Successive NT governments seem more concerned with maintaining power than making principled leadership decisions following honest and transparent communication with voters, and the problems of rapidly developing social conflicts, and escalating debt, point to a bleak future, writes Don Fuller.

Regardless of who formed government after the August 2024 NT election, the future for the Northern Territory looks bleak in the medium to longer term.

This is because of two serious problems confronting government in the Territory.

The first is the rapidly developing social conflicts between different demographic groups, and the consequent encouragement of the development of a ‘dual economy and society’ in the Northern Territory.

The second is the major difficulties associated with government financial management and escalating levels of debt.

Both of these problems are now deep seated and difficult to reverse after on-going failures by successive Territory governments.

They would appear to be beyond the competence of any new Territory government.

Raising the living standards of Indigenous Australians, especially in Northern Territory remote communities, is one of the major challenges facing the Australian and the NT governments.

There are a large number of people living in communities typified by conditions of poverty, poor health, high crime, alcoholism and other forms of substance abuse. Many have been caught in a destructive cycle of welfare dependency, incarceration and youth mental health issues and suicide, all of which have exacted severe suffering on Aboriginal people and their communities.

Recently, this severe disadvantage has transformed, not unexpectedly, into increasing levels of aggressive, criminal behaviours in Territory centres.

This has been magnified by the financial and economic mismanagement of the NT economy by successive governments, particularly over the last twelve years.

As all economists regardless of political persuasion, from Karl Marx to Adam Smith have argued, the viability and health of a political-social system depends importantly on the foundations established by the economic system.

However, even given the rapid demographic transitions occurring in the Territory, this is something that has long eluded Territory politicians.

In the case of Indigenous peoples in the NT, politicians at both the commonwealth and Territory levels, have chosen to impose policies which develop exactly the opposite structure of incentives and development to those required for poverty elimination and social cohesion.

These have included geographic immobility, welfare dependency, and what is known as ‘rent seeking’, where individuals and their organisations such as land councils, seek privileges via royalties, for example. This is another form of ‘sit down money’ obviating the need to provide reciprocal contributions through employment for example, to society.

In addition, political activism has been used as a primary means for accessing income. The result has been to make the eradication of poverty far more difficult as such strategies avoid the need to participate and contribute to the mainstream economy and society.

Rather, they provide the conditions for increasing levels of divisiveness.

The development of settled Indigenous communities, particularly in remote areas – “outback ghettoes” – has also made integration into the wider economy and society far more difficult.

Whereas the application of a lands rights policy may have granted over half the land of the NT to Indigenous ownership, it has not fostered integration into the wider, wealth generating market, nor assisted promote Aboriginal economic and human development in remote regions.

This is accentuated by the provision of welfare payments directly to remote communities and other programs that create a disincentive to labour mobility and lock people onto communities.

Such measures have promoted what may be termed a ‘dual economy and society’, leading to an increase of economic and social divisions.

If the Territory is to survive as a successful multi-racial society, a central policy objective for the NT should be to maximise the rate of involvement of the Indigenous population into the modern sector of the NT economy and society.

In order to achieve this, far more attention will need to be paid to the social, cultural and educational attainments of the Indigenous population.

Important phases of this movement toward a dual economy in the Territory are gathering pace as large, very well-funded Aboriginal organisations and businesses move to control a larger proportion of resources in the Northern Territory.

This is occurring as powerful Aboriginal organisations, such as land councils, increasingly use available resources for longer term business investment and capital accumulation, rather than to assist overcome the severe disadvantages faced by many Aboriginal people living in remote communities and regions.

This has resulted in Aboriginal people being excluded from key mainstream economic and social paths, rather than encouraging the different demographic groups in the Territory to work together in joint-venture arrangements and partnerships.

A disturbing example of this is provided by the Northern Territory Aboriginal Investment Corporation, which was established in the last few years, and which recently changed its name to Aboriginal Investment NT.

This organisation has received an initial amount of $680 million, from the Aboriginal Benefits Account, established to receive royalty monies from mining on Aboriginal land in the Northern Territory.

