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Social Justice Report 2003

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Chapter three: Indigenous participation in decision making – Transforming the relationship between government and Indigenous peoples

The twin pillars of the government's approach to Indigenous policy in 2003 continued to be practical reconciliation, with its emphasis on service delivery in core areas of disadvantage, and mutual obligation, with its emphasis on reciprocity and individual responsibility. Through both of these policies, the government has identified moving Indigenous people beyond welfare dependency and enabling Indigenous participation in program delivery and design as key features of its approach.

Within this framework, there has been increased attention over the past year to the nature of the relationship between government and Indigenous peoples. There has been a lot of talk from governments about the need to change the way they interact with and provide services to Indigenous peoples and communities. This has largely occurred as a result of the significant policy focus of Indigenous peoples and governments on capacity building and governance reform in recent years, and progress in 2003 in advancing the whole-of-government community trials by the Council of Australian Governments. It has also been influenced by the conduct of a number of significant inquiries during the year, including parliamentary inquiries into national progress towards reconciliation and capacity building in Indigenous communities, as well as the conduct of the Indigenous business review, and the review of the role of the Aboriginal and Torres Strait Islander Commission (ATSIC).^[1]

Debates during the year about the relationship of Indigenous peoples and government have identified three key, inter-connected, issues. First, the need to change the way government interacts with Indigenous peoples. For governments, the emphasis here has been on the need to change the way services are provided to Indigenous peoples, including through improved coordination between governments and among government agencies. Second, the need to build the capacity of Indigenous communities, coupled with demands for improved corporate governance among Indigenous organisations. Third, the need to review the structures and operations of ATSIC, such as through introducing improved corporate governance mechanisms and by making ATSIC more representative and participatory.

Indigenous peoples and governments alike have focused on the importance of these issues during the past year. There are, however, differences on how to best address these issues. This chapter examines current debates about the nature of government service delivery, building the capacity of Indigenous communities, and ATSIC reform. Ultimately, a key focus of the chapter is on the role of ATSIC as a critical agent in facilitating change to the relationship of Indigenous peoples and government. It makes proposals for a changed relationship between Indigenous peoples and governments by ensuring the effective participation of Indigenous peoples in decision making and addressing Indigenous issues within a framework of promoting sustainable development.

A relationship of dependence - Challenging the existing service delivery approach

Indigenous peoples seek to challenge the underlying basis of their relationship to governments in Australia. Indigenous peoples have increasingly come to realise that the current system perpetuates a cycle of dependency and is also not contributing to or promoting sustainable improvements in Indigenous communities and individual well-being.

As ATSIC noted in 2002, 'it is now widely recognised that Indigenous programs have perpetuated dependence, not development. Our communities have had to face arbitrary, complex, inconsistent and inflexible demands from program providers.' ^[2]

From the 1970s through to the present, a particular operational environment has been established which has consisted of governments funding Indigenous organisations to provide services to Indigenous people. Despite criticising the failure of this community development model (and of the self-determination principle that underpins it) there has been virtually no change in the underlying basis of this relationship since the current government came into power in 1996, and a continuity in government approaches since the 1970s. ^[3]

ATSIC have described this operating environment as a 'directed community services' model:

Current funding arrangements for Indigenous organisations are ... directed in that it is the various Commonwealth, State and Territory government agencies that decide the functional areas and guidelines for expenditure. The agencies determine also whether particular applicants' proposed projects are of high enough priority within those guidelines to warrant funding and, if funded, they hold the grantees accountable for the expenditure of funds according to those guidelines. The current arrangements constitute a directed community services model in at least two other senses. First, the arrangements envisage that the major purpose of the funding is the provision of services to people within the community and, second, when the arrangements direct resources to incorporated bodies they conceive of those bodies as non-government community service organisations ...^[4]

This approach has created 'a model of dependency on two levels - from government to organisation, and from organisation to clients' .^[5] The first level of dependency in the existing approach to Indigenous service delivery is of Indigenous organisations to government agencies:

The Royal Commission into Aboriginal Deaths in Custody identified changing this relationship of dependence - which disempowers Indigenous people through governmental control - as integral to achieving the equal enjoyment of rights by Indigenous peoples.^[7]

While Indigenous organisations have become dependent on government agencies under this approach, Governments have also become dependent on such organisations as agents for service delivery. This is also problematic. In its 1996 review of the Aboriginal Councils and Associations Act 1976 (Cth), the Australian Institute of Aboriginal and Torres Strait Islander Studies identified the following structural problems with the present system of funding service delivery:

• being application based, the initiative for program design rests largely outside the authority of the funding agency;
• furthermore, the funding agency generally cannot directly influence in advance the nature and composition of the applicant groups;
• it follows that matters of critical importance to the equitable, effective and efficient delivery of publicly-funded services (such as representativeness, consultation and staff engagement) cannot be built into the planning for service provision at an early stage;
• accordingly, the planning and implementation of service provision is compromised by the need to accept the groups intended to provide the service in the form in which they have already incorporated themselves;
• accountability controls are then applied via the conditions of grant and enforcement of compliance with the incorporation law concerned;
• but this is largely ex post facto accountability (by grant acquittance and audited financial statements) and cannot cure basic defects which might exist in the group's suitability and capability as the service provider, stemming from its manner of incorporation;
• thus handicapped in its capacity to plan for service provision, the funding agency's efforts to ensure performance of funding objectives are frustrated;
• service provision by existing corporations is less than satisfactory so new corporations are established - and the whole process begins again. ^[8]

The second level of dependency is of Indigenous people to Indigenous organisations. The activities of Indigenous organisations are substantially defined and controlled by government decision making processes over which Indigenous peoples exercise minimal, if any, control. As a result, such organisations are based on non-Indigenous models of governance and do not necessarily reflect the priorities and needs of Indigenous communities. As stated by ATSIC:

This operating environment continues today. In the words of ATSIC, it 'has in many cases replaced one form of dependence with another. Not the welfare dependency of the Pearson theory, but the dependence on permanent service delivery by external agencies'. ^[10]

Concerns about dependency on permanent government service delivery are accompanied by concerns that this service delivery model is not delivering long term and sustainable improvements in Indigenous communities.

The current approach reduces the idea of development 'to one of 'community development' devoid of any economic dimension' and provides 'little encouragement to Indigenous economic development since the resourcing of Indigenous organisations does not increase with increases in economic activity in their local area'.^[11] Service delivery of itself brings few economic benefits.

The discussion in chapter 2 and the statistics provided in Appendix 1 illustrate this. They show that there is no evidence that the existing service delivery model is achieving sustained improvements in Indigenous well-being. There is no consistent forward trend in reducing inequalities compared to the broader Australian population and there is a very real prospect of a worsening in the situation of Indigenous peoples over the next decade.

As a consequence of these factors, Indigenous people seek to move from a position of dependency on government service delivery to being active participants in governing their own communities. This requires a changed approach by governments and Indigenous organisations and communities.

