4. Implementing a place-based approach to economic development that empowers Indigenous Australians

The objective of this chapter is to develop a framework and tools to support the implementation of a place-based approach to Indigenous economic development. The chapter begins by explaining the rationale for a place-based approach to regional and rural development, and OECD principles related to it. This sets the framework for an assessment of the different elements required to implement this approach in the Australian context. The first element is the capacity, skills and networks embedded in local and regional Indigenous institutions. The concept of an eco-system is utilised to examine the different elements required to develop and implement community-based Indigenous economic development strategies. The second is the existence of formal and informal mechanisms that enable these local Indigenous institutions to deliver economic development solutions in collaboration with other (non-Indigenous) actors. This includes partnerships with public, private and other non-government actors at local and regional levels. The third section of the chapter assesses how local and regional Indigenous institutions can influence policies and facilitate agreement on place-based outcomes with different levels of government. This includes how governments can create mechanisms to include Indigenous peoples in decision-making, agree on local outcomes, and develop funding arrangements that are more flexible and enable local innovation.

This section of the chapter identifies why a place-based approach is important to Indigenous economic development and sets out the framework for analysis. It builds upon previous chapters that demonstrated how place is fundamental to Indigenous identity and shapes economic development and well-being outcomes. The first reason is the shift toward self-determination (the right for Indigenous peoples to govern their own affairs) implies the transitioning toward more localised forms of decision-making. This is not only consistent with the UNDRIP but there is also evidence internationally that strong local institutions are associated with better socio-economic outcomes for Indigenous peoples (Wunan Foundation, 2015[1]) (Cornell, 2006[2]). The second reason is how to respond to the importance of place and the heterogeneity of outcomes for Indigenous peoples across different geographies. Each of these places has different histories, institutional capacities, endowments and access to markets. Developing these places requires addressing multiple factors (human capital, infrastructure, innovative capacity) in an integrated way, aligned with local circumstances and cultures. The framework for analysis focuses on how the Australian government can shift toward an integrated, place-based approach to Indigenous economic development.

Over recent decades, across OECD member countries, there has been a shift toward self-determination for Indigenous peoples (Jentoft, Minde and Nilsen, 2003[3]). These shifts have occurred over a long period time but gained strong momentum across a number of different countries from the 1960s and 1970s. The movement toward self-determination was essentially a bottom-up process led by community leaders and arose out of legal battles related to land rights. In parallel, there were increasing critiques of a long term approach characterised by policies of state and religious institutions aimed at assimilating Indigenous peoples, and imposing ‘one-size-fits-all’ solutions which did not engage Indigenous communities in decision-making processes (Cornell et al., 2003[4]). This previous approach had led to the dispossession of land and the loss of identity and culture, erosion of social capital and leadership capabilities, and policies and programmes that did not match the needs of Indigenous peoples (Dodson and Smith, 2003[5]). This previous approach contributed to the poorer socio-economic outcomes and dependency relationships experienced by many Indigenous communities.

Self-determination is now generally accepted across many countries as a key principle in Indigenous policy to break these dependency relationships, and is reflected in the institutional arrangements that have been established within their policy frameworks for Indigenous affairs (OECD, 2019[6]). These policy shifts have resulted in greater decision-making authority invested in institutions that enable Indigenous peoples to make decisions about their land and resources, and the delivery of public services (Dodson and Smith, 2003[5]; Wunan Foundation, 2015[1]). Self-governance relates to a number of dimensions including the degree to which Indigenous people determine issues such as the scope of competencies they are responsible for, scale (e.g. tribe, groups of tribes, regions), who makes decisions about land and resources, and how decisions are enforced (Cornell et al., 2003[4]; Tsey et al., 2012[7]). However, these trajectories of Indigenous self-governance are uneven between and within countries and what constitutes good governance for Indigenous peoples is a contested concept (Tsey et al., 2012[7]).

In a North American context increasing decision-making responsibility in the hands of Indigenous peoples has been shown to be associated with reduced welfare dependency and the emergence of economic activity, higher levels of multi-dimensional wellbeing, improved resource use, and increases in the contribution to regional non-Indigenous economies (Cornell et al., 2003[4]; Vining and Richards, 2016[8]). These findings are consistent with a wider literature that examines the association between the quality of institutions and regional economic performance (Morgan, 1997[9]; Wood and Valler, 2004[10]; Rodríguez-Pose, 2013[11]; Cornell et al., 2003[4]; Cornell, 2006[2]) propose three key reasons why self-governance results in better long-term outcomes for Indigenous peoples:

  1. 1. It promotes the engagement of citizens in collective efforts to improve community wellbeing.

  2. 2. There is greater likelihood of policy choices reflecting the interests, needs and aspirations of Indigenous peoples.

  3. 3. It increases transparency and accountability with local leaders, and also builds their capacity to become better decision-makers.

However, a number of key conditions need to be in place for this to be effective particularly capable governing institutions that are matched to the social and cultural characteristics of Indigenous groups which avoid pitfalls such as corruption, nepotism, confusion about roles and responsibilities, and lack of accountability (Cornell, 2006[2]; Tsey et al., 2012[7]).

There are many different examples of where self-determination has been applied to give Indigenous peoples greater decision-making responsibility and accountability. Self-determination has also informed decisions to decentralisation competences, for example, giving Indigenous peoples control in terms of the governance of municipal, education and health services (Cornell et al., 2003[4]; NSW Ombudsman, 2016[12]). Self-determination is also embodied in international agreements and covenants, which strengthens the legal basis for a new and more equitable relationship with national and subnational governments (Jentoft, Minde and Nilsen, 2003[3]). The Indigenous and Tribal Peoples Convention (1989) of the International Labour Organisation (ILO) is based on principles of self-determination and sets out rights in in relation to land, employment, education and training, and social security. The UN Declaration on the Rights of Indigenous Peoples was adopted by most member countries in 2007. The Declaration establishes a universal framework of minimum standards for the survival, dignity, well-being and rights of indigenous peoples. Rights are defined at an individual and collective level and include cultural rights and identity, and rights to education, health, employment and language. Article 3 of the UN Declaration on the Rights of Indigenous Peoples states that “Indigenous peoples have the right to self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development(UN, 2007, p. 8[13])

Chapter 1 identified how Indigenous peoples are distributed unevenly across Australia’s territory with a relatively higher proportion located in rural regions. Indigenous peoples experience lower socio-economic outcomes, and there are significant gaps between Indigenous and non-Indigenous peoples across different types of regions. These gaps are larger in predominantly rural regions. This Indigenous disadvantage has traditionally been approached as a social policy issues through income transfers and support for employment participation, and addressing social needs through education, and health and social care services. However, these regions also have different assets and this challenge can be approached as a regional development opportunity. Growth opportunities across different types of regions are shaped by endogenous factors (size of the local labour market, resource endowments, and amenities) and access to markets. The growth potential of Indigenous communities is also shaped by the prevailing legal arrangements governing Indigenous lands and waters, local institutions, and community aspirations for development.

Persistent and increasing inequalities within and between regions, cities and rural areas is evident across OECD countries (OECD, 2019[14]). Persistent inequalities result in under-used economic potential and weakened social cohesion. They generate dependency relationships that can become a fiscal burden. Promoting growth across different types of regions requires an approach that is sensitive to different place-based assets and can activate a development process (OECD, 2012[15]). Over past decades, there has been shift in how OECD countries approach regional and rural development policies. An approach developed in the post-World War 2 period that was based upon addressing disparities between regions through the provision of subsidies to compensating them for lower incomes. Policies were designed by central governments through departments of state that delivered narrowly defined programs with support for individual firms, incentives for inward investment, and a focus on infrastructure investment. Over time, this approach has been seen as increasingly ineffective because it does not incorporate local knowledge, creates dependency relationships and is not sustainable from a fiscal point of view. The new approach to regional policies emphasises a focus on competitiveness and working with cities and regions to unlock growth potential based on their unique assets and local conditions (across policy areas influencing human capital development, innovation, and infrastructure). The OECD promotes place-based policies that have the following features:

  1. 1. Use of regional specific assets (or create absolute advantages to stimulate competition and experimentation across regions).

  2. 2. Create complementarities among sectoral policies at the regional (or local) level.

  3. 3. Use of multi-level governance mechanisms for aligning objectives and implementation (OECD, 2016[16]).

Within the context of the Closing the Gap Refresh the Australian Government has recognised the importance of partnerships with Indigenous communities and organisations, and the need to implement locally driven solutions (COAG, 2019[18]). In the past decision have been taken centrally without engagement of local communities and this has led to mismatches between needs and programs, unclear lines of accountability for delivery, and poor outcomes (Wunan Foundation, 2015[1]). In order to assist the Australian Government in its process to shift towards a more integrated place-based approach this section draws on the OECD approach to regional development to analyse current policies and approaches and advice on how to address challenges and gaps (Table 4.2).

This section of the chapter undertakes an assessment of Indigenous institutions and their capacity to mobilise local and regional economic development opportunities. This includes local Indigenous institutions, the local governance eco-system that can support community economic development, and mechanisms to facilitate local benefit sharing agreements. It is impossible to understate the complexity of local governance arrangements across Indigenous communities in Australia. They are shaped by different histories, family and clan relationships, and aspirations. Commonwealth and State and Territory legislation mediates and shapes them in different ways. There is an overall trend of Indigenous peoples “taking back control” but trajectories of self-governance are different. This section of the chapter begins by describing the capabilities needed to undertake community economic development and the gaps identified during the OECD fieldwork and analysis of the Australian context. Following this, assessment is undertaken of local Indigenous institutions, eco-systems for community economic development, and benefit-sharing arrangements. It is based on the idea that Indigenous economic development is shaped by the community’s capacity to utilise its natural, physical, human and social capital resources to improve its standard of living and community wellbeing (OECD, 2019[6]). Economic development involves converting each of these capitals into economic capital (Bourdieu, 1985[19]; Harker, Mahar and Wilkes, 1990[20]). Strengthening institutions (endogenous leadership and capacity) and networks that link Indigenous-led institutions to power and resources enables them to manage, drive, and contribute to regional economic development (Table 4.3).

Local institutions are an important factor in shaping regional development outcomes (Rodríguez-Pose, 2013[11]). Formal and informal institutions that facilitate negotiation and dialogue among key actors in order to mobilise and integrate them into the development process are vital, as are those that enhance policy continuity (OECD, 2012[15]). This includes institutions that strengthen the region’s “voice” in decision-making and fostering linkages among the private, public and education sectors. These institutions might include Indigenous community service organisations and economic development entities, and administrative structures such as land councils linked to legislative frameworks governing land use (Moran, 2009[21]; Tsey et al., 2012[7]; Vining and Richards, 2016[8]). Local Indigenous institutions have their own characteristics. For Indigenous people’s language and kinship groups were the basis of pre-settler forms of social organisation (Bern and Dodds, 2000[22]). Community decision-making is still primarily organised through family and clan groups and this is generally not well understood by outsiders (O’Brien, Phillips and Patsiorkovsky, 2005[23]; Tsey et al., 2012[7]). Indigenous communities can also self-organise at different scales, for example, nations combining common language groups, groups of clans sharing kinship ties, and Indigenous organisations with membership based on common cultural and historical affiliations and issues of shared political interest (Moran, 2009[21]). Decision-making about property rights and resource allocation can also operate at different scales: households, local communities and wider territories, and if institutions are weak or are captured by particular groups then it can result in conflicts or exclusion (Bennett and Sierra, 2014[24]).

There are a number of capability gaps which have been identified in these local institutions including relating to financial management, human resources, commercial negotiations, leadership skills and project management (Dodson and Smith, 2003[5]; Jentoft, Minde and Nilsen, 2003[3]; Tsey et al., 2012[7]). In this context, ‘cultural match’ is an important factor in building effective governance arrangements for Indigenous communities (Dodson and Smith, 2003[5]; Tsey et al., 2012[7]). Governance arrangements should be tailored to the historical and cultural characteristics of communities, integrate with their conceptions of how authority should be exercised, and developed in a way that builds trust and respect between government agencies and these communities (Tsey et al., 2012[7]). This means engaging in meaningful dialogue with Indigenous communities to make decisions factors such as:

  • Group membership and identity (who is the ‘self’ in their governance).

