In the name of ‘protection’

 

For the vast majority of the Australian population who live in cities and towns around the seaboard of our nation, and particularly people of my generation or older, the last couple of decades have not only been an amazing journey of learning but have challenged the very core of how we thought of ourselves as a nation.  We have learned about hundreds, if not thousands, of Aboriginal babies and children taken from their parents, we have been forced to confront the fact that Aboriginal people did indeed have prior title to this country, and many of us are now learning that our governments, rather than protecting and preserving Aboriginal lives and interests, may well have been doing just the opposite.  This was, in fact, what prompted me to examine Aboriginal affairs in Queensland for my PhD thesis: how did a century of authoritarian government controls produce such disastrous outcomes on every social indicator – health, education, employment, living standards, personal and communal stability?  After many months research in the archives, in church records, and in the government’s own files, the answer was appallingly clear: successive Queensland governments during the twentieth century had run a system they knew was flawed at almost every level, they refused to fix what they knew to be wrong, they were fully aware of the enormous consequential damage yet they continued regardless.  And now – as seems to be the way of those in power – they are denying the evidence.

Many of you here tonight will have been appalled at the backlash which followed release of the Bringing Them Home Report that laid bare the heartbreaking realities of government policies to take Aboriginal children from their families and foster them among the white community or institutionalise them for training before indenturing them to work.  We had been told – indeed our prime minister and many like-minded people continue to insist – that this practice was only applied to children who needed ‘rescuing’ from adverse circumstances, and the unstated assumption was that all these children thereby were accorded the opportunity of healthier and more prosperous lives.  In my book Black Lives, Government Lies I demolished both the assertion of benevolent removals and also the assumption of improved lives, certainly in Queensland.  In reading the early ‘stolen generations’ cases of Joy Williams in New South Wales, and Lorna Cubillo and Peter Gunner in the Northern Territory, I was disturbed how the expansive discretionary powers which governments had accorded themselves so constricted the legal possibilities of determining official accountability.

And so my focus has gravitated towards the financial.  Knowing what I did about the cavalier mishandling of Aboriginal private and communal funds in Queensland, I surmised that if the specifics of trust law were applied to the realities of this mismanagement then the cold hard financial facts would all but exclude considerations of ‘benevolent’ intent and political sanction.  Either you have the power to administer people’s money or you don’t; either you act with due diligence or you don’t; either you act with integrity or you don’t; and if you fail in your duties as a trustee, then the law has its penalties which are not open to political or philanthropic permutations.  And so began my journey.

Queensland is certainly not the only state to set up trust funds from Aboriginal earnings and entitlements (such as child endowment, workers compensation and inheritances), but it is the state for which we have an abundance of evidence which I would like to acquaint you with tonight.  The records for Queensland show that at almost every conceivable point where Aboriginal money could be lost or stolen, it was.   From 1897 any person of Aboriginal descent could be declared a ward of state: they lost power over themselves, over their children, over where they could live and where and at what wage they could work.  During the twentieth century thousands of people were banished to reserves and thousands of men, women and children were contracted out to work, separated from their families for 12 months at a time.

From 1901 ‘unclaimed’ wages and money owed to deceased workers were put in a special trust account; from 1905 all women’s wages were paid direct to the protectors, and from 1914 all male wages were similarly intercepted, apart from pocket money during the work period.  Protectors were deemed to be public accountants under the Audit Act (1874) and had to keep a ‘proper record of wages’ available for inspection; they determined if you could withdraw from your own savings and people, even with large savings, were commonly refused.  The government knew fraud on workers’ accounts was rife from as early as 1904 when it introduced thumb printing to reduce it.

In 1919, the government decided to tax gross wages at 5% (single) and 2.5% (married), although it didn’t inform workers of this confiscation.  By 1921 this brought almost $300,000 into a new trust for sick or unemployed workers; but a public service inquiry in 1922 found the government had taken large amounts from both this Fund and the deceased estates fund for construction on the settlements, subsidies for missions and costs of compulsory relocations.  The inquiry said police calculations were so unreliable workers should be allowed to appeal dealings on their accounts; this recommendation was rejected and frauds continued.