Overall, it requires two main but inter-related changes. First, it requires changes to the approach of government to funding in order to increase Indigenous participation and control.

Twelve years ago the Royal Commission into Aboriginal Deaths in Custody made recommendations for longer term, more flexible funding arrangements which would ensure increased Indigenous participation and control. In particular, it recommended the introduction of triennial block grant funding for Indigenous organisations and that this funding be allocated through a single source with one set of audit and financial requirements combined with maximum devolution of power to the communities and organisations to determine the priorities for allocating such funds. ^[12]

These and similar recommendations have been reiterated time and again over the past decade. This includes through the landmark report of the Commonwealth Grants Commission on Indigenous Funding in 2001. As the discussion in chapter 2 and Appendix 2 of this report demonstrates, addressing these issues is also a key priority of the COAG whole-of-government trials through the concepts of shared responsibility and of a 'joined up' approach to government activity and pooled funding.

Second, it raises challenges for Indigenous people to develop structures that are capable of interacting with governments while also being representative of and accountable back to Indigenous communities and people. This requires building the capacity of Indigenous communities to be self-determining as well as reforming the structures of ATSIC to provide effective representation within government at the regional, state and national levels. It is this second set of challenges that this chapter focuses on.

In ATSIC's Annual Report for 2002-03, the acting Chairman describes the challenge facing Indigenous communities and ATSIC as follows:

A central issue is how to empower people at the community and regional levels, so that policies and service delivery are driven by the people and the communities themselves. In this vision of the world as it should be, service delivery by governments and agencies is driven by the needs of the community rather than by one-size-fits-all policies and models which are imposed from above and afar. We want Indigenous people and communities to drive change and shape their own futures. But that means we have got to get two things right:

• the capacity of community members and the community as a whole to make good policy and to campaign and negotiate for the outcomes they want; and
• the good governance and self-management of Aboriginal and Torres Strait Islander people at national, regional and local levels.

'Capacity building' and 'good governance' are buzz words around at the moment. But the issues that they cover are fundamental. Basically, they mean building the skills of all Indigenous people to improve ourselves, to shape our own lives, to run our own affairs, and to take our rightful place as a unique part of Australian society.

Whichever way you look at it, capacity building and good governance lie at the heart of our [i.e., ATSIC's] current agenda. How we deal with them will determine our future. Our focus must be to build the framework of capacity and governance within which we can develop relevant, well-researched policy reflecting what Indigenous people want, and oversee the delivery of effective programs flowing from those policies. Aboriginal and Torres Strait Islanders need a renewed, reinvigorated, focused and high performing ATSIC. Dare I say it: the nation needs 'a new ATSIC'. ^[13]

Facilitating Indigenous participation and moving beyond welfare dependency - The government's approach

A key focus of the government, in implementing its practical reconciliation and mutual obligation policies, has been on processes for fostering Indigenous participation and moving Indigenous people beyond welfare dependency.^[14] The central element of the government's approach to these issues has been a focus on the need for partnership and shared responsibility between government and Indigenous peoples. As the Minister for Immigration, Multicultural and Indigenous Affairs stated in August 2003:

[There is a] need to recognise that there is a partnership of shared responsibility between governments and Indigenous people. Governments and outsiders alone cannot effect the necessary changes.

• Indigenous Australians have rights like all other Australians - rights to education, health services and the like. Governments therefore have obligations to provide those services in a fair, reasonable and appropriate way.
• But rights and responsibilities are inseparable, and there is a view, well founded I believe, that the responsibility of the individual has not been given sufficient attention.^[15]

Recent developments in the government's position on fostering Indigenous participation and the objective of moving Indigenous people beyond welfare dependency can be briefly summarised as follows. ^[16]

In 2002, the Minister for Immigration, Multicultural and Indigenous Affairs set out a five point plan for Indigenous affairs which consists of:

• implementing a shared responsibility approach between Government and indigenous people that recognises that each side has rights and obligations;
• shifting the emphasis of policy towards the needs of individuals and families, with a focus on 'empowering individuals as members of families and communities rather than viewing the Indigenous world through the construct of community', and considering 'the functioning of Indigenous organisations to identify whether they are providing services that can demonstrate tangible outcomes'; ^[17]
• tackling substance abuse, particularly alcohol, as a major health priority and 'as a absolute necessity in terms of breaking the shackles of family violence, welfare dependency and the like'; ^[18]
• pursuing English literacy and numeracy as the most basic foundation to securing the long-term economic self-sufficiency of Indigenous people; and
• ensuring that mainstream funding caters to Indigenous needs to enable better targeting of Indigenous specific resources.^[19]

In responding to the Commonwealth Grants Commission's report on Indigenous funding, the government also committed to a series of guiding principles for equitable provision of services to Indigenous people. These principles seek to identify the basic requirements and parameters for effective and equitable approaches to service delivery to address Indigenous disadvantage. They include:

• flexibility in the design and delivery of services, and the importance of developing partnerships and shared responsibilities with Indigenous peoples;
• developing a long term perspective in funding, design and implementation of programs;
• improving access to mainstream services for Indigenous peoples and access to services being based on need and equity;
• improving coordination of service delivery within and between governments;
• improving community capacity in order to achieve sustainable outcomes for Indigenous communities; and
• improving data collection to enable performance reporting of outcomes and better alignment of resources to need.^[20]

Two processes are also seen as central to the government's 'shared responsibility' approach. First is building the capacity of Indigenous communities and governance reform. As stated in the government's submission to the parliamentary inquiry into capacity building in Indigenous communities, the government's overall approach is to 'locate capacity building firmly at the heart of policy and programme design ... An emerging policy challenge for governments ... is to actively support Indigenous people in their efforts to develop the individual and community capacity necessary to achieve self-management and self-reliance'. ^[21]

Second, agreement making processes were identified as the mechanism for implementing the government's shared responsibility and partnership approach. In August 2002, the Minister stated that 'we need agreements that are a two-way undertaking that change the relationship from one of passive welfare dependency to a much more equal relationship' based on empowerment.^[22] Such agreements, he stated, should be guided by principles of involvement of the local Indigenous community in decision making; shared responsibility; flexibility to meet local circumstances; and an outcomes focus with clear benchmarks to measure progress.

As noted in Chapter 2, the government has also made a series of commitments through the communiques of the Council of Australian Governments. These include investing in community leadership initiatives and promoting links between Indigenous people and the private sector to increase economic independence. The whole-of-government community trial initiative has also been discussed at length in Chapter 2 and Appendix 2 of this report.

The government has also initiated a number of inquiries and reviews in 2002 and 2003 on matters that are related to these priorities and this approach. These include:

• Inquiry into capacity building in Indigenous communities, commenced by the House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs in July 2002 and still underway;
• Review of the Aboriginal and Torres Strait Islander Commission, which delivered its final report in November 2003 and which will form the basis of legislative proposals for reforming ATSIC in 2004;
• The Indigenous Business Review, which is due to report shortly; and
• Review of the Aboriginal Corporations and Associations Act 1976 (Cth) in 2002, with the government recently announcing that it would introduce legislative amendments to the Act in 2004 to improve the effective of Indigenous organisations; ^[23]

In the Social Justice Report 2002, I examined the approach of the government in some detail. I sought to establish whether government activity and programs backed up the weighty commitments that they make or whether the broader approach of the government to Indigenous issues, particularly through the confines of practical reconciliation, constrained the enabling environment in which such directions were to be implemented.

