Research Note Index

Research Note no. 18 2004–05

Commonwealth expenditure on Indigenous affairs 1968–2004

Dr John Gardiner-Garden
Social Policy Section
16 November 2004

Historical Overview

Identifiable Commonwealth expenditure in the area of Aboriginal and Torres Strait Islander (ATSI) Affairs began with the establishment of the Office of Aboriginal Affairs soon after the landmark referendum in 1967. It was relatively low in the first few years but increased significantly with the creation of the Department of Aboriginal Affairs soon after the Whitlam Government came to office in December 1972 (see Table 1). Identifiable expenditure in the area continued to grow through the 1980s (see Table 2).

Table 1: Identifiable Commonwealth Expenditure on Indigenous Affairs,
1968–69 to 1978–79 ($ millions—cash basis)

(a)      Office of Aboriginal Affairs—1967–1971; Department of Aboriginal Affairs—1972–March 1999.
Sources: Annual Report of the main ATSI agency, various years and, for the 'Other Cwlth Agencies' J. C. Altman and W. Sanders, From exclusion to dependence: Aborigines and the welfare state in Australia, Discussion Paper No. 1/1991, Centre for Aboriginal Economic Policy Research.

Table 2: Identifiable Commonwealth Expenditure on Indigenous Affairs,
1979–80 to 1989–90 ($ millions—cash basis)

(a)     Department of Aboriginal Affairs—1972 to March 1990; Aboriginal and Torres Strait Islander Commission—March to June 1990.
(b)     Function absorbed by other agencies from 1988–89.
Source: Annual Report of the main ATSI agency, various years and, for the 'Other Cwlth Agencies' data up to 1984–85, J. C. Altman and W. Sanders, From exclusion to dependence: Aborigines and the welfare state in Australia, Discussion Paper No. 1/1991, Centre for Aboriginal Economic Policy Research.

In 1990 the Department was replaced by the Aboriginal and Torres Strait Islander Commission (ATSIC) and by 1992–93 total identifiable Commonwealth expenditure in the area exceeded $1.4 billion. Except for a slight dip in 1993–94, this figure continued to rise throughout the 1990s (see Table 3). The proportion represented by expenditure on ATSIC fell, however, from 1994–95 onward. The reasons were primarily that several areas attracting increased Commonwealth support shifted from ATSIC to other departments:    

• health shifted from ATSIC to the Department of Health and Aged Care in 1995–96,
• land acquisition and management shifted to the Indigenous Land Corporation in 1995–96 and 1996–97,  
• Torres Strait affairs shifted to the Torres Strait Regional Authority in 1994–95.

A secondary reason was that in the 1996 Budget, ATSIC’s funding was cut.

Table 3: Identifiable Commonwealth Expenditure on Indigenous Affairs,
1990-91 to 1999-2000 ($ millions - cash then accrual basis)

(a)     Estimates.
(b)     Functions absorbed by other agency(ies) from this year.
(c)     Includes Human Rights.
(d)     Excludes Community Housing.
(e)     Includes Community Housing.
(f)     Does not include ABTA/Aboriginal Benefit Reserve expenditure.
(g)     The cash basis figures are the Commonwealth capital injections, but the accrual basis figures are annual agency expenditures. The agency regards itself as self-funding.
(h)     Aboriginal Benefit Trust Account until 1996–97. Includes $0.2 million provided annually under the Ranger Agreement.
(i)      Torres Strait Regional Authority.
(j)      Indigenous Land Corporation.
(k)     Includes $91.0 million for each year for the Aboriginal Rental Housing Programme previously funded under the Housing portfolio.
Source: ATSIC, Annual Report, various years; Addressing priorities in Indigenous Affairs, Statement by the Minister for Aboriginal and Torres Strait Islander Affairs, 12 May 1998.

The 1999–2000 figures continue the trend of ATSIC expenditure representing a progressively smaller proportion of total Indigenous specific programme spending (from 59 per cent in 1998–99 to 56 per cent in 1999–2000).

Although overall expenditure continued to rise from 2000–01 onward, for several reasons it is difficult to compare figures from these years with those from earlier years:

• 1998 was a year of transition from cash to accrual accounting
• from 2000–01 onward the annual Ministerial statements on Identifiable Commonwealth Expenditure on Indigenous Affairs used different categories for representing expenditure
• in 2003 an administrative rearrangement led to most of ATSIC’s funding and responsibilities being transferred to Aboriginal and Torres Strait Islander Services (ATSIS), and
• in 2004 a further administrative rearrangement lead to most ATSIS responsibilities being transferred firstly to an Office of Indigenous Coordination within the Department of Immigration and Multicultural and Indigenous Affairs, and then later to other departments (see Table 4).  

