Productivity Commission misleads on Indigenous expenditure

The Productivity Commission’s second Indigenous Expenditure Report, released earlier this week, shows that Commonwealth, state and territory taxpayer spending on Indigenous Australians has risen by 16% from $21.9 billion in 2008–09 to $25.4 billion in 2010–11.

Indigenous-specific expenditure – spending on Aboriginal and Torres Strait Islanders which is in addition to the expenditure on education, health, welfare, etc. on all Australians – only rose from $5.1 billion in 2008–09 to $5.5 billion in 2010–11. This seems a realistic increase given that the Indigenous ‘bush’ population that attracts most Indigenous-specific expenditures has been relatively stable. But although there has been some improvement in these ‘bush’ communities – for example, reduced access to unlimited alcohol, more income management, and some new housing – most are still Third World ghettos.

The overall increase in Indigenous expenditure principally reflects the high Indigenous population number that the commission used to develop the expenditure estimates.

According to the commission, the Indigenous population increased from 545,202 in 2008 to 575,297 in June 2011. But this count is 26,927 higher than the number in the Australian Bureau of Statistics’ (ABS) 2011 Census, which identified 548,370 Indigenous Australians in August 2011.

Because detailed government expenditures are not available, the modelling used to calculate expenditure estimates relies on population size.

The ABS’ post census enumeration is likely to change the number of Indigenous Australians to adjust any possible over-counting in remote locations, but this is unlikely to offset any increases in urban locations. Yet, whatever the post enumeration outcome, the principal Indigenous population increases between 2006 and 2011 were in capital cities and other urban areas, with Canberra leading with a 33% increase.

The increase in the urban Indigenous population reflects increasing Indigenous self-identification. Children of mixed marriages are identifying as ‘Indigenous’ as families take pride in their ancestry. These families are part of the majority of urban Aboriginal and Torres Strait Islanders – 65% of the Indigenous population – who go to work, send their children to mainstream schools, buy their own homes, and pay their taxes. Their claims on government support are similar to other working Australians. The report’s estimates of per capita Indigenous government expenditure ($44,000) versus non Indigenous ($20,000) do not reflect these working families’ characteristics.

The estimates imply egregiously high and ineffective expenditures on the 35% welfare dependent Indigenous population, of which probably less than 15% live in ‘bush’ communities.

The commission has consistently underestimated the proportion of Aboriginal and Torres Strait Islanders working in capital cities and regional towns, ignoring their considerable contribution to the mainstream economy and society. It has ignored NAPLAN evidence that most Indigenous students reach national minimum literacy and numeracy standards, and has exaggerated Indigenous alcoholism, violence and child neglect.

The 2012 Indigenous expenditure estimates seem to exaggerate Indigenous government expenditures. Such sums certainly do not reach Aboriginal and Torres Strait Islanders in need.

Helen Hughes is a Senior Fellow at The Centre for Independent Studies.