Government's Indigenous budget strategy blasted for failures and hundreds of millions to non-Indigenous organisations

It’s been four years since the government introduced one of the biggest shake-ups to Indigenous spending in recent times. The Indigenous Advancement Strategy promised to improve outcomes for First Australians through a new competitive grants funding process, but the controversial scheme has continued to come under fire over a lack of transparency and how much funding is going into Indigenous hands.

A scathing Senate review found disadvantage toward Indigenous organisations, while several major reports criticised its design and implementation. Ongoing community backlash has revealed the frustration within First Nations communities and concerns that the system is still failing them, but the government insists it is working. As the IAS approaches its fifth budget, has anything improved?

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The shakeup of Indigenous spending

In 2014, Tony Abbott made sweeping changes to Indigenous affairs in the Commonwealth budget.

The self-proclaimed ‘Prime Minister for Aboriginal Affairs’ said this latest scheme would change the way government does business with Indigenous Australians.

The Indigenous Advancement Strategy, or IAS, radically shifted the government’s approach to funding and delivering programs and services to Aboriginal and Torres Strait Islander peoples.

Under the IAS, more than 150 programs were collapsed into five funding streams, providing $4.9 billion over four years - in the hopes of eliminating waste and duplication, streamlining services and cutting red tape.

It saw 27 programs from eight separate entities fall solely under the responsibility of the Department of Prime Minister and Cabinet. The result was more than $500 million cut from Indigenous spending over five years.  

But many frontline Indigenous programs and services bore the brunt of that saving. Many are still feeling the impact and some say the Government never even bothered responding to applications for funding under the scheme.

“The damage has already been caused. So, it’s a recovery process,” says National Congress of Australia’s First Peoples Co-Chair Rod Little.

National Congress, the national Indigenous representative body, had their $15 million three-year funding cut during the Abbott government’s major overhaul of Indigenous expenditure.

They’ve been running on a shoestring budget since, after not hearing back about their own IAS application.

“Congress had an application from 2014. I haven’t really seen a formal response from the Department,” Mr Little told NITV News.

The lack of communication from the government about the application process seems to be felt across the board.

“I know, even up to last year, I had people from around the country saying, Rod, you’re at [National] Congress, can you find out what’s happened to their application when they put it into the IAS twelve months ago.”

In fact, a 2015 senate inquiry found the program was plagued by poor communication,  uncertainty over continuity of funding and had a confusing application process, with reductions in funding and timeframe commitments.

Senate inquiry blasts Indigenous Advancement Strategy for multiple failures
The final report from a tri-party inquiry into the IAS recommends a full internal review, as the Minister leaps to the policy’s defence.

The inquiry was called to look at the impact of the new system on service quality, efficiency and effectiveness of the IAS tendering process. Ultimately, the program was labelled ‘deeply flawed’ and the government was urged to make substantial changes, something it says it has now done.

Mr Little says for decades Indigenous peoples have heard about improving and innovating processes and taking a different approach to improving outcomes for Indigenous peoples.

“But then when the strategies are being developed, the same principles are being applied. So, you’re going to have the same approach and you get the same results,” he said.  

“You can throw that language around, ‘we want to make a difference, we want to work with Aboriginal people, we want to do things with, not to.’ But when you think about the approach, it’s still the same.”

Of the 86 submissions provided to the senate inquiry, just three were positive. Even then, organisations said they did not feel adequately funded.

Like Ninti One Pty Ltd, a non-for-profit developing opportunities for remote Australia, who received one successful application out of eight.

"There was unlimited opportunity to tender for the opportunity for innovative service design and delivery. However, our experience was that PMC (Department of Prime Minister and Cabinet) did not reward the innovations in any of the 8 unsuccessful applications," its submission read.

"Whilst we respect PMC’s decision, our proposals were built on 11 years of applied research by 15 universities, State and Territory governments and private firms in remote Australia."

