have greater flexibility that is resented by unions and by the regulators themselves (only about 20 per cent of casuals are covered by unfair dismissals laws, for example). What would regulators do if everybody became a ‘casual’ employee? Given that casuals (as defined by the ABS) have constituted about half the growth in employment between 1984 and 1989, no wonder the AIRC wants to "discourage the trend"!

In short, without this less regulated part of the labour market, Australia’s employment growth may well have been even more disappointing than it has been. The lesson here is that any action to make it more regulated should be strongly resisted.



Tucked well away in the AFR (and not reported elsewhere) was the revelation that Patricks Stevedores has set a new high in crane rate moves of 55.6 per hour, compared with the Reith ‘benchmark’ of 25. While this was only in one shift, the success of the reforms continues to be reflected in Lang Corporation share prices, which are now over ten times their low during the 1998 dispute.



I have continued to help Peter Howson with articles on Aboriginal issues, with the focus on the treaty and reconciliation issues. One article was published in the Canberra Times (Attachment D) but The Australian continues to be virtually impenetrable despite its claim to be committed to covering both sides. It has in fact been one-sided in its publication of several articles by Aboriginal leaders (sic) supporting the treaty.

Howson has (rightly) started to question whether the so-called leaders have a mandate to speak for Aborigines generally. This is particularly relevant to members of ATSIC, whose elections attract only about 25 per cent of potential Aboriginal voters. ATSIC Chairman, Geoff Clark, may have been seeking to compensate for lack of electoral support when, after "a tumultuous week in which a magistrate cleared him of rape charges", he bounced back with the reported comment on this experience that "I’m used to being up and down" (The Age, 4 November).

Subsequently, Clark has engaged in further propagandizing by asserting that racism is one of the "terrible defects" weakening Australia – a good strategy for reconciliation? Clark’s press secretary - presumably his own – doubtless has to be kept busy!



Subscribers may recall that I reported in last month’s newsletter that the Chief Minister of the Northern Territory, Denis Burke, had told the Samuel Griffith Society in November of the extraordinary misreporting by the media of the mandatory sentencing of Aboriginal criminals. His examples of such misreporting included the oft-quoted allegation of mal-imprisonment for the stealing of food by an Aboriginal woman. This misreporting (by the Sydney Morning Herald) simply quoted as if it was correct a statement implying a minor offence that did not justify jailing. The statement was made by Alice Springs black ‘leader’, William Tilmouth, at a symposium on mandatory sentencing held at the University of NSW on 30 October.

Burke pointed out, however, that several important aspects of the case were not mentioned, including that it involved the breaking and entering of the home of an 85 year-old pensioner, the imposition by the magistrate of double the minimum sentence for a ‘first striker’ and the failure of the defence to appeal the sentence! Burke’s statement was in response to the President of the NSW bar and NSW Law Society, Ruth McColl, who had addressed the Society and had also taken the Tilmouth statement as correct.

But her error was repeated by none other than former Chief Justice, Gerard Brennan, in an article in the SMH on 22 January entitled "Allow the punishment to fit the crime". He quoted the Tilmouth tale as if it was gospel, noting that ‘the story illustrates the difficulties and dangers of mandatory sentencing’. Things have come to a pretty pass if a former Chief Justice cannot check the facts.

But Brennan has, of course, a position to defend. In Mabo his judgement appears largely to have been based on his (highly political) view that a failure to recognize the ‘rights and interests of the indigenous inhabitants…can no longer be accepted’. That judgement made a case for judges having to stand for election!

Incidentally, it now appears that the (mandatory) sentencing of the Aboriginal boy who then committed suicide was a mistake by the magistrate: ‘Johnno’ should not have been sentenced but put on a ‘diversionary’ program. So much for the ‘wets’ revolt that ‘forced’ Federal Government intervention to persuade the NT Government (with money) to modify its treatment of juvenile offenders!



