Taken on trust….
The evidence I will share with you tonight is taken from documents which are held by the Queensland government – or were held by them in 1990 when I researched my PhD which examined how governments controlled Aboriginal people in this state. Although all Australian legal systems derived from British jurisprudence, each state operated independently in regard to its treatment of the Aboriginal population. (Amounts are approximated to today’s value; full sources for the evidence is in Trustees on Trial.)
In 1897 the Queensland government passed The Aboriginals Protection and Restriction of the Sale of Opium Act giving itself the power to declare anyone of Aboriginal descent a ward of state and confine any person or family on a controlled reserve. Leading police officers in each district were nominated as protectors. This surveillance regime operated for 80 years during which time the government dictated where, when and on what wage children and adults could be indentured to work; in fact no Aboriginal person could work except under government-controlled ‘agreements’.
Regulations in 1899 required employers to provide shelter, blankets, rations and clothing but made no provision as to how this would be enforced. Protectors or JPs certified that the agreement had been ‘explained’ to the worker ‘who appeared to me to understand the same’ and over 1200 agreements were processed in the twelve months to June 1900. Under the Amendment Act (1901) the government assumed the power to manage Aboriginal property including retaining or selling it; protectors could demand direct payment of workers’ wages and supervise their spending. Minimum wages were set ranging from children under 12 years and including domestics. Aboriginal stockmen were paid only one-eighth the white rate although they were often described as more highly skilled than their white counterparts.
From 1903 protectors took direct payment of all female wages; these were banked in the name of each employee, with the protector as trustee. He was deemed to be a public accountant under the Audit Act (1874) and had to keep a ‘proper record of wages’ available for inspection. The protector was authorised to expend money on the worker’s behalf and to supervise withdrawals ‘to protect the interests of the employee’, commonly by way of vouchers at local stores. Wages of workers based on missions or settlements were similarly paid direct to the superintendents and accessed through store vouchers on the communities. Workers could only access their money by asking the protector or superintendent, and people, even with large savings, were routinely refused. The government knew fraud on workers’ accounts was rife from as early as 1904 when it introduced thumb printing to reduce it.
In 1914 the department increased minimum wages and demanded every worker’s wage be paid direct to local protectors, lifting government holdings of Aboriginal earnings to almost $4 million. In 1919 the government lobbied to exclude Aboriginal workers from the Station Hands Award, striking a deal with the pastoral industry to freeze Aboriginal wages at 66% the white rate despite continuing testimonials confirming the preference of many employers for Aboriginal workers. Workers had to maintain their families on this fractional wage; failure to do so triggered removal of children from families or deportation of families to a reserve.
The government controlled savings of more than $6 million in over 6000 accounts in 1919, when new regulations imposed a tax on gross wages of 5% (single) and 2.5% (married), although it didn’t inform workers of this confiscation. This brought almost $300,000 into the new Aboriginal Provident Fund by 1921, ostensibly for sick or unemployed workers; but a public service inquiry in 1922 revealed the government had taken large amounts from both this Fund and a second fund holding deceased estates and unclaimed accounts, 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 was rejected and frauds continued.
An inquiry in 1932 said supervision of accounts was ‘totally inadequate’ with 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. The chief protector admitted the rarity of inspections allowed a culture of dishonesty, but he again refused to allow workers to check their accounts. The government had taken around $3.5 million from the two Trust funds ‘for departmental purposes’, rendering the deceased estates’ fund technically insolvent. In 1933 the bulk of workers’ savings was centralised under head office control in Brisbane, ostensibly to ‘minimise fraud by members of the Police Force who are Protectors.’ Almost $15 million – over 80 per cent of these private savings – was promptly transferred to investment to raise revenue for Treasury, a lucrative policy continued for over 30 years. Protectors now sent a monthly cheque to head office of total wages received, and withdrawals were listed on individual cards for reconciliation in Brisbane. In reality protectors’ daily dealings on Aboriginal funds continued largely unchecked, and the government admitted most account holders were ‘illiterate and unable to comprehend the system of recording and investing their funds’.
In 1935 thumbprinting was reintroduced as a check on dealings on Aboriginal accounts. Although auditors stressed in 1940 that thumbprints were ‘the only valuable evidence that expenditure is correctly chargeable against individual accounts’ they found many prints were ‘so carelessly taken’ they were ‘useless for verification’, and only one-third were checked against identification cards. By 1941 the department controlled over 18,000 people; a new investigation said records at head office were hopelessly muddled, accounts were not properly kept and no effective checks were in place. Although the Criminal Investigation Branch (CIB) subsequently checked the prints, auditors complained protectors commonly held thumb printed vouchers for goods not yet provided or not supplied at all.
Again in 1950 auditors stressed the high importance of accurate witnessing ‘owing to the more or less illiterate condition of natives subject to the Act’, yet the department had no database to check thumbprints on the accounts of the hundreds of workers based on the northern missions and in 1964 there was still no double check for workers controlled through the Brisbane office or from the settlements, nor for child endowment accounts holding almost $450,000 which had operated since 1942. Auditors warned it was highly unlikely a worker could detect errors and frauds because all knowledge of dealings on their accounts was denied them. In 1965 there was still no signature database and therefore no certainty ‘that witnesses do, in fact, witness all payments’; public service inspectors warned the accounts were therefore exposed to ‘potential loss by fraud’. In response, the department introduced only sample signature checks.