  • Who has authority within the group, and over what.

  • Agreed rules to ensure authority is exercised properly and how decision-makers are held accountable.

  • How decisions are enforced.

  • How rights and interests are negotiated with others.

  • What arrangements will best enable them to achieve their goals (Moran, 2009[21]).

Negotiation about governance models can help facilitate cross-cultural learning and exchange, and build trust between Indigenous communities and public institutions (Tsey et al., 2012[7]). Apart from traditional governance structures, many local Indigenous institutions have been established under Commonwealth, State or Territories statutes for purposes such as holding land or other assets as well as delivering services including housing, health and commercial enterprises. While some of these might reflect, government’s need to develop organisational arrangements that are familiar to them, they also offer Indigenous peoples a strategic tool to engaged with dominant society, allow them to exercise control and define their own goals and aspirations (Martin, 2005[25]).

Indigenous communities may also wish to pursue economic development in different ways than current mainstream modes. Many are seeking models that are not only profitable but that also address community capacity and the preservation of traditional culture, values and language. Communities are deciding for themselves what they want to achieve and what will be a culturally acceptable way of realizing their goals. This is shaped by their unique cultural understandings and obligations, as well as the processes for reconciling the multiple, overlapping and intersecting Indigenous interests of individuals, families, clans and First Nations, and Indigenous organisations (CYPCYLC, 2018[26]). In some cases, there is a genuine trade-off between cultural values and economic performance; in other cases, the two are complementary. Either way, this contested ‘how’ creates additional challenges for internal and external governance. Capacity building requires a framework for understanding the community development processes that builds local leadership, and the institutional processes through which communities can take charge of, and responsibility for, improving their circumstances. Shaped by unique cultural characteristics and obligations, these processes include ways to empower effective governance institutions to create legitimacy, seek community input, reconcile different opinions, make decisions, build the right relationships with those that can help achieve goals, implement projects, and ensure leadership that can bring a community along on the journey. It does not matter what type of local governing institution exists – whether they have been established in response to government policies, created for community advocacy, or are a traditional governance group – they will need the capabilities listed in Box 4.1 to undertake economic development.

Professor Marcia Langton has discussed the problems associated with the fragmentation or ‘Balkanisation’ of Indigenous governance, which has resulted in a diversity of small, and generally under-resourced governance organisations (Langton, 2015[27]). These arrangements affect the capacity of Indigenous peoples to achieve sustainable change and impose significant administrative costs. The diversity of local Indigenous organisations makes it difficult to develop a clear typology that defines their authority, roles and responsibilities. It is also a changing landscape impacted by Native Title claims and public administration reforms in different jurisdictions. Because Indigenous affairs is a shared responsibility, the nature of local Indigenous institutions also varies across different States and Territories. This demonstrates that any approach to strengthen these institutions needs to involve a bespoke analysis of the (historical) institutional context to be able to map which organisations are present and how they can be best strengthened. Within this diverse landscape three type of Indigenous institutions are identified: (i) Indigenous municipalities; (ii) Indigenous corporations and co-operatives; and, (iii) Prescribed Body Corporates.

In Queensland, 16 Indigenous shire councils function as discrete local governments. They have responsibilities for delivering municipal services, economic planning, and maintaining economic and essential services infrastructure. These Councils were originally established in the mid-1980s. In the colonial period Indigenous peoples in Queensland were moved onto missions that were run by the Church. During the 20th century, these missions were transferred to the State of Queensland. The Queensland Community Services Act (1984) enabled the creation of Indigenous Community Councils, which were mainly located in the far north of the State (including the Torres Strait). During a state-wide municipal reform in 2008, some of these Councils were amalgamated into larger Shires (Limerick, 2009[28]) identifies a number of factors that are associated with improving the effectiveness of Indigenous Shire Councils, in terms of the capacity to deliver improved local infrastructure, services, housing and employment opportunities. The first is a strategic vision that translates into a set of priorities, which are understood and accepted by community leaders. The second is a separation between political representatives (who set direction) and a stable administration that applies laws and policies and delivers on it. The third is the capacity of leaders to relate effectively with non-Indigenous institutions (other local governments, business and the State Government). Community factors that inhibit good governance include low levels of human capital, lack of experience and interaction with non-Indigenous governance institutions, community conflict based around kinship groups, and a history of dependency upon religious and government institutions (Limerick, 2009[28]). In the Northern Territory, there are 63 local authorities in remote areas that have predominantly Indigenous populations. The role of local authorities is limited to planning and giving feedback on service delivery while Regional Council deliver municipal services (Northern Territory Government, 2019[29]). This arrangement is the result of municipal amalgamations that were undertaken in 2008. This removed control of service delivery from Indigenous organisations, and in some instances led to the contracting out of service delivery to non-Indigenous organisations (Limerick, Morris and Sutton, 2012[30]).

Across Australia, many Indigenous Organisations are established as corporations (of which there are several thousand). This means, that they are incorporated with the Office of the Registrar of Indigenous Corporations (ORIC) within the framework of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). The CATSI Act seeks to meet ‘the special incorporation needs of indigenous people’ that allows corporations ‘to accommodate specific cultural practices and tailoring to reflect the particular needs and circumstances of individual groups’ (Nehme, 2014[31]). Alternative ways for incorporating Indigenous organisations also include the Northern Territory Associations Act 2003 or under the Corporations Act 2001—which is managed by the Australian Securities and Investments Commission (ASIC) (Australian Government, 2019[32]). Apart from Indigenous Corporations, Indigenous Organisations might also choose to from a Cooperative or other type of non-government organisation. These Aboriginal Corporations and co-operatives have different origins. Some have been set up to manage statutory land rights and Native Title. Others have their origins in the transfer of housing and other public assets to Aboriginal people.

Indigenous corporations often play an important role in Indigenous communities, as many provide health and community services, and generate local employment. The benefits of registering as an Indigenous Corporation include being able to choose to be liable for debts, development of a rule book (constitution) that can accommodate Aboriginal and Torres Strait Islander customs and traditions, no registration fees as well as being eligible for ORIC’s advice and support such as training in governance, recruitment and legal help. Amongst the top 500 Indigenous corporations, the largest share - 40.4 % were operating in the services sector, while other sectors are a lot smaller. Also, most (64%) of the top 500 Indigenous corporations only operate in one sector and did not engaged in alternative activities (Australian Government, 2017[33]). This suggest that many corporations’ sole activity is in the health and services sector, are heavily reliant on government funding, and do not or only marginally engage in other economic opportunities. This creates a dependence on government spending and political priorities. Further, this can also mean missed opportunities in setting up foundations for more diverse economic development from within the community.

Lack of organisational capacity for local Indigenous institutions was reported as a common issue (OECD Fact Finding Mission, July 2018). This is partly a function of the small and fragmented nature of these institutions, and of the type of support given to them. General support given to Indigenous corporations runs through ORIC. ORIC offers training workshops and guidelines to support the set-up and running an enterprise. This includes topics like, meeting corporate governance obligations such as reporting, the role and responsibilities of managers, general good business practices and understanding financial records. Reconciliation Australia and the Australian Indigenous Governance Institute also support capacity building including on-line tool-kit covering issues related to leadership, rules and policies, staff management, organisational governance, and nation building (Reconciliation Australia, 2019[34]; Australian Indigenous Governance Institute, 2019[35]). The 2010 Strategic Review of Indigenous expenditure found that governance and leadership programmes tend to build individual rather than institutional capacity (Australian Government, 2010[36]). Furthermore, different entities involved in governance and capacity building do not coordinate effectively (e.g. ORIC, Land Councils, and IBA). Given the size of these organisations, many of them would lack the capacity to undertake training, and develop and apply organisational policies. It is also important to understand that Indigenous groups may be participating in multiple structures (corporations, Prescribed Body Corporate, and trusts) that have different regulatory frameworks and compliance mechanism, which place significant burdens on these groups (Langton, 2015[27]). Many organisation spend significant amounts of time on adhering and understanding the regulatory and legal framework they are operating in (OECD Fact Finding Mission, July 2018) (Wunan Foundation, 2015[1]). These circumstances inhibit the capacity to develop long-term planning, engaging with communities, and mobilising economic development opportunities.

Prescribed Body Corporates (PBC), also sometimes known as or Registered Native Title Bodies Corporate, are established to manage (as an agent) and hold (as trustee) the native title, in accordance with the objectives of the native title-holding group. The Native Title Act requires establishment of a PBC. PBCs represents the interests of the native titleholders and act as a contact point for third parties such as government and industry that are interested in accessing or regulating native title land. Indigenous groups decide on a structure and rulebook to guide its work. PBCs have the obligation to consult with and obtain consent from native titleholders regarding decision which surrender native title rights and interests (AIATSIS, 2018[37]). A key mechanism for supporting the work of PBCs are Native Title Representative Bodies (NTRB). NTRBs are organisations appointed under the Native Title Act 1993 (NTA) and have the following functions:

  • Assisting in native title claims resolution.

  • Future acts and agreement making.

  • Managing native title.

  • Supporting the use of native title to achieve cultural, social and economic outcomes.

  • Other activities related to their broader regional functions unrelated to native title (Australian Trade Commission, 2019[38]).

To be able to utilise and maximise their native title rights and engaged in land management as well as economic development PBCs need to be able to operate effectively. For many this is not the case. The literature as well as the OECD study visit demonstrated that many PBCs are not fully functioning (Altman, 2004[39]; AIATSIS, 2007[40]; Deloitte, 2014[41]; AIATSIS, 2018[37]). Data on their performance also underpins this, between 2015 and 2016 only 18.8 % of all PBC emerge in the top 500 indigenous corporations in terms of income. Further, 44.7% of all PBCs reported zero income (Australian Government, 2017[33]).

The largest challenges for PBCs emerge around a poor resource and capacity base coupled with the need to carry out a wide range of responsibilities. In addition to their native title obligations, many are also expected to carry out more general tasks linked to community and economic development. This can include community governance, land management, language and cultural maintenance, capacity building, economic development as well as caring for social and emotional well-being and networking with other indigenous institutions (AIATSIS, 2007[40]). It is essential there is support for these wider functions. Support for PBCs in terms of capacity building and these wider functions have largely been insufficient and ad-hoc. For example, to finance themselves, PBCs can draw on Basic Support Funding provided through NTRB to meet basic compliance obligations. The Australian Government has recognised that PBCs may require additional support in terms of community and economic development. Since 2015, newly set-up PBC capacity funding, allows these organisations to increase capacity for engaging with project proponents, improving long-term organisational capacity and support for native title agreement making (Australian Government, 2019[42]). This funding stream however only makes up $6.2 million (2019-2020), which is marginal in comparison to the funds provided to for NTRB, $90.2 (2019-2020) million, to assist native help native title claimants and holders.

PBCs require particular forms of capacity support which enable them to function as effective institutions that can represent native title interests, and support wider economic and community development outcomes. These types of support include:

  • Preparing traditional owner groups for the multiple roles they will hold as a PBC, particularly in the start-up phase. This includes developing an understanding for what it means to be a landowner as well as supporting them in building capacities around working with social issues and aspects of business development in addition to land management. Support would combine training, and supporting peer learning between soon-to-be native titleholders and those that have already experienced taking on this responsibility and managed it successfully. It could address aspects like setting up and managing trust funds as well as project identification and delivery. These efforts could build upon existing institutions such as the National Native Title Council and the Australian Indigenous Governance Institute, and may require new Indigenous-led funding mechanisms (Box 4.2).

  • Apart from financing Native Title processes, government could also assist PBCs comprehensively in setting up local economic development strategies and/or plans for social development needed in the community. This would require financial support to assess community profiles and collect data on possible opportunities for income generation and potential partnerships that goes further than single, project specific payments currently available.

  • Agreements reached with the private sector, and state and territory governments should also acknowledge the PBC resource need. A good example for this can be noted from a range of settlement processes in Western Australia. For instance, in Western Australia where the Land Use Agreement between the Yawuru PBC and the State Government includes monetary benefits from capacity building, preservation of culture and heritage, economic development, housing and joint management (Government of Western Australia, 2019[43]).