Overall, I have noted the significance of the government's commitments to improved coordination and efficiency in service delivery, on focusing on building the capacity of Indigenous communities and in seeking to enter into partnerships of shared responsibility with Indigenous peoples to promote economic development. The commitments of the government offer significant potential for making real advances in the situation of Indigenous peoples.

I have also expressed concern, however, that the government appears reluctant to relinquish any control over decision making or resource allocation and accordingly, that they have set a narrow basis for the relationship with Indigenous peoples.^[24] As noted in the previous chapter, the absence of any benchmarking and agreement of targets in the short, medium and longer terms also means that the government's approach lacks a longer term perspective to issues of funding, program design and implementation.

There are a number of implications that flow from the government's approach that are relevant in considering developments in fostering Indigenous participation in decision making processes and seeking to move Indigenous peoples beyond welfare dependency.

First, the government's approach is a narrow one in that it is primarily directed to improving the existing service delivery framework. While the government seeks to engage Indigenous people in making this system more responsive to their needs, the primary focus of the government is not on transforming the current approach. The focus is on addressing the needs of Indigenous people (at the individual, family and community level) as disadvantaged citizens and on improving their access to citizenship entitlements. Distinct cultural attributes of Indigenous peoples are secondary concerns in this framework.

Second, as a consequence, the process of re-drawing the boundaries of the relationship between Indigenous peoples and government through partnerships and agreements does not contemplate a change in the relationship based on acknowledgement of distinct Indigenous identity and cultures or recognition of the distinct status and inherent rights of Indigenous peoples. It is not based on recognising Indigenous jurisdictions or on sharing power. This distinguishes the government's approach from a treaty process and from the broader comprehensive agreement making approach proposed by ATSIC in the mid-1990s in negotiations on a social justice package.^[25]

Third, the government's focus in on achieving greater efficiency and outcomes for Indigenous peoples from within the existing service delivery framework. The government is not, for example, contemplating radical change to existing financial commitments and approaches to addressing Indigenous disadvantage. Instead it is focused on improving the performance and accessibility of existing mainstream programs and services; freeing up Indigenous specific services to address issues that cannot be addressed through these mainstream services; improving the allocation of existing funding on the basis of need; and addressing fragmentation of service delivery that exists across government departments and between governments. These are important issues to focus on, but without a broader frame of reference they confine the scope of the relationship between government and Indigenous peoples.

Ultimately, these factors suggest that the government's approach, and their efforts to date to engage Indigenous peoples, do not seek to transform the existing model of service delivery to Indigenous peoples. Instead, they focus on improving the effectiveness of the existing approach and consequently, the outcomes achieved by it in relation to Indigenous disadvantage.

The government's approach is not, however, completely closed. Their commitment to capacity building in Indigenous communities and governance reform of Indigenous organizations offers much potential to unshackle the constraints that exist through the current service delivery approach and has the potential to lead to more radical transformation in the relationship into the future.

Capacity building in Indigenous communities and governance reform

In setting out a human rights framework for reconciliation, the Social Justice Report 2000 noted the pivotal importance of building the capacity of Indigenous peoples and supporting Indigenous governance structures. Such a focus, the report suggested, provides 'the potential for a successful meeting place to integrate the various strands of reconciliation' by tying together 'the aims of promoting recognition of Indigenous rights with the related aims of overcoming Indigenous disadvantage and achieving economic independence'.^[26]

The Social Justice Report 2001 then provided an overview of developments in relation to community capacity building and governance reform, and provided some detailed case studies of current developments.^[27] That report referred to capacity building and governance as follows:

Capacity building relates to the abilities, skills, understandings, values, relationships, behaviours, motivations, resources and conditions that enable individuals, organisations, sectors and social systems to carry out functions and achieve their development objectives over time.^[28]

Governance concerns the structures and processes for decision making, and is generally understood to encompass stewardship, leadership, direction, control, authority and accountability.^[29]

There is currently an emerging consensus among governments and Indigenous peoples in Australia about the importance of supporting governance reform and capacity building of Indigenous communities. These terms are now reflected in the policy approaches of all Australian governments and commonly appear in debates about Indigenous policy.

There are four main features of developments over the past few years relating to capacity building and governance reform that I highlight in this chapter.

a) The existence of significant capacity in Indigenous communities

The first is that the significant attention paid over the past three years to issues of governance and capacity building in Indigenous communities has demonstrated that there already exists much capacity at the community level.

There are numerous examples of the ingenuity and initiative of Indigenous peoples in developing solutions to meet their local needs. These range across all areas of life for Indigenous people as well as all areas of government activity. They include justice related issues, health, education, employment and training, through to business development, dealing with substance abuse, healing, processes for applying customary law and improved community coordination. As an example, Figure 1 over the page provides a case study of the approach of the Murri School in Queensland in addressing Indigenous educational achievement in a culturally appropriate and community controlled environment.

Examples of community initiatives such as this have predominately been brought to the attention of governments, policy makers and Indigenous communities through the following events and processes over the past two years : ^[33]

• The first national Indigenous governance conference convened by Reconciliation Australia, ATSIC and the Australian Institute of Aboriginal and Torres Strait Islander Studies in 2002; ^[34]
• The Northern Territory's Indigenous economic forum of May 2003;^[35]
• The Northern Territory's Indigenous governance conference ('Building effective governance') of November 2003;^[36] and
• The House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs inquiry into capacity building in Indigenous communities, which commenced in July 2002 and is due to report in the first half of 2004.^[37]

These conferences, forums and inquiries have revealed that activities currently taking place in Indigenous communities all across Australia encompass a startling variety of processes and cover an enormous range of activities. While these activities achieve varying levels of success and generally operate under difficult conditions, their mere existence provides an antidote to the regular public image of Indigenous people which almost entirely defines our people as victims and according to the disadvantage that many of us suffer, and which presents our communities as dysfunctional and riddled with problems.

As Reconciliation Australia notes, 'the Building Effective Governance conference in the Northern Territory in November (2003) for example, uncovered multiple positive initiatives unknown even to other Territorians'.^[38] The identification of positive stories about Indigenous peoples 'having a go' and seeking to change the circumstances that exist in communities, has two main benefits. It suggests that problems that exist in Indigenous communities are not insurmountable and can be challenged; and it chips away at the negative portrayal of and misconceptions about Indigenous peoples.

