Lack of opportunity leads to poverty on Indigenous lands

Over the years, I have been struck by the similar problems and experiences of First Nations people in Canada and the Aboriginal people in Australia. Any community that is deprived of individual property rights and decent education (but showered with welfare) is poor and dysfunctional. This point was reinforced by Chief Commissioner C.T. (Manny) Jules at a recent talk for The Centre for Independent Studies about the challenges facing his people.

Poverty, underinvestment and mal-investment are an unholy trinity on many First Nations reserves. Although the unemployment rate on the reserves dropped from 25.9% in 1996 to 18% in 2006, it still compares poorly to a Canada-wide unemployment rate of 6.3%. Jules believes this high unemployment rate on First Nations reserves is due to a lack of opportunity.

Instead of thriving personal and communal finances, ‘dead capital’ litters the landscape of reserves. Although many First Nations people would qualify for mortgages, they are unable to borrow funds to either build or improve their own properties or funds to launch small businesses under existing land legislation.

The situation is similar to that faced by Aboriginal people living on Indigenous land in Australia. The communal ownership of Indigenous land means Aboriginal people cannot apply for a mortgage, insure their property, or leave it in their will to their children. Residents on Indigenous lands have no choice but to live in public or social housing.

Jules’ proposal, the First Nations Property Ownership Initiative, is for First Nations land to be a fee-simple based land title system. His proposal has met with some controversy, particularly by those concerned that the free-market approach will allow land to slip away from First Nations control. But as Jules points out: ‘First Nations would also ... have the option of establishing special protections of their own design, such as setting aside certain lands to remain inalienable, or limiting the sale of certain lands to First Nations members.’

In Australia, growing recognition of how communal land ownership has made Aboriginal people ‘land rich but dirt poor’ led the Howard government to amend the Aboriginal Land Rights (Northern Territory) Act 1976 to facilitate 99-year leases for homeowners. Unfortunately, the legislation is unnecessarily bureaucratic: head leases are not held by communities but by the federal government under the Office of Township Leasing. To date, only 16 private housing leases have been issued in Nguiu on the Tiwi Islands.

When the Labor government came into office, the Minister for Indigenous Affairs, Jenny Macklin negotiated Office of Township Leasing head leases with the Groote and Bickerton Islands Land Council, but reduced the head lease term to 40-plus-40 years. Sub-leases for homes expire with the head lease. If someone on Groote Eylandt was to take out a lease today and build a house with a 30-year mortgage, six years after paying off the mortgage, the ownership of the house could transfer to the Commonwealth for $1. Not surprisingly, no one from Groote Eylandt has taken up a private home lease.

Communities could potentially bypass the controversial head lease arrangement for the 99-year leases initiated by the Howard government in 2006 if land councils issued residential leases to communities. But land councils have demonstrated myopic thinking on this issue.

When the residents of Baniyala, a small community in East Arnhem Land, approached the Northern Land Council (NLC) for 99-year leases on their land, the council refused to issue leases and told the residents they could build private housing without leases.

Kim Hill, chief executive of the NLC, said in an article in The Australian that residents should be ‘well aware that leasing is not required for charitable construction on Aboriginal land.’

This comment completely misses why residents are applying for leases on their land. They know charitable organisations can help construct buildings on their land – this is already happening – but there is no legal clarity on who would be the owner of these buildings.

The situation is a farce. Land councils happily lease land to mining companies for commercial operations but won’t lease land to residents.