The landscape of local Indigenous organisations is diverse and changing. It is evident these local institutions have delivered important innovations in terms of Indigenous service delivery, housing, community development, and land management. However, they are also institutions that face capability gaps, which affect their capacity to promote economic and community development and achieve self-determination. Based on engagement through the OECD Study Mission and a review of the literature (Tsey et al., 2012[7]; Wunan Foundation, 2015[1]), the following capacity gaps at the local and regional level amongst Indigenous institutions in Australia are as follows:

  • Leadership skills, particularly at the Board level, in young people for succession (“new faces”), and in light of the high demand for Board activity from a limited group of people in relatively small communities. Culturally relevant leadership programs are desired, but communities reported governments do not focus on, or consistently support them, the way they do the development of small business skills.

  • Community and strategic planning (to identify needs and aspirations and strategic planning to identify markets, models and finance options). Local land councils reported a lack capability to run community planning and so the new backbone organisations have been developed. Some communities reported they would like a community advisor to assist with these processes and some were bringing in non-Indigenous people (either short or long term) to add this capacity (see Box 4.3). Resourcing these roles was reported as an issue.

  • Organizational technical capabilities such as legal advice, accountancy and financial management, business systems, and human resources management and staff training. Organisations have reported having trouble with workforce development including succession planning, upskilling and mentoring, and generally looking after and developing staff. Some reported having difficulty finding enough staff and can have trouble competing with governments and the private sector for skilled workforce. Some Indigenous organisations reported they felt governments wanted to support the development of Indigenous corporations, but did not have any organised program or project to do so.

  • Business skills, were reported as a key challenge for Aboriginal business owners in remote areas (OECD Fact Finding Mission, July 2018). This is one area where support services are available, but they remain uncoordinated, are focused on small business and do not always reach Indigenous people in remote areas. They also do not have mechanisms for peer-to-peer coaching/mentoring, which was reported as something communities would like more of. There is no formal delineation of roles and responsibilities in the provision of support for Indigenous businesses between state and federal governments and there is overlap. Three Commonwealth funded Indigenous Business Hubs, to be rolled out from 2018, are hoped to alleviate this. In addition to hubs, Indigenous communities would like a better pipeline for the development of financial literacy and entrepreneurship skills throughout secondary and adult education (the latter of which is absent in remote communities).

  • Undertaking commercial negotiations, contracts and joint agreements to develop partnerships/joint ventures was often raised as a capacity gap. Some communities would like to go into arrangements with corporations, government, legal firms providing pro bono advice, etc. (in tourism, land management, mining, fisheries, etc.) but do not know how, or, what models work. Indigenous organisations can lack the acumen to undertake negotiations to undertake partnerships to get the best outcomes for their communities, or to include cultural obligations and imperatives (Campbell and Hunt, 2013[44]). As partnerships are different in every context, and for every project, skills and brokers are needed to develop models. Communities would like more of these models, including commercially viable social enterprise models, showcased so they can see what successful economic development looks like.

Addressing capacity gaps will require a reparative investment to create a stable enabling environment for organisations to operate in (Moran, 2009[21]). The skills above can be developed through a range of programs but governments will need to consider what an ecosystem of support will look like. This will provide a logic for investment decisions and the creation of incentives (for example, tax incentives) and other policy reforms that will support development (for example, procurement). A framework should consider the investment needed for programs and advisories to support individual businesses. However, it should also consider the co-development institutions required for community economic development. Importantly, this should also enable local Indigenous institutions to build economies of scale to address social and economic development issues. These co-development institutions include:

  1. 1. Regional advisory services.

  2. 2. Indigenous research institutions.

  3. 3. Brokers that bring extra capacity to community governance.

Regional advisory services can help local and regional Indigenous organisations build governance capacity, and economic development expertise. They can also provide direct support to Indigenous-owned businesses. The fragmentation of this support was identified as a key issue on the OECD Study Mission. The Australian Government has also recognised this as a challenge by committing to establish Indigenous business hubs that can offer a ‘one stop shop’ for services and support. A pilot business incubator model will also be tested through the CDP in remote areas (Department of the Prime Minister and Cabinet, 2019[46]). This will support CDP participants to develop business ideas, and link them with resources such as Many Rivers Microfinance.

For individual community organisations, one way of building governance capacity involves auditing the skills, financing, technical assistance and relationships of the decision-making group and/or organization, and offering education, training, mentoring or organizational restructure to fill gaps. These types of audits and self-assessment are widely used for mainstream decision-making boards to ensure they follow good governance principles and there are many tools available. Entities in urban areas can tap into the plethora of consultants, leadership programs, or university researchers to spend time with them to go through the process in one project. This approach is also possible in rural areas, for example, the Apunipima Cape York Health Council invited university researchers to work with them to improve employee capacity within their organisation. They focused on building both hard capacity, such as in the technical aspects of planning, and soft capacity, including empowerment. Participants identified planning priorities, developing their skills, and then refined the strategies. The project was able to demonstrate changes in organisational capacity and confidence over time (Tsey et al., 2012[7]).

There are a range of issues for rural Indigenous organisations in the above strategy. Some rural communities may not be aware of what is available to them or have the networks to access the right help. Some may not have the funds to contract services. Some might find the training or leadership programs they identify as needed on an ongoing basis are not accessible in their areas. Some organisations offering consultations may not be culturally competent and therefore inappropriate. Small-scale Indigenous organisations may not have enough people to train in all aspects and may prefer to bring additional capacity in, for example to do planning or strategy writing, rather than relying on training. Most importantly, this type of capacity building may not bring in the right types of activities and expertise at the right times.

Regional business advisory services (or development agencies) and incubators can help by providing links to a broader range of resources in a network that can be accessed as needed. They can offer Indigenous businesses and organisations a seamless experience over a longer development process by connecting them to opportunities to find:

  • Foundation skills through training, mentor programs, and public workforce and economic development programs (including Indigenous developed ones such as Jawun in Australia that offers short term corporate or government secondees).

  • High quality technical assistance such as data analysis, legal advice, accountancy or other management services.

  • Planning or policy advice, including models.

  • Financial advice, access to finance and information about investment opportunities;

  • Assistance with regulatory issues.

  • Links to collaboration partners.

  • Other support as required.

Community-based advisory hubs, have been called for by regional Indigenous governance including for the Arctic (OECD, 2018[47]) and Australia (CYPCYLC, 2018[26]). They could be cost effective if they utilised the abundance of infrastructure that already exists, and governments could assist by creating frameworks for areas (Jacobs, 2017[48]). In addition, they could provide capability improvements for government officers working to support economic development, who may have never led an organisation or run a business themselves.

Local and regional development strategies also require the mobilisation of knowledge and expertise. This issue is recognised in the literature about regional innovation strategies where open and networked governance arrangements need to include experts, academics and higher education institutions (OECD, 2011[49]). Beyond their traditional role of research and teaching, higher education institutions can contribute to economic development by consulting for local industry, advising decision-makers, supporting start-ups, and informing public debates (Trippl, Sinozic and Lawton Smith, 2015[50]). Research institutions that offer research and development, advice and advocacy to Indigenous governance institutions can improve local Indigenous economic development. Access to this type of evidence allows communities to develop the type of governance they need to mobilise resources, increase productivity and reduce dependency on income transfer payments. Indigenous communities therefore need links to research that can help them create new models and utilise best practice.

Representatives of Indigenous governance institutions in Australia identified the importance of sharing best practice to learn from, access to expertise, and the capacity to better inform local planning and prioritisation (OECD Fact Finding Mission, July 2018). This included access to local area data. Local data is important because it comprises knowledge and information on the people living in the community, including lands, resources, and programs. It also sheds light on demographic development, membership, socio-economic conditions such as educational attainment rate and employment, maps of sacred lands and territories and way of life (Kukutai and Taylor, 2016[51]). In an effort to rebuild indigenous governance structures and empower communities in their local planning, Indigenous communities need to have access to information and data about themselves and their communities. Yet, despite increased digitalisation, accessing, gathering, owning and applying local data is a challenge for many indigenous communities (Kukutai and Taylor, 2016[51]). Without data, decision making for Indigenous communities and organizations is limited. Indigenous community level data availability is challenging and if it exists, it is often fragmented or siloed so that it is not useful to inform decision-making (OECD Fact Finding Mission, July 2018). To be able to do this on large scale and with a certain degree of sophistication, this also requires governments to increase funding for data collection and expertise for analysis.

There are a number of specialist centres in universities around the globe that provide research and development to Indigenous governance and economic development (Box 4.4). They examine best practice in governance, the community development processes and tools outlined earlier, produce data and analysis, and models for economic development. They also review and collate learning from global experience, giving communities access to the combined body of knowledge on governance from Indigenous groups globally. Governments fund these institutions and could expand their funding to include the support for capacity building being requested by regional Indigenous groups in their jurisdictions.

An additional strategy for building governance capacity is through community brokers within Indigenous communities. Community brokers (sometimes called community advisors, community facilitators, or CEO’s of community corporations) are being used in some Indigenous communities to increase the capacity of governance organisations to undertake economic development. There are other models that address disadvantage, and others focused on creating enterprises. In some, the brokers are Indigenous, and in others, they are non-Indigenous overseen by Indigenous governance. In both, brokers strengthen governance organisations by bringing in extra capacity.

Brokers can build partnerships with those with the levers to make action happen. When partners first come together they do not necessarily see themselves as interdependent (Keast et al., 2004[55]) and to achieve this requires building both trust in, and understanding of, other organisations (Mandell, 2001[56]; Lewis, 2005[57]). The success of partnerships is therefore dependant on the relationship building brokers can foster that allows people to learn about each other, reshape any stereotypical views they hold, and understand the constraints other organisations face (Mandell, 2002[58]). In addition, brokers deal with hindrances such as: ‘blockers’ (organisations or individuals that slow down activity or act against its interests); staff turnover in government; and organisational silos in governments. Supporting this approach requires enabling policies from governments including direct funding for community brokers, re-orientating local staff to fulfil brokering and facilitating functions, and creating flexibility in service delivery models and contracts.


Another mechanism available for local Indigenous institutions to mobilise economic development opportunities are benefit-sharing agreements. With the right governance arrangements and tools, land can be a powerful lever for local Indigenous economic development (OECD, 2019[6]). This includes the capacity to develop agreements with project proponents wishing to undertake commercial development on Indigenous lands. The Native Title Act (1993) establishes a legal procedure to recognise Indigenous land rights (to hunt, gather, fish and hold ceremonies on land) (see Chapters 1 and 2) (Smith, 1998[63]). Under the Native Title Act, Indigenous Land Use Agreements (ILUA) provide a mechanism for voluntary agreement making between Indigenous peoples (as traditional owners of land represented by a Prescribed Body Corporate), governments, resource developers and other stakeholders in relation to native title matters and land-use concerns. There is a six-month period for the negotiation of an ILUA. Once registered, ILUAs are binding to all persons holding native title in the agreement area. These agreements can regulate the development of new projects, issues of access to an area, protection of cultural heritage and other matters. Through them, Indigenous groups can negotiate benefits, such as shared revenues, protection of sacred sites, preferential employment opportunities and support to Indigenous business development. ILUA related to mining and extractive industries and infrastructure development fluctuate over time (Figure 4.1). They are mostly concentrated in areas with high levels of mining and extractive activity (Queensland, Western Australia and the Northern Territory).

Benefit-sharing agreements typically cover labour, economic development, community well-being, environmental, financial and commercial issues (Sosa and Keenan, 2001[64]). These agreements provide an opportunity for local Indigenous communities to develop their assets and improve the long-term well-being of its members through a combination of monetary and non-monetary benefits. Monetary benefits can include single up-front payments, fixed annual payments, and equity participation. Equity participation enables Indigenous groups to have a direct say in projects and receive a portion of the profits (NAEDB, 2012[65]). This increases incentives for the community to maximise benefits and generates own-source revenues that increase self-reliance. The challenge is raising sufficient capital to participate as an equity partner. This can be achieved through monetary payments associated with ILUA, and potentially through the investment function of IBA. However, IBA largely makes investments in commercial property and tourism (IBA, 2019[66]). Regardless of the model, financial capital and royalty payments are usually placed in a trust, which is considered a good practice because it generates autonomous financial resources to support sustainable regional economic development for the future, beyond the duration of the project (Loutit, Madelbaum and Szoke-Burke, 2016[67]). It is important that the trusts be structured in a way that enables both wealth creation and charitable activities. This can be achieved by allocating a proportion of financial capital and royalty payments to a discretionary trust (which enables flexibility), and another to a charitable trust (less flexibility but with tax advantages) (OECD Fact Finding Mission, July 2018). This arrangement enables the disbursement of income for a range of activities such as investing in local businesses, running community programs, and provide payments to community members. Non-monetary compensation can range from employment opportunities, training and business development to infrastructure construction and provision of services. In terms of local labour supply, this can include preferential hiring and targets, mentoring and training, and cultural programs for Indigenous workers. Targets and other support mechanisms can also be established to enable preferential procurement for local Indigenous owned firms. A range of social and environmental issues can also be covered in these agreements. This might include the protection of hunting grounds and sacred sites, environmental provisions, and social issues such as support for community projects, and recreational programs (OECD, 2019[6]).