Importantly, all payments from the ABA were previously authorized by the federal Indigenous Australians minister, and distributed via a centralised grants program administered by the government.

However, under new arrangements the AINT will not need ministerial or government approval for any level of expenditure below the very high figure of $100 million.

The board of AINT comprises eight land council directors, with two appointed by each of the NT land councils, and four independent directors.

It has Aboriginal self-determination rather than joint partnership arrangements with the mainstream economy, as a major objective.

Representatives from Aboriginal peoples from remote communities are noticeably absent on the board. These representatives would have the in-depth knowledge and experience of the serious and immediate problems facing people living in remote communities.

There is also a noticeable absence of representatives from Indigenous business, which is fundamental to Aboriginal community development as well.

Barbara Shaw is the chair of the AINT. She is also an executive member of the Central Land Council, which appears to be following similar investment strategies to that proposed for the AINT.

The ABA had distributed royalty funds in three ways. The first is as payments to traditional owners, and other Aboriginal people, living in areas affected by mining. The second is as community grants for the benefit of Aboriginal people living in the Northern Territory. The third is as funding for land councils.

Controlled under the Land Rights Act, funding from the ABA was not available for investments in potentially risky businesses.

Apparently, in order to circumvent those provisions in the Aboriginal Land Rights Act, the Central Land Council joined forces in 2009 with two other well-funded Aboriginal organisations in Central Australia; the Central Australian Aboriginal Congress, and Tangentyere Council, as joint trustees of a charitable trust called CentreCorp.

Principal investments of this Central Australian charitable trust have included businesses that operate in a potentially risky economic and financial environment such as Peter Kittle Motor Company, LJ Hooker Alice Springs, Mercure Alice Springs Resort, properties at 75 and 82 Hartley Street, Alice Springs, and Hertz commercial vehicle franchises in Sydney, Melbourne, and Adelaide.

CentreCorp lists as its main functions, the need to manage its own portfolio of investments, and to manage the portfolio of assets for other Indigenous organisations.

This investment vehicle appears to be at substantial odds with the main functions of the Central Land Council which, according to land rights legislation, should be to consult with Aboriginal people in the land council area about the management of land, and to protect their interests, and to supervise and provide administrative assistance to land trusts in their area of responsibility.

In addition, it should assist with economic projects on Aboriginal land, and promote community development, and improve service delivery in order to improve the economic and human development of Aboriginal peoples, particularly in remote regions.

In this regard, it is noteworthy that a number of traditional owners are currently in dispute with the CLC with regard to the manner in which the council is carrying out these responsibilities.

In her message from the chair and board in the AINT strategic investment plan for 2024-29, Ms Shaw states that in developing the investment strategy, “we travelled across the NT and listened to Aboriginal people in their communities. Overwhelmingly, our people called for … control over the way money is deployed to leverage and grow Aboriginal assets and benefit Aboriginal Territorians.”

This appears at odds with the very wide range of research and project work undertaken over a relatively long period by others, in remote communities of the NT. Much of these findings have appeared in published works.

The works clearly establish that there are very clear and immediate needs for many Aboriginal people living in remote communities and regions of the NT.

Areas requiring immediate attention include expenditure on vital areas such as housing, health, nutrition improved education and training, vastly improved infrastructure and Aboriginal-run community small businesses.

It is also stated in the investment plan that the chosen approach is underpinned by Aboriginal peoples’ right to self-determination.

However, self-determination and self-management have been key principles since the Whitlam Government of the 1970s, and Aboriginal human development has gone backward.

In addition, and importantly, given the wide diversity apparent among Aboriginal groups, communities and regions in the Territory, self-determination cannot be expected to function effectively as an achievable concept outside a particular Aboriginal group and community level.

An important reason for the lack of success of self-management arrangements to date is likely to be because Aboriginal people from particular communities have never been provided with the opportunity to make their own decisions and manage their own affairs at the community level.

