Forrest, Indigenous Employment And Closing The Gap

In July 2014, mining magnate and Indigenous advocate Andrew Forrest handed the Abbott Government a radical new report on welfare distribution and income management among Indigenous Australians. The Forrest Report also makes recommendations on ways to enforce attendance at school and other social dysfunction in many poorer communities and seeks to make recommendation to tackle Indigenous unemployment. The Abbott Government is pledged to close the gap for Indigenous Australians. Which has accentuated the significance of the Forest Report. Following on from the release of the report, on Tuesday 5 August 2014, The Hon Alan Tudge MP –

Parliamentary Secretary to the Prime Minister with responsibility for Indigenous Affairs – addressed The Sydney Institute to outline the government’s approach to Indigenous employment and “closing the gap”.

FORREST, INDIGENOUS EMPLOYMENT AND CLOSING THE GAP

ALAN TUDGE

Last Friday, Andrew “Twiggy” Forrest delivered to the government one of the most ambitious reports in a generation. It outlines a blueprint with the goal of ending the disparity between indigenous and non-indigenous Australians. It is huge in breadth and is confronting to governments, business and community leaders alike. The Prime Minister called it a “watershed” moment; a marker in history.

I would like tonight to outline some of the key ideas that are in this report and some of the government’s thinking on them. I shall touch on how we might convert these ideas from simply being a paper recommendation to something that might indeed live up to its stated ambition.

Context of the Forrest Report

Before doing so, let me give you some context.

The biggest social problem in Australia is the plight of Aboriginal and Torres Strait Island people. On every measure, they fall behind other Australians. Life expectancy is 10 years behind. Imprisonment is 15 times higher and 31 times higher for indigenous youth. Fifteen year-old indigenous students have fallen two and a half years behind. The indigenous employment rate is 30 per cent lower.

In remote communities, the data is catastrophic. Despite the volumes of cash in welfare payments, there is impoverishment in many communities more akin to a poor developing country.

If Helen Hughes was with us tonight, she would remind me to not overemphasise the average results as they hide the fact that there are also many indigenous people who are middle class: working in everyday jobs, buying their own homes and accumulating wealth and possessions. Warren Mundine also makes this point, rightly pointing out that indigeneity does not equal disadvantage.

Nevertheless, the economic and capability gaps cannot be ignored.

In recent decades, there has been increasing good will, the end to formal discrimination and a steadily increasing financial commitment towards indigenous advancement. But despite this, we have not collectively had the progress that we would have liked. In fact in many locations, the social fabric has got worse.

Initially governments tried via budgets to provide materially for indigenous people and expected them to maintain traditional or modernised lifestyles of their choice that had no or little economic rationale. When this didn’t work, we have tried to address the problems with programs.

In many locations, the dominance of programs over normal development has been so complete that our policies amount to a large-scale controlled experiment inflicted upon 100,000 indigenous people who have been immersed in passive welfare for decades.

There has been a simplistic one-to-one correspondence between symptom and response. If kids come to school hungry, governments start a breakfast program. If they are bored we start a sport & rec program. If women feel unsafe, we start a women’s shelter. Noel Pearson facetiously asks that now that we have a life-promotion program, when will we have the breathing program?

Last year an Auditor-General’s report found that a typical indigenous community is serviced by one government program for every five members. Wilcannia in western NSW has 102 funded activities from 18 state and federal agencies, with a further 17 activities proposed. The population is 474 people.

During the last decade, funding on Indigenous Affairs increased by 80 per cent in real terms. The average government expenditure per indigenous person is $44,000 and probably twice that in remote communities. In recent years, we have introduced elements of intervention in the Northern Territory rather than unconditional service delivery. This lead to some improvements, but the program-based approach was still the foundation of policy.

In each community, there is a whirlwind of service providers flying or driving in and out, and the social and economic indicators don’t improve. We never as a nation took a step back to draw the obvious conclusion: we are not going to close the gap with more programs. If this was the case, we would have closed the gap years ago.

