Whose Accountability?

 

The Aboriginal Welfare Fund was set up in 1943 enabling the government to continue previously unauthorised usage of Aboriginal earnings and enterprise to fund administration and development.  Often over 40 per cent of department costs were carried by the Fund, and an estimated $300-$500 million was processed through it before trading was frozen in the early 1990s.   Today the Queensland government is pressuring Aboriginal people to accept the $8 million remaining, plus a rumoured $180 million as a final settlement of present and future claims against all aspects of the financial regime.  To assess the equity of such an offer requires background knowledge also of the massive financial experiment in which it was embedded.

Between 1897 and the 1970s almost half the state’s indigenous population lost all control over where they could live, their housing, health, children, education, labour and personal savings.  Financial deprivation of Aboriginal families was engineered through two separate, although interlinked, strategies. The government appropriated Aboriginal earnings and also diverted them into Trust funds without the consent or knowledge of account holders.  Then by sidelining the bulk of private savings and Trust funds into investments, the government generated income to minimise input from consolidated revenue.  The Trust funds were routinely misused by governments to meet departmental expenditure, a fact clearly stated in a range of highly critical internal inquiries and audit reports.

The government controlled employment, wages and savings in a system rife with frauds, embezzlements and duplicity by employers and police protectors.  Government policy of keeping all dealings secret from account holders led to an official warning in 1932 that ‘the opportunity for fraud existed to a greater extent than with any other Government accounts.’¹  Yet the system was never changed.  A subsequent auditor remonstrated that in 60 years of operation, no procedures ever ensured workers received their full pay.²  When people finally got their bank books in the early 1970s many found little left in their accounts

Deprivation occurred not only through negligent oversight of wages and savings but also by expropriation of Trust monies.  The Aboriginal Protection of Property Account (APP) collected outstanding wages of deceased or missing workers from 1902, but often only 25 per cent was distributed to beneficiaries.  Meanwhile this Fund was routinely misused for wages, grants to missions and improvements on government settlements.  The Aboriginals Provident Fund (APF) was started in 1919 simply by taking levies from workers’ wages.  But it was used to subsidise existing ration programs, in breach of its intended use to provide additional relief during hardship or drought; outlays also covered departmental costs such as removal expenses.  In some years under 10 per cent was expended on relief to destitute contributors.

In addition to improper payments, and without authorisation,³ the government had, since the early 1920s, claimed large amounts of Trust funds were ‘idle’, and diverted them into revenue-raising investments. This strategy saved consolidated revenue almost $750,000^* annually ‘towards the cost of maintaining the Aboriginal community as a whole’ during the depression years, when a further $3.5 million and almost $1 million from private savings was simply taken ‘for departmental purposes’.⁴  None of this money was ever repaid.  Those whose money it was, meanwhile, lived in abject poverty.

The easy conversion of Aboriginal monies to revenue generation prompted the centralising, in 1933, of all savings balances into the Queensland Aboriginal Account, a change publicly lauded as a tactic ‘to mimimise fraud by members of the Police Force who are Protectors’.⁵  Paying of wages directly to protectors and severe limitations on withdrawals had generated a huge pool of private savings of around $14.5 million.  Now under head office control, over $12 million was immediately committed to investments, bringing revenue from Aboriginal monies to over $900,000 a year.⁶

Successive internal inquiries and audits slammed habitual improper outlays on items which ‘are definitely charges against consolidated revenue’ such as over half a million dollars from private funds – APF levies and investment interest – diverted through the department’s operating account to cover an ‘insufficiency of departmental votes’ in 1941.⁷  The head of the department protested that ‘much of this taxation is an injustice’; the minister was informed cessation of unauthorised outgoings would require an increase of almost one million dollars in the annual vote; yet Cabinet decided to ‘adhere to present procedures.’⁸

In this context the Aboriginal Welfare Fund was created in 1943 to legitimise any dealings which could be claimed as ‘for the benefit of Aboriginals generally’.  Started with an injection of around $2.5 million and a small ‘welfare’ balance from the Standing Account, this Fund was controlled by Treasury, rather than the department.  It absorbed the APF deductions, any ‘surplus’ in the APP, profits from investments and from departmental enterprises such as cattle, produce and settlement stores, and child endowment of children under five on the settlements.  Settlement enterprises were henceforth bankrolled through the Welfare Fund, although grants to missions, removals costs and capital works remained government responsibilities.