The realisation that there is already a significant accumulation of capacity and skills in communities also provides a platform for reform. As the Centre for Aboriginal Economic Policy Research note:

The capacities of individual Indigenous community members can certainly be increased, through education, training, and experience ... However, it should also be noted that in our experience it is often the case that many Indigenous community members have enormous capacities, acquired from past experience and training, but they are somewhat reluctant to use those capacities in difficult organisational environments. Community members get burnt out in such environments and end up withdrawing from them, either as employees or active members of governing bodies.^[39]

A key challenge is therefore to identify existing capacity in Indigenous communities and to understand and deal with the circumstances that prevent this capacity from being fully utilised.

b) The importance of capacity building in building a more effective service delivery framework

The second feature of the attention to capacity building and governance reform in Indigenous communities in recent years is the growing realisation of the integral role that these issues play in addressing the deficiencies of the existing service delivery approach.

Building community capacity and promoting good governance in Indigenous communities is increasingly being seen as necessary to developing a more effective service delivery framework that can contribute to sustainable development in Indigenous communities.

In a discussion paper released in 2003, Mick Dodson and Diane Smith explore the linkage between capacity building and sustainable development. They sought to consider in the Australian context one of the main findings of the Harvard Project on American Indian Economic Development, namely, that there is a vital link between governance and sustainable development.^[40]

They approached the issue by identifying the key ingredients for sustainable development and examining these according to the level of local control that Indigenous communities presently have over them. They state:

On the evidence available, many Indigenous communities and their organisations have been going about development backwards, getting caught up in issues over which they have little or no control. The most common way communities and organisations proceed is to focus all their energy on:

• starting up a never-ending variety of new business projects that are uninformed by wider 'whole of community' needs and realities;
• responding to externally driven development proposals and other people's economic agendas;
• chasing transitory opportunities, usually single major development projects;
• chasing transitory grant funding, and tying their scarce local expertise into whatever repackaged programs are on offer from government and the private sector; and
• focusing on short-term outcomes where success is usually measured by immediate economic impacts such as money and jobs (neither of which seem to last).

Given local conditions of socioeconomic disadvantage and great need, this approach is both tempting and understandable. But the result is that the overall direction of development in communities is usually haphazard.^[41]

They describe this approach as a 'tatslotto approach' to economic development which 'produces the inevitable outcome - the odds are against winning and most of the time communities lose their money'.^[42] They argue that international best practice and research suggests that instead of this focus, Indigenous communities should focus on issues over which they exert a high level of control:

[T]he key ingredients over which Indigenous communities can currently exercise the greatest degree of control are their own local processes and structures for governing themselves, and their local development policies and strategies. Communities and their representative organisations can create the local conditions for more legitimate and broadly representative rule, more effective decision-making, capable delivery of services and collective action.

Arguably then, the best approach for communities to follow in trying to achieve sustainable economic development would be to focus initially on those key ingredients over which they have the greatest degree of local control: that is, their governance arrangements ...^[43] [T]hey should concentrate on building up stable, capable and legitimate governing institutions, structures and processes.^[44]

Dodson and Smith suggest that based on international evidence, 'it is only when effective governance and holistic development strategies are in place that economic and other development projects have the chance of becoming sustainable'. Or put differently, 'sustainable development is - fundamentally - a governance issue'.^[45]

This creates a challenge for Indigenous communities and organisations:

Communities do not have to suspend all development initiatives until they get their governance in order, but neither should they embark on new development initiatives without also commencing the harder work of building effective governance. For many communities and their organisations this may mean having to create a whole new mindset; and it will be hard not to fall back into reactive mode.^[46]

It also creates challenges for government in supporting the building of such capacity and appropriate governance. These include not locking Indigenous communities into a service delivery model that is not responsive to their needs and which distracts or dilutes the focus of Indigenous peoples from establishing and pursuing their own priorities, as well as providing appropriate recognition of the role of Indigenous people in setting priorities and developing processes for allocating funds on this basis.

c) The importance of corporate governance standards

The third, related, feature to emerge from the focus on capacity building and governance reform in recent years is an identified need to improve corporate governance in Indigenous communities and of Indigenous organisations.

This issue has received extensive public coverage during the past year in relation to the operations of ATSIC and prompted the introduction of a 'separation of powers' within ATSIC by the Minister for Indigenous Affairs in early 2003. As ATSIC's Chief Executive Officer notes, there was also a significant level of 'negative reports on ATSIC published in the media that intensified from February 2003, and which drew strength from a widespread public acceptance that ATSIC had not been vigorous in pursuing problems of accountability'.^[47] The issue of improved corporate governance for ATSIC is discussed in the next section of this chapter.

Corporate governance is an issue that has also been prominently reflected in the media following allegations of fraud and mismanagement among some Indigenous organisations. In Western Australia, for example, a parliamentary committee inquiry was established during the year into the handling by the WA Health Minister of allegations of financial impropriety relating to a peak Indigenous representative body.

The most recent review of the Aboriginal Councils and Associations Act 1976 (Cth), conducted in 2002, highlights a range of challenges for Indigenous communities and government relating to corporate governance standards.^[48]

It is estimated that there are nearly 3000 associations incorporated under the Aboriginal Councils and Associations Act, fulfilling a range of diverse functions in relation to Indigenous communities. Associations incorporated under the act play an integral role in delivering services to Indigenous communities at the federal, state and territory level. A vast majority of these associations are non-profit organisations delivering services to Indigenous communities, such as health, housing, employment and legal services. There is great fragmentation of service delivery through the vast range of corporations that exist in communities, with a loss of economies of scale and lack of focus on the holistic needs of communities.

As the Review notes, 'the formation and regulation of corporations is a very prominent feature of Indigenous social and economic life'.^[49] While this is very much a reflection of the level of dependency of Indigenous people on government services, the prominence of regulatory systems in Indigenous communities comprises a level of intrusiveness into Indigenous lives that is experienced by no other group of people in Australian society.

The reliance of governments on Indigenous organisations to deliver government services creates a high level of dependency for Indigenous peoples on these organisations. The consequence of this is that 'whole Indigenous communities may be dependent on the services provided by a corporation. When such corporations fail, there may be no alternative service providers'.^[50] The standard of corporate governance thus has a major impact on service delivery and accessibility of programs for Indigenous peoples.

As the Review notes, the Aboriginal Councils and Associations Act has been in operation for more than 25 years and has not been amended in the past decade. Since the act was introduced, however, there have been 'significant changes in the circumstances of Indigenous peoples and in the uses which Indigenous people make of corporations' as well as in corporate governance standards.^[51] These changes range from broader Indigenous involvement in program delivery, legal recognition of Indigenous rights (such as native title), and significant changes to the approach to corporate regulation.