Instead, we need to be honest about the elephant in the room: in the modern world, communities are functional and prosperous if kids go to school in the morning and parents go to work. If they don’t, there is systemic poverty and dysfunction. No service delivery or income support can prop up a community if kids aren’t at school and the majority of adults aren’t employed.

It is based on this insight that the Prime Minister has set the priorities for the federal government: ensuring kids are in school, adults are in work, and that communities are safe.

Underpinning these priorities is a bed of governance reform: amalgamating 150 federal programs into five, placing them all within the Prime Minister’s Department and devolving decision-making power to the regional level so that there can be more local flexibility and greater empowerment of local leaders. The “Empowered Communities” initiative will add to this.

Alongside this, we have an objective of constitutional recognition of Aboriginal people. Together, these three practical priorities – kids to school, adults to work, safe communities – alongside greater local empowerment and constitutional recognition, constitute our agenda for indigenous advancement.

They aim to ensure Australians have the opportunity, capability and responsibility to reach their full potential as individuals in a modern Australian society, while acknowledging and supporting their desire for a distinct indigenous identity.

Andrew Forrest was engaged to advise on the practical priority of getting adults working, but his report is broader than this, and picks up many parts of the overall agenda. Forrest was chosen to head up this review in part because of his own success in training and employment within his own company, Fortescue Metals.

But while his report is influenced by his own experiences, his recommendations go well beyond just training and employment programs. He has gathered ideas from some of the best indigenous thinkers in the country as well as academics and business leaders. So while it is a report in his name, many of the concepts that he recommends were informed by key thinkers, including Noel Pearson, Ian Trust, Marcia Langton, Warren Mundine and Fiona Stanley, as well as consultations with hundreds of others.

The strength of the report is that it pulls the ideas together into a framework for government – all with the single objective: getting more adults working.

Education

The starting point is education, and this is the opening chapter of the Forrest Report.

A fundamental but often overlooked fact is that within each level of educational attainment above Certificate III, indigenous people have the same job outcomes as non-indigenous people. In fact indigenous women with tertiary degrees do better than their non-indigenous peers.

This is important because it suggests there’s no or little element of discrimination contributing to the employment gap. It’s more a matter of getting sufficient numbers educated and trained, and in some cases geographically mobile. The very first thing we need to achieve for Indigenous children is therefore a better start in life; in fact a better pre-natal environment.

The Abbott Government agrees with Andrew Forrest’s strong recommendations for all governments in Australia to work together to achieve this as a matter of urgency.

There are estimates that in some remote communities the rate of Foetal Alcohol Syndrome caused by excessive drinking during pregnancy is one in four. This has to be addressed through better early pregnancy assistance such as Forrest and Fiona Stanley recommend, but also could be through curbing alcohol, including the use a cashless debit card for welfare payments if necessary.

There is a lot of talk about the rights of people to spend their welfare money as they please. I would like to see equal concern for the rights of children to be born healthy. At the next step in a child’s development, enrolment and school attendance, much needs to be done. Indigenous school attendance is 10 percentage points lower than non-indigenous attendance. In remote areas, average attendance is 60 per cent. Some schools consistently have attendance rates in the 40s or below. It’s important to understand that 60 per cent attendance doesn’t mean that kids at least learn 60 per cent of the course. Experts say that 80 per cent attendance is the minimum for learning.

In remote Northern Territory, a shocking 75 per cent of students attend less than 80 per cent of the time. That is, three quarters are not attending often enough to learn. This is why the government is so determined to work with community leaders and schools to change this.

The first step has been to put in place attendance officers in 73 remote schools. These are local people who literally go and collect kids from their homes and take them to school. The number of attending students has risen 17 per cent as a result of this. But it will not be enough.