The new program also meant many Indigenous organisations, that were already funded, would need to reapply under the new multi-billion dollar scheme and justify their funding.

Djirra, a member of the National Family Violence Prevention Legal Services Forum, said the IAS was a massive upheaval for all fourteen of their services across the country.

“Djirra has had to fight for survival,” Djirra CEO Antoinette Braybrook said.

“[It] left our services fighting for essential funds through a competitive tender process, with no certainty of continued funding, just to be provided with short-term funding agreements at the same amount of funding frozen at 2013-14 rates,” she told NITV News.

“There was no justification for this upheaval to the National FVPLS Program. Djirra, for example, had been operating for 15 years and was highly successful."

Backgrounder: How the 2014 budget affected Indigenous affairs
NITV News has compiled an overview of how Australian Indigenous affairs were impacted by the 2014 Federal Budget.

New policy, same old approach

Rod Little says the IAS has been a failure.

“It should not be labelled as a success,” he said.  “It’s the only policy shift that I can recall in history that has had a particular inquiry into it.

“Since the IAS has been implemented, what we certainly have considered is that there have been failings… it certainly was the wrong move.”

Djirra provides critical services for Aboriginal and Torres Strait Islander women in situations of family violence.  

“The Federal Government has identified violence against women as a national crisis,” Ms Braybook said.

“The situation is much worse for Aboriginal and Torres Strait Islander women, being 32 times more likely than other Australian women to be hospitalised as a result of family violence and 10 times more likely to be killed from a violent assault,” she said.  

“This acknowledgement needs to translate into increased funding for Family Violence Prevention Legal Services to address the high levels of unmet demand and help keep our women and children safe.”

The government said under the IAS, Indigenous affairs would be a ‘significant national priority.’

“We must strive and strive again to ensure that the First Australians never again feel like outcasts in their own country,” Tony Abbott said in 2015.

But four years on since the IAS was implemented, serious doubts still linger.

“It has been an absolute and utter failure,” said Research Professor Jon Altman from the Alfred Deakin Institute for Citizenship and Globalisation at Deakin University.

“But I think you need to put that in the context of the overall approach of Indigenous policy and that’s very much framed around this notion of Closing the Gap, and it's certainly framed around notions of cooperation and collaboration between the Commonwealth and the states and territories,” he told NITV News.

“We do have to keep in mind that the majority of expenditure on Indigenous Australians happens through states and territories expenditure, not the Commonwealth.”   

Former Chair of the Indigenous Advisory Council Warren Mundine agrees the states and territories need to step up.

“Aboriginal and Torres Strait Islander people are citizens of the State, they should be getting the same services, but the states and territories get away with a lot of stuff,” he told NITV News.

“Closing the Gap should have state representatives there. This is the missing link in the whole process, we need a lot better coordination and be more accountable to taxpayers,” he said.  

Mr Mundine presided over the Council when the IAS was introduced and admits the process needs more work.

“You can’t hold people out waiting for funding, that is not up to scratch,” he said. “First of all it's bad manners, second of all it's not a way to be running a funding program, we need answers to these questions.”

“Overall, the policy is focusing on the right areas; it's heading in the right direction. But we need to be making sure states, territories and the private sector are doing the same thing.”

But Professor Altman believes the time is up for the IAS.

“I think at the very least what we need to consider is a specialist Commonwealth agency to deliver Indigenous programs,” he said.  

The IAS is managed from within the Department of Prime Minister and Cabinet. Professor John Altman says representative organisations, like the former ATSIC, provided better outcomes compared to what we are seeing today.

“I think we need a fundamental rethink of our policy approach and I think that might come with a change of government. I don’t have heart, I don’t really believe that this government is going to admit the errors of its approach and take a fundamentally different approach,” he said.    

Professor Altman himself provided a submission to the senate inquiry into the IAS because Indigenous Australians have heard the same failure for years. 

"What had become clear I think with the Indigenous Advancement Strategy, was that we were seeing a centralisation of Indigenous-specific expenditure in one department, the Department of Prime Minister and Cabinet, a department that lacked expertise on Indigenous affairs.”