As a consequence of this, the Review concludes that the Act is now out of date, suffers from a series of technical shortcomings and that successive amendments to the act prior to 1992 have meant that it has drifted from its original legislative purpose. This legislative purpose, the provision of a statute of general application to provide Indigenous people with a simple and flexible mean of incorporation, also reflects an outmoded conception of corporate governance and does not reflect changes that have taken place in the relationship of Indigenous peoples and governments.^[52] As a consequence, 'the incorporation statute has now itself become a source of disadvantage for Indigenous people'.^[53]

Despite this, incorporation of Indigenous organisations under the act is often 'involuntary' in the sense that Indigenous organisations are required to incorporate to comply with legislative provisions and government policy. Under certain circumstances, for example, Indigenous organisations are required to incorporate under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) and Native Title Act 1993 (Cth). Similarly, governments have 'adopted policies of 'self-management' which give the responsibility for the delivery of a wide range of essential services ... to Indigenous communities themselves. Government funding bodies often require the communities to form corporations before they are eligible to receive the funding to perform these services'.^[54]

There are consequences to such 'involuntary' incorporation, including:

• People who would not have otherwise formed a corporation, and who may not understand the consequences or technical requirements of incorporation are required to do so.
• The requirement for incorporation can force together Indigenous groups which would not otherwise have joined together, and which might not share the same views or goals, making the corporation vulnerable to destabilising competition between groups.
• The requirement for the establishment of community-based organisations to perform community services can result in confusion between the membership of the community or group and the membership of the corporation itself.^[55]

ATSIC have similarly noted concerns about the incorporation of community-based organisations that has occurred over the last thirty years which has occurred through a 'reactionary' process with 'no real strategy underpinning the proliferation of incorporated bodies'. They note that the culturally inappropriate structures of these organisations have led to organisations being 'dominated by larger families'. Ultimately, this process 'commonly did not contribute to social capital and, in fact, often undermined existing capacities' with the consequence that 'the effects of this history now have to be 'undone'.' ^[56]

In essence, government policy and legislative requirements have foisted on Indigenous peoples regulatory frameworks that contribute to an absence in Indigenous organisations of what the Harvard Project on American Indian Economic Development refers to as a 'cultural match'. As Dodson and Smith explain:

Underlying ... principles of good governance is the issue of legitimacy and mandate. Each community and region will have to find some degree of match or 'common ground' between the types of governing structures and procedures it wants to develop, and the culturally based standards, values and systems of authority of community members. For example, common ground must be found about issues such as who should hold power, how power should properly be exercised, how decision making and disputes should be handled, and about the respective rights and responsibilities of different members and leaders. The more a governing body finds some cultural 'fit' or 'match' in these matters, the more it will secure the ongoing mandate of its members ...

Cultural match is not simply a matter of importing romanticised views of traditional Indigenous structures or authority, and expecting them to handle economic development decisions, financial accounts and daily business management. Creating a cultural match is more about developing strategic and realistic connections between extant cultural values and standards, and those required by the world of business and administration ... [W]hile Indigenous governance arrangements need to be informed by local cultural standards if they are to be regarded as legitimate by community members, the governing arrangements also have to work - governing bodies have to be practically capable of responding and taking action in the contemporary environment.^[57]

The Review of the Aboriginal Councils and Associations Act concluded that, on the basis of the concerns expressed about the Act, there is a pressing need for reform to the corporate governance regulatory framework for Indigenous organisations. The Review recommended two main aspects to this reform: the provision of 'special regulatory assistance' for Indigenous peoples, through the provision of measures for the corporate regulator (currently the Registrar of Aboriginal Corporations) to assist and encourage directors of corporations to develop the skills and good governance practices necessary for long term viability of corporations; and significant reform to the Aboriginal Councils and Associations Act, but maintenance of an Indigenous specific incorporation approach.^[58] Accordingly, the Review proposes the introduction of a new Indigenous Corporations Act. ^[59]

On 15 January 2004, the Minister for Immigration and Multicultural and Indigenous Affairs announced that the government was shortly to introduce proposed legislative reforms to the Aboriginal Councils and Associations Act. These proposed amendments are intended to:

• rationalise the number of corporations through a focus on pre-incorporation scrutiny and support for alternatives to incorporation;
• provide conferencing opportunities to encourage agencies to resolve co-ordination issues;
• provide accredited training for Directors and members of corporations;
• expand assistance for dispute resolution; and
• establish a 'rolling program of 'healthy corporation' checks tailored to Indigenous corporations, coupled with more streamlined responses to critical problems'.^[60]

The provision of greater support for addressing corporate governance issues in Indigenous organisations and amending the Aboriginal Councils and Associations Act are vital components in seeking to build the capacity of Indigenous communities. The government's proposed legislation should be treated as of the highest priority. This should be reflected in the treatment of the draft legislation in the legislative programme in Parliament. The draft legislation must also be subject to broad consultation, given the necessity that any legislative reform should facilitate rather than obstruct the development of Indigenous organisations that achieve an appropriate 'cultural match' between cultural legitimacy and corporate governance requirements.

d) Definitions of capacity building and a reform agenda

The fourth main feature to emerge from the focus on capacity building and governance in Indigenous communities over recent years is that, despite the convergence of views on the need for capacity building and governance reform, there is no commonly agreed definition of what capacity building is, nor an agenda for progressing capacity building and governance reform in a whole of government and holistic manner.

Submissions to the House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs inquiry into capacity building in Indigenous communities (herein referred to as the parliamentary inquiry into capacity building) reveal that there are significant differences in the understanding of what the terms capacity building and governance reform mean to different governments, service delivery agencies and Indigenous peoples and organisations.^[61] The Australian Institute of Aboriginal and Torres Strait Islander Studies comment in their submission to the Inquiry on the widespread and uninformed use of the term capacity building and it's permeation across all levels of public policy and research.^[62]

Submissions reveal that different organisations apply the term capacity-building to refer to anything from political processes, self-determination, Indigenous rights, citizenship rights, corporate governance, self-governing community structures, regional autonomy, government service delivery reform, education and training, partnerships, economic development to sustainable development. Some of these descriptions equate potential outcomes of capacity building with the process of capacity building.

The lack of a common understanding of what capacity building and governance reform entail promotes policy confusion. It is a significant problem that has the potential to render commitments by governments to support such processes meaningless. As ATSIC have stated:

In this country the rhetoric of capacity building has been adopted by state governments and by Commonwealth agencies ... What is missing is an agreed setting for the programs and activities which, these agencies claim, incorporate capacity building or capacity development processes. Each agency derives its own view of capacity building and development, and there is a danger that this reinforces the stovepipe program environment. ^[63]

A potential consequence of this policy confusion is the adoption of an extremely limited approach to capacity building that equates developing the capacity of Indigenous organisations and communities with improving the delivery of government services. This has the potential to co-opt the process of capacity building so that it reinforces the characteristics of the existing system, with all the structural problems noted earlier in this chapter. As I discuss in Chapter four in relation to developments on the Anangu Pitjantjatjara Lands, this raises the concern that the emphasis of governments on capacity-building could amount to nothing more than a bureaucratisation of what was formerly called community development.

This limitation is implied in the terms of reference of the parliamentary inquiry into capacity building which requires the Committee to examine 'strategies to assist Aboriginals and Torres Strait Islanders better manage the delivery of services within their communities'.^[64] The Committee has, however, been presented with arguments from many witnesses and in many submissions urging that it not make the mistake of confining discussions about capacity development to the realm of service delivery.