Assessing outcomes from ILUAs is difficult because measures of progress differ between communities and some data is commercial in confidence; it is also difficult to isolate impacts, which may also be long-term. Socio-economic outcomes for Indigenous peoples in rural areas with resource extraction, indicate that at a general level, benefits are not flowing through to local communities (Campbell and Hunt, 2013[44]). Although the share of employment of Indigenous peoples in mining is higher than non-Indigenous (5% compared to 3%), the overall proportion is small. These outcomes also reflect the legacy costs of colonisation, poor access to markets, and low institutional capacity (OECD, 2019[6]). Monetary benefits may flow to activities that do not build the social, human and economic capital of communities, and predominantly focus on the distribution of income to individuals and families. However, ILUAs can act as a catalyst for community economic development by providing a mechanism to invest in assets that activates a longer-term development process. A number of elements need to be in place to achieve this. First, trust models that invest compensation in long-term strategies to build financial and human capital through business development and social programs (OECD Mission to Australia, July 2018). Non-monetary benefits such as procurement targets and employment and training initiatives complement this by stimulating demand and activating economic development opportunities. These are necessary but not sufficient conditions to link Indigenous communities with regional development. Governments also need to complement these strategies with investment in supply-side factors, particularly infrastructure and skills (Crooke, Harvey and Langton, 2006[68]). Local communities also need the time and capacity to articulate a strategy for development that matches local preferences and aspirations. This may also open up alternative priorities for development such as outstation development, cultural activities, and shorter-term projects (Holcombe, 2009[69]) (Campbell and Hunt, 2013[44]).

The negotiation and implementation process is critical to the efficacy of these agreements. The main challenges relate to the significant power asymmetries between local Indigenous institutions and multi-national corporations (Crooke, Harvey and Langton, 2006[68]; Campbell and Hunt, 2013[44]). Lack of capacity and fragmented relationships within communities were identified as challenges by industry in terms of striking effective and timely agreements (OECD Mission to Australia, July 2018). The role of PBCs is to hold and represent native title rights and interests, and not to negotiate commercial agreements and promote local economic development. Some support is provided by Native Title Representative Bodies (NTRBs) and Native Title Service Providers (NTSPs) including agreement making (Austrade, 2019[70]). However, complexities and risks can emerge, as PBCs are required to adhere to different regulatory requirements, oversee trust funds, and identify and fund projects (OECD Mission to Australia, July 2018). Different actors indicated that support for PBCs and trust operation (training, capacity building, templates and tools, and technical support) was inadequate (OECD Mission to Australia, July 2018). Industry and government also need to provide investment in leadership and governance training, business and commercial skills, and the opportunity to buy-in technical expertise for local Indigenous institutions (Crooke, Harvey and Langton, 2006[68]; Campbell and Hunt, 2013[44]). Other support might include access to local data and analytical capabilities, skilled facilitators to help broker agreements, and cultural sensitivity training (Australian Human Rights Commission, 2006[71]; Campbell and Hunt, 2013[44]). Much of this depends upon the efforts of the project proponent and Box 4.8 provides a list of leading practices on agreement making for companies.

This section of the chapter focuses on how local Indigenous institutions can build scale to access ideas and resources, and mobilise actors to promote community and economic development. As identified in the previous section the core unit of decision-making is often family and clan groups at a local level. Multiple family and clan groups may exist within a single functional economic area (metropolitan region or local labour market). Although this scale may be representative of family and clan interests, bottlenecks may emerge in terms of mobilising local and regional economic development opportunities. Local Indigenous organisations need to build scale to access public resources, attract investment, and resolve complex problems. Additional challenges can be present if Indigenous communities are small and in remote locations, and their institutions are young with low levels of own-source funding and support. Governments can provide enabling environment for regional collaboration and partnerships in four ways (OECD, 2019[6]). The first is through the brokering and facilitating role of local staff working in Indigenous affairs and economic development. The second is linking Indigenous community representatives to decision-making about regional economic development. The third is through the planning and investment decision-making roles of local governments. The fourth is through facilitating regional alliances and agreements.

The primary interface for the Australian Government with local Indigenous communities is the regional network of the National Indigenous Australians Agency (NIAA). The NIAA was created in May 2019 to lead and coordinate Indigenous policies and implementation of Australia’s closing the gap strategy. Between 2013 and 2019, Indigenous Affairs was located as a division within the Department of the Prime Minister and Cabinet (PM&C). Previous to this, Indigenous Affairs had been primarily located in the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) with functions distributed across seven other Departments and agencies (Australian National Audit Office, 2018[72]). The regional staff, which came with this shift, were mostly involved in the administration and delivery of Indigenous specific programs. The consolidation of these functions into PM&C was designed to give coherence across government to Indigenous issues. In 2014-15 the regional network was re-structured to shift from a state-based model to a regional model with boundaries that better matched patterns of culture, language, mobility and economy (Australian National Audit Office, 2018[72]). The restructure was also designed to move the regional network beyond its core business of contract management and program delivery into functions such as stakeholder collaboration, strategic advice, and building capabilities (OECD Fact Finding Mission, July 2018). The included gathering and transmitting local knowledge to better inform policy and program settings (Australian National Audit Office, 2018[72]).

The Regional network model is based on having a regional manager who is responsible for local outcomes. This is a significant shift from delivering outcomes through centrally designed sectoral programs and initiatives. The following tools and mechanisms have been implemented to support this shift: establishing a discretionary fund for regional managers to fund local projects, regional plans/ blueprints to set local priorities, and redesigning position descriptions so they are fit for purpose (Australian National Audit Office, 2018[72]). Engagement on the fact-finding mission demonstrated that regional network staff had a good understanding about the priority and rationale for implementing a place-based approach to Indigenous community and economic development (OECD Fact Finding Mission, July 2018). This was framed as shifting from a reactive/ transactional model toward proactively brokering solutions with Indigenous communities. Within this model, local engagement officers work with local communities to identify opportunities and bottlenecks, and coordinate within government to identify Commonwealth program solutions, and resources across State and local governments, and the private and philanthropic sectors, to address them. For example, for Indigenous owned businesses, a local business adviser in the Kimberley can tap into various entities such as Many Rivers (micro-credit), Wunan Foundation (employment and training), Indigenous Business Australia (loans and grants), AusIndustry (advice and business programs), and the Land Council (land tenure issues) (OECD Fact Finding Mission, July 2018). Staff recognised that implementing place-based agenda was a challenge because it required a recalibration of a business model that over 50 years was embedded in a social policy framework focussed on contract and program management (OECD Fact Finding Mission, July 2018). Staff also had to deal with complexities within communities including significant variations in the quality of local institutions, and fragmented interests and decision-making. Adjustments to support and engagement had to be undertaken based on local capacities and objectives for development (OECD Fact Finding Mission, July 2018).

A report by the Australian National Audit Office in 2018 found that the full potential of this place-based approach is currently not being maximised (Australian National Audit Office, 2018[72]). The Report found that arrangements to coordinate with key stakeholders are ineffective and local officers and regional managers have limited discretion in making decisions about resource allocation. In addition, mechanisms to shape central policy are limited. It recommended developing an internal and external communication and engagement framework for the Regional Network, and embedding processes to leverage local knowledge and lessons into program design. The report recommendations do not directly address the tools and capabilities, which are required within the regional network to implement a place-based approach. This question of how to implement a place-based approach to Indigenous policy was also extensively addressed in the 2015 design report of the Empowered Communities initiative (Wunan Foundation, 2015[1]). However, it only partially addressed how the regional level needed to reform operations to facilitate it. This included recommendations for pooled regional budgets and developing accords for governments and local Indigenous organisations to implement agreed place-based outcomes (Wunan Foundation, 2015[1]). Given the diversity of conditions across Australia’s First Nations, and in the absence of a formal or guaranteed process for agreement making with Indigenous peoples, a bespoke approach is needed. To make this transition to a place-based approach the NIAA needs to create a tool-kit that can be applied in a flexible way across different parts of the regional network. This tool-kit has five interconnected elements, which is further developed in different parts of this chapter (Table 4.4).

In Australia, local governments tend to have some kind of formal role in economic development (Beer, Maude and Pritchard, 2003[73]). This role varies greatly depending on the relevant State and Territory legislative and policy frameworks, population size and density, and revenue capacities. Beyond the provision of local community infrastructure and services, their role in economic development may include the provision of information and data, place promotion strategies, and inducements to attract firms. Local governments play an important role in local planning, and are usually required to enact a community plan and a local land use plan. Within the framework of these local plans, they may also play a coordinating or convening roles (e.g. coordinating infrastructure investment), and facilitating development approvals. Local governments are also creatures of State and Territory legislation, and have few powers and independent sources of revenues compared to higher levels of government (Megarrity, 2011[74]). A key trend over the past three decades has been the amalgamations of local governments to realise efficiencies in the provision of local infrastructure and services (Beer, Maude and Pritchard, 2003[73]; Megarrity, 2011[74]). This can raise greater community controversy and impacts in rural areas because they are sparsely populated and local municipalities play a relatively more important role in the local economy and provision of services. Nevertheless, local governments continue to play an important role in creating the basic conditions for local economic development (regulatory services, and local infrastructure), and proactive strategies to attract and develop local firms in rural regions.

There is not a large literature on the relationship between Indigenous peoples and local government in Australia (Sanders, 1996[75]; Sanders, 2006[76]; Limerick, 2009[28]) Sanders (2006) identifies a basic division between local governments in urban areas (where Indigenous peoples are a minority group) and in remote areas where they make up a large proportion of the population and/or are in the majority. This influences the level of democratic representation for Indigenous peoples, and the degree to which local governments focus on their needs and interests. In turn, the capacity for Indigenous groups to influence local decisions and have autonomy in rural and remote areas depends on whether it the community is part of a mixed township or in a discrete remote community. Land ownership can have an impact on Indigenous – local government relations when Indigenous peoples are a minority group in a larger incorporated area. Indigenous lands may have historically been outside the jurisdiction of local governments and when they are within jurisdiction, there has historically been difficulties related to valuation and paying of rates (Sanders, 1996[75]). Since the 1980s, there has been progress in Indigenous-Local Government relations for example through the establishment of local Aboriginal Advisory Committees, employing Aboriginal community liaison officers, and through the election of local councillors (Sanders, 1996[75]). Some jurisdictions (Queensland, Northern Territory and South Australia) have distinct Aboriginal local governments. The main challenges identified for this model include the lack of flexibility in the type of governance model that may not match local norms and preferences, lack of autonomy and own-source revenues (Sanders, 1996[75]).

This diversity in experience was also observed on the OECD Fact Finding mission in July 2018. There was a range different approaches observed where Indigenous communities were part of a larger incorporated area in both urban and rural areas. Some local governments had limited engagement with local Indigenous communities, which was restricted to ceremonies and symbolic gestures. Local governments also identified difficulties in terms of engaging with local Indigenous communities, particularly where questions of land rights and traditional owners had not been resolved. In some cases, local governments played a more expansive role. In more remote areas, service delivery for discrete Indigenous communities are governed by contracts that are based on a fee for service arrangement. Local governments are also increasingly using preferential procurement as a lever to support Indigenous economic development. A good example of a holistic approach is the City of Greater Shepparton in Victoria that has used the framework of a Reconciliation Action Plan (RAP) to engage with its local Indigenous community (City of Greater Shepparton, 2019[77]). This includes an Indigenous employment target, investing in street art, truth telling and recording history, and events. The Council has also worked with local Indigenous institutions to support funding applications to other levels of government for projects. The Council has worked with a diversity of local Indigenous groups to map and understand relations, and implemented a flexible engagement strategy (OECD Fact Finding Mission, July 2018). Engagement with Aboriginal local governments reflected the findings identified by (Sanders, 1996[75]). Community Councils in Central Australia expressed preferences to have more autonomy and self-determination in running local services and more support to build local capacity (OECD Fact Finding Mission, July 2018). The different potential roles of local government in Indigenous economic and community development are identified in Box 4.9.

