Freehold the land to save the mob

freehold-the-land-to-save-the-mob

In 2017, I swapped life as Chief of Staff to the Minister for Agriculture working out of an office overlooking the Swan River, to working out of a donger in Fitzroy Crossing, overseeing a struggling Aboriginal Corporation that owned three bankrupt and abandoned stations in the Kimberley. Besides the pleasant shock of working with real people what I found most shocking was how 1.3 million acres of prime pastoral country was being left virtually abandoned during the middle of one of Australia’s biggest cattle booms when there was big money to be made owning, running, share farming or just sub leasing pastoral properties in the north.

It was obvious that the ivory towers of government which I had been involved in had missed the fact that there was something very wrong with the world of indigenous owned cattle stations. In government, I had seen reports that across the 41 indigenous owned stations that comprises over 30% of the Kimberley and Pilbara there were serious problems with governance and management. But nothing prepared me for the reality of what I saw on the ground. Abandoned homesteads and broken windmills, fences that had collapsed and yards that were unusable and worse, stories of serious animal welfare issues.

A recent report in 2018 has confirmed what many suspected, across the board these stations were running at less than half their potential carrying capacity with most falling way behind industry benchmarks for basic infrastructure and stocking numbers. In short most have been run into the ground since they had been purchased or handed over.

In fact, the gulf is getting wider with many neighbouring properties having cashed in on the boom in cattle prices, using the proceeds to invest millions of dollars into hundreds of kilometres of wire and water. New fenced laneways, bores, tanks, pipes and troughs, reliable solar battery pumps, automatic weighing and drafting systems, remote monitoring systems, yards at half a million dollars a set and multimillion dollar pivot irrigation systems.

This flood of investment dollars is the difference between long-term patient capital that builds the business and stock numbers all supported by good governance and good management and short term chaos where profits are spent and stock sold off. The sad thing is there should be nothing more patient than indigenous ownership as it has been set up to run in perpetuity, but the problem lies in the governance and management of indigenous corporations and the power of a select few on the board to treat the properties as their own cash cow.

For a simple comparison, I only had to drive down the road from the stations I was overseeing, Leopold Downs and Fairfield to the neighbouring Fossil Downs and GoGo stations with their magnificent homesteads surrounded by green lawns, modern infrastructure and tens of thousands of selectively bred cattle. The contrast could not have been more stark compared to the abandoned and collapsing homesteads and broken infrastructure and feral cattle. Other indigenous properties are operating but most are at way below their potential and collectively would require hundreds of millions of dollars to bring them back up to full roar.

Something has gone horribly wrong with the management of many of these stations over the past 40 since they were transferred across to indigenous ownership. Many have run into financial difficulties cutting off sources of capital which has left some of them bankrupt and others incapable of looking after the welfare of their cattle. Half have been sub leased out, others stagger on while a select few are doing well and looking to expand.

But it’s the recent report of up to 3000 plus dead cattle on two indigenous owned stations that is the real wake up call to government – you have a problem. It’s time to put the political correctness aside and do something radical that fixes these governance issues once and for all.

We all know that in the real world poor operators get exposed, get criticised, get prosecuted and go broke. But what the federal and state governments have built over the last 40 years is a parallel world for indigenous stations and aboriginal corporations that are held to a different set of standards. It needs to stop. Stay with me on this, it becomes very clear in my last few paragraphs.

What we are witnessing is the fact that no government seems prepared to call out what is an obvious failed system of indigenous corporations that operate under special legislation. It’s these corporations that often fail in their ability to manage the complex risks that come with running pastoral stations.

Any normal corporation is run under the ASIC Act while indigenous corporations have their own special Act of Parliament which, while full of checks, offers almost no compliance. They are treated differently to the rest of corporate Australia, opening the door to various state and federal government agencies to “help” by busily interfering in their affairs or attempting to micro manage them. From the Office of the Registrar of Indigenous Corporations to the Aboriginal Business Development Unit there are a myriad of government agencies out there to help. The problem is too big and too complex for yet more government intervention in indigenous affairs. These corporations when they run into financial difficulty should be allowed to fail just like any other business, let success breed success and failure end up in closure.

And there are plenty of examples of success out there, my involvement with the Bunuba Corporation nearly led to a deal with another successful indigenous corporation from the Pilbara which would have seen $20 million invested in a long term joint venture partnership to rebuild and restock Leopold Downs and Fairfield stations and move them into irrigated agriculture.

We got as close to buying 3000 head of cattle and hiring a new station manager only to have the deal collapse when the self-interest of a select few elders ultimately saw the deal fall over. Two years later, that 1.3 million acres remains empty and the homesteads abandoned when it should be well on the way to building up to running 30,000 head of cattle netting $5 million dollars a year and commencing the construction of $10 million worth of pivot irrigation and feedlots to double the size of the business. But today with its zero credit rating Bunuba’s only hope now is a sub-lease deal with one of the neighbouring cattle barons. It’s a failure of governance and failure of successive governments to accept they are ultimately responsible for building an ownership system designed to fail.

But maybe the real problem is the basis of the solution. The basic fact is that traditional owners don’t really own the land when they buy or are handed a pastoral lease, they are leasing it from the Crown on 49 year leases. Leasing country that often they have native title rights to. Something doesn’t add up. Why can’t they own the land freehold just like a farmer does in the Wheatbelt? Why can they never really own their own land.

The fact the government refuses to move to freehold title in the pastoral region and hand over the permanent title deeds is paternalism in the most extreme form or in the case of indigenous ownership it’s just plain racism. If we are serious about handing over control of country and supporting self-determination why doesn’t government freehold indigenous owned stations and allow them to own the asset under normal corporation structures. Freehold the land, issue shares to the traditional owners and let them take real control of their country. This would surely be a way to ensure better governance and management and with that better animal welfare outcomes not to mention local jobs and returns back to the people.

The alternative system is a structure that is akin to the collective communist farm and we know how well that worked in Russia. Collective ownership leads to poor management and poor outcomes. What we know that does work really well in agriculture asset management is family partnerships and corporate shareholder structures.

So, what don’t we want to see, definitely not a press release from the Minister for Agriculture or Indigenous affairs outlining yet more government involvement, more taxpayers money to be spent on governance and finance seminars and training people on how to fix windmills all of this is destined to fail. The cattle deaths at the two stations are a signal that there is a systemic problem which needs a radical solution. That radical solution is to treat indigenous owners with respect and give them back their land, give it back free and freehold it. If they choose to sell it and invest elsewhere so be it, it’s their land.

Indigenous people should be free to buy and sell land just like the rest of us. Members of the mob should be free to cash out their shares if the business and the management has failed them and there is no capital gain or dividend in sight. Just like any other extended family under a corporate structure. The current aboriginal corporation structure just like Russian communes suits the big men just fine but it often does not work for the rest, neither does it work for the cattle. The solution is simple it’s time to give it back, and the government should get on and freehold the land and save the cattle.

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