The Federal Opposition agrees the IAS has had significant failings.

“I think it was an absolute failure in the first two years. The government started to realize that they weren’t hitting the mark,” said Shadow Assistant Indigenous Affairs Minister Pat Dodson.

Mr Dodson says while the Minister for Indigenous Affairs Nigel Scullion has begun to engage in consultation with relative organisations, like National Congress, much of it is ineffectual.

“Because he picks and chooses whether he wants to take any notice of it,” he told NITV News.

Mr Dodson says the IAS has ‘basically folded up Aboriginal controlled organizations’ and set out competitive tenders for people to fight for funding amongst private business and non-government organisations.

“They [the government] didn’t believe the Aboriginal-controlled organizations were delivering on the sort of outcomes that they were expecting,” he said.

“So you had people then, out of Sydney, or Melbourne, or some organization that had no idea what life is like in Palm Island, and implementing a policy that was meant to create the economic opportunities, the job opportunities, the employment prospects and the small business opportunities for people in those communities.”

But Indigenous Affairs Minister Nigel Scullion says it’s Labor who has failed.

“The IAS replaced Labor’s failed approach to haphazard and badly administered grants that went mostly to non-Indigenous organisations,” he told NITV News in a statement.

“Through the IAS, the Government is increasing the number of Indigenous organisations, introducing outcomes-based grants management and, for the first time, is able to provide information about the whole of government funding for Indigenous Australians,” he said.

But a key concern is that a large proportion of funding still goes to non-Indigenous organisations, with smaller organisations ill-equipped to apply for funding in a competitive field set up under the scheme.

Less than half IAS funding awarded to Indigenous organisations
Out of nearly 1000 successful applicants for its new Indigenous funding model, fewer than 500 organisations are actually Indigenous, according to a report from the Department of Prime Minister and Cabinet.

In 2015, the Department of Prime Minister and Cabinet provided a submission to the senate inquiry confirming that less than half of successful recipients of the IAS’ first-round were non-Indigenous.

It estimated that 45 per cent of all recommended applicants were Indigenous organisations.

Alongside grants of less than $20,000 for playground equipment, preschools and sporting programmes run by Indigenous organisations are multi-million dollar grants to elite private schools for scholarships and private businesses for traineeships.

One school, Presbyterian Ladies College Perth, has received more than $4 million in direct funding from the IAS plus an additional undisclosed sum through another organisation that receives IAS money, the Australian Indigenous Education Foundation, for scholarship placements. According to the school’s website, it hosted 29 Indigenous students last year.

Critics argue the competitive nature of the IAS locks out some organisations that are not geared towards tenders the way private business and large mainstream not for profits are.

Like the Marninwarntikura Fitzroy Women’s Resources Centre, who through the IAS, lost 60 per cent of their funding - a community organisation in place for the past two decades providing essential services to Indigenous women and children.

"The competitive application process which the IAS funding application is based on is dysfunctional because it fails to recognise the interconnected and collaborative nature of local community organisations and initiatives," its submission read.

"The IAS funding model does not recognise the need for a whole of government approach to addressing complex social challenges."

Rod Little says money not going into Indigenous organisations cost Indigenous jobs and business opportunities.

“It doesn't demonstrate engagement of Indigenous businesses and all those kinds of things. Or Indigenous employment” he said.

Despite this, the government says the IAS is driving opportunities for Indigenous businesses.  

“Under the Coalition Government, Indigenous organisations receive almost 54 per cent of IAS funding,” Minister Scullion said.  

“Remaining funding is directed to non-Indigenous organisations including schools, universities and state and territory government. This is up from 35 per cent before the introduction of the Indigenous Advancement Strategy,” he said.

Mr Scullion says the government is committed to increasing the proportion funding to Indigenous organisations.

“Because we know that using local Indigenous organisations to deliver services ensures better outcomes for communities and will grow Indigenous employment," he says. 