In the 1990s, the Australian Government began to support dedicated regional development organisations as part of a response to uneven spatial impacts of economic liberalisation and restructuring (Beer et al., 2005[78]). These institutions were designed to bring regional stakeholders together to identify competitive strengths, constraints and opportunities, and strategic plans and partnerships to address them (Beer et al., 2005[78]). The current Regional Development Australia (RDA) network is made up of 55 RDA committees. The establishment of these institutions reflected broader shifts in regional development policies of OECD countries which emphasised governments working with regions to unlock growth potential (OECD, 2009[79]). This requires taking an integrated approach to development, and collaboration between levels of government and the private sector. RDAs undertake this role by engaging and bringing together stakeholders to undertake regional strategic planning, identify and facilitate projects, disseminate information about government programs, and inform government of regional priorities. Different studies of these institutions in Australia have identified a number of constraints including: limited and project based funding, absence of community and political support, and lack of clarity about roles and responsibilities, and competition between different levels of government and agencies (Beer, Maude and Pritchard, 2003[73]; Beer et al., 2005[78]; Buultjens, Ambrosoli and Dollery, 2012[80]). However, they are important institutions for identifying and communicating priorities for regional development, and therefore influencing decision-making about investment across different levels of government.

The assessment in Chapter 2 identified that across the case study communities, the Indigenous economy is not strongly visible in regional development planning frameworks of RDA Committees. Engagement on the study mission revealed that RDAs were not critical stakeholders for Indigenous communities and institutions. This may be the result of different portfolio responsibilities with distinct economic development programs delivered through NIAA and IBA. However, AusIndustry has developed a presence and role in Indigenous economic development, particularly in terms of investment on Indigenous lands (Australian Trade Commission, 2019[38]). The Charter for RDAs does not identify Indigenous economic development as a priority (Regional Development Australia, 2017[81]). A 2016 report by the NSW Ombudsman into Indigenous economic development also identified this gap and argued that RDAs could play a role in supporting place-based economic development planning for Indigenous communities (Ombudsman New South Wales, 2016[82]). The roles of RDA Committees in Indigenous economic development could include engaging with communities on regional development programs and support, communicating Indigenous economic development priorities in the region to different levels of government, and supporting local community economic planning. This depends on ensuring Indigenous communities are visible in regional strategies and examples of this from New Zealand and Sweden are identified in Box 4.10.

Localised kinship relations are very important to how Indigenous peoples organise their affairs. Indigenous institutions established under State and Territory land rights legislation and the Commonwealth Native Title Act tend to be localised and reflect the historical connection of kinship groups and clans to specific territories. The exception are the Land Councils in the Northern Territory, which represent and work on behalf of multiple local groups within their jurisdiction on land management issues. Local decision-making has a number of benefits including lower transaction costs and better matching of support to community needs and preferences. However, smaller institutions can result in higher cost structures, less diversity and specialisation, and difficulties in managing externalities. These can translate into governance failures such as mismatches between functional and administrative boundaries, lack of technical expertise and capacities, and asymmetries of information (Charbit and Michalun, 2009[83]). Local institutions can increase scale using a number of different mechanisms, which range from “harder” legal or financial incentives, to “softer” collaborative mechanisms (OECD, 2013[84]). Contracts between municipalities and First Nations to deliver services is a feature of local governance in both Australia and Canada (Nelles and Alcantara, 2011[85]). These are transactional agreements (contracts) based on fee for service covering functions such as garbage collection (Sanders, 2006[76]). Collaborative agreements are different and can provide an opportunity to address unequal relationships. These agreements usually include a set of common principles, such as mutual recognition and respect, and a commitment to communicate and/or meet regularly to discuss issues of common concern (Nelles and Alcantara, 2011[85]).

Regional Indigenous structures had existed under the Australian Torres Strait Islander Commission (ATSIC) that was dissolved in 2004. There were 34 regional councils across Australia that were elected every three years. A 2003 review of ATSIC had recommended strengthening and increasing emphasis on regional planning functions (Pratt and Bennett, 2004[86]). The abolition of these regional bodies created a vacuum in terms of an administrative structure to facilitate regional co-operation amongst different local Indigenous groups (OECD Fact Finding Mission, July 2018) (Wunan Foundation, 2015[1]). To a degree, PM&C regional services can help facilitate these relationships, and in some cases, local governments also take on this facilitating role. The Empowered Communities program provides another mechanism to facilitate regional co-operation and dialogue. However, there is no systemic way to organise regional co-operation amongst local Indigenous institutions in terms of economic and community development. Incentives to facilitate co-operation are also lacking (Wunan Foundation, 2015[1]). Economic development programs focus on individual Indigenous-owned businesses. The Indigenous Advancement Strategy guidelines on Jobs, Land and Economy does not include specific provisions related to regional collaboration on economic development (Australian Government, 2016[87]). Native Title legislation incentivises agreement making with individual traditional owner groups. Greater support for regional collaboration will require some proactive leadership from governments (facilitating collaborative partnerships and creating incentives), and willingness and capacity from local Indigenous institutions and groups. Two examples of successful multi-level governance agreements to build partnerships and effective scale from Canada and New Zealand are outlined below (Box 4.11).

This section of the chapter focuses on the multi-level governance and funding mechanisms to support the implementation of a place-based approach to Indigenous economic development. The capacity to achieve effective forms of local self-governance is shaped by the framework conditions within which Indigenous communities and organisations operate. This includes legislative statutes, roles and responsibilities between levels of government and different portfolios, the administrative practices of different state agencies, and programme rules and fiscal arrangements. Drawing on the global study for this project the assessment in this section covers two main dimensions (OECD, 2019[6]):

  1. 1. How to create opportunities for the meaningful participation of Indigenous peoples in decision-making. This includes consultation mechanisms, and the development of cross-cultural competencies within public institutions.

  2. 2. How to align implementation and enhance coordination between levels of government, across different sectoral policies, and with Indigenous communities at the local level. This includes governance mechanisms to enhance coordination, funding arrangements that facilitate and incentivise co-operation, and mechanisms to facilitate agreements on outcomes and priorities at local and regional levels.

Citizen participation in policymaking can have two significant benefits in terms of public policy outcomes. Firstly, it can improve the quality of policies, laws and services as it incorporates knowledge and feedback from people who will be impacted by them. Secondly, it improves the policymaking process, making it more transparent, inclusive, legitimate and accountable, building trust in government (OECD, 2016[90]). A central element of shifting toward a place-based approach for Indigenous economic development is making greater use of local knowledge through partnerships and engagement with Indigenous peoples (OECD, 2019[6]). This also has significant implications for economic development. Evidence in Australia and internationally suggests that Indigenous self-determination and self-governance are essential foundations for sustained economic development among Indigenous peoples (Cornell and Salt, 2007[91]; Aboriginal Affairs NSW, 2017[92]). Research also suggests that there is a ‘development dividend’ to ‘good’ governance, and that ‘weak governance capacity’ in Indigenous communities is a contributing factor where there are failures in economic development (Smith, 2008[93]). Indigenous participation in decision-making is also consistent with the UNDRIP (UN, 2007[13]).

Indigenous participation in government decision-making is multi-layered, and complex. A key factor shaping this participation it is how Indigenous peoples are represented in political institutions. Indigenous peoples are poorly represented in all branches of Australian government (Jordan, Markham and Altman, 2018[94]). In the Commonwealth parliament, there is no electoral division where Indigenous people form a majority of eligible voters. Nor is there an Australian state or territory where Indigenous people form an electoral majority, although remote Indigenous people wield a degree of electoral power in the Legislative Assembly of the Northern Territory (Sanders, 2012[95]). Indigenous peoples have most formal governmental influence at the local government level. As previously discussed in this chapter, local government is both limited in its powers and influence in sparsely populated areas have been weakened by the amalgamation of adjoining local government jurisdictions in several states and territories (Sanders, 2013[96]). There are no national Indigenous representative bodies with any governmental powers, or formal agreed processes for Indigenous peoples to have a say over their affairs (Wunan Foundation, 2015[1]). An elected national Indigenous representative body - the Aboriginal and Torres Strait Islander Commission or (ATSIC) - was established in 1990. This body had both representative and executive duties, and did not have powers to legislate for Indigenous peoples. In 2005, the Australian government abolished ATSIC. The National Congress of Australia’s First Peoples, a membership-based organisation that advocates on Indigenous policy issues, was established in 2010 with Commonwealth funding. It no longer receives funding support from the Australian Government but continues to advocate and has a membership of over 9,000 individuals and 180 organisations. Some States and Territories are moving toward treaty making with Indigenous peoples and this may include the formation of representative structures. For example, the State of Victoria has commenced the process of negotiating a Treaty with Indigenous peoples in their jurisdiction and this includes a formal representative structure (Box 4.12).

Recently, there have been steps to improve Indigenous representation in policy decision-making at the national level through the establishment of the Joint Council on Closing the Gap. It operates under the framework of COAG and includes Ministers from all jurisdictions, and 12 representatives from peak Indigenous organisations. Other mechanisms for engagement at the Australian Government level are the Indigenous Advisory Council (IAC), the Indigenous Reference Group to the Ministerial Forum on Northern Development, and regular national public consultations about Australian Government policies, programmes and/or legislation (Department of the Prime Minister and Cabinet, 2018[98]). The IAC is appointed by the Prime Minister to provide expert policy advice to the Australian Government on Indigenous policy and programmes, implementation and practice. Roundtables and workshops, and meetings with peak Indigenous organisations are also used to provide input to policies. Indigenous peoples also influence policies through a range of different advisory bodies, and State and Territory and local institutions. There are several thousand incorporated Indigenous-controlled non-government organisations and statutory bodies with diverse objectives and roles. Indigenous specific services are more important in some policy domains (e.g. early childhood education and housing), and Indigenous organisations play other roles in building social and political efficacy (Jordan, Markham and Altman, 2018[94]). As identified in the previous chapter, Indigenous Chambers of Commerce operate at the State level, and can represent Indigenous business interests in policy and decision-making. The regional network of NIAA is another point of engagement; however, its capacity to shape central policies and decision-making has been found to be limited (Australian National Audit Office, 2018[72]).

The current arrangements have led to a situation where the great wealth of knowledge present in indigenous communities, peak bodies and other indigenous institutions is not effectively influencing government policy (Australian Human Rights Commission, 2016[99]). The Australian government has acknowledged that one of the biggest weaknesses of policies, such as the “Closing the Gap” strategy was its limited involvement of Aboriginal and Torres Straight Islanders in the design, development and implementation of the program. The Government established new consultative mechanisms to ensure Indigenous representatives informed the refresh (see Chapter 2). It is crucial to ensure that Indigenous representatives are not only consulted to “tick a box” in the policymaking process but their input has an impact on the decisions taken. Research shows that levels of engagement where Indigenous people do not have the feeling of being able to make a difference, bears the danger of trust erosion and consultation fatigue (Hunt, 2013[100]). To avoid that the government needs to providing Indigenous people with the opportunity to make decisions in the policy making process, including the definition of the problem, the development of policies, as well as implementation and evaluation of outcomes (Hunt, 2013[100]; OECD, 2019[6]).

As identified above, a key issue in relation to regional development is how Indigenous peoples can participate in decision-making at the regional and local level. A key mechanism at the regional level is the NIAA regional network. As at 31 January 2018, the Network comprised over 550 staff in around 82 locations across urban, rural and remote Australia (Department of the Prime Minister and Cabinet, 2018[98]). This includes departmental officers in residence (Government Engagement Coordinators (GECs) and/or Indigenous Engagement Officers (IEOs)) in 49 communities around Australia. IEOs are community members as such able to communicate in their local Indigenous language(s). The network is critical in terms of consultation because it is designed to actively engage and maintain relationships with Aboriginal and Torres Strait Islander individuals, groups, organisations and representative bodies about government decisions, policy changes and how government funded services are working in the community (Department of the Prime Minister and Cabinet, 2018[98]). The other key institution is local government. As discussed earlier in the chapter, it is the political institution closest to local communities, delivers and maintains local infrastructure and services, and can act as an advocate for local communities to other levels of government. Because of this local presence, local governments have the opportunity to build close and ongoing relationships with Indigenous peoples.