Passbooks and child endowment books were issued from February 1966 but only after 1971 could account holders finally control their own accounts. The bank passbooks gave only the balance remaining at that date and many people were shocked at how little remained despite decades of work and decades of financial denial. It may well be true, as the government now claims, that all balances were paid out in the 1970s, but these balances of course conceal the decades of loss through the entrenched flawed management so clearly detailed by auditors, internal investigations and on administration files. People 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.
I’ll turn now to the matter of pocket money. During its 70-year contract labour system the government allowed employers to pay into workers’ hands between 30-80% of wages, supposedly detailed in a special book. These books were never checked by head office although it knew fraud was rife. 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. Auditors’ demands the books be returned for inspection by head office were rejected as too costly. 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’. In a workforce numbering annually between 3000 and 5000 people in the 50 years to 1968, potentially an average of 50% of their wages was lost ‘in many instances’. That equates to over $18 million for just the 1957 year, which authorities admit could ‘quite reasonably be assumed’ to be defrauded from the grossly discounted wages because the government refused to apply essential safeguards.
Turning now to the matter of child endowment and pensions. Endowment was paid by the Commonwealth from 1941. Queensland’s department of Native Affairs immediately applied to receive the endowment direct and control its distribution to mothers on the settlements. It also cut government grants to missions to reflect the endowment income, effectively profiting by $40,000 quarterly in reduced outlays to the Presbyterian missions alone. From mid-1947 the government retained the full endowment for all settlement children under 5 years of age, asserting it was supplying ‘luxury food and clothing’ as well as ‘complete maintenance.’ But this is belied by medical surveys of that time that show the settlements were mired in poverty: there was chronic malnutrition, children’s diets were grossly deficient in milk, vegetables and fruit, and infant mortality rates were 15 times the Queensland average. And one year later, when the stockpile of endowment for settlement mothers was $240,000, these funds were earmarked for dormitory fridges and recreation halls.
In 1951 over $51,000 from endowment funds was used to build a child welfare centre at Cherbourg settlement. In 1953 the endowment stockpile for Palm Island mothers stood at almost $420,000 and the director said 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 allocate $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 1966/67 year the government gave settlement mothers less than half the $685,000 it held to their credit and from 1968 it processed endowment through the Aboriginal Welfare Fund, replacing revenue lost when the 1919 tax ceased. Meanwhile the children sickened and died: a 1970 survey found malnutrition was 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 reducing rations to pensioners in country areas, reducing subsidies to the impoverished missions and withholding two-thirds of the pension for ‘clothing and incidentals’ for settlement pensioners. In 1960 the director said almost $525,000 of pensions ‘goes direct to Revenue’; this rose to around $720,000 in 1963/64, a direct profit to the government which previously met all pensioner needs. Auditors warned there was no provision in the Acts or regulations for such ‘contributions’ from pensioners to consolidated revenue, but the government continued the practice while widows, invalids and the elderly struggled to survive.
These are the Stolen Wages, although I haven’t mentioned the failure to distribute workers compensation and deceased estates, and I haven’t mentioned government raiding of private savings accounts to pay for amenities on its country reserves. Do not forget that the Stolen Wages regimes are grounded in, and themselves compounded, the unquantifiable emotional and social cost of fractured families, unremitting and largely unrewarded work, lousy conditions and physical and sexual abuses – these are detailed in Trustees on Trial. These abhorrent regimes of financial dispossession occurred around Australia, and are the focus of the current Senate committee of inquiry into Stolen Wages nationally.
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. The financial dispossession of parents and grandparents is simply disowned. Claimants must indemnify the government against legal action on any matter arising under the protection Acts and very few people 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 what is identified on its records as money held in trust for individuals but never distributed to them; no indemnity is demanded. But successful claims in both states are dependent 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 on those grounds.
To my mind this is a disgraceful miscarriage of justice. Successful litigation for decades of lost finances is dependent on the government’s ability to find sufficient scraps of evidence 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 receipt and disbursements, 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 trust fund management was described as so chaotic it was ‘akin to leaving the vault door open.’ As I hope you now realise, that certainly applies for Queensland. As in the Cobell case the Queensland government has never accounted to the people for monies it held for them in trust, and people have no way of finding out unless a court compels it to adhere to standard trust practices. Like the Cobell case, people are seeking to recover what was rightfully theirs.
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 detailed ‘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, and the fact account holders were denied knowledge of dealings on their funds, 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 primary breach of trust 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 has been 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, an avenue I explore in more detail in the current issue of the Alternative Law Journal. 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 in reparations, dependent on the lottery of surviving records.
So I ask the legal audience here tonight: given the evidence to hand, surely there is a legal duty to account as breach of trust and/or breach of fiduciary duty?