ATSIC Commissioner Kim Hill referred to the need for capacity development to be applied outside a formal service delivery framework by the Committee as follows:

The terms of reference are limited to service delivery only. If the aim of the inquiry is to overcome disadvantage and failing policies then we have to look beyond just service delivery. I believe the inquiry should be based on the human element of the problems which we face and not on service delivery. It should be about how our people can become full and active partners with agencies as part of our participation in the economic, political and social environment of Australia. So capacity building should concentrate on the participation of people, with human and citizenship rights, rather than on organisations, which are only deliverers of such services to the communities. In terms of access and equality, I think governments have a responsibility to provide services. The inquiry should not just be looking at ways to hand over this responsibility to communities; it has to take a broader view of capacity building-or capacity development, which is the term I prefer to use.^[65]

In their submission to the inquiry, the Fred Hollows Foundation emphasises the importance of acknowledging the broader structural environment within which capacity building strategies take place:

[C]apacity building and service delivery must take place in a broader context of policy and funding arrangements which are likely to constitute significant barriers to these approaches.^[66]

They note the following seven structural issues relating to the approach of governments that impacts on the successful implementation of capacity development initiatives:

• The current socio-economic and health status of remote communities and their members;
• Lack of basic infrastructure in which 'capacity-building' can occur;
• The lack of availability of services and lack of funding equity;
• The complexity of Government funding arrangements and lack of coordination of services at various levels of Government;
• Lack of sustainability in Government programs - the impact of electoral and funding cycles;
• The lack of accountability of Government departments to achieve measurable outcomes in the delivery of services; and
• The lack of Indigenous control of decision-making.^[67]

Failure to acknowledge and address these features of the existing service delivery model will result in any benefits from capacity building only ever being marginal or short-term. This is also illustrated by the case study of infrastructure provision in remote communities provided in Figure 2 below.

It is essential that capacity building be properly understood as complementary to reforming government approaches to service delivery and not as a substitute for such reform. As ATSIC state:

ATSIC believes that appropriate service delivery and a developmental approach [that incorporates capacity building] are different and that these differences need to be understood by everyone involved in service delivery in Indigenous communities. Both are required, and the best outcomes are obtained when there is a synergy between the two.^[75]

To address the lack of an agreed framework for advancing capacity building, ATSIC has developed an integrated framework for progressing capacity building and promoting sustainable development in Indigenous communities. ATSIC have recommended to the parliamentary committee into capacity building that this framework be adopted through the Council of Australian Governments and form the platform from which all governments would work with Indigenous communities. ATSIC have also entered into a partnership with OXFAM International to provide technical assistance within ATSIC to pilot this approach. This framework is an important initiative and is considered in more detail in the next section.

ATSIC's framework for capacity building and sustainable development

ATSIC's framework for capacity building and sustainable development has its origins in a number of reports and discussion papers that have been prepared by or for ATSIC over the past six years. These include the discussion paper and report on greater regional autonomy;^[76] scoping paper on resourcing self-determination;^[77] the Dillon report on service delivery in Doomadgee and Palm Island;^[78] discussion papers on capacity building;^[79] and other documents.^[80]

Each of these documents reveals a continual engagement by ATSIC, and one that has generally not been acknowledged, on finding new and improved ways to exert its leverage and utilise its functions to achieve lasting improvements in Indigenous communities. As the 2001 discussion paper Changing perspectives in ATSIC states:

More than ten years after the establishment of ATSIC, more than twenty five years after the establishment of the Department of Aboriginal Affairs, socio-economic indicators for many of the Indigenous peoples of this country are still a source of shame. The question being asked both internally and externally is whether there are some aspects of the way ATSIC does business which do not have a positive impact on these indicators ... ^[81]

The history of our structure (ie, ATSIC), and the history of our programs and program priorities, tend to enshrine the 'service delivery' approach to community development. Service delivery is of course an agreed function of government. But, in the words of Paul Streeton, 'we know very little about how to transform social services, adequate food and certain institutional arrangements into long, healthy, productive, creative, enjoyable lives'. The continued adherence to a service delivery model - at the expense of seeking additional approaches to dealing with endemic social and economic issues confronting some Indigenous communities - means that this transformation is still some way in the future.^[82]

As ATSIC notes in its submission to the parliamentary inquiry into capacity building, they have made 'a concerted effort' over the past three years to understand the limitations of the current service delivery model ^[83] and to identify ways of overcoming them. They emphasise international trends in development practice, which has moved from 'the needs-based approach (needs determined by external experts) of the 1970s to activities based on theories of participation, capacity building and capacity development'.^[84] Their integrated framework for capacity building and sustainable development is the product of this consideration.

The focus of ATSIC's integrated framework is on capacity development, involving the active participation of Indigenous peoples in decision-making processes. Capacity is defined as 'the abilities, skills, understandings, values, relationships, behaviours, motivations, resources and conditions that enable individuals, organisations, sectors and social systems to carry out functions and achieve their development objectives over time'.^[85] The focus on capacity development rather than capacity building emphasises two things - that considerable capacity already exists at the community level; and that the emphasis is on a continual process rather than on completing an activity.

This approach is characterised by broad based participation and a locally driven agenda; building on local capacities; ongoing learning and adaptation; long term investment by government agencies; integration of activities at various levels to address complex problems; and a systems approach to problem solving. It aims to enhance skills, abilities and resources; strengthen understandings and relationships; and address issues of values, attitudes, motivations and conditions in order to support sustainable development.^[86]

In accordance with this, there are three defining features of ATSIC's approach. The first is that it is a people-centred developmental approach focused on building the human and social capital necessary for Indigenous participation in planning, organising and administering programs. As stated in the Dillon Report:

[C]ommunity development ^[87] is about people development, not service delivery. It is participatory in nature, specific and not focused on compliance. It is about process. It is about engagement of people of their well being. No amount of ... programs will bring about development in people unless (the programs) ... are linked to a community development process ... (Such a process) ... is supplementary to the service delivery function of governments. ^[88]

Second, it emphasises process elements such as access to choice, participation in planning, and access to decision making. ATSIC states:

What distinguishes capacity development from service delivery is its holistic nature, and its suggestion that individuals, families, and organisations have a definite and active part to play in the process - rather than as passive recipients of services ... if the program is simply delivered to passive recipients, dependency is reinforced and capacity is not strengthened ... [C]apacity development recognises the importance of thinking about individuals, organisations, programs, policies, etc, as part of a broader whole rather than as discrete, or loosely connected concerns. It requires change in the way 'problems' are addressed. The traditional service delivery mode, which breaks a large issue into separate chunks ... does not necessarily deal with the 'whole' - or the space between the inter-related elements.^[89]

The third is that a capacity development approach incorporates a focus on sustainability, continually re-assessing whether a program or project can become self-sustaining or how to maintain the impact of a program intervention in a community over time. ATSIC see this as involving a subtle change form the current service delivery approach, which focuses on the following key stages:

• Where are we now? (current situation);
• Where do we want to be? (vision, goals);
• How do we get there? (planning, strategies);
• Did we get there? (monitoring, evaluation);
• Where are we now? (Current situation);
• and so forth.^[90]

By contrast, the capacity development approach introduces a new element to this cycle as follows:

• Where are we now? (current situation);
• Where do we want to be? (vision, goals);
• How do we get there? (planning, strategies);
• Did we get there? (monitoring, evaluation);
• How do we stay there? (sustainability);
• Where are we now? (Current situation);
• and so forth.^[91]

ATSIC's integrated framework for capacity building and sustainable development is reproduced in figure 3 below.