In a letter to The Age (Attachment E) I suggested that a $60 million plus subsidy by the Victorian Government (reportedly quoted by the South Australian Premier) for a Holden engine plant was equivalent to about $60,000 per job and, tongue in cheek, asked why we don’t provide more such subsidies to job-creating multi-nationals. Perhaps that was why The Age published the letter in the first place! It certainly fooled one of the commercial radio stations whose interviewer thought I was serious!

Alan Wood, Economics Editor, The Australian, wrote the next day that Canberra "sources" had indicated that the subsidy was nearly $300,000 per job and would provide Holden with a 25 per cent rate of return. That led to my being interviewed on the 7.30 report, the usual ten seconds worth (Wood has subsequently firmed up his estimate of the total subsidy by both Federal and Victorian Governments to $142 million or 37 per cent of the company’s investment!).

Neither the Victorian nor Commonwealth Governments have been prepared to say how much the subsidy is, although Minister Minchin has said that the $300,000 figure is "grossly exaggerated". Despite its criticisms of the Kennett Government for being unaccountable, the Bracks Government continues along much the same path. Imagine the uproar from The Age if Kennett had acted as Bracks has on this!

The contra argument is that, without the subsidy, Holden would have built the new engine plant in another country and that Australian exports and employment would have been lower (part of the plant’s production will be exported). But would it not be better to have a lower exchange rate that encouraged efficient production for export and/or substitutes for imports? Even Victoria might benefit from that!



So much has been written about Bush’s close win in the US Presidential election that it is difficult to do more than breathe a sigh of relief that Gore did not make it (and that Bush seems to be behaving both soberly and sensibly). Those who protest because of the obvious flaws in the (Democrat-originated) Florida voting system need to recognize that Florida was not the only State with flawed voting. They might also reflect on the following analysis:

States won by Bush: 29

States won by Gore: 19

Counties won by Bush: 2,434

Counties won by Gore: 677

Population of counties won by Bush: 143 million

Population of counties won by Gore: 127million

Square miles of country won by Bush: 2,427,000

Square miles of country won by Gore: 580,00

Average murder per 100,000 residents in counties won by Bush: 2.1

Average murder per 100,000 residents in counties won by Gore: 13.2



Greenies and the like have so far been able to persuade the Bracks Government not to allow the destruction of the 5,000 or so bats which have been progressively undermining the Botanic Gardens. The political ability of these small lobby groups to frighten timid governments is revealed by the Herald Sun survey showing that 81 per cent of Victorians think that the bats should die if that is needed to preserve the gardens.

Last year, Victorian Environment Minister, Sherryl Garbutt, reportedly authorised the trapping and gassing of 17,000 galahs, cockatoos and corellas to save grain and other crops. So, why not the bats too?

The campaign of the bat lovers to protect their ‘beautiful’ creatures has even gone to the point of harassing the head of the gardens at his home! That these groups are not deterred from extremist acts reflects the continuing belfry-like behaviour of some sections of the judiciary.

The latest example of judicial ‘wisdom’ was the Victorian magistrate’s decision not to convict two protesters despite their plea of guilty to causing wilful damage at the World Economic Forum. Instead, he released them on good behaviour bonds and awarded them $3000 in costs against the police!

Incidentally, the Swiss know how to handle ‘peaceful’ demonstrators: all demonstrations at the World Economic Forum were banned in Davos (where it was held) and demonstrators were ‘forced’ to retreat to Zurich to battle police. After, there was some suggestion that future WEF’s would be shunned by demonstrators!



One of Senator Newman’s parting gifts as she left the Ministry was to announce a $467,000 grant to help fund the well-known ‘existing-welfare-is-not-enough’ group, the Australian Council of Social Service (ACOSS). Total grants to welfare lobby groups by Mother Christmas amounted to $3.8 million. Who said the Government isn’t generous with taxpayers money?