However, Indigenous engagement in these local and regional institutions are inconsistent, and in some cases, inadequate. The Regional Network has an inconsistent approach to engagement which risks stakeholder confusion and consultation fatigue (Australian National Audit Office, 2018[72]). Local government practices in regards to Indigenous engagement and participation are highly variable (OECD Fact Finding Mission, July 2018). It is important to understand these issues in a historical context. ATSIC structures provided relatively good access for Indigenous peoples across Australia but were removed as part of the mainstreaming agenda after 2005 (OECD Fact Finding Mission, July 2018) (Wunan Foundation, 2015[1]). Since this time, there have been many changes in structures and approaches and this has generated confusion and eroded trust between government and Indigenous communities and organisations (OECD Fact Finding Mission, July 2018). The capacities of local Indigenous communities and organisations also varies greatly and each of them are at different points in terms of community and economic development (OECD Fact finding Mission, July 2018).

The engagement/ brokering work of regional network staff also sits outside of traditional performance metrics of public administration based on clear objectives and deliverables that translate into agreements and contracts. Contract and program management had traditionally been the core business of local Indigenous Affairs staff. In engaging with communities, staff also need the flexibility, time and support to deliver locally driven innovations. As discussed earlier, there is now much more emphasis on facilitation and engagement (essentially coordination or brokering services) which requires a higher degree of flexibility to deliver innovative solutions. One example in the Kimberley was how the regional network had supported the development of a Memorandum of Understanding (MoU) between a network of local service providers, which included working with communities to identify priorities for change in how early childhood services are delivered and a joint calendar to schedule visits to Indigenous communities. There was a high degree of complexity in this task that involved coordinating service providers; collecting data, presenting it back to communities for dialogue; and, identifying priorities for change and implementing them (OECD Fact Finding Mission, July 2018). Some of these initiatives may also result in failure. The study mission revealed examples of where staff had made efforts to bring local stakeholders together to address common issues (e.g. managing the impacts of infrastructure investments, or addressing social challenges) that had resulted in some progress but then had stopped working (OECD Fact Finding Mission, July 2018). In these cases, it is important that there are mechanisms to capture lessons and feed them back into policy and future decision-making.

Implementing clear frameworks and protocols for engagement is one way to address these inconsistencies. To a degree, these already exist in Australia in relation to Indigenous land rights. For example, there are rights to negotiation mandated under the Commonwealth Native Title Act (1993). These can occur under the framework of an ILUA (National Native Title Tribunal, 2018[101]). Indigenous groups may also be referral authorities under State and Territory land use legislation where development may affect Indigenous cultural heritage. However, there is a lack of consistency in how Australian Government departments and agencies include Indigenous peoples in decision-making (Australian National Audit Office, 2018[102]; 2017[103]). This reflects a lack of guidance and support for engagement with Indigenous Australians on matters that affect them. Some countries have implemented duties to consult with Indigenous peoples (Canada, New Zealand and Norway). Crown-Indigenous Relations and Northern Affairs Canada takes a leadership and coordinating role within the Federal Government to implement its duty to consult. This includes providing direction on consultation practices, developing partnerships with Indigenous groups and organisations, coordinating with provinces, territories and industry, and delivering training and guidelines on the duty to consult (Crown Indigenous Relations and Northern Affairs Canada, 2019[104]). In the case of Canada, some Indigenous groups have started to develop their own consultation protocols and have signed individual agreements with the federal or provincial governments (Box 4.9). Requirements for consultation can also be legislated as it is with the New Zealand Local Government Act (2002) (Box 4.13).

Capacity gaps do not exist solely on the side of Indigenous communities. Policymakers often do not have sufficient knowledge and awareness of the regional and local complexity of Indigenous cultures, livelihoods and society to engage with them effectively (Hunt, 2013[100]; Wunan Foundation, 2015[1]). This may create capability gaps, especially in positions of middle and upper management in central offices that have less direct contact with communities than their local and regional staff (OECD, 2019[6]). Part of the effort to build an environment in which Indigenous communities are encouraged to engage in policymaking is investing in the capacity of government personnel to build meaningful and strong relationships based on mutual respect. Cultural exposure sessions and training in cross-cultural skills can help address this issue (OECD, 2019[6]). There are different models of this in the Australian context. For example, the Australian Institute of Aboriginal and Torres Strait Islander Studies (AITSIS) has developed Core Cultural Learning: Aboriginal and Torres Strait Islander Foundation Course (AIATSIS, 2019[109]). The course has 10 modules covering topics such as culture, customary law, history, Indigenous community organisations, and how to engage effectively with Indigenous communities. In addition, Indigenous peoples need to be encouraged and supported to join the public services, to be able to mediate between the cultures bridge gaps in understanding and help to link the two worlds (OECD, 2019[6]). For example, engagement on the OECD Study Mission revealed how beneficial this was in terms of building relationships with Indigenous peoples in policy development and delivery through community brokers or navigators (OECD Fact Finding Mission, July 2018). In March 2015, the Australian Government announced a target of 3% representation of Aboriginal and Torres Strait Islander peoples in the Australian Public Service by 2018 (NIAA, 2019[110]). By March 2018, the level of representation was at 2.9%. Similar public employment targets exist at the State and Territory level.

A place-based approach to regional development has significant important implications for how government works. Policies should be adapted to the needs and circumstances (social, economic, cultural, geographic, environmental, etc.) of different regions. This requires the development of feedback loops and coordinating mechanisms between different levels of government to ensure policies and programmes are better matched to regional and local conditions. Policies should also be integrated horizontally to help realise complementarities between them. The concept of policy complementarity refers to the mutually reinforcing impact of different actions on a given policy outcome. Policies can be complementary because they support the achievement of a given target from different angles. In effect, governments should frame interventions in infrastructure, human capital and innovation capacity within common policy packages that are complementary to sectoral approaches as well (OECD, 2016[16]). Examples of policy complementarities for rural remote regions are provided in Table 4.5.

OECD member countries have put in different reforms to help facilitate this place-based approach to rural and regional development. However, governance challenges to implement a place-based approach to regional and rural development remain. OECD governments have reported that some of the greatest challenges to vertical coordination are: a lack of private sector participation in public investments, regulatory and administrative obstacles, and a lack of subnational government understanding of central government priorities and vice versa (OECD, 2013[84]). Horizontal coordination is also a challenge because of different objectives between ministries, lack of incentives for co-operation, and different funding rules and arrangements. These challenges are also evident in relation to Indigenous policies. Some of the key challenges identified in the literature include:

  • Programmes and initiatives for Indigenous peoples are mainly delivered in a top-down way through sectoral ministries.

  • Lack of coordination between different services and programmes at a local level.

  • Funding is delivered in a ‘drop feed’ manner, is short term, with different administrative burdens and reporting arrangements.

  • Lack of policy continuity with frequent changes in governance, programmes and funding (Dodson and Smith, 2003[5]; Cornell, 2006[2]; Tsey et al., 2012[7]).

There are different mechanisms and instruments that can be utilised to overcome these challenges. Vertical coordination can be enhanced through the use of formalised agreements and co-financing agreements between levels of government, and establishing platforms for dialogue between different levels of government (OECD, 2018[111]). Horizontal coordination can be enhanced through the creation of strategic frameworks that align objectives between ministries, linking infrastructure funding to cooperative governance arrangements, increasing the flexibility of programme rules, inter-ministerial committees and working groups, and pooled and block funding arrangements (OECD, 2016[16]).

The Australian Government’s role in Indigenous Affairs can be traced to the 1967 amendment to the constitution, which removed the reference that barred the Commonwealth from making laws related to Aboriginal people. Following the amendment, the Commonwealth was able to legislate for Aboriginal people and this became an area of shared responsibility with the States. States have historically managed relations with Indigenous peoples, and they retain significant areas of responsibility. States have primary responsibility for managing land in Australia and many established statutory land rights regimes for Indigenous peoples from the 1970s. States are also primarily responsible for the delivery of education and vocational training, health, and local police services and the judicial system. Figure 4.2 provides an initial mapping of institutional arrangements for Indigenous Affairs in Australia. The diagram is illustrative and it aims to give a general overview. Furthermore, it shows that while integration between the federal level and states and territories is institutionalised through the Council of Australian Governments (COAG), links on the regional or local level between PM&C regional offices, local and state/territory government, service provides and aboriginal organisations are not institutionalised. This indicates the importance of local co-ordination for effective implementation of Indigenous specific programs and services.

COAG is the peak intergovernmental forum in Australia and its Ministerial Councils provide a forum for collaboration and decision-making on agreed priorities. In 2007, the Commonwealth, State, and Territory Governments developed and agreed on the “Closing the Gap” framework (discussed in the previous chapter) through COAG. This framework was operationalised through the 2009 National Indigenous Reform Agreement (Closing the Gap) (Council of Australian Governments, 2009[112]). This 2009 agreement aimed to give greater coherence to policies for Indigenous peoples by setting out agreed targets, principles and priority actions. The Agreement identifies seven ‘building blocks’ (including economic participation), which subsequently formed separate National Partnership Agreements. The National Partnership Agreement on Economic Participation expired in 2013 (Department of Employment, Skills, Small and Family Business, 2018[113]). While positive outcomes were achieved, reviews noted the impacts of governance challenges such as complexities in Commonwealth-state relations and short planning cycles (Department of Health and Ageing, 2013[114]; Commonwealth of Australia, 2017[115]).

In 2017, the Commonwealth, States and Territories established a Ministerial Council on Indigenous Affairs within the framework of COAG. An important impetus for establishing the Council was to engage all levels of government in the 10 year refresh of the Closing the Gap framework (Department of the Prime Minister and Cabinet, 2017[116]). As discussed in the previous chapter, this refresh had a strong emphasis on engagement with Indigenous organisations. Agreement through COAG was formalised in a Partnership Agreement on Closing the Gap, which included a coalition of peak Indigenous organisations and the Australian Local Government Association (ALGA) (COAG, 2019[18]). The Agreement sets up a governance arrangement to oversee monitor and evaluate the implementation of efforts to close the gap in socio-economic outcomes between Indigenous and non-Indigenous Australians over the next 10 years. This includes articulating agreed objectives and principles in regards to shared decision-making and self-determination for Indigenous peoples, identifying the key role of Indigenous organisations, and the need for local communities to set their own priorities (Box 4.15). The Ministerial Council has now been re-named the Joint Council on Closing the Gap, which reflects its membership of Ministers and 12 representatives from peak Indigenous organisations. The Joint Council has identified three priority areas for reform:

  1. 1. Developing and strengthening structures to ensure the full involvement of Aboriginal and Torres Strait Islander peoples in shared decision making at the national, state and local or regional level and embedding their ownership, responsibility and expertise to close the gap.

  2. 2. Building the formal Aboriginal and Torres Strait Islander community-controlled services sector to deliver closing the gap services and programs in agreed priority areas.

  3. 3. Ensuring all mainstream government agencies and institutions undertake systemic and structural transformation to contribute to Closing the Gap (NACCHO, 2019[117]).