An inquiry in 1932 said supervision was ‘totally inadequate’: there were no checks on wage payments or deductions, pilfering on the 4550 accounts was common, the accounts were at great risk and ‘the opportunity for fraud existed to a greater degree than with any other Governmental accounts’.  The chief protector admitted there were no real controls on dealings on workers’ accounts, currently totalling almost $14 million.  Around $3.5 million had been taken out of the two Trust funds ‘for departmental purposes’, rendering the deceased estates’ fund technically insolvent.  In 1933 the government centralised the bulk of workers’ savings in Brisbane to ‘minimise fraud by members of the Police Force who are Protectors.’  And it immediately invested over 80% of these private savings – almost $15 million – to raise revenue for Treasury, a lucrative policy for the next 30 years.

From 1935 thumbprinting was mandatory on dealings on Aboriginal accounts, and auditors in 1940 said thumbprints were ‘the only valuable evidence that expenditure is correctly chargeable against individual accounts’.  According to auditors, not only were the prints ‘so carelessly taken’ they were commonly ‘useless for verification’, but protectors often thumb printed blank vouchers.  In 1950 there was still no thumb print database for the hundreds of workers based on the northern missions; and in 1964 there was still no check on the prints for workers controlled from Brisbane or from the settlements.  Auditors warned it was unlikely a worker could detect errors and frauds because they had no knowledge of dealings on their accounts. In 1965 there was still no signature database and therefore, warned auditors, no certainty ‘that witnesses do, in fact, witness all payments’.

In 1971 account holders could finally control their own accounts, but their bank passbooks gave only the balance remaining at that date.  Many people were shocked at how little remained despite decades of work and decades of financial denial.  Those who protested then, and now, were told the government has lost many of the files and cannot explain what happened to their money.  In 2002 premier Peter Beattie told parliament it was ‘impossible to say’ how much each worker is owed.

Employers likewise cheated people of their money.  Pocket money constituted 30-75% of wages, supposedly itemised in a special book.  Despite constant warnings head office refused to check these books: the 1932 inquiry said the system was so easily abused it could ‘quite reasonably be assumed’ workers were being cheated even where books were fully itemised and endorsed; protectors in the 1940s described the system as a farce and a direct profit to employers; protectors in 1956 said the pocket money system was useless, futile and out of control, with workers ‘entirely at the mercy’ of employers who simply doctored the books; auditors in the mid-1960s said the department ‘appears to exercise no direct supervision … over the payment of pocket money by employers’, and the department’s director conceded pocket money was probably not paid ‘in many instances’.   And the potential loss?  For the 1957 year alone the amount which authorities admit could ‘quite reasonably be assumed’ to be swindled was over $18 million, due to government refusal to fix the system.

The Queensland government deprived people of their child endowment and pensions.  It deprived mission mothers by simply cutting state subsidies by the amount of incoming endowment, reaping $40,000 quarterly for Treasury in 1942 from the four Presbyterian missions alone.  It was paid bulk endowment to distribute to settlement mothers, but after 1947 it simply kept all the endowment of children under 5 years old, asserting it was supplying ‘luxury food and clothing’ as well as ‘complete maintenance’.  Yet medical surveys of the time detail chronic malnutrition, children’s diets grossly deficient in milk, vegetables and fruit, and infant mortality rates at 15 times the state average.  Over $51,000 of endowment of Cherbourg settlement mothers was used to build a child welfare centre.

In 1953 the government held endowment of almost $420,000 for Palm Island mothers and the director noted the superintendent had ‘that much money, you don’t know what to do with it’; concerned that the Commonwealth government might ‘find out we are holding that money’ they decided to use $52,000 apiece on domestic science and manual training centres.  In 1954 over $166,000 of Palm Island endowment was used to build a hostel on the mainland plus another $58,000 in 1957 to complete the project.  In the 1967 the government gave settlement mothers less than half the $685,000 it held to their credit: a subsequent survey identified malnutrition as the key factor in deaths of 50 per cent of settlement children under three and 85 per cent of children under four, and stillbirths and premature baby deaths were over four times the rate for white babies.  Only after 1971 – thirty years after its introduction – was endowment paid in full to mothers to use for the benefit of their families.   Pensions payable from 1959 were also ‘diverted to revenue’ by simply cutting rations to pensioners in rural areas, cutting subsidies to the impoverished missions, and withholding two-thirds of the pensions of settlement inmates.  In 1960 the director said over $500,000 of pensions ‘goes direct to Revenue’, rising to almost $720,000 in 1964; a direct profit to the government.