Full marks to an almost unreported but excellent Productivity Commission Research Paper on the Distribution of the Economic Gains of the 1990s. This important research paper warrants further IPE analysis but it is worth highlighting here one or two major conclusions, viz:

  • Growth in per head income accelerated from 1.4 percent pa in the 1970s and 1980s to 2.5 percent pa in the 1990s. This large improvement in living standards was due almost entirely to faster growth in productivity;
  • Labour and capital shared equally in the strong income growth of the 1990s. "It implies that there was no bias against labour at the aggregate level";
  • While the distribution of earnings among individuals became more unequal in the 1990s, that was "a continuation of the growth in earnings inequality during the 1980s, rather than a step up in the 1990s";
  • Moreover, this increased dispersion in earnings has not resulted in any major change in the distribution of disposable incomes because government taxes and transfers offset it ie contrary to much popular media blurb, there has not been a widening ‘gap’ in disposable incomes, which provide the basis of individual living standards.

Given the widespread populist criticism of economic rationalism, it is surprising that this analysis has not received more attention at the political and media levels. Of course, not everybody (or even every industry) would have benefited. But the clear implication is that economic rationalism has worked for the bulk of the population (including the bulk of workers).



Australian Financial Review

9 January 2001



The highly interventionist arrangements of our industrial relations system have served Australia poorly since the 1900s, argues Des Moore

Beyond federation

Wage arbitration

The framers of the Commonwealth Constitution thought they left the regulation of employment conditions primarily to the States. The only direct power given the Commonwealth was in Section 51 xxxv, which allows the "conciliation and arbitration for the prevention and settlement" of industrial disputes judged as interstate.

Thus, when introducing the Bill that established the Conciliation and Arbitration Commission (CAC) in 1904, even protectionist Alfred Deakin declared Parliament would be incompetent to regulate industrial affairs generally " because of the impossibility of drafting provisions, however well devised, so that they would meet all the contingencies, changes, and difficulties of different industries, which are subject in themselves to continuous alteration." Wise words, but he overlooked the capacity of quasi-judicial institutions such as the CAC to effect a major regulatory capture.

Why was that allowed to occur? US jurist Professor Richard Epstein has pointed to various intellectual trends in the late nineteenth century consistent with the idea of modifying the basic principle of common law that workers and employers should largely decide the content of their relationship. Action was thought necessary to redress the misconceived perception of a bargaining imbalance between employers and employees.

The apparent case for such action was reinforced by considerable political, economic and industrial turmoil in the 1890s. Major strikes (lost by the unions) and a period of economic stagnation extending over twenty years led some to seek ways of preventing a repetition of the disputation, and achieving more equitable outcomes.

The naïve Justice Higgins envisaged that with the CAC "there should be no more necessity for strikes and stoppages" because "reason is to displace force; the might of the State is to enforce peace between industrial combatants as well as between other combatants; and all in the interests of the public".

Over time, the CAC in fact captured the system by attempting to compel industrial disputants to settle because that is allegedly in the public interest. To "assist" in settlement, a wide range of employment conditions, including even wage levels, thus came to be proscribed. Unions readily contrived with the CAC to create "interstate" disputes requiring judicial intervention.

As early as 1907, Justice Higgins even pronounced in the infamous Harvester case the need for a minimum wage for an unskilled worker, his wife and three children. Never mind that, by setting it above market rates, employment was deterred: the CAC had portrayed itself as a protector of the low paid and a provider of social welfare.

Astonishingly, many still espouse the Higgins gospel today. While nobody can say definitively how it has worked in practice, the resultant highly interventionist arrangements have apparently served us poorly, viz:

  • Although until 1930 both strikes and lockouts were proscribed, industrial disputes continued apace after 1904. When Australia experienced another serious recession in the 1930s, dispute rates went even higher. There has been a general downward trend since the mid-1970s, but that cannot be attributed to our regulatory arrangements. Arguably, the reliance on Section 51 xxxv as the source of industrial power has actually encouraged disputation.
  • On several occasions, the Commission has failed to suppress excessive wage pressures by unions, such as those in the mid 1970s and early 1980s. These surges were unrelated to productivity, added to inflation and were employment-destroying. They were almost certainly encouraged by the unwarranted preference accorded to unions both in legislation and its administration. Fortunately, important changes in the Reserve Bank’s role have now made it primarily responsible for containing inflation and effectively limited the aggregate wage increases the Commission can allow.
  • Since the mid 1970s, the Commission has allowed the inequality of earnings to widen and, at least until recently, the real minimum wage to fall. While this has almost certainly helped employment, it runs counter to the equalising picture painted of the Commission. In any event, the Commission can scarcely be portrayed as a deliverer of social justice attempting to keep wages up at the bottom end when the majority of the low paid live in households in the upper half of the income scale. Government social security, not Commission decisions, has made incomes more equal.
  • The proportion of Australia’s working age population employed has been lower than in countries with broadly similar political and legal institutions. If, for example, we had the same proportion employed as in the USA our employment levels would be higher by an amount about equivalent to our unemployed. Yet, as those countries have larger proportions that are more difficult to employ, Australia should have even better rates of employment than them.

Any evaluation must also assess the overall riskiness of our labour market institutional arrangements because that has an important influence on economic performance. An unbiased observer would surely conclude that the extent of third party intervention in employer-employee relationships has significantly inhibited risk-taking relating to both employment and investment. That has also almost certainly inhibited decisions to apply new technology requiring changes to workforce structures. Thus, from having the highest income per head at century start, our relative living standards have slipped despite our large resources.

The current interventionist and one-sided interpretations of the law, particularly by the Federal Court, and the not infrequent union boasts that they hardly ever comply with tribunal orders, continues to exacerbate social and economic divisiveness. Australia needs to convert the Commission into a voluntary advisory/mediation service but offering subsidised services to low wage earners. Present legislation should be replaced with legal arrangements designed to limit judicial intervention and allow employers and employees to enter contractual relationships applying under not 19th but 21st century common law/equity.



AFR Editorial,

12th January 2001


Union lessons in BHP ruling

This week’s Federal Court decision to reject union claims against BHP’s November 1999 offer of individual agreements to its iron ore workers could have significant implications for BHP’s productivity, the union movement and the workplace-relations policies of the major political parties in the forthcoming West Australian and federal elections.

Most significantly, Justice Susan Kenny’s judgement establishes that the conclusion of individual agreements between employers and employees under the Workplace Relations Act does not constitute discrimination against unions, if it can be shown that they were undertaken to improve efficiency. As BHP was able to show, Rio Tinto’s move to individual agreements had opened a productivity ‘gap’ of about 20 per cent in Rio’s favour.

What is more, after extensive cross-examination of senior executives, Justice Kenny noted their conclusion, ‘rightly or wrongly, that negotiations with the unions had in the past hindered the introduction of necessary workplace changes.’

The potential implications of the move by BHP away from its long-entrenched policy of collective bargaining with unions can be judged by the strong challenge mounted by unions and the year taken by the Federal Court to reach a decision. But in a modern economy it is unfortunate that a court can delay productivity-enhancing reforms by attempting to read the minds of management, employees and unions. And it is absurd that executives should have to face many weeks of court hearings on such matters.

Still, the ruling eventually handed down may give employers greater confidence in the Federal Court’s approach, after justifiable criticism of earlier decisions as displaying a pro-union leaning in their interpretation of the act.

In recent years several leading companies have identified the potential for increased flexibility from extending individual agreements to a wider group of employees. And while BHP says it will only extend individual agreements if it cannot otherwise get the efficiency it needs, it would be surprising if it did not act.

Given the threat that the union movement has perceived from a spread of individual agreements, the foreshadowed appeal against Justice Kenny’s decision is hardly surprising. Nor would it be surprising if other extensions of individual agreements are similarly opposed. But unions should seriously consider the wisdom of such action from their own perspective.

They should recognize Wednesday’s judgement accepts that the Workplace Relations Act really does protect union membership. And they should recognise that, under the act, collective bargaining can exist with or without individual agreements. But what is not protected is an absolute right of unions to insist that collective bargaining on union terms is the only way of determining employment conditions.