Clearly the government saw the Welfare Fund as a key to self-funding Aboriginal administration and minimising revenue input.  Expenditure from the Fund soon equated to 48 per cent of the total department Vote (or 81 per cent exclusive of administrative wages),⁹ but was so crudely compounded between 1943/63 as to mask identification.¹⁰  To maximise revenue, private savings stockpiled for investment soared from $10.9 million in 1946 to $13.3 million in 1962; figures which incisively quantify Aboriginal deprivation.¹¹

Operation of the Welfare Fund was characterised by unauthorised expenditure and frequent insolvency.  Forced to meet development costs and farm wages – described by the director as ‘legitimate Vote expenditure’ – on two cattle farms acquired in the 1940s (partly with ‘surplus’ private savings), the Fund was in deficit by 1948.¹²  Yet the Fund continued to be used for government liabilities: in the mid-50s wages for white overseers and $48,000 for land for a hostel near Townsville (later constructed with $150,000 of Palm Island child endowment funds), in 1959 for trucks and launches, and in 1963, after covering reafforestation at Hopevale mission, sewerage at the Aitkenvale hostel and a new store on Palm Island, the Fund was again in debt,¹³ thereby proscribing legitimate Welfare Fund needs.

The level of private subsidisation of this government Fund is measurable by the revenue slump (down almost 78 per cent from $613,345 in 1965 to $135,270 in 1968) after the department ceased levies on Aboriginal wages and gave individuals control of their own bank accounts.  Retail stores then became the main focus, revenue jumping almost 70 per cent from $1.85 million in 1965 to $3.13 million in 1968¹⁴ when cash economies were initiated on all reserves, replacing the 70-year ration system.  Set at 20 per cent below the dole, the ‘wage’ for compulsory work was retrieved through the stores courtesy of a 40 per cent profit margin.  For many years during the 1970s beer canteen takings were also absorbed into the Welfare Fund.

Outlays from the Fund during the 1970s were skewed towards development: enterprises such as bakeries, piggeries, potteries and artefacts were established on the settlements, and the director boasted in 1971 that his department was the biggest ‘cattle baron’ in Queensland, with over $13.5 million of stock generating $1.7 million in sales.¹⁵  Yet housing and amenities remained deplorable.  Under the 1972 regulations child endowment, unclaimed estates, profits and rents went to the Welfare Fund; Queensland was frequently castigated for charging excessive rents on federally-funded welfare housing.

The Welfare Fund wage bill quadrupled in 1971-72 after the department was ordered to pay full wages to workers on federal housing (CSHA) projects, then rose almost seven-fold between 1972 and 1981¹⁶ as the state buckled to federal pressure to increase remaining illegally low wages.  Separate Welfare Fund wage figures are not available after 1982 when Cabinet refused to directly fund further wage increases,^# but large sums commence to be listed under housing repairs and maintenance at a time when such programs were severely curtailed due, in part, to mass sackings.  Managers were instructed to ‘forget about welfare’ and aggressively pursue unpaid rents, even where, as they protested, there was a five-year backlog for major repairs.  Overcrowding and social upheaval increased.

Several Welfare Fund enterprises were running losses by the early 1980s; the ‘cattle baron’s’ venture was in the red every year after 1975, losing $2.4 million to 1980 and a further $11 million to 1990.  Investments were cashed in to maintain operations, and the deteriorating position was also camouflaged by over $800,000 garnered from sale of Comalco shares in 1987 (which had been earmarked as a lending pool for private initiatives) and deployment through the Fund of over $200 million of CSHA grants in the decade to 1990.  Lack of basic accountability for these massive sums, (annual expenditure often entered only as ‘sundry town houses’), raises deep concerns as to probity of transactions.  Analysis reveals a ‘surplus’ in unspent CSHA funds of $7.5 million between 1980/84 and a further ‘surplus’ of $11.25 million from 1985/90,¹⁷ no doubt attracting high interest on the short term market – a bonus retained by Treasury.  When communities finally became self-controlling in the later 1980s, the department dismantled and removed existing enterprises, except the stores and canteens.

Public agitation over the Fund prompted an internal inquiry in 1991.  Conclusions were that many projects bankrolled by the Fund were probably economically unviable, that no register existed of the ‘considerable asset base’ and that ‘unwise decisions may have been made’ by the executive officer.  Establishing illegality was said to be problematic given incompetent account keeping and consequent lack of evidence.

Aboriginal Queenslanders have been condemned to poverty while the government played banker and investment guru with money raised from their earnings and enterprise.  Flawed accountability and negligent record keeping is the government’s main line of defence against litigation for redress.  However it is a basic duty of trustees to keep full and detailed accounts; indeed, in countless Annual Reports the director stated he was doing just that.  Surely the onus is on the government to provide evidence that it has fulfilled this requirement?  And surely the state, having usurped powers over these designated wards of state, had a fiduciary duty toward them?  The basic premise of a fiduciary relationship is that the trustee must at all times act in the interests of the beneficiaries, and is not entitled to profit from the fiduciary relationship.  This last point should certainly be challenged: for decades Queensland governments have clearly profited by massively withholding private savings from those in desperate need.

Settlement means silence.  It would enable today’s government to clamp an air-tight lid on a century of engineered financial deprivation.  Aboriginal destitution would remain, in most eyes, an Aboriginal problem.  The vast extent to which Aboriginal labour has subsidised department operations, rather than vice versa, would remain a shameful secret.

*All amounts are approximated to present day value.

Endnotes