The states and territories need to do more, including enforcing their own truancy laws, as Forrest suggests. Despite the figures I told you, there were probably fewer than 20 truancy fines issued last year. There needs to be consequences on parents who fail to send children to school and we will step in if the states and territories do not.

We are not being overdramatic in this. It is simply the basic fact that if kids aren’t in school, another generation is destined for disengagement, welfare dependence, and in many cases imprisonment. Attendance is the start to good schooling, but effective instruction goes hand in glove.

Ideally we would put the best teachers in the lowest achieving schools as Forrest suggests. While the states and territories should work towards this admirable goal, I am sceptical that this can be achieved in the near future. In the Northern Territory, the average time a teacher lasts in a remote school is 7 months. Even if we could double this, an extraordinary teacher would hardly have time to turn a school or class around.

We therefore need a teaching methodology that is easily transferable from one teacher to the next and not dependent on always having the best there for a long period of time. In part, this is why we are funding the organisation, Good to Great Schools, led by Noel Pearson, to roll out the Direct Instruction method beyond Cape York Peninsula. In Cape York, where I worked as deputy director under Pearson at the Cape York Institute, I have seen how Direct Instruction can reinvigorate a school such as Aurukun Primary School.

The direct instruction method is based on several core principles, including having tightly scripted lessons where teacher discretion is minimised; grouping students by ability not age; and regular and frequent testing so that problems are picked up early and students only advanced to a higher level when there is mastery of the previous one. These principles appear common sense but in many schools, it would constitute a radical change.

Some will argue that the answer to the employment problem finishes here; that our entire focus should be on getting the next generation educated. Certainly, as I mentioned earlier, if kids are healthy, attend and learn like anyone else, they will be employed like anyone else. But I caution against this “generation change” concept. Firstly, it’s not right in principle to draw a line between generations and give up on the parents.

Second, if adults are idle, there are too many distractions for kids to succeed. We have heard this from our local School Attendance Officers. We need whole communities to be employed or at least active in order to get school attendance up and to give children the peace to thrive. And this where the rest of the Forrest Review comes in.

The training system and VTECs

Before beginning his review, Andrew Forrest’s main thinking (and critique) in relation to indigenous employment concerned training and employment services. I can assure you, Forrest doesn’t hold back in the report! And by and large, his criticism is justified.

The training system is disconnected from employer demand. Training for training sake is rife particularly for Indigenous people. Eighty-nine per cent of training funded through the job network for indigenous people is in Certificate I or II, which employers often don’t value.

I have met Indigenous job seekers with ten certificates in their hand, but no job. An Aboriginal mayor once joked that the houses in his community were falling apart. A social housing bureaucrat responded that the government would look at it; obviously a major housing program was needed. “No,” said the mayor, “it’s our framed certificates pulling the walls down!”

Forrest recommends no federal funding go towards Certificate I or II courses, unless they are explicitly linked to a job. He suggests that Certificate III and IV also have tighter links to employers, through employer bodies certifying and assessing courses. These changes are directionally where the government would like to go. Training must have stronger links to jobs. It is a waste of money and people’s time to do training with no outcome.

One of the real innovations that Andrew Forrest developed and that the government has funded is the VTECs – the Vocational Training and Employment Centres. The concept of a VTEC, which is so different to ordinary training and employment services, is that the training is directly linked to a job outcome. If a job is not secured, the training provider does not get paid. It is a very powerful incentive to get a person through from unemployment to work.

We committed to 5,000 VTEC places at the election. This will be delivered by year’s end. That’s 5,000 training spots into guaranteed jobs for unemployed indigenous people. Forrest suggests converting our entire Job network system – the JSA’s into something more similar to VTECs. Our draft JSA reform proposals place much greater emphasis on outcome funding. Forrest’s report may give it a further nudge.