More usually, attempts have been made to do this for them, often recently, by urban based Aboriginal people with limited understanding of the living conditions in remote communities, as well as the special culture and law of the groups they claim to represent.

Rather, as in the strategic investment plan, Aboriginal people are aggregated together as if they are one homogeneous group, rather than a series of different groups characterised by special, particular characteristics and diversity.

Ambiguous and misleading language is introduced to support such an approach by referring to ‘our people’, for example. Long-standing and in-depth research by Australian anthropologists with international reputations, would refute that such an approach is reasonable or acceptable, or can have practical application.

Concerns about the main objectives of the AINT are emphasised when the strategic investment plan outlines the first main objective of the organisation as – ‘to grow Aboriginal money for future generations’.

While the plan states that the aim is to strike a balance between providing “real time” benefit to Aboriginal people and communities today, while also investing their capital into a future fund so that it grows “significant intergenerational wealth” to benefit future generations, a number of people are asking, but what about the urgent needs of current generations?

They further argue that there are insufficient checks in place to ensure that this balance is being achieved and that in their view, the main emphasis is on using the fund for longer term investment purposes, rather than assisting reduce underlying, long term poverty and disadvantage.

It is further stated in the investment plan that by prioritising investments aimed at generating sustainable sources of capital for Aboriginal communities, “we seek to develop meaningful funding alternatives beyond discretionary grants”.

However, there is no explanation as to how this is to be done. For example, who is to make the decisions on the investment portfolio? What expertise do they possess in this area? What about the risks? How are these being assessed and managed? How are the very large needs on the ground that require immediate attention being assessed against future income and how is to be dispersed? On what criteria?

The document states: “Our approach combines a long term, patient and commercially minded outlook. We will make investments along a continuum from a future fund to sustainably grow our money over generations, to multi-faceted place-based investments that put Aboriginal people in the driver’s seat of regional and sector development, through to small, targeted community and business grants and supports. In each of our activities, we will respond iteratively to Aboriginal needs, as the driver of all investment”.

Urban Aboriginal people with access to high salaries and quality living facilities in urban environments may have time for a “patient and commercially-minded outlook”, whatever that may mean, but those living in third world conditions do not possess such advantages.

Within the strategic investment plan there is very thin and superficial methodological evidence that Aboriginal people indicated a preference for medium to longer term investment of moneys rather than direct funding to areas urgently required to lift a number of communities out of third world conditions.

A few summarised comments supported by illustrations and perplexing diagrams, are used as justification, rather than a serious presentation of a methodology reporting on wide discussions with important groups and individuals using accepted and well tested cross-cultural data collection and analytical techniques.

To many with experience of the conditions and opinions held by Aboriginal peoples in remote regions, such thin evidence has often in the past, been used to disguise the real motivations behind organisations claiming to assist people in remote regions with money that often fails to hit the ground to assist with desperate and immediate needs.

While federal Labor member for Lingiari Marion Scrymgour is quoted recently in the Alice Springs News as saying the money will be used for on the ground infrastructure improvement, this is not supported by a number of Indigenous people involved in how the money is being managed.

Importantly, the board of AINT appears unwilling to take on board any form of interference in their priorities, including from elected NT federal members.

In Section 7 of the strategic investment plan, titled Overarching Approach, the document states: “Our interconnected approach enables iterative institutional and community capacity-building along the continuum as the scale and complexity of funded activities increases, providing a scalable pathway towards investment and collective wealth management (where desired)”.

Much of the document is impossible for highly trained economists to understand much less Aboriginal people from a remote region without the benefit of a high level of education.

The language used is vague, impenetrable, lacking in definition and over-generalised to the point of being meaningless. There is no clear financial or economic methodology available for those who may be involved and interested.

It appears as a hotchpotch of euphemisms and clichés in an attempt to appear as an authoritative, well designed, and established set of methods.

This hinders accountability and transparency and promotes confusion and a lack of understanding and confidence in such an organisation. It also severely restricts the ability of Aboriginal members from remote communities to contribute to such a plan.

Aboriginal people from remote regions are far more likely to disconnect from the impenetrable language and methods used in this process.