Figure 3: ATSIC’s integrated capacity building framework for sustainable development ^[92]

This framework highlights that there are three levels of interventions for capacity development - the community level; Indigenous organisations; and government level (including ATSIC). There are different approaches needed for each level. The focus of capacity building strategies for individuals and community members is on empowerment, with interventions to be essentially participative. For Indigenous organisations the focus is on governance and aligning organisational structures to community-based Indigenous decision-making processes. At the government level, the focus is on integration and whole-of-government coordination and cooperation.

As ATSIC Commissioner Kim Hill noted at a public hearing for the capacity building inquiry:

all three (levels or tiers of activity) have to embark on a new relationship with capacity building as a key focus. Concentrating on communities will not make any significant changes. Agencies have to change the way they deal with and interact with communities and community people. For communities, I believe, the aim is empowerment. For organisations, the aim is appropriate government systems. For agencies, the aim is to have a whole of government approach with community aims in mind. ^[93]

ATSIC's framework suggests that by reforming and improving the way Indigenous organisations and government undertake their obligations and responsibilities to individuals, families and small groups, the resulting space will reinvigorate the strengths and creativity of Indigenous people and communities. Indigenous community capacity will be given the opportunity to emerge and be supported if the surrounding structures reform (and develop) their existing practices. Community-based organisations can do this by seeking to align their organisations structures to Indigenous decision-making processes and government can integrate and coordinate their policies and programs to facilitate strategic planning (at the regional and community level) rather than submission based interventions.

ATSIC describes the different focus and emphasis at each level as follows:

Community level: A focus on empowerment using participative community asset development techniques. 'Family/clan panning could also include participation in situational analyses, demographic projection and feasibility assessment of economic development aspirations. These approaches mean local responses to local issues and active involvement in identifying problems and contributing to solutions'.^[94]

Community organisations: A focus on good governance. 'ATSIC recognises and endorses the broader role of Indigenous community-based organisations, and believes that (this) integrated framework ... will reinvigorate community-based organisations in a way that will build human and social capital, as well as capacity.'^[95] 'The potential of community -based organisations as vehicles for community capacity building depends on good governance, including how representative they are of individuals, families and small groups (with their private interest) that make up 'community'. Negotiation of roles and responsibilities between organisations, and between organisations and kinship based groupings, is a critical aspect of organisational reform. Changes to legislative and regulatory frameworks are required to enable culturally appropriate forms of governance'.^[96]

Government: A focus on whole-of-government approaches. 'The diversity and complexity of contemporary Indigenous societies and cultures point to the need for location specific responses by service delivery agencies in all jurisdictions. Such location specific responses should be driven by local and regional perspectives, through community and regional plans, and by formalising a shared partnership arrangement through agreement making, based on those plans'.^[97] 'Whole of government engagement with whole-of-community would build on the emerging capacities within communities and constituent groups, as well as government agency representatives, and allow flexible service delivery across coordinated agencies in all jurisdictions. Agencies would deal with communities in structured planning environments (Sec. 13 and Sec 94 of the ATSIC Act, 1989 are critical in the application of this strategy)'.^[98]

In their submission to the parliamentary inquiry into capacity building, ATSIC highlight two crucial issues to drive change across each of these levels.

The first is concentrating on local level planning processes that 'can better match 'vertical' sectoral resource supply systems with local development planning so as to build integrated 'horizontal' environmental, economic, social and governance systems'.^[99] ATSIC intends to develop a model of local level planning that has the following features:

• is participative, raises awareness and empowers;
• incorporates or is consistent with principles of mutual obligation and sustainable development;
• supports the development of greater economic self-reliance which working to reduce passivity and dependency;
• can be part of the process of program and service delivery reform by better matching planning and coordination to local level need; and
• integrates community planning with ATSIC Regional Council planning processes. ^[100]

The second is building the internal capacity of ATSIC (and in its present form, ATSIS) as well as the wider bureaucracy to support and manage a developmental approach with communities. To this end, ATSIC/ATSIS signed a Memorandum of Understanding (MOU) with OXFAM International in early 2003 to undertake joint development activities aimed at building the capacity of ATSIC/ATSIS officers.

The first activity under the MOU is a capacity building training program being trialled with ATSIC/ATSIS staff in three regional offices (Cairns (Qld), Kalgoorlie (WA) and Bourke (NSW)). There are two stages to the training - the first stage and level is staff in regional offices to understand and implement a developmental approach; and the second stage and level for regional managers and more senior staff to manage staff and programs in undertaking a developmental approach. ^[101] The purpose of the training is not to turn ATSIC/ATSIS staff into development workers but instead to institute within the agency an understanding of capacity development principles to apply within a service delivery environment. The trial is managed by the Community Development and Education branch of ATSIS, working in conjunction with the ATSIC Board. An advisory committee is oversighting the initiative and will evaluate its progress.

Capacity building and governance reform - an agenda for change

Overall, it can be seen that there have been significant advances in the past three years in relation to capacity building initiatives. There is a broader acceptance of the need for capacity building and governance reform within Indigenous communities and to changing the way that governments go about delivering services. There is also a broader acknowledgement of the breadth of initiatives currently underway to address the overall circumstances of Indigenous peoples. This is let down, however, by the lack of a consistent understanding of what capacity building entails which promotes a more limited focus purely on the operations of existing service delivery mechanisms.

The proposal of an integrated capacity development approach by ATSIC demonstrates the potential for transforming the relationship of Indigenous peoples and government through a focus on governance reform and capacity building. It provides a holistic, whole-of-government approach that serves as an agenda for change. The adoption of this framework would not only provide a long term framework and vision for improving Indigenous well-being, it would also ensure that all governments proceed in addressing capacity development issues with a consistent understanding of the goals and objectives of such a process. Many current initiatives of governments - such as the COAG whole-of-government trials, proposals to reform corporate governance standards relating to Indigenous corporations, and agreement making with ATSIC - fit within or is consistent with this integrated framework.

On the basis of the issues discussed in this section, I have chosen to make the following recommendations to advance progress on capacity building in Indigenous communities.

