What, if anything does this imply for the future of CDEP? I restrict myself to a few observations, prompted by the work of the Reference Group on Welfare Reform and by Noel Pearson’s recent scathing attack on ‘passive welfare’ (Pearson 2000a, 2000b). Some time ago, Will Sanders described the CDEP scheme as ‘sitting astride the welfare/work divide’, by which he meant that it was primarily a welfare program, but with many of the attributes of an employment program (Sanders 1997; see also Sanders, Ch. 6, this volume). Now CDEP is located at the centre of the welfare—work stage, not because of any change in the program itself, but because welfare is now viewed as part of a spectrum leading to work in an era of mutual obligation.

Since its establishment on a pilot basis in 1977, CDEP has shown remarkable resilience in a period of constant welfare reform. It has also proved to be popular among the Indigenous community and its leaders (Altman 1997) and has recently been shown to generate additional income in the communities reliant on CDEP compared with other Indigenous communities (Altman & Gray 2000). Yet the fact remains that CDEP has not provided the basis for economic renewal in remote Indigenous communities.

Research undertaken by Gregory and Daly (1997) has relevance to this issue. They showed that although Indigenous Australian men had higher incomes than Native American men in the USA, Indigenous employment rates were much lower in Australia. Over the 1980s, while Native Americans maintained their employment level in the face of a 17 per cent fall in income, the incomes of Indigenous Australians rose by 10 per cent while their (non-CDEP) employment fell by one-quarter. This situation in Australia can only be overcome, the authors argued, by giving ‘Aborigines currently residing in remote communities… access to the range of employment opportunities that are normally available to the White community in cities’ (Gregory & Daly 1997: 118). The implication is that CDEP cannot provide a long-term solution to this problem, whatever its short-term popularity and effectiveness.

There are echoes of this line of argument in Noel Pearson’s recent criticism of ‘passive welfare’, by which he means welfare provided as ‘unconditional cash pay-outs to needy citizens of whom nothing further will be required’ (Pearson 2000a: 137). Although CDEP does require something of its recipients and provides a modicum of control over local communities, Pearson emphasises that this should not divert attention from the fact that Indigenous Australians have been provided with social transfer income but have been dispossessed from the real economy (Pearson 2000b).

There is a certain similarity between Pearson’s use of the term passive welfare and the moralistic tones which were expressed by Minister Newman in her ‘welfare dependency’ speech to the National Press Club prior to the establishment of the welfare review (Newman 1999). The difference is that whereas Senator Newman was arguing that requiring too little of non-Indigenous welfare recipients may have induced a ‘culture of dependency’ that has left individuals excluded from economic wealth and prosperity, for Indigenous Australians the problem is one of community exclusion based on systematic discrimination and dispossession.

Welfare reform alone will do little to resolve the problems identified by Noel Pearson. What is needed is the establishment and development of real productive economic activity in the Indigenous community. Welfare reform may be necessary to achieve this, but unless accompanied by economic reform its role will be, at best, only marginal. This paper has argued that the same is true of the role and impact of welfare reform generally. In light of this, the failure of CDEP to bring about economic revival is hardly surprising.

This is the main conclusion that flows from the arguments presented here. The major contemporary problems we face—structural unemployment, poverty, and inequality—are all basically economic in origin and their resolution requires policies that address these economic causes. That is why welfare reform must be accompanied by labour market reform in mainstream Australia, and why significant progress for Indigenous Australians will not be achieved without sweeping economic reform.