In 2002 the Queensland government said it recognised the suffering caused by the protection controls and offered a maximum of $4000 to an estimated 16,400 surviving potential claimants.  Yet claimants must indemnify the government against legal action on any matter arising under the protection Acts and very few have any documentation to identify what is missing from their accounts.  Most said the offer was an insult and rebuffed it; just over 5000 people were paid.  In 2004 the New South Wales government agreed to pay back trust money identified on its records for individuals but never distributed to them.  In both jurisdictions successful claims depend on documentary evidence and both governments are quick to stress many records have been lost.  Indeed over a third of those who applied for payment in Queensland were rejected because their records were not found.

To my mind it is a disgraceful miscarriage of justice that successful litigation for decades of lost finances hangs on governments producing evidence sufficient to sustain a plaintiff’s charge of fraud or misappropriation.  Meanwhile the whole appalling array of management and accountability failures remains quarantined from scrutiny: inadequate accounting systems, inadequate controls over receipts and payments, inability to determine cash balances, failure to provide account holders with meaningful statements of their accounts.  These words, in fact, were cited by the District Court judge in the US class action of which Dr Cobell will shortly speak, where Indian fund management was described as so chaotic it was ‘akin to leaving the vault door open.’  And that certainly applies for Queensland.  As in the Cobell case, the Queensland government has never accounted to the people for monies held in trust and people have no way to quantify their loss unless a court demands adherence to standard trust practices.  Like the Cobell case, people are seeking to recover what is rightfully theirs.

 

Queensland is certainly not the only state where management of Aboriginal monies should be challenged.  Between 1869 and 1911 the mainland states and the Northern Territory passed laws to control Aboriginal lives and labour.  From 1869 the Aborigines Protection Board in Victoria could dictate where people could live, take custody of their children and control employment through work contracts.  From 1871 wages could be paid directly to the local guardian and could be used by the Board for administrative costs.  In New South Wales the Aborigines Protection Board opened an interest-bearing Trust account for child wages in 1898; after 1909 the Aborigines Board could indenture any Aboriginal child to work and put the  bulk of their wage in the Board Trust Account to be expended ‘in the interest of the child as the Board saw fit’ or paid out on completion of indenture or when the Board directed.  Station managers arranged external work contracts for inmates and controlled their access to savings; after 1936 the Board could take direct control of the wages of any Aboriginal worker and spend it on their behalf.  From 1911 the South Australian chief protector could control the property and finances of anyone of Aboriginal descent; missions and Homes took control of wages of child inmates sent to work.

Protectors in the Northern Territory could demand direct control of wages after 1911, but no minimum wage was set and most pastoral stations paid no cash.  From 1913 a trust account was started to take 10 per cent of the wages of Aboriginal employees of the government; by the time Treasury legitimised this procedure in 1915 improper usage of the trust accounts was already apparent.  From 1918 a portion of rural wages was paid direct to protectors or police and in the same year over $64,000 in 500 ‘unclaimed’ accounts was transferred to Treasury.  Evidence to the 1919 Royal Commission revealed it was easy to corruptly access trust monies and cash, and in 1921 another $49,000 in ‘unclaimed money’ was transferred to Treasury.  From 1927 the government could retain control of the savings of adult men, and in 1933 all female wages were paid direct to the trust account; and I remind you the commonwealth government ran the Northern Territory between 1911 and 1978.  Employers in Western Australia were pressured after 1916 to pay part of Aboriginal wages direct to department control; the department took the whole wage of children under 16 although older children were allowed a little pocket money.  By 1934 the department held almost $135,000 plus another $141,000 sidelined in investments.  From 1936 the government could take control of all property of intestate wards and claim the wages of any absconding or deceased workers.