But Senator Dodson says there is no real analysis of the nature of those Indigenous businesses.

“There’s a lot of cynicism about it because companies often have one or two Indigenous people employed and present themselves as an Indigenous company,” he said.

Rod Little says there are many cases of what’s known as ‘black-cladding.’

Less than half IAS funding awarded to Indigenous organisations
Out of nearly 1000 successful applicants for its new Indigenous funding model, fewer than 500 organisations are actually Indigenous, according to a report from the Department of Prime Minister and Cabinet.

“And that is you make up a business, give it an Indigenous name or have a couple of Indigenous partners or board members, and it’s an Indigenous business,” he said.

“But the question from my perspective is about how many Indigenous people are employed?" 

Dr Nicholas Biddle, from ANU's Centre for Aboriginal Economic Policy Research, says there are many Indigenous organisations that have benefited from the IAS, but he too says the process isn’t fair.

“There are many Indigenous organisations that are doing fantastically well in engaging with the system. We shouldn’t ignore those,” he said.

“And there are other organisations, like Supply Nation or Indigenous Business Australia, which do provide some of that support, and we shouldn’t discount that. But it’s not necessarily available for all in a way in which all organisations would benefit."

No idea if it is working

Another key concern is the lack of accountability of programs that receive funding through the IAS.

“There are funds that the [Indigenous] Minister’s committed to reviewing the various programs, but most of those haven’t been reviewed as yet in terms of the effectiveness of those programs and their outcomes,” says Labor Senator Pat Dodson.

“So it’s very hard to get a consistent line of sight on how any particular program or project is tracking. And then you basically have a lucky dip that the Minister can put his hand into and, produce funds for various projects that he might find personally attractive,” he said.

Dr Nicholas Biddle says while there is a genuine desire from government to evaluate programs, he says there is a need to invest to find out what is working and what isn’t.   

“I think there are many within government who have a genuine desire to find out about what works and build on that. But I think there’s also a need for those within government to invest in the types of skill and capacity development, as well as funding all evaluations to find out if they do work,” Dr Biddle says.

“And also I think a genuine openness to say that, actually, it's really hard to make sure a kid who’s living in a relatively disadvantaged area, with not fantastic housing, in a school with low resources, it’s very hard for the teachers to engage with their students,” he says.  

“So we would expect that some of our policy interventions actually don’t work. And they might make things worse, and that’s fine because it’s hard and we don’t know so we need to trial things properly and evaluate them and learn from those so the ones that do work, we then scale those up, for the ones which don’t we learn from the lessons of those. And I don’t think there’s been investment in that type of thinking across all levels and all political persuasions of government.”

In February last year, the Australian National Audit Office found the Department of Prime Minister and Cabinet ‘did not effectively implement’ the IAS.  

Their review described the IAS was rushed and found that it failed to meet standards and guidelines, and that not enough time was given to properly oversee its implementation.

“The department’s grants administration processes fell short of the standard required to effectively manage a billion dollars of Commonwealth resources,” the report said.

“The basis by which projects were recommended to the minister was not clear and, as a result, limited assurance is available that the projects funded support the department’s desired outcomes.”

Minister Scullion said that at the time of release the report was “historical” as the program had been updated since the period the report analysed.

In 2016, in response to the senate inquiry, the government updated the IAS grant guidelines saying the new provisions ‘are clearer for potential applicants, reduce red tape, and should result in better, more targeted service delivery on the ground.’

A further Productivity Commission about Indigenous Expenditure Report found that more than $30 billion is spent on delivering programs and services to Indigenous Australians.

But Professor Jon Altman said the report did not assess the adequacy, effectiveness or efficiency of government expenditure on Aboriginal and Torres Strait Islander Australians.

“The question that’s never asked on an equitable, needs basis [is], 'as Australian citizens, is enough being spent on Indigenous people? And is it being spent in the right way?',” he said.