With respect to measuring the performance of their investment portfolio, the strategic investment plan continues to be confusing and promote obfuscation.

For example, it is argued that the performance measures required under the Public Governance, Performance and Accountability Act 2013, financial reporting rules, “rely on western approaches and tools that cannot measure these holistic, interrelated and inherently place-based concepts in a meaningful way.

“Aboriginal self-determination and place-based approaches are predicated on Aboriginal people being empowered to determine appropriate measures of success aligned with their aspirations.

“In this context, pre-determined performance measures can have the effect of directing investment contrary to Aboriginal Territorians’ ongoing self-determined choices.”

This is highly debatable, and appears as an attempt to escape any notion of acceptable financial accountability and transparency. This is particularly troubling as much of the investment strategy is predicated on involvement with the western market-based financial system which is based on widely accepted measures of performance and transparency.

It raises the question of how, without these measures, do interested parties understand what has been achieved and the costs of such achievements or failures and what corrective policies and strategies are required?

One is left wondering whether it is the intention of AINT, and the land councils involved, to attempt to invent a whole new financial management and governance language to justify their investment strategies and programs that are virtually impenetrable to most people?

Given the failure of many Aboriginal organisations to contribute to ‘closing the gap’, and evidence and concern regarding the ethical use of funds – including land councils – it is necessary that a suite of performance measures and success indicators be devised that are clear and transparent.

This is particularly the case given the substantial management and organisational problems that have occurred with regard to the mismanagement of funding by a range of Aboriginal managed organisations, meant to assist Aboriginal disadvantage.

Foremost amongst some of the worst examples of this have occurred in NT land councils, and are still continuing.

For example, the Commonwealth has recently frozen funding for the Anindilyakwa Land Council, after it failed to act on recommendations following a governance probe. The audit came ahead of claims the ALC misused millions of dollars in mining royalties, some of which benefited companies its chief executive had executive roles in.

A recent performance audit report into the Northern Land Council by the Australian National Audit Office found, amongst other things, that a number of recommendations had to be made by the ANOA to improve financial accountability, transparency, and detection of fraud and to improve the governance of the organisation.

The Northern Territory land councils have significant influence and control in board positions in AINT. Given recent financial management and governance problems identified in these organisations this is a matter for important concern.

There is much research and project work on the ground, that shows that successful joint businesses can be established between Aboriginal people and businesses in the mainstream economy and that such arrangements enable Aboriginal people to maintain their identities and cultural priorities.

Within the strategic investment plan it is recognised that: “Tthere is a flourishing Aboriginal business sector in the NT. There are a reported 396 NT Aboriginal businesses, 95 per cent of which are small businesses. Aboriginal business owners make up 7.5 per cetn of’all business owner-managers outside of Darwin, and 2.5 per cent within Darwin”.

Key Aboriginal business sectors include construction, arts and recreation services, agriculture, forestry and fishing, retail, and professional, scientific and technical services.

However, the Northern Territory Indigenous Business Network is “deeply concerned” about the future of Aboriginal business following the release of AINT guidelines.

In just seven months since AINT opened its doors, the NTIBN has been inundated with complaints from Aboriginal businesses.

They argue that the recent drastic reduction in funding commitments – from an initial $180 million over three years, to just now $19 million per annum – along with changes to grant thresholds, has sparked outrage within the Indigenous business community.

The last thing Aboriginal people in remote regions need is for moneys previously from the ABA to be misdirected by urban Aboriginal people with little connection to regional communities and the problems they face.

For some it appears that AINT is intent on becoming like a large corporate investment organisation where senior managers would be able to access all the wealth trapping of senior corporate managers, including expensive cars, multiple houses and extensive travel, for example.

The issue of demographic change, and the impact of a lack of involvement of Aboriginal people in the wider economy and society is escalating rapidly. It is beyond the resources of the police and justice system to deal with.

Crime rates strongly correlate to levels of social inequality. Social and economic exclusion is highly associated with anti-social behaviours involving inhibited self-regulation, reduced empathy for others and increased aggression.

