Dr Ros Kidd
Historian - Consultant - Writer
Abuse of trust: the government as banker
in Queensland and the United States
Aboriginal circumstances in Australia are the outcome of almost a
century of social engineering whose premise of ‘care and protection’ was
betrayed across many generations. This betrayal has been kept from the
public, who are encouraged to blame the Aboriginal. This article is a
summary grounded in twelve years of investigation of primary files and
correspondence, generated by successive Queensland government
departments as they established and then violated their ‘protection’
regime during the twentieth century.1
Between 1897 and 1972, the government legislated to control every aspect
of the life of any person of Aboriginal descent targeted for state
‘care’. This included where they lived, who they could marry, and
guardianship of their children. It was accomplished under powers to
‘remove’ people from their family and country, to life-long confinement
on government-controlled settlements and missions. The consequent
starvation, sickness, scandalous mortality rates, substandard housing,
inadequate or non-existent schooling, and non-paid or underpaid labour
are the evidentiary indicators of how that duty of care was exercised.2
From 1904 until the late 1960s the government used this captive labour
pool to build and maintain the missions and settlements, and as raw
material for the lucrative contract labour market. There is a body of
incriminating financial data which clearly shows the massive sums of
money earned by generations of Aboriginal workers which did not reach
their needy hands. The depth and duration of negligence, fraud, and
government misuse of trust monies, all recorded on government files,
convinces me that there is evidence aplenty for successful legal
redress.3
If there are professionals out there who are willing to be part of this
fight for justice, for what are now known as the Stolen Wages, feel free
to step forward.
The current Queensland government is holding a hard line on what is
effectively a bargain buyout for any and all of the damnable aspects of
its regime of controls, because to access its current princely ‘offer’
of either $2000 or $4000 to survivors,4
the government demands an indemnity from any future actions against it.
Moreover, the government demands that the estimated 16,500 claimants
provide this indemnity without first giving them access to their
personal financial records held by the government, and the incriminating
evidence regarding government mismanagement. It seems to me, they are
required to meet the government’s demands without advice as to their own
best interests.5
The government is determined that the burden of proof remains anchored
tightly to each individual who might dare to mount legal action against
it concerning its role as guardian or banker. The government knows well
that this is a lottery, and they are taking the chance that potential
litigants will fail. Moreover, the government knows that they alone
possess the vast repository of incriminating evidence so cavalierly
recorded by men convinced of their superiority and safe in their
anonymity. Successful litigation will depend on the government ‘finding’
relevant documents for the case against it, and making them available to
plaintiffs. However, the government declares loudly and often that
records are fragmentary, misplaced or destroyed. There is an obvious
need for independent gate-keepers to oversee access and availability of
these files. The government will drag out each case as long as possible,
and the tenacity, the means, and the life-spans of those whose money
went missing will ebb away. The amount each successful individual might
recoup would barely make a blip on the government’s public relations
budget. In this game plan the government holds all the cards. Surely
there is a more equitable way to resolve this situation?
In the United States, since mid-1996, the federal government has been
fighting and losing a class action brought on behalf of 300,000 past and
present Native American account holders. They assert that monies
due to them, which were collected and managed by the government have
never been accurately accounted for.6
The funds at stake, like those in Queensland, belong to individuals. In
the Individual Indian Money (‘IIM’) case these funds were generated from
the sale or lease of natural resources on Indian lands allotted by
treaties as reserves. It is estimated that the government amassed
billions of dollars during the twentieth century through farming and
grazing leases, and sales of timber, oil and gas. It is alleged that
there is no way of knowing whether this money was fully disbursed to IIM
account holders because the government failed, during 100 years of
control, to properly account for the IIM funds it controlled, that it
failed to prudently manage trust assets, that it refused to correct
defects in its accounting system, and that its accounting of assets was
fundamentally flawed and completely ineffective. Consequently billions
of dollars remain unaccounted for.7
What parallels can be drawn to the Queensland case? The primary point of
difference is the generation of the missing funds. In Australia
proprietorship of reserve lands was not ceded by treaty to Aboriginal
groups, who remain tenants on their own country. However, this is not
the issue. The US case centres on the mismanagement of private funds by
government, which is relevant to Queensland. The funds in question in
Queensland are largely those of individual workers whose wages were
quantified and collected, and whose savings were withheld, and too
frequently defrauded and misused by government agents. Also under
examination are child endowment and pension payments intercepted by
government, since 1943 and 1959 respectively, and only partially
distributed to endowees. In 1960, the department estimated over $500,000
(today’s value) of settlement pensions went directly to consolidated
revenue. It was not until the early 1970s, when account holders were
accorded the right to request management of their own funds, that they
saw any record of wages and savings. Many found to their horror that
little remained in their accounts after decades of work and financial
deprivation.