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$33 billion injected into Indigenous affairs, ‘misleading’

Around $33.4 billion of Australian, state and territory funding was spent on Indigenous Australians in the year 2015-16.

According to the Productivity Commission’s Indigenous Expenditure Report of 2017, this spending has increased by almost a third since 2008-09, and equates to $44,886 per Aboriginal and Torres Strait Islander compared to non-Indigenous Australians at $22,356.

It may sound like a huge slice of the government’s expenditure specifically for Indigenous Australians, but when broken down the results are much slimmer.

“Whenever I hear these $33 billion dollars being bandied about, they actually mean the six billion dollars,” says Research Fellow Francis Markham at ANU’s Centre for Aboriginal Economic and Policy Research.

“One-sixth of that $33 billion is spent on just general government expenditure, that doesn’t actually have anything to do with Indigenous people, specifically,” Dr Markham told NITV News.

He says well under twenty percent of government expenditure is actually for Indigenous-specific programs.

“And only a smaller proportion of them are delivered by Indigenous sector organisations,” he says.

“When you see that $33 billion dollars, it sounds like such a lot of money. But a lot of it never could get to the ground, if people say that money’s not getting to the ground it actually doesn’t make any sense for it to possibly ever get to the ground. Because it’s not really Indigenous, it’s not what people actually think of when they think of Indigenous funding.”

"This money that we hear is being thrown around is just stuff which every Australian receives. It's being able to live in a country that's not being invaded by a foreign power, it's having a foreign diplomatic service, it's having roads that you can drive on. That is a big chunk of the funding."

In fact, many experts say the $33.4 billion figure is utterly ‘misleading.’

“It’s very important to kind of contextualize and think very clearly about what actually it’s showing, and whether its, and it’s not necessarily showing what people assume it to be,” says Dr Nicholas Biddle. 

Dr Biddle explains the figure factors in all government expenditure from state and territory to the Commonwealth, and includes spending on things like roads, defence, law enforcement, and schools.

“[It’s] pretty much any expenditure from the government, and trying to allocate that to the amount which is spent on Indigenous Australians. So only a very small proportion of that is an Indigenous-specific expenditure. Most of it is expenditure on things which the vast majority, which all Australians have access to, whereas there’s some, but there are some comparing which is Indigenous-specific,” he said.

Labor Senator Pat Dodson says Indigenous money gets lost in Commonwealth state grants.

“It gets inflated into mainstream services that the government should be providing to citizens anyway, but it gets tagged as First Nations expenditure. And it’s administered by a portfolio that hardly ever talks to Indigenous peoples,” he said.

Senator Dodson says funding for Aboriginal and Torres Strait Islander peoples is insignificant.

“It’s insignificant to what we spend on defence, what we spend in overseas aid, what we spend on migration, on border defence expenditures. So what we’re spending on Indigenous peoples is really insignificant in comparison to those bigger, bigger portfolios,” he said.

“But for the size of our population, those of us who aren’t sick, those of us who aren’t in prison, and those of us who aren’t in out-of-home care, we’re not a very big group,” he says. “And yet we can’t correlate the expenditure that’s needed to bring the quality of life about for all of us,” he says.

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Assumption Indigenous people will live like non-Indigenous people

Professor Jon Altman says governments often make the mistake of assuming First Nations people in Australia will live like the rest of the population, and that this is one of the emerging critiques of the Closing the Gap framework.

“If you're an Indigenous person who say, lives in a very remote community in say, the central desert, you're not going to live in the same way as the statistically average mainstream Australian unless you move from your country, unless you move somewhere else,” he said.

He says the problem when somebody moves from a remote community in Central Australia or the Top End there is an expectation that their circumstances will improve.

"[But] they move from one marginalized situation to another,” he said.

“The rhetoric and thinking of policy are extraordinarily simplistic and that was really caught up in that language of the Indigenous Advancement Strategy about getting the kids to school, getting the parents into jobs and creating safe communities.”