The Joint Council and Partnership Agreement is important in terms of providing an overarching framework to improve the coherence of policies for Indigenous peoples. This includes enabling communities to set their own priorities and tailoring solutions to them. However, this approach will require a significant shift in governance and funding arrangements across different levels of government. Services provided by Commonwealth, state/territory and local governments as well as by a range of contracted service providers generate complexity and high transition costs for local communities (Wunan Foundation, 2015[1]) (OECD Fact Finding Mission, July 2018). Shared responsibilities and large amount of actors involved entails the creation of an abundance of programs, Indigenous specific as well as mainstream, that provide services across sectors including health and related services, housing and infrastructure, education and training, employment and business development, as well as legal services and land and resource use and management (Wunan Foundation, 2015[1]). This is also the case in regards to programs and support provided to support Indigenous business and community economic development. In NSW, a chairperson of a Local Decision-Making Regional Chairpersons Group stated:

“There are an abundance of plans and agreements already developed targeting economic development in Aboriginal communities and for the most part these plans generate little in the way of concrete outcomes for Aboriginal people...Due to the sheer number of plans that exist, their differing focuses, owners etc. it is virtually impossible for Aboriginal community to understand who is targeting what and how to leverage off various plans to achieve outcomes.” (Ombudsman New South Wales, 2016, p. 6[82])

This complexity is evident when mapping how Indigenous-specific and mainstream services and programs are delivered in local communities. Mainstream programs and services (i.e. those that are not Indigenous-specific) constitute around 82% of government expenditure on Indigenous peoples, and are particularly important in urban and regional areas where there is a higher Indigenous population but proportionally fewer Indigenous-specific programs (Australian Productivity Commission, 2017[118]). Some policy areas – such as health and education – have particularly complex multi-jurisdictional arrangements, but service delivery is so multifaceted that mapping is perhaps most useful at the local community level. The Queensland Productivity Commission recently completed an inquiry into Indigenous service delivery in remote areas and attempted to represent this complexity with the following diagram (Figure 4.3) for an indicative community within its jurisdiction (Queensland Productivity Commission, 2017[119]).

A range of reports have pointed towards the problems with regards to lack of coordination in policy design and program delivery, lack of robust evaluation of policies and programs, and potential for duplication and/or cost shifting inherent in such complex arrangements (Jordan, Markham and Altman, 2018[94]). For instance, the 2010 Strategic Review of Indigenous Expenditure (‘Strategic Review’) identified that indigenous-specific programs were “unduly complex and confusing” (Department of Finance and Deregulation, 2010[120]). It attests poorly articulated objectives and an excess of red tape, as well as too many programs and too little evidence on program performance. It also reports fragmented program management and across Commonwealth agencies as well as state and territory governments. It recommends consolidation of programs and transfer of programs to state and territory government as well as creating more effective co-ordination (Department of Finance and Deregulation, 2010[120]). Despite efforts to consolidate programs under the 2014 Indigenous Advancement Strategy, a 2016 Report on Mapping Indigenous Programs and Funding still identified 1082 Indigenous-specific programs delivered by the federal government, state and territories and non-governmental or organisations. Forty-eight programs were federal, 236 state or territory and 797 programs delivered by NGOs, often times funded in part or fully by government (Hudson, 2016[121]). Along with a lack in evaluation and assessment of program quality, it mentions program duplication as well as competing aims and objectives between providers as problems. Stricter demarcation of responsibilities between federal and state and territory governments is recommended (Hudson, 2016[121]).

The situation described above is problematic for a number of reasons. The first is that it imposes transaction costs upon local Indigenous communities and organisations in terms of navigating and accessing government services and programs, and meeting requirements in terms of administration and reporting (OECD Study Mission – July 2018). The 2015 Empowered Communities design report identified a number of examples of this complexity at the local level:

  • Roebourne in Western Australia has a population of 1,150 but is reported as having 67 local service providers and more than 400 programs funded by both the Commonwealth and the state.

  • Ceduna in South Australia is reported to have as many as 95 programs focusing on youth problems alone.

  • In 2013, the Ngaanyatjarra Pitjantjatjara Yankunytjatjara Women’s Council received total funding of approximately $10 million. The Women’s Council was required to enter into 41 agreements with agencies of the Commonwealth and the governments of South Australia, Western Australia and the Northern Territory (Wunan Foundation, 2015[1]).

This complexity makes it more difficult to match programs and services with local preferences, and to integrate them in ways that develop solutions in response to them. The second is the overall efficiency of public expenditure designed to meet the needs of Indigenous peoples and improve outcomes. These arrangements increase the risk of duplication (and gaps) in implementation. Addressing these challenges will require some structural change and coordination between different levels of government, and across different portfolio areas.

Fragmentation of government support is a common challenge in contemporary public administration (Gregory, 2003[122]; Christensen, Lise Fimreite and Lægreid, 2007[123]; Halligan, 2007[124]). This partly due to the impacts of New Public Management (NPM) reforms progressively implemented from the 1980s. NPM is based on the idea that efficiencies in public administration can be realised through the allocation of resources by competitive markets (Lynn, 2007[125]). Its core features include privatization, user charges, contracting-out, performance measurement and assessment, managerial flexibility, and an emphasis on service receivers as customers (Vining and Weimer, 2007[126]). Advantages of these reforms include greater value for money, increased choice for citizens, and greater transparency (Ferlie, 2017[127]). However, it can also fragment public administration by dividing policy and service delivery functions, organising service delivery based on narrow and short-term performance-based contracts, and transferring expertise and functions to specialised agencies and non-government organisations (Ferlie, 2017[127]; Head and Alford, 2015[128]). These reforms are well suited to service delivery tasks that can be standardised and delivered in high volume (welfare entitlements, hospital treatments) but less so with problems that are more complex and open-ended. This is because it is difficult to reduce complex and open-ended challenges to a simple intervention logic (linking inputs, outputs and outcomes), and allocating responsibility for addressing it to a single agency (Head and Alford, 2015[128]). The limitations of these more traditional and linear approaches to policy and public administration has seen an increasing interest in how to address so-called ‘wicket problems’ (Briggs, 2007[129]; Head and Alford, 2015[128]). Indigenous policy issues have the characteristics of a ‘wicked problem’ (Box 4.16).

Addressing these wicked problems requires some degree of ‘top down coordination’ through whole-of-government planning and reporting arrangements (Wilkins, 2002[130]). Over the past decade, Commonwealth, State and Territory governments have taken steps to improve ‘top down’ coordination through COAG. However, this has been in the absence of an agreement long-term national policy framework for Indigenous economic development. Implementation of the 2009 National Indigenous Reform Agreement (Closing the Gap) was organised through seven sectoral national reform agreements between Australian Governments. One of which was economic participation that lapsed in 2013 and had a relatively narrow focus on coordination related to the Community Development Employment Program (CDEP), procurement and public sector employment. This narrow focus may be because it was developed in the absence of a national policy framework for Indigenous economic development (a national Indigenous Economic Development Strategy was subsequently released in 2011 under the Gillard Labour Government). The Joint Council on Closing the Gap (established in 2018) provides a renewed platform for inter-governmental coordination with the added benefit of including local government and peak Indigenous organisations. The 2019 Closing the Gap Partnership Agreement commits each party to report annually on progress, and a comprehensive three yearly evaluation (COAG, 2019[18]). A structure is already in place to coordinate policy design and implementation but it is in the absence of a coherent policy framework for Indigenous economic development. The refresh of the Closing the Gap framework also provides an opportunity for the Australian Government to develop a more comprehensive Indigenous economic development policy framework in collaboration with other levels of government and peak Indigenous organisations. As discussed in the previous chapter, this should also include clarification of roles and responsibilities between levels of government in Indigenous economic development. This would provide a coherent policy basis for identifying shared priorities and specific areas that would benefit from improved inter-governmental coordination.

Reforms to funding and appropriations can also improve the coherence of programs and services and the capacity to address ‘wicked problems’ (Wilkins, 2002[130]; Dunleavy, 2010[131]). As identified above, funding directed to local Indigenous communities is the responsibility of multiple agencies at Federal, State and Territory, and local levels, and can result in the fragmentation of programmes and services at the local level. Indigenous leaders often highlighted the need for more long-term block funding to increase the autonomy and predictability of public funding (OECD Fact Finding Mission, July 2018). Within the Australian Government, one option is using the Closing the Gap framework to support joint appropriations. For example, consideration could be given to longer-term budget bids for Commonwealth departments and agencies under shared outcomes outlined through Closing the Gap. The Minister for Indigenous Australians could then be given powers to adjust funding between participating departments and agencies within the overall budget envelope. In this respect, the New Zealand Better Public Services Results Programme is one example. This orientated departments and agencies toward shared medium-term outcomes with mutual responsibility embedded in the performance plans of senior executives (OECD, 2018[132]). Pooled budgeting at the community level can also support this approach (Wilkins, 2002[130]). This model has already been suggested in the context of designing the Empowered Communities initiative (Wunan Foundation, 2015[1]). The design report for the initiative suggested transferring program and service budgets into regional accounts. Local communities and governments would agree on outcomes with authority for funding decision-making allocated to senior Commonwealth and State officials. Although the report does not directly address it, implementing this approach would require clear accountability mechanisms back to a coordinating Minister at a Commonwealth, and potentially State and Territory level.

Over recent years, the Canadian Government has taken steps in the direction of reforming funding arrangements with First Nations. This has some parallels with the situation in the Australian context. The differences relate to the constitutional relationships with First Nations, which is an exclusive relationship with Indigenous peoples on reserve. The Canadian Government has a range of programs to support community economic development for First Nations that cover activities such as support for governance and administration, infrastructure and housing, strategic planning, and land management. Most of the funding is project based with decisions made on a case-by-case basis. This means First Nations put together a project proposal, which is then assessed by the Federal Government. These arrangements generate a number of challenges for First Nations. The first is that it makes it difficult to set long-term priorities for development and integrate investments in a timely way to deliver on them. Second, it can create challenges in terms delivery within short project timelines (for example where variable and extreme weather can impact on construction). Third, the administration of separate funding applications and agreements generates administration costs. To address these challenges the Canadian Government is currently implementing a new fiscal relationship with First Nations (Box 4.17). This also takes an asymmetric approach with implementation dependent on community readiness.

The implementation of a place-based approach also requires coordinating mechanisms and instruments at the regional and local levels. The NIAA regional network is an administrative mechanism that is important in this respect because it is the key interface between the Australian Government and local and regional Indigenous communities and institutions. State, territory and local governments also have a key role to play because of their responsibility for delivering infrastructure and services, and representing local communities. This section of the chapter focuses three elements needed to coordinate and align different local actors to implement a place-based approach:

  1. 1. Local area planning.

  2. 2. Local governance and place-based agreements.

  3. 3. Co-locating services.

OECD research shows that shifting the policy paradigm from subsidies toward mobilising the regions’ own resources and assets is an important factor for growth in under-developed regions (OECD, 2012[15]). This includes a common strategic vision understood and supported by local stakeholders. Local area plans can start these conversations and provide a framework to manage local development ambitions on an ongoing basis. This type of planning can take several forms. It may include a vision of the future and a series of short, medium and long-term development goals elaborated through community dialogue and engagement. Typical components include: i) an overview of a community’s mission, vision and values; ii) an analysis of the current state of affairs (e.g., community challenge, assets and opportunities), ii) strategic priorities, and iv) prioritisation for actions. As identified in the previous chapter, Indigenous communities have different approaches to setting priorities through local Indigenous corporations, PBC’s, and Land Councils. However, the quality of these planning frameworks is variable with lack of consistent mechanisms for support from different levels of government (OECD Fact Finding Mission, July 2018). Support for local area planning is provided on an exceptional basis. For example, the eight Empowered Community sites where financial and technical support is provided for each region to establish a local development agenda (Empowered Communities, 2018[134]). This situation makes it difficult for local Indigenous communities to proactively plan, and re-orientate community development to an asset-based approach. The United States and Canada have put in place mechanisms to address this issue. These examples from the United States and Canada demonstrate how governments can give practical support to local area planning by:

  • Making access to funding conditional on the development of a plan.

  • Providing community planning grants.

  • On-line support (guidance and best practice examples).

  • Facilitating peer-to-peer learning.

Once a community planning framework and set of priorities are in place, an agreement is needed for different parties to deliver on it. This is not clear in the Australian context because there is no formal recognition of representative bodies for Indigenous peoples at a local and regional level, or an agreed legal procedure for agreement making. For example, PBCs are essentially restricted to native title issues and interests – not questions of broader community and economic development. PBCs represent holders of native title on issues that affect these property rights, and do not represent people who self-identify as Indigenous in the region but are not native titleholders. As a result, agreement making is restricted to ILUAs that relate to native title interests. Kinship groups within regions who do not hold native title may affiliate to a range of different institutions; however, they are not party to these agreements (OECD Fact Finding Mission, July 2018) (Wunan Foundation, 2015[1]). This situation has evolved because there were never treaties to define Indigenous rights in Australia, the creation of self-governing entities to hold them, and the recognition of these rights in the constitution (as is the case in Canada and the United States). In this context, Australian governments have developed various approaches to negotiating and implementing place-based agreements with Indigenous peoples.