Table 4: Identifiable Commonwealth Expenditure on Indigenous Affairs,
2000–01 to 2004–05 ($ millions)

(a)     ATSIC to 2002–03, ATSIS (Aboriginal and Torres Strait Islander Services) for 2003–04 and OIPC (Office of Indigenous Policy Coordination in the Dept of Immigration and Multicultural and Indigenous Affairs) for 2004–05
(b)     Including Community Housing and Infrastructure programme.
(c)     Including some Community Development Employment Projects.
(d)     Previously Aboriginal Benefit Reserve.
(e)     Previously ATSICDC (Aboriginal and Torres Strait Islander Commercial Development Corporation).
(f)     Includes $91.0 million for Aboriginal Rental Housing Programme.
(g)     Not available because correct figure may include expenditure on functions not specified above.
Source: ATSIC, Annual Report 2000–01 and 2001–02; and Ministers’  Indigenous Affairs Statements at the time of the 2001, 2002, 2003 and 2004 Budgets.

Per-Capita Expenditure

When the total identifiable Commonwealth expenditure on Indigenous specific programs is divided by the total number of people identifying as indigenous (based on census data), per capita expenditure is found to have ranged over the last decade from $4400 to $5600 (see Table 5). This expenditure is not, however, simply 'on top of' that which Indigenous Australians might benefit from by being Australians. Close to one third substitutes for expenditure on mainstream assistance programs (for example Abstudy for Youth Allowance, Community Employment for Newstart, Community Housing for housing under the Commonwealth-State Housing agreement, Aboriginal Legal Aid for general legal aid, Aboriginal Medical Services for Medicare supported services). A further percentage is for services which are arguably the responsibility of other levels of government. At the same time, Indigenous Australians often utilise mainstream services and benefits (for example Pharmaceutical Benefits and Aged Care) at a lower rate than other Australians, and a lot of Commonwealth assistance flows to other groups within Australian society, such as veterans and farmers, with a disproportionately low number of Indigenous members. When considerations such as the above are taken into account, Indigenous Australians are often found not to be receiving, on a per-capita basis, the benefit of  much more expenditure than non-Indigenous Australians.

Table 5: Per Capita Identifiable Commonwealth Expenditure on Indigenous Programs,
1995–96 to 2003–04

(a)     ABS Estimated Resident Population from 1996 and 2001 Census data
(b)     Estimated using a straight projection increase in population between and after the Census
Source: ABS Australian Demographic Statistics (Cat No 3101.0) and funding data as per Tables 3 and 4.

In their paper, Public Expenditure on Services for Indigenous People, (Discussion paper, no. 24, The Australia Institute, Sept 1999), Max Neutze, Will Sanders and Giff Jones found the following:

• per capita public expenditure on education for Indigenous persons in most relevant age groups (3–24 years old) in 1995 was 18 per cent higher than for non-Indigenous, but not out of proportion to need. Many educational services for Indigenous people are in rural and remote locations where the per capita cost of delivering education is great. Many Indigenous students are from families with lower than average incomes, may speak a language other than English at home, may have parents who themselves have had little formal education and may not have the books and facilities at home to facilitate homework. Indeed, if those programs which Indigenous students are particularly likely to avail themselves of, because of their low income, remote location or special needs are left out of the sums, the per capita estimated public expenditure per Indigenous person is only 89 per cent of that for non-Indigenous, and only 52 per cent at the tertiary level
• per capita public expenditure on programs for the unemployed has been 48 per cent more for Indigenous Australians than for non-Indigenous Australians. Contributing to this disparity would seem to be the higher average cost of the general employment programs in which Indigenous people participate, specifically those for the long‑term unemployed and Community Development Employment Projects (CDEP), the latter also having broader community development objectives. When that part of CDEP which is over and above the Newstart allowance is left out of the equation, per capita general employment programs expenditure is 35 per cent less for an Indigenous unemployed than for a non-Indigenous
• per capita expenditures on publicly funded health services in the years of 1995–96 and 1998–99 was more than 50 per cent higher for Aboriginal and Torres Strait Islander people than for non-Indigenous. Per capita privately funded expenditure in both these years was much higher for non-Indigenous people making total per capita health expenditure (all levels, all sectors private and public), only slightly higher for Indigenous people (about 8 per cent in 1995–96, and 22 per cent in 1998–99). The gap in per capita public expenditure closes dramatically when comparing Indigenous and non-Indigenous people with comparable incomes and in comparable regions
• the average Indigenous household receives between 8.5 and 25 per cent more than the non-Indigenous in benefits from public expenditure on housing (for example through funding for public and community housing, through rent assistance paid to eligible tenants and through the favourable tax treatment of owner occupied housing). Contributing to this discrepancy is, however, the fact that a much higher proportion of Indigenous households than non-Indigenous, live in public housing. The benefits are on average the same for Indigenous and non-Indigenous tenants. Also, as Indigenous households are larger on average than non-Indigenous, when the benefit from public expenditure is expressed as a per capita benefit, the margin shifts to favour the non-Indigenous by between 9 and 21 per cent.

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