Strengthening the role of the Aboriginal and Torres Strait Islander Commission

This chapter and the previous chapter have highlighted a number of positive developments as well as deficiencies in the current approach of the government to Indigenous policy. Both the positive initiatives currently underway and outstanding concerns point to the need to strengthen the role of ATSIC as a way of facilitating increased and improved Indigenous participation in decision making processes. On this basis, I have chosen to conclude this chapter by presenting an agenda for reforming the role and functions of ATSIC. Such reform is needed to extend ATSIC's influence and to support ATSIC in adopting an expanded leadership role within government, as well as to facilitate greater Indigenous participation in the processes of government.

I particularly focus on the challenges of greater regionalisation and strengthening the influence and leadership role of ATSIC at the national level.^[102] These are crucial issues for advancing capacity building in Indigenous communities, improving accountability of governments to Indigenous peoples and ultimately, in creating a new relationship between Indigenous peoples and governments. They are also issues which will in all likelihood dominate debates about Indigenous issues in 2004, with proposals for legislative reform to ATSIC likely to be debated in Parliament in the first half of the year.

a) Developments in 2003 - Corporate governance issues and the ATSIC Review

Much of the focus on Indigenous issues in 2003 centred on the performance of ATSIC and proposals for reforming its structure and functions.

These concerns about conflicts of interest led the Minister to announce on 17 April 2003 that the government had decided to strip ATSIC of over $1 billion in funding by creating a new executive agency to manage ATSIC's programs in accordance with the policy directions of the ATSIC Board.^[105] The basis of this decision was to promote good governance and accountability; address the 'current breakdown in community confidence in ATSIC'; allow ATSIC to refocus its attention on 'more significant policy issues' rather than be distracted by 'the micro-management focus on ATSIC's own spending'; and to enable the Board and Regional Councils to take 'a more strategic approach in future so that their influence is extended - not only with regard to the programs for which they are directly responsible, but also by enabling them to engage with mainstream agencies with greater credibility and authority'.^[106]

The newly created Aboriginal and Torres Strait Islander Services (ATSIS) commenced operations on 1 July 2003. The Minister issued directions to ATSIS on 1 July 2003 requiring it to:

• take all reasonable steps to ensure that ATSIS conforms to the policies and strategic priorities established by ATSIC, and reflects the priorities set by ATSIC Regional Councils in their regional plans;
• facilitate linked approaches with other government agencies and coordinate its activities to achieve 'effective synergies with overall Government policies and priorities' as well as have 'appropriate regard to overall Government policies and priorities';
• take all reasonable steps to allocate resources on the basis of relative need, taking account of the availability of alternative services, as well as the supplementary nature of ATSIS funding and the priorities for addressing relative need spelt out by the ATSIC board;
• ensure best practice in its relationship with service providers, for example through adopting outcome-based funding and performance-based contracts;
• ensure compliance with the conflict of interest directions described above; and
• work in partnership with the ATSIC Board and Regional Councils, including by providing support for regional planning and policy development. ^[107]

The Minister declared that the creation of ATSIS was to be an 'interim' measure pending the outcomes of the review of ATSIC announced in 2002.

This review of ATSIC produced a discussion paper in June 2003 expressing significant concerns about the way ATSIC currently operates.^[108] In November 2003 it released its final report, titled In the hands of the regions - a new ATSIC, with recommendations for reform. The final report of the Review Team acknowledges the importance of ATSIC:

ATSIC should be the primary vehicle to represent Aboriginal and Torres Strait Islander peoples' views to all levels of government and to be an agent for positive change in the development of policy and programs to advance the interests of Aboriginal and Torres Strait Islander Australians.^[109]

Ultimately, however, they conclude that ATSIC:

The report of the Review Team particularly emphasises the need to improve the connection between ATSIC's regional representative structures and national policy formulation processes. The Review Team state that:

In terms of capacity building, this identifies a challenge to develop a 'cultural match' between the structures of ATSIC and Indigenous peoples at the local level to ensure that ATSIC is representative and participative.

Significantly, the Review Team note that public perceptions of how ATSIC have performed have been burdened by unrealistic expectations, with the organisation blamed for failures which lie outside its control. They have noted that:

Similarly, they note that ATSIC has also not lived up to unrealistic expectations of what it can achieve:

They state that these unrealistic expectations have also operated to shield governments from being accountable:

Accordingly, they approach the issue of reform of the role of ATSIC pragmatically, stating that:

b) The ATSIC Review's proposal for a 'new ATSIC'

The report of the Review Team outlines the Review Team's vision of what a reformed ATSIC should look like. They consider that ATSIC reform should result in an organisation that:

• Enables Aboriginal and Torres Strait Islander people to build a future grounded in their own histories and cultures within the broader Australian framework;
• Represents and promotes the views of Aboriginal and Torres Strait Islander people, including their diversity of opinion;
• Vigorously pursues the interests of Aboriginal and Torres Strait Islander people through partnerships with Aboriginal and Torres Strait Islander communities, governments and other sectors of Australian society;
• Influences priorities, strategies and programs at the national, State/Territory and regional level;
• Minimises and streamlines the government interface with Indigenous communities;
• Promotes good Indigenous governance;
• Recognises the complexity of relationships between Aboriginal and Torres Strait Islander individuals, communities, organisations and governments and the values and limitations created by this;
• Is an equal partner in all negotiations, resourced adequately to achieve this equality, and commands goodwill and respect;
• Increases women's participation and expression of views;
• Ensures that there is transparent accountability of all organisations that are funded to provide services for Aboriginal and Torres Strait Islander people;
• Maintains its unique status;
• Recognises that ATSIC is a key player, but not the only player, that seeks to advance the interests of Aboriginal and Torres Strait Islander Australians with government and others.^[115]

To achieve this vision, the Review Team recommends a revised structure for ATSIC that includes the following features:

• The retention of ATSIC's 35 Regional Councils;
• The replacement of the ATSIC Board, which is currently constituted of 18 zone commissioners, with two new structures - a national body and a national executive;
• The new 'national body' would be the governing body of ATSIC and determine ATSIC policy, primarily through the development of a national plan which would be drawn from ATSIC Regional Council plans and ultimately form the basis of the policies and programs of all governments;
• The 'national body' would meet at least twice every four years;
• The new 'national body' would have 38 members and be comprised of the 35 elected Regional Council chairs, the chair of the Torres Strait Islander Advisory Body and the chair and deputy chair of the new 'national executive';
• The new 'national executive' would be delegated by the 'national body' the role of leading ATSIC and advocating on behalf of ATSIC on a day to day basis;
• The new 'national executive' would have up to10 members, comprised of 8 people elected by the 'national body' including a chair and deputy chair, as well as up to 2 people appointed by the Minister from elected regional councillors;
• A series of national committees would be established to provide policy input to the 'national body' to ensure the incorporation of regional priorities into national planning, with membership drawn from the 'national body' and 'national executive';
• The Regional Council planning process would be accorded higher status in establishing ATSIC's priorities; and
• The elected and administrative arms of ATSIC (and presently ATSIS) would be reunified in one organisation with a clear delineation of roles incorporated into the ATSIC Act.