In 2002, COAG announced a place-based initiative to explore new ways for governments to work together and with communities to address the needs of Indigenous Australians. The initiative was designed for governments to tailor needs to different communities, coordinate investment, address bottlenecks, and build capacity. This included negotiating agreed outcomes and responsibilities for delivering on them. Each trial site had the scope to develop its own local governance arrangements that bought together Commonwealth, state and territory governments and a local Indigenous representative body (Morgan Disney and Associates, 2006[135]). There was also an expectation to engage local governments where they were present. Each of these local governance bodies then negotiated priorities that became the basis of a ‘Shared Responsibility Agreement’. Two of the sites did not reach the point of agreeing on priorities and instead used an exchange of letters between parties (Morgan Disney and Associates, 2006[135]). Evaluations of the initiative found challenges related to capacity to engage and work across sectors, and the inability to make systemic changes to government programs and services. In spite of whole-of-government goals, implementation of programs and policy on the ground was affected by the fragmentation of government policy, service delivery and funding processes across agencies and jurisdictions, counter-productive statutory and program frameworks, and poor engagement at the local level (Tsey et al., 2012[7]).

The Empowered Communities initiative was launched in 2013 and focuses on supporting Indigenous-led local development in eight trial sites (Empowered Communities, 2018[134]). The programme focuses on supporting local Indigenous leaders to create and drive solutions according to their communities’ needs. Indigenous community leaders from eight remote, regional and urban communities across Australia developed the programme in collaboration with the federal government. In this case, the local governance arrangement has two elements. One is a backbone (Indigenous) organisation that coordinates local stakeholders, undertakes engagement and consultation, and prepares a development agenda. A leadership group or steering committee of a broader set of local Indigenous organisations oversees the work of the backbone organisation. Each community has followed a different pathway in terms of who is the backbone organisation and local leadership group. The NPY and Goulburn Valley sites have both put efforts into mobilising local stakeholders and building cohesive local governance arrangements, and both have identified a set of community priorities (covering issues such as health, education and employment) (Empowered Communities, 2017[136]; Empowered Communities, 2017[137]). These priorities will be translated into five-year Regional Development Agendas and First Priority Agreements to identify shorter-term projects and investment priorities. The key interface with government is the NIAA regional network, which provides support and coordinates action at a Commonwealth level. This is a departure from the COAG Trials that was based on a partnership between Commonwealth, state and territory governments.

The OECD Mission team had the opportunity to engage with three Empowered Community sites (West Kimberley in Western Australia, Goulburn Valley in Victoria, and Inner Sydney in New South Wales). The opportunity to mobilise local stakeholders around a set of agreed priorities was as a positive development. However, this was difficult in contexts where there are multiple local kinship groups and Indigenous organisations. In these cases, building collective efficacy takes several years. Within the planning and prioritisation stage, the availability of appropriate data was a bottleneck, particularly in terms of Indigenous peoples being able to tell a story on their terms, including about language, traditional knowledge, and culture. The challenge now will be how to translate local priorities into agreements with governments, which may require systemic change and different investment priorities (as was the case with the COAG trials). This was already identified as a challenge by local Indigenous representatives in terms of engaging State and Territory Governments, particularly where it may imply changes to the delivery of mainstream services (OECD Fact Finding Mission, July 2018).

Recently, State and Territory Governments have experimented with different place-based agreement models. In 2013, the NSW Government launched the Local Decision Making (LDM) initiative under OCHRE – the NSW Government’s plan for Aboriginal affairs. The overall aim of the initiative is to implement localised and flexible place-based approaches to service delivery for Indigenous communities (NSW Department of Premier and Cabinet, 2015[138]). It is based on the NSW Government gradually delegating greater powers and budgetary control to Aboriginal Regional Governance Bodies (Regional Alliances) through agreements (‘accords’) as capacity is established and proven (Ombudsman New South Wales, 2016[82]). The Accord is a formal agreement between regional alliances and the government covering agreed priorities, outcomes, timeframes, resources and responsibilities. There are three stages of delegation:

  1. 1. Advisory delegation (establishment of a task group, priority setting and capacity building.

  2. 2. Planning delegation (establishment of a board of management and flexible funding).

  3. 3. Implementation delegation (direct management and accountability for services).

In 2013, Aboriginal Affairs called for open expressions of interest from Aboriginal communities wanting to be part of LDM (Aboriginal Affairs NSW, 2019[139]). There are now eight regional alliances that cover relatively large geographic regions and each includes a range of different local Indigenous groups and organisations (Aboriginal Affairs NSW, 2019[140]).

The role of the NSW government agencies includes knowledge and data sharing, capacity building, and service and funding re-design. These roles are set out in a Premier’s circular, which is an important instrument in terms of clarifying roles and responsibilities within government (NSW Department of Premier and Cabinet, 2015[138]). In the start-up and establishment phase government agencies work with the regional alliances to map services, share data and identify the basic scope of the initiative. In the design and operational phases government agencies have different responsibilities. Aboriginal Affairs NSW has a coordination role, supports knowledge-sharing and capacity building, and reports on progress and issues to the NSW Secretaries Board. Regional coordinators are the key interface and work directly with regional alliances to develop priorities and resolve issues. The Department of Premier and Cabinet manages agency participation and oversees service re-design while the Treasury oversees funding models. These arrangements clarify how to operationalise a place-based approach and connect it with systemic change to service delivery. However, the NSW LDM initiative is limited in two ways. The first is that its scope is restricted to the delivery of social services. Although this is important, it does not include business and economic development. Second, is that it does not connect with local and Commonwealth decision-making structures.

In 2017, the Northern Territory Government launch its own LDM initiative. The initiative operates on a 10-year timeframe and aims to transfer government service delivery to Aboriginal people and organisations based on the idea of a continuum from informing to empowerment (Table 4.6). The Government and Aboriginal Communities for LDM partnerships to develop bespoke pathways focused for each community covering issues such as housing, local government, education, training and jobs, healthcare, children and families as well as law and justice. This is done building on already existing structures and only if strong community support is secured (Northern Territory Government, 2017[141]). The first step is the signing of a commitment agreement (protocol) that outlines how each party will work towards an LDM Heads of Agreement. Individual agreements are then negotiated with different agencies (primarily police, education, health and housing). This is a positive shift toward self-determination and community control but these bilateral agreements with different agencies may increase the risk of administrative burden and fragmentation at the local level. One way to address this will be supporting local communities to develop an overarching vision and priorities for community and economic development and continue to invest in capacity building. Importantly, within the framework of the LDM initiative, the Northern Territory Government provides grants for local communities (organisational capacity, businesses cases, and community and economic development projects), and provides on-line information, templates to guide planning, and agreements. The key regional interface is six Regional Coordination Groups consists of all relevant government agencies, together with partner organisations, such as local authorities and the Commonwealth government (Northern Territory Government, 2017[142]). These groups provide strategic leadership, address service delivery issues, and promote collaboration – they report through to the Northern Territory Chief Executive Officer Coordination Committee. This direct reporting line is important; however, it still raises the issue of how it influences decision-making at the Commonwealth and local government levels.

Over the past 20 years, two models of place-based agreements with Indigenous peoples have emerged in Australia. The first is a broad community and economic development approach (COAG Trials and Empowered Communities), and the second is a narrower focus on improving service delivery outcomes (LDM in the Northern Territory and NSW). Only one of these models engaged across all three levels of government (COAG Trials). This coordination is important because Indigenous affairs is an area of shared responsibility between the Commonwealth, state and territory, and local governments. The Joint Council on Closing the Gap is a mechanism that can support improve coordination and alignment between levels of government to implement place-based approaches. It has already identified shared decision-making and systematic and structural transformation of government agencies as key priority areas (NACCHO, 2019[117]). There are two strategic options for how the Joint Council could support place-based approaches within the framework of the partnership agreement (COAG, 2019[18]). One is for the Joint Council to champion place-based initiatives (e.g. Empowered Communities and Local Decision-making) and provide opportunity for jurisdictions and Indigenous organisations to share lessons and leading practices. The second is embedding inter-governmental support for these place-based initiatives into the COAG Closing the Gap Agreement, which will guide implementation and accountability arrangements over the next 10 years (COAG, 2019[18]). For example, the Joint Council could set up a Working Group on ‘shared local decision-making’ to operationalise this. All parties would need to agree upon a set of principles for “shared local decision-making” and then certifying which Commonwealth, state, territory and local initiatives meet them. As such, the place-based model may vary across different States and Territories. This certification would qualify these initiatives for long-term support from all levels of government within the overall framework of implementing Closing the Gap. This support should be formalised in an agreement (by State and Territory) that establishes the roles and responsibilities of different levels of government. Based on a review of existing initiatives and the relevant literature, the effectiveness of these place-based initiatives would be improved with the following design features:

  • Supporting a regional approach that allows local Indigenous groups to self-organise at a scale that enables management of economic development and service delivery issues.

  • Long-term commitment of at least 10 years that is matched to community capabilities and aspirations with an objective toward self-determination (greater Indigenous control over local resources and decision-making).

  • Clarity about government roles and aspirations across different points of a continuum from information sharing to empowerment.

  • Investing in organisational capacity building (leadership, mentoring and peer-to-peer learning, financial management, and planning and data analytics).

  • Co-design of engagement protocols and formal agreements that is tailored to different communities.

  • Leadership from central agencies to ensure coordination and redesign of policy, programs, service models, and funding mechanisms.

  • Place-based accountabilities and coordinating mechanisms – regional coordinating bodies that can provide an interface with regional Indigenous groups, and making senior officials and Secretaries responsible for place-based outcomes.

Linking up services locally helps address problems of fragmentation (Wilkins, 2002[130]). Investments in public services can require economies of scale that are difficult to achieve in rural areas, so communities must identify other arrangements to ensure adequate service provision. Integrated service delivery is one approach frequently implemented to improve access to services by providing improved cost, quality, and access (OECD, 2016[16]). Different forms of integration include colocation, collaboration, cooperation, and co-production:

  • Co-location involves enabling different service providers to use the same building. This has been used in Australia, for example, through rural transaction centres that co-locate municipal, Centrelink and other services (Parliament of Australia, 2004[143]).

  • Another form of integration is collaboration, whereby agencies work together as part of a network to share information and training. Collaboration helps reduce gaps in service provision by providing opportunities for horizontal and vertical service integration.

  • Co-operation, a third type of integration, entails different levels of government communicating and working together on multi-agency teams. This form of horizontal coordination strives to lower the costs of delivering services and reduce duplication.

  • Finally, co-production is a type of integration that involves community and non-profit groups, also known as the third sector, in providing services. By partnering with citizens and local organisations, public service providers can ensure products and programs reflect the needs of the community as identified by the people receiving the services.

Service delivery integration has been used to improve the delivery of social services to Indigenous communities (education, employment and training, housing, and health). For example, Empowered Communities is an example of a collaborative model, and the LDM initiative as a co-production model. Local communities have developed innovations to address problems of service fragmentation, for example, by develop common schedules for service providers visiting remote communities (OECD Fact Finding Mission, July 2018). The 2018 Commonwealth Indigenous Business Sector Strategy also identified service fragmentation as a challenge for Indigenous-owned firms (Department of the Prime Minister and Cabinet, 2018[145]). The Strategy committed to the establishment of Indigenous Business Hubs as ‘one-stop-shops’ to access business advice and connect with existing mainstream and Indigenous business support services. Within this model, Indigenous clients will receive a single point of contact to discuss their business needs, and guided to the most appropriate service and advice. The range of support on offer at the Hubs could include access to intensive business and capital support, incubation and start-up support, back office administration and cash flow management, marketing support, links to industry and relevant networks and provision of concessional desk and office space. It is important these hubs are not just focussed upon individual businesses, but also provide support for local Indigenous institutions to build capacity to promote community economic development (along the lines of the co-development model discussed earlier in this chapter). Delivering this model will require the inclusion of Indigenous institutions and different levels of government in the design and governance of these hubs. Another issue is operating these hubs on a virtual or mobile basis to ensure accessibility for businesses in more remote areas.


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