Commercial development and natural resource management on the indigenous estate: a profit-related investment proposal

Economic Papers (Economic Society of Australia), Sept, 2005 by Jon Altman, Michael Dillon

One challenge to be addressed is how to develop expertise and entrepreneurial skills in an organisational framework that works in partnership with, and complementary to, the skills and capacities of landowners in managing country? Cultural and customary relations often work to reduce incentives for individuals to pursue commercial opportunities as kin-based relations of production can operate to skim off any surplus accumulated by an individual. At the communal level, competition between landowning factions might similarly operate to negate the potential gains from co-operative behaviour. (5) At the organisational level, opportunities exist for unethical activity that can strip resources out of corporate entities, benefiting non-Indigenous employees to the disadvantage of the local community.

There is the potential for landowners to leverage themselves into investments in a wide range of commercial businesses (stores, road maintenance work, tourism enterprises), in service delivery functions of various kinds (community housing, aged person care programmes, etc.) and in innovative landcare and land management enterprises like bioprospecting, commercial utilisation of wildlife, feral animal control, quarantine inspection, bush fire management, and weed eradication programmes--that is the provision of so-called eco-services. There is also potential to invest directly in commercial enterprise or indirectly in commercially valuable tradable assets, like fishing or crabbing licences, which could not only generate market opportunity, but could also provide a future source of collateral for commercial loans. (6)

Such suites of activities do occur in a few locations; but they are always based on a robust organisational base with an entrepreneurial focus that has the wherewithal (or good luck) to employ qualified, culturally astute, honest and ethical senior managers. Notwithstanding the few exceptions, across the breadth of remote Australia the scale of missed commercial opportunities for development on Indigenous land is significant.

One possible approach to meeting this challenge is to utilise a profit-contingent loan or capped public investment mechanism to finance development opportunities on Indigenous land, as generically proposed by Chapman and Simes (2004). The model we propose, based on a conjunction of state support, market-based incentives and projects that align with local aspirations, has the capacity to reflect the reality of the 'hybrid economy' outlined above. The rest of this article outlines some exploratory ideas that might animate a policy conversation about such a scheme.

4 Preliminary Considerations

There are several issues to be considered in proposing any innovative scheme such as this. First, the institutional architecture governing development on Indigenous land nationally is legally complex, dynamic, and in a state of continuing flux. In particular, the NTA is only twelve years old, and is still in the early stage of development in terms of case law and precedents. Any scheme will need to be administratively flexible and versatile, and have the capacity to deal with different types of tenure and title, as well as the contingent nature of many Indigenous native title rights based on claims that in many cases may be years away from determination or settlement.