The them and us mentality and culture is now being expressed in outbreaks of crime and violence.

This has been fuelled by failed and wasteful policies administered by the Northern Territory governments in the areas of Aboriginal education, Territory Families and Aboriginal health, for example. These areas have all resulted in a substantial waste of government funding.

Beside the important social and economic issues developing from a dual economy in the Territory, a major challenge to the future sustainability of the Territory as a viable, separate jurisdiction lies with controlling reckless and ineffective government expenditure.

This has resulted in a very high level of government debt.

The new Country Liberal Party government has inherited $10.82 billion in net debt that is projected to climb to $12.26 billion in the 2027-28 financial year,

Debt was already increasing when Labor won government in August 2016.

However, it has continued to climb and at a rapid rate, from $2.71 billion in the 2016-17 financial year to $10.82 billion last month.

The NT will be paying interest of $1.6 million a day, increasing to more than $2 million a day by 2026-27, with net debt to forecasted levels of over $12 billion.

This puts debt at around a whopping 34 per cent of the Territory’s gross state product. This is very high for a small economy where a lot of wealth earned through gas exports for example, leaves the NT.

In addition, the measure of GSP does not take account of the very large interest payments leaving the NT to pay for the government debt. Taking into account these factors, debt is likely to be over 40 per cent of the productive capabilities of the NT economy.

It is also likely that as the social and cultural problems escalate in Territory centres, and more and more money is borrowed to throw at the problem, the expenditure and debt levels will increase to such an extent that the cost of servicing the debt will start to have a major impact on the funding available to meet basic program requirements.

In the absence of thoughtful policies and management, designed to deal with the rapidly emerging problems, it can be expected that social dislocation will escalate further.

As the substantial waste in the Territory begins to affect the revenues available from the commonwealth to the other states, they are bound to start applying pressure to the commonwealth to take control of the waste and misuse of resources being supplied to the NT by other Australians.

Such an enormous debt from such a small economy as the NT compares to that of South Australia at around 11 per cent and the largest economy in the nation, that of NSW, at around 12 per cent.

Not only is the NT being supported by very large revenue transfers from the rest of Australia through the Commonwealth Grants Commission but the only government capable of picking up the tab for the major waste and inefficiencies of government in the NT is the federal government.

If the Territory is to survive as a separate, self-governing jurisdiction, this very high level of debt along with a limited capacity to raise revenue, is likely according to economist Saul Eastlake, to lead to discussions aimed at achieving a commonwealth bailout.

However, as pointed out, the commonwealth would not give the NT a bailout without imposing some fairly harsh conditions. This could include the NT do more to raise its own revenue, through increased taxes and to substantially cut spending.

Such intervention will call into sharp question, the capacity of the NT to govern itself.

However, the new Chief Minister Lia Finocchiaro said her government would grow the NT economy rather than impose more taxes.

How this can be achieved rapidly remains a mystery to many.

“I don’t think it’s time for austerity measures now,” she said.

But is it ever the right time in the Northern Territory and how bad can things get before government faces up to their fundamental responsibilities?

Current governments seem more concerned with maintaining power than exercising their responsibilities to take principled leadership decisions following honest and transparent communication with the voters.

It will become increasingly difficult to attract business investment to the NT and the number of people deciding to leave the Territory can be expected to accelerate further, creating additional problems for an economy and society already facing daunting challenges.

Dr Don Fuller holds a first class Honours degree and PhD in economics from the University of Adelaide. He has worked as a senior public servant in the Territory and as Professor of Governance and Head of the Schools of Law and Business at Charles Darwin University. He grew up in Darwin and attended Darwin High School.

Dr Fuller was also involved with the establishment of the first NT medical school under the leadership of Flinders University vice-chancellor Professor Ian Chubb, 27 years ago.

Dr Fuller was also an adviser to the former CLP MLA Maralampuwi Francis Xavier, was briefly the senior private secretary to Chief Minister Paul Everingham, and is a former member of the CLP and the ALP