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I am very pleased to be here today. I have been so impressed over the last decade or so by the progress made in collecting and analysing Indigenous economic and labour market data that I wanted to come and say how much the situation has improved and how important CAEPR and its Director, Professor Altman, and the ABS, have been in pushing hard to improve the empirical foundations upon which sound policy can be built.
I, too, have made some small contribution to this development. Dr Boyd Hunter and Dr Anne Daly were my students and they have played a significant role in advancing knowledge in this important area. Perhaps I might share a little reflected glory from their fine publishing records. Apart from this, however, my contribution has been small. So I am very much an outsider with all the advantages of that position; I can speak in a tone of voice with great authority without knowing what I am talking about; I can leave the conference very quickly without being missed; and, lastly, the chance that anything I say will adversely affect my career is very slight. If I was actively working on Indigenous economic policy, and building a career in this important area, then I might choose to be more circumspect and a little more humble and politically sensitive in my remarks.
So, I thought that the best thing I could do as an outsider, and remembering my state of ignorance, is to say the sort of things that are often said behind closed doors, or at dinner parties, but not usually said too explicitly and openly by experts who are working on Indigenous affairs. The public remarks of insider experts seem to me to be too optimistic in assessing past progress, too optimistic as to likely future outcomes, and to place insufficient emphasis on economic outcomes. The more pessimistic, and I believe more realistic comments I am about to make, need to be laid out clearly because I believe that Indigenous economic and employment policy is about to change quite markedly. It is possible already to discern three major initiatives and these policy directions will continue, probably at an accelerating pace.
Firstly, there will be large political shifts in the relationship between government and the Indigenous community. Relationships are becoming more concerned with economic issues and less concerned with developing an Aboriginal identity and with gestures of reconciliation. The Federal government has clearly decided to reduce its support for Indigenous political development and to change the way it seeks policy advice from the Indigenous community. This process has begun with the abolition of ATSIC. My guess is that the golden period of broad-based Indigenous political influence is over, at least at the federal level. It is worth noting that there was no widespread political opposition to recent changes.
Secondly, there will be important shifts in Australian welfare policy, not prompted by Indigenous outcomes but, nevertheless, very important for Indigenous living standards. These changes, in the short run, must lead to lower Indigenous incomes. Much of the income that flows to Indigenous people comes from the Australian Government as income transfers through the Australian welfare system, and policies to reduce welfare expenditure across the board will impact disproportionately on Indigenous people. The hoped-for trade-off from these initiatives is that lower real welfare incomes in the near future will generate individual responses that will lead to higher real employment incomes in the far future. The hoped-for response is that individuals will substitute higher employment income for lower welfare income. To offset these short run losses of welfare income would require disproportionate and wide-ranging employment responses, outcomes which seem unlikely when placed against past trends.
Thirdly, there will be large changes made to the CDEP scheme, which is the major employment growth centre for Indigenous people.
In these comments I focus primarily on the economic issues of employment and welfare reform and put aside political changes.