Bob Hawke hoped a commission to oversee indigenous spending would ensure higher quality management and strong self-governance.
The Aboriginal and Torres Strait Islander Commission was also supposed to lead to a "higher quality of life and sense of belonging" for all indigenous Australians.
Established in 1989, the body was responsible for about half of the indigenous affairs budget and was designed to give aboriginal people a greater say in government services.
The Hawke government had identified problems - some of them serious - with the administration of public indigenous funding and set out to balance self-management and ministerial responsibility.
It reformed the system.
"That after all the benign neglect, the paternalism and the failed attempts at assimilation, we today realise that the Aboriginal and Torres Strait Islanders themselves are the best judges of their needs and priorities," then prime minister Hawke told parliament 25 years ago.
Confidential cabinet documents released by the National Archives of Australia reveal Mr Hawke was determined to ensure "mechanisms are put in place so that future administration is on a sound footing".
But by 2005, when it was torn down by the Howard government, ATSIC had been embroiled in allegations of corruption, waste and nepotism.
Its former chairman, Geoff Clark, faced rape allegations before being removed from office.
The Howard government claimed in 2003 the commission did not effectively represent nor well serve indigenous people.
Seven years later, the Rudd government set up the National Congress of Australia's First Peoples to represent indigenous Australians.
The government cut all funding to congress in 2014.
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