Justice Kenny also revealed the hollowness of the unions’ claim of discrimination when she noted that about half of those on individual agreements remained union members. Indeed, the judgment highlights serious dissatisfaction many union members with the hostile handling by union officials of both the company’s initiative and of employees who signed individual agreements.

It is evident that union officials made a serious tactical blunder. Instead of pursuing ideological objectives, union officials should haveoffered to help the many members who favoured the adoption of better-paid and more flexible individual agreements.

This decision and union attitudes have important implications for next month’s election in Western Australia, where the Opposition Leader, Dr Geoff Gallop, has attempted to overcome internal ALP differences by promising to reduce significantly the Court Government’s State legislation on individual agreements, which is more flexible than the regime under federal legislation. The preservation of the existing workplace agreement laws used extensively by BHP and the mining industry in Western Australia, and now upheld by the Federal Court, is thus likely to become a major issue in the election.

The Federal Opposition – which promises to take Australia back to the days of the Industrial Relations club with its legal protection of union monopolies - will also face a serious problem with its promise to abolish individual agreements. But with more and more companies and employees likely to enter such agreements or to favour them, it is difficult to believe that such a policy can be seriously proposed, let alone sustained.



Letters Editor

Australian Financial Review

13th January 2001


Dear Sir

Stephen Long asserts (Case opens door for employers, 11 January) that the heart of BHP Iron Ore’s decision to offer individual agreements concerns the issue: ‘what does it mean to be a union member’? Subsequently (13 January), he portrayed BHPIO’s decision as one of a ‘union-buster’.

Long apparently forgot to read his own paper’s editorial (11 January) pointing out that the Federal Court decision allowing individual agreements actually protects union membership. It effectively endorses the Workplace Relations Act approach of allowing collective bargaining in conjunction with individual agreements. In short, individual agreements do not stop an employee being a union member, as demonstrated by the half of BHPIOs already on individual agreements who remain members.

The real heart of the BHPIO case relates to whether employers and employees will be allowed by unions and tribunals to agree on employment conditions that maximize productivity and wages while providing returns on capital that encourage employment-adding investment. Long continues to write as though the only part of the employment equation is whether unions, in combination with tribunals, can determine what are regarded as minimum conditions.

The Federal Court verdict is a welcome break from the many misconceived previous decisions that have largely ignored the employer side of the employment-creating process. One can only hope that journalists and tribunals will start to recognize that reform involving lesser employment now has considerable potential to encourage more employment down the track.



Canberra Times

11th January 2001



Instead of debates over treaties, the important thing is to change outdated policies that are antipathetic to long-run Aboriginal interests, says Peter Howson

The celebration of the federation’s centenary has reminded us of Australia’s many great achievements, not least the peaceful formation and development of a nation. Surprisingly, however, there has been only limited acknowledgement either of the contribution by individuals and private enterprises to modernizing our economy and society or the failures of many government policies.

Even today the potential for government action to solve problems is over-emphasised and past government failures are often overlooked. There remains, for example, only limited recognition of the evident failure of the major government Aboriginal policies of the past thirty years. Those policies attempted in a modern society to combine the encouragement of separate development of Aboriginal communities along traditional lines with the too-ready provision of social welfare that Noel Pearson has rightly characterized as undermining.

Yet the poor living conditions now experienced by many in such communities are all too rarely seen as a product of such policies. The deteriorating situation over the past twenty-five years of the Yolnu tribe despite their land richness highlights the problem. As former missionary, Richard Trudgen, sadly observes in his recent book "if the status quo remains then the(se) great warriors of Arnhem Land will just lie down and die".

Today there remains support in the Australian community for reconciliation between indigenes and non-indigenes for both symbolic and practical reasons. But that support would not extend to agreement on provisions against the interests of indigenes and non-indigenes. In any event, in August 1999 the Federal Parliament passed a motion of reconciliation reaffirming the central importance of practical measures to overcome disadvantages faced by Aborigines and expressing deep and sincere regret for injustices suffered under past policies. Why isn’t this an appropriate culmination of the reconciliation process that commenced in 1991?