Professor Altman says while there are success stories, there isn't capacity at the governmental level to replicate success.

"And we just have service delivery regimes that are punitive and that are looking to punish Indigenous people if they want to live differently and if they don't want to adopt the norms of mainstream Australia," he said.

"So punishing the different is not the approach in my view that an affluent liberal democracy should take in the way that it deals with its First Peoples. I think it's truly recognized now, [that Indigenous peoples have] been extraordinarily unfairly treated historically and have had experienced dispossession, discrimination, and marginalization."

Warren Mundine says there needs to be a regional approach.

"When you take the national average of how outcomes are measured, when you take regional areas get buried in that, we need [a] regional approach," he said.

"We need to know what’s happening in each area because that will give a better picture of where money needs to go. We really need to look at the regional level, because someone living 500km west of Alice Springs doesn't have the same issues as [someone] living in Sydney.

‘Rivers of gold’ in Tuesday’s budget, but for whom?

On Tuesday, Treasurer Scott Morrison will deliver his third budget, the Turnbull government’s last before the nation heads to the polls. It’s the fifth Budget since the IAS was implemented.

This year, economic forecasters are predicting ‘the rivers of gold are running again’ due to an economic upturn. 

In its latest budget monitor, Deloitte Economic Access said it expected budget bottom lines in 2017-18 and 2018-19 to improve by more than $7 billion.

“It’s an almost picture-perfect backdrop for the taxman: not only are there more dollars in the economy than Treasury forecast, but companies and super funds have also increasingly run out of the losses they racked up during the GFC (global financial crisis), meaning that good news on the economy is being turbocharged in terms of its effects on the tax take," its report said.

What's known about this year's budget is the government will be prioritising tax cuts.

The Medicare levy to fully fund the National Disability Insurance Scheme was dropped because of this better bottom line. But one leading economist said earlier this week raising welfare payments is a much more urgent issue than budget repair.

Chris Richardson said dole payments are unnecessarily cruel and a standout failure for the nation.

There are about a million people living on Newstart or Youth Allowance and they receive about $40 a day – this hasn’t been increased in the last 25 years.

Welfare spending will be an area to be looking out for particularly the further rollout of the cashless debit card, drug testing of welfare recipients, and the Community Development Program (CDP) which have all been heavily criticized since they were introduced and they affect our most vulnerable in the community.

But the government has already made some announcements ahead of Tuesday’s Budget – including an addition to the Medicare Benefits Scheme to include dialysis for Aboriginal and Torres Strait Islander people. It means some of our most remote communities will have better access to the life-saving treatment.

We’ve also seen an increase in funding for Indigenous rangers, about $250 million will be injected into the program providing around 2000 jobs over 3 years.

Another $270 million has been announced for more support to access early childhood education and care for regional and remote Indigenous communities – this is part of sweeping education reforms from the Turnbull government.

While revenue is higher, many Indigenous organisations and communities are still reeling from half a billion dollars in cuts made by the Abbott government when it introduced the Indigenous Advancement Strategy.

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“Each year with the budget we are always looking and hopeful that there will be some significant investment by government that will really have an impact so that you are not at the door banging all the time and asking for dribs and drabs of money,” Rod Little told the National Indigenous Times. 

He said Indigenous health also needed a proper commitment.

“What we’ve got is an Aboriginal and Torres Strait Islander health plan but we’ve also got an Aboriginal and Torres Strait Islander implementation plan – neither has been funded and there’s no forward commitment of any investment,” he said.

Pat Dodson hopes to see reform to the government’s controversial work-for-dole scheme.

“I’m hoping to see the people actually moved to wages as opposed to benefits, and that those people who have got disabilities in some way, shape, or form are actually looked after, and not expecting them to go to work if they have got some handicap or some disability,” he said.

He also hopes to see improvements to women’s programs and extended help to young mothers, keep people out of prison and help families work through challenges of domestic violence.

“And I’m hoping to see these things being run by First Nations organizations and, and their people.”

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