There is little doubt that the mainland states and the Northern Territory acted as trustees for Aboriginal monies.  Given what we know of Queensland mismanagement, these other jurisdictions must be similarly suspect.  A brief look at how other jurisdictions profited from child endowment only confirms this imperative.  When New South Wales introduced family endowment in 1927 the Welfare Board anticipated ‘a considerable saving to the consolidated revenue’; in 1930 the Board distributed to mothers less than one-third of endowment of nearly $500,000.  A 1937 Select Committee Inquiry was told the Board used endowment for construction and maintenance of station facilities, including managers’ homes; the Board collected commonwealth endowment until 1969.

In the Northern Territory the director of Native Affairs told missions in 1949 they could use endowment on capital works (schools, dormitories, clinics), medical care for mothers and proper diet – all items rightly the responsibility of the government.  The director admitted it was impossible to certify that endowments were legally expended, and in 1952 the director of Social Services reported: ‘Neither the mission station authorities, nor the cattle station managers, are using child endowment payments solely for the benefit of the children in respect of whom it is paid.’  In Western Australia bulk endowment for mothers on government stations was paid direct to the department after 1944, covering around half the government outlay for rations and relief.  From endowment income the government funded a new station on the Fitzroy River as well as staff wages, a practice the commonwealth condemned.  In 1950 the director admitted missions depended for survival on endowment income and this ‘a great saving to the state.’  Pastoral stations also profited, paid bulk endowment as late as 1959 which was used to ration families, previously a cost to the station.

Now endowment and pensions were paid as additional bonuses to improve the well-being of the vulnerable – children, the aged and the chronically ill.  Was it not a breach of trust duty to seize this money to benefit state Treasuries?  Was it not the duty of the commonwealth government to ensure that the states and pastoral stations to whom it delegated distribution, lawfully disbursed the payments?  It seems the commonwealth did not act to stop taxpayers funds being misapplied in Western Australia and the Northern Territory.  Surely this is a breach of trust duties?

 

To conclude, I’d like to return for a moment to Queensland.  There is no doubt the Queensland government saw itself as trustee for the Aboriginal money it held for private individuals.  Legislation stated protectors ‘acted as trustee’ for wages they controlled, successive Annual Reports list  ‘Aboriginal wages held in trust’ and detail ‘Aboriginal Trust Accounts’, and in 1956 the department’s director wrote of his authority ‘in his capacity as trustee for any Aboriginal on whose behalf money is held’.  Given its superior expertise and comprehensive authority, it could be argued the government had a legal obligation to use ‘a greater degree of skill’ than the ordinary man of business in preserving the trust funds in its control, and a requirement for a higher standard of accountability.  I note the US court confirmed in the Cobell case that the duty to account is ‘black letter’ trust law; that losing the records is not a shield against litigation but a breach of that law.  Indeed in 2003 the US court demanded the federal government account for all money and property controlled in trust since 1887.

There is also the wider trust duty adhering to a person or institution that holds a discretionary power to adversely affect the legal or practical interests of another, namely a fiduciary duty.  The vulnerability of Aboriginal people to the abuse of such discretionary powers is the focus of tonight’s paper and also of Trustees on Trial, which investigates the Queensland evidence within the dynamic of national and international case law relating to the fiduciary duties of governments in their management of Indigenous money and property.  Trustees on Trial acknowledges that Australian courts recognise a more limited range of enforceable fiduciary duties, and that the ‘accepted doctrine’ – according to the Federal Court in Cubillo v The Commonwealth of Australia – is that in Australia such duties adhere only to economic interests.  My thesis is that the Stolen Wages constitute precisely such ‘economic interests’.  No other financial institution with such an abysmal record of negligence, refusal to implement standard safeguards and outright misappropriation of trust funds would be allowed to simply pay out a residue or a maximum $4000, dependent on the lottery of surviving records.

 

So I ask the legal audience here tonight: is there not a legal duty to account as breach of trust and/or breach of fiduciary duty?