One answer is that those regarded as Aboriginal leaders have continued in recent weeks to propose the extension of reconciliation to include a formal agreement. Cunningly, they want a plebiscite on a treaty but doubtless without divulging specific clauses that would be unacceptable, such as the recognition of Aboriginal customary laws, a national apology (mainly for the stealing of Aboriginal children), and the right to self-determination.

Important questions are raised by such specifics.

First, how relevant are they to the majority of Australian Aborigines when traditional Aboriginal practices and lifestyles are now confined to an increasingly small group? For example, with over 70 per cent living in urban communities and professing Christianity, customary practices appear increasingly of historical interest. Similarly, with 64 per cent of indigenous adults now married (de facto or de jure) to non-indigenous spouses, and the majority of Aborigines now of mixed descent, the Aboriginal community essentially comprises two nations, one part of the broader community and the other largely separate and comprising full-bloods.

Second, such characteristics raise the question of whether those portrayed as Aboriginal leaders can legitimately claim to represent the diversity of interests and views amongst people who claim Aboriginal lineage. For example, there is now a significant difference of views between full-blood and part Aborigines, as well as within those groups. The majority of Aborigines do not even vote in the elections for ATSIC.

Third, there is a very real question as to whether the conclusion of a treaty would be in the interests even of the relatively few Aborigines who live in tradional type communities. True, those Aborigines have more than others retained some links with their traditional cultures, as have migrants from non-Anglo-Saxon countries. But the latter have participated more widely in the Australian community, as have the majority of Aborigines.

For the remaining minority, a treaty that included self-determination and customary law would encourage the continuation of the disastrous separatist policies of the past thirty years. The report by John Reeves QC on Northern Territory land rights concluded that these policies have resulted in "hopelessness, despair, and anti-social behaviour ….and contempt and hostility." Other reports have also revealed the horrific violence in traditional Aboriginal communities.

Fourth, with the dismissal of the stolen children claims in the Cubillo-Gunner case, and the accompanying evidence, there is no basis for apologising for past policies of removing part-Aboriginal children from their mothers. It must be emphasised that the most recent survey again showed over two-thirds against such an apology. Nor has any apologist reconciled those past policies with existing policies under which, today, many more aboriginal children are being forcibly taken into care because of severe neglect and abuse than were ever removed in the 1950s and 60s.

The important thing now is not to debate treaties and the like but to change the outdated policies of the 1970s to 1990s that are antipathetic to long run Aboriginal interests. The essential need is to provide Aborigines with enhanced incentives and opportunities to adapt to life in Australia in the 21st Century.

Peter Howson was Minister for Aboriginal Affairs in 1971-72. He chaired last year’s Quadrant Forum on Truth and Sentimentality: After the Cubillo & Gunner Judgement on "Stolen" part- Aboriginal children.



Letters Editor

The Age

14th December 2000                                                                                                                           

Dear Sir

The major Victorian political parties must be congratulated on their agreement to combine in defeating other State and international competitors in the fight to obtain the location for building the Holden V6 engine at Fishermans Bend. Indeed, it appears that the cooperation extended well beyond those parties to embrace the Federal Government and even the trade unions.

One cannot help thinking that such cooperation could be extended to securing the location of major investments by other international multinational companies in addition to General Motors. After all, this decison reportedly adds more than 1000 permanent jobs and at a cost to the taxpayer of only $60 million, that is, only $60,000 per job. If that is the price, Victoria could surely lead the way in promoting the restoration of manufacturing so cruelly undermined by previous governments and so rightly attacked by Victorian unions.

However, in view of the widespread criticism of the Kennett Government's refusal to disclose the costs of arrangements with the private sector, it is surely behoven on the Bracks Government to issue a full and accurate report on all the costs that will be borne by Victorian taxpayers. After all, the commitment to open government, and particularly to restore of the authority of the Auditor General, were major reasons for Labor's election victory.

Of course, the Auditor General will presumably ensure a full disclosure in due course. But the taxpayer should not have to wait for that when such an important project is involved.