Boosting demand

A section of Forrest’s report, which has received little public attention to date, has been the recommendations to boost demand for indigenous employees. This is the toughest section for classic liberals who tend to reject suggestions of targets or special measures. Forrest’s argument is pragmatic and based on the data: (a) the employment gap is already too large and is growing and (b) it will take too long to wait for early childhood and education measures to flow through. I would add a (c) as outlined above: that without more adults working, achieving education success is so much harder.

The actual employment figures are stark. Between 2008 and 2013, the indigenous employment rate fell from 48.2 per cent to 45.9 per cent. At the same time, the non-indigenous employment rate rose to 75.6 per cent. More indigenous people depend on welfare for their income than a wage. In remote communities, fewer than one in five young adults are in training or work.

Even in a mining state like Western Australia, where thousands of Aboriginal people have been given opportunities, the proportion employed has dropped. We are kidding ourselves about making meaningful progress on other social indicators if these figures don’t change.

Forrest outlines four suggestions to boost demand. First, to increase public sector employment targets to 4 per cent, from the present 2.7 per cent. Second, to support the top 200 companies to boost their indigenous employment rate. Third, to use government procurement as a lever to support indigenous business creation, and therefore wealth. And fourth, to create a new tax-free status business for those Indigenous owned businesses that employ a very high proportion of unemployed indigenous people.

Collectively these would significantly boost the number of indigenous employees. There will be debate about the appropriate targets in this area. Already for example, the public sector has an employment target of 2.7 per cent. This is about parity with the underlying indigenous population.

I have argued publicly that our ambition should be parity across the board. Some companies already have this stated ambition. The government could do more to support others to reach this goal. The current private sector employment rate is only 0.5 per cent.

Similarly in procurement. The Commonwealth government alone buys goods and services for $39 billion every year. Only $6.2 million worth of contracts were awarded to indigenous businesses in the previous financial year – that’s 0.01 per cent.

In the United States, five per cent of federal procurement has been set aside for small minority businesses by law since 1969. These laws introduced by President Nixon, have been credited with providing a significant boost to the creation of the African American middle class.

Procurement is a potentially powerful lever, because indigenous businesses employ indigenous people at 100 times the rate of non-indigenous businesses. We already have laws in place to allow government agencies to award contracts to indigenous suppliers who provide value for money. But the exemption policy has been underutilised because there are no incentives on government procurement officers to use it, but there’s a perceived risk in not going to a full tender. As Forrest points out, departmental leaders need to be accountable for procurement targets to have a chance of being met.

Employment for remote Indigenous people

Tonight, I have discussed recommendations to boost education, recommendations to fix training and employments services and recommendations to boost demand. All could dramatically change the outcome in urban and regional areas. But it would not be possible to have a discussion on Indigenous employment without addressing squarely the question of employment of people in remote communities.

Many remote communities have no economic base and are unlikely to in the near future (although that is not the case for all communities.) The employment rate of working age people in remote is 30 per cent overall and only 18 per cent of 17 to 24 year olds are engaged in work or training. Lost generations are created because of welfare money requiring little or no activity. Many communities are grog or drug filled.

Forrest does not have a dedicated chapter addressing the question of remote employment (or more specifically employment of remote people), but there are references throughout. In essence, he suggests three suites of measures, derived from ideas of various indigenous leaders.

First, is the end of sit-down money. Passive welfare is a poison and becomes an attractive alternative destination to taking a job. I have seen entry-level jobs in a remote community being filled by non-indigenous people because of the inability to attract a local worker.

Forrest recommends that every able person must be doing a constructive work-for-the-dole initiative in exchange for welfare. This is something that the government supports. Sit-down money has to end. When people are active, they maintain skills and work-habits. It is also an encouragement to seek a fully paid job if one is available.

Second, Forrest suggests land tenure reform to enable greater economic development opportunities on remote lands. Greater opportunities for individual land title are sought by traditional owners and should be supported. How many work opportunities this would lead to is unknown and would vary from location to location. In some areas, land tenure reform in concert with the development of land may generate dozens if not hundreds of jobs.

