The economics of remote Aboriginal communities (5)

Tim Trudgen

Manna Matters November 2013

The need for flexibility

The following article has been reproduced from the ‘Why Warriors’ blog and is the fifth in a series.


In my previous article (Manna Matters April 2013), I argued that indigenous communities need locally-based production, which is the basis of any real economy, and that this needs to be driven by local ownership of local products. However, when it comes to encouraging local economic participation and appropriate economic development, things get most difficult when it comes to regulations. All other issues I have discussed so far can be put into place at the project and program level. But the inflexibility of the regulatory environment requires an adjustment in the bureaucratic ideology that drives modern government, and it also requires changes in legislation. The flexibility I am talking about is a willingness to deregulate, to allow for local circumstances and the needs of pioneers. The legislation of modern Australia is designed for a city environment – but when applied to remote and low-income areas, it is a great barrier to overcome for people attempting to start production-based industries and enterprises in general. Indigenous entrepreneurs in remote communities are pioneers, most of them doing things for the first time with little capital or experience and often poor supporting infrastructure. Often the barriers of licensing, accreditation and industry standards are too much to overcome, despite their motivation and the long-term potential of the business plan.

It is often wrongly suggested that indigenous people do not have enterprising mindsets, unlike poor people in overseas countries who thrive on any little help given to them. In developing countries, it is often said that, “you can give people a small loan and they create for themselves a thriving small business, but Aboriginal people have all these resources at their fingertips but are just not interested in the hard work.”

Such sentiments miss several major differences between the circumstances of the poor in the developing world and the circumstances of remote communities in Australia. An entrepreneur in the developing world is often only limited by their access to credit, but crucially they are often not limited by legal and bureaucratic frameworks. In many developing countries, people in rural areas can start a small business: tailoring, a food stall or selling chicken eggs, without having to think about bookkeeping, income tax, town plans or health laws. In many places they can even build stalls on the side of the road with little or no negotiation with local authorities. Where they do have legal requirements, these are well understood and highly simplified. In many parts of India, for example, taxation comes in the form of fixed levies at various roadside collection points.

The story in Arnhem Land is entirely different. A Yolngu person who starts a small business, after the first year of business, risks becoming a criminal if they do not have accurate records of their income. All income, including cash sales at a market stal, must be declared on their tax return, or to Centrelink if they are receiving social security benefits. That seems fair enough, but it is so poorly understood and bookkeeping is such a foreign activity to many that it is a significant disincentive. While a business remains little more than a supplement to other income, this is not a big problem – unless Centrelink finds out and demands repayment. In such cases, people can see their total income halved overnight.

The real complexities start when businesses get to a size where they are the main income for more than one employee. At this point businesses become identifiable entities to the Australian Taxation Office and other regulatory bodies. Then there are many laws and regulations to consider. The killers for many include: superannuation, GST, PAYG withholding, health and safety regulations, company income tax, regulations against loaning to family and various forms of licensing. Primary production based enterprises find it even more difficult, even small-scale fishing and native wildlife use requires licenses and are highly regulated. Agricultural food production is hampered by over-the-top health regulations on the delivery chain of the end product. While welfare dependency certainly undermines people’s motivation for economic participation, those that do attempt to create business often find themselves worn down by the maze of regulations and laws they have to navigate. Those entrepreneurs in PNG, India, Indonesia or developing countries in many ways have it easy compared to a remote indigenous Australian, being able to rely simply on the sweat of their brow to succeed.

There is a real need for regulatory flexibility that can account for the circumstances of remote business people. As an example, the sale of food products does have a range of health risks. When someone wants to sell food, they have to meet pre-defined requirements that are designed for mass production and the sterile world of our cities. It’s not sterile here in remote communities – you can’t avoid dust and dirt to the same degree as in cities. People eat it when they go hunting and it gets on everything because the roads are not sealed. People can’t afford the stainless steel bench tops required in enclosed preparation areas. A standard of hygiene is needed, but why must it be the same standard as the cities when it doesn’t work in this context?

We are currently supporting an enterprise that is trying to reuse treated sewage to grow food. It would be nice if someone from one of the government departments came and said, “OK, let’s find a way to make this work.” However, all we hear is why it is too hard and that we have to meet all this red tape and overcautious standards. We cannot meet the standards because the infrastructure is just not there. Yet in developing countries, treated sewage of the same low standard as ours is being used safely to grow good food. We have independent professional advice about safe standards in our context, but the bureaucratic systems are not interested in the possibilities, only the regulations. Effluent reuse was successfully occurring in the 1990s in several communities, producing massive crops of bananas without ill effects on the families running these gardens. At one stage they were even endorsed by the Chief Minister of the Northern Territory. But they were shut down by inflexible and unhelpful Balanda (white people), more interested in protecting their legal behinds than helping locals find solutions that might work for everyone. In the end, this is what supporting successful, sustainable development must be about: finding solutions that work in the current local context, not maintaining inflexible mainstream standards.

Historically, standards increase as economies develop. Our Australian “white” pioneers started with land and bush in remote locations with few regulatory requirements. They started with small incomes and only their motivation to keep them going. They did not have to meet today’s building accreditations or health standards. As a nation, from 1800 onwards the Balanda mainstream grew – and so did the red tape, to give us the standards we have today. In today’s mainstream the economy, infrastructure, and skill base makes it (mostly) reasonable that we meet these standards.

On the other hand, indigenous people in remote communities are our “black” pioneers, economically and educationally. Our “black” pioneers have economies that are isolated, maintained by a discouraging welfare system and desperate for locally derived products and production. Like our colonial pioneers, it leaves them with little other than their internal motivation to move them forward. They are working to build sustainable economies against a tide of resistance created by legalistic inflexibility and mainstream failures to cooperate or communicate. The degree of flexibility to support new local products must be in proportion to the pioneering context the people are working in. Without this flexibility new products are stifled, because the leap from hobby to profitable business is too big to make.

Flexibility in regulations for remote indigenous communities can help everyone, but most importantly it would help local indigenous entrepreneurs become successful. They are our “black” pioneers and it needs to be recognised that much of their struggle to get by can be eased by bureaucratic systems that appreciate the unique local circumstances. Broad-brushing may work for cities, but it is inappropriate and unrealistic for the context of remote indigenous communities. Legislation, policy and enforcement need to be flexible to unleash the pioneering spirit that is so often squashed by attitudes that value red tape over reality.

Tim Trudgen is the Managing Director of Why Warriors Pty Ltd. He has worked closely with Indigenous people from North-East Arnhem Land (Yolŋu), Northern Territory Australia, since 2001. Today he works as a cross-cultural educator, and as an Enterprise Faciliator to help Yolŋu develop their economic and social endevours.