Helen Hughes was of the view that there was considerable economic development potential from land tenure reform. Certainly, development is almost impossible without it. At the very least, it would open up small business opportunities and home ownership opportunities, of which there are presently very few on communal lands.

A simple principle should apply: if traditional owners want land tenure reform, they should be supported. Indigenous Affairs Minister Nigel Scullion is working with traditional owners to do this.

Third, Forrest suggests changing the incentives to encourage mobility to where the jobs are located. Every person has a right to live in a place of their choice – that is part of the citizenship contract. But government policy impacts these decisions. For the last few decades, government policy has not leant towards mobility, or even been neutral, but has actively encouraged people against immobility and remain in a place of no economic opportunity.

The key policies that have enabled this have been welfare policy and housing policy, and particularly the latter. Stay in a remote community, and you will be given a free house which becomes effectively yours. Leave for a job and enter an expensive rental market. The effect is that it becomes almost of no financial benefit for a family to leave for an entry level job.

An unemployed man and spouse and three young kids in a remote community would have about $42,000 of disposal income, post housing expenses. If they leave the community, so the husband gets an entry-level job on minimum wage, their disposable income post housing would perhaps go to $44,000. But they would be working hard, have the risk of losing the job, being away from family and, importantly, lose the “family home” back in the community which may have been “theirs” for years. Ailsa Woibo, an indigenous grandmother from Hopevale, called these disincentives “the welfare pedestal that our young people are sitting on”. To climb the staircase of opportunity they must step down before stepping up.

The Forrest report includes valuable suggestions of how mobility can be facilitated, including how housing policy can be amended to support employment, rather than just shelter. In essence, to make any housing entitlement portable, rather than only available in a place of no economic opportunity.

Ian Trust in the Kimberley has done good work on this, and the Report draws on this. The ideas build upon the government’s mainstream mobility program which offers individuals up to $6,000 to move location or $9,000 if they have kids. Often it is not just the structure of financial incentives. Many people need practical support with accommodation if they move from remote social accommodation to the private rental market for the first time. This assistance is recommended in the report.

If we get this right, then the opportunities for mobility, for short times or for longer periods of time, will be significant.

Other measures

There are other measures in the Forrest Report that I have not discussed tonight. He suggests a new governance model in remote locations to provide greater local empowerment. He makes constructive suggestions for dealing with royalty money. He makes specific recommendations about implementation and the creation of a “Creating Parity” website to track progress very transparently.

Of course, as you know, he recommends a new debit card for all welfare payments to be placed upon with limitations on cash withdrawals and certain products such as alcohol and gambling.

What happens now?

None of Forrest’s ideas are easy. Some will be fiercely challenged and may well be too far ahead of public opinion. Others would take time to put into practice. This is a five year blue-print, not five month. Local community leaders must be part of any change process for it to be successful.

The government is determined to make a difference. The Prime Minister has established an Implementation Feasibility Taskforce to assess the practicality of each of Forrest’s proposal. Alongside this, we will have an extensive consultation process over the next six weeks which I will lead. This will involve inviting written submissions as well as conducting dozens of face-to-face meetings across Australia.

This initial feedback and feasibility assessment, as well as ongoing advice from the Prime Minister’s Indigenous Advisory Council will guide the government’s broad response to the Forrest Report. As measures are implemented, ongoing engagement will occur.

As Tony Abbott said at the launch of the report, this could be a defining moment in Australia’s history. Never have we had such an ambitious blueprint and a Prime Minister so committed to the advancement of aboriginal people.

Forrest’s report might not get implemented word for word, but it will become the guiding document for how the government approaches indigenous affairs.

We don’t want a hundred more programs. We don’t want billions more spent. We want to work with indigenous leaders, business and the broader community to ensure that kids are learning, adults are working and communities are safe.

There is so much goodwill. It’s time to convert it into action.