Did the Queensland government properly account for the Aboriginal monies
it managed? We know thumb prints were introduced in 1904 and again in
the early 1920s because of widespread fraud on private accounts by both
employers and police protectors. In 1932, pilfering from private
accounts was found to be common, and department supervision was
described as ‘totally inadequate’. During the depression years the
government seized private bank interest only on Aboriginal accounts. In
the 1940s, auditors said there was ‘no system of internal checks’ on
wage collections, and banking and withdrawal dockets were marked as
witnessed despite the absence of thumb prints. In 1965, a public service
inspection deplored the lack of a central signature register against
which to check ‘signed’ withdrawals, and observed that there was no way
to authenticate the witnessing of multiple withdrawals. In 1967, it was
admitted that lax head office checks on withdrawals, payments and
interest allocation allowed ‘room for fraud’. In 1970, auditors were
still calling urgently for ‘vital checks’ to be implemented to avoid or
deter forgeries. In 1974, the auditor again criticised head office
controls as faulty. Therefore, it is surprising that in her frequent
assertions that department accounts were regularly audited, the Minister
for Aboriginal and Torres Strait Islander Policy Judy Spence has not
felt it necessary to inform us of these constant and trenchant
criticisms.
As employment broker, the department decreed that Aboriginal labour was
to be supplied to pastoralists between 1919 and 1968 at the discounted
rate of 66 percent. However, perusal of payments to workers shows in
every year between 1931 and 1956 the department failed to secure even
this fraction for its contracted workers, who received in that period
wages as low as 31 percent of the award rate – a massive loss of
earnings over time.
The ‘pocket money’ portion of wages, which was supposed to be paid to
workers in cash during the contract period, was always known to be
unverifiable. In 1932, a report on the workings of the department found
there was ‘no system of inspection’, and therefore it could be
‘reasonably assumed’ that many workers were not getting this prescribed
portion of their wages. In a 1943 survey, protectors described the
system as a farce and a direct profit to employers. In 1948, the
department rejected as ‘too costly’ the auditor’s call for external
inspections of pocket money books. In 1956, the department admitted that
‘in many instances’ pocket money was probably not paid after protectors
variously reported the system was ‘useless’, ‘futile’ and ‘out of
control’, with workers ‘entirely at the mercy’ of employers who
concocted the figures which protectors were far too busy to check. Yet
this portion of the wages accounted for up to 80 percent of individual
earnings – a further massive loss of income.
As banker, having proscribed any private sighting of transactions on
individual accounts, the government wielded enormous power over personal
savings. In 1919, a levy was imposed on accounts of all rural workers
without their knowledge or consent. This was pooled into a trust fund,
the Aboriginal Provident Fund (‘APF’), ostensibly as unemployment and
sickness insurance. From the beginning, auditors complained as low as 10
percent was distributed in relief, while the fund was frequently
diverted to cover government costs. By the mid-1920s the APF ‘surplus’
was invested, with the interest going to Treasury while rural families
struggled and died in grinding poverty. From the 1930s depression, bulk
amounts were transferred to cover budget shortfalls, a practice which
continued until 1942 despite warnings from auditors that this was ‘wrong
in principle’ and ‘without the authority of Parliament’.8
A separate trust fund, the Aboriginal Protection of Property Account,
was established in 1902 to safeguard distribution of outstanding wages
and estates to relatives of deceased workers. This fund was similarly
raided to cover shortfalls in consolidated revenue, particularly in the
period between 1925 and 1941.9
Perusal of income and disbursements from this account show distributions
were at times only 25 percent of revenue in any particular year, and a
Public Service inquiry in the early 1940s condemned department failure
‘to make proper inquiries’ even where entitled relatives were listed on
their records.
As banker, the government exploited the bulk savings for profit. In
1933, it began investing vast sums of ‘surplus’ private savings to
generate interest for the Treasury.10
In the 1940s, private savings were ‘loaned’ to the department to enable
the purchase of two cattle properties. By 1950, around $7.3 million
(today’s value) was frozen in investments, and in 1956 a new regulation
enabled the department to offer the ‘surplus’ to Hospital Boards
for building projects at a time when Aboriginal patients were dying in
the substandard underfunded equivalents on reserves. In 1960, almost
$10.5 million was unavailable to account holders.
The Aboriginal Welfare Fund (‘AWF’) was started in 1943 to absorb APF
payments and all profits from community enterprises on reserves, and to
legitimise expenditure on development of government assets. To date, I
have identified occasions in 1946, 1948, 1958, 1959 and 1960 when the
director of Native Affairs complained that the AWF was forced to cover
items which were legitimate government liabilities. From 1960 to the
mid-1980s, settlement wage costs were increasingly charged against the
AWF, following the government’s refusal to meet wage rises from revenue.
In 1970, auditors were critical that there had never been a profit and
loss accounting of the AWF’s cattle enterprises, which were worth almost
$2.5 million in the 1970s. In 1979, they complained there was no way to
quantify cattle holdings. In the mid-1980s, they condemned incomplete
livestock controls which ‘comprised the handwritten sheet attached to
the inside cover of the relevant file’.11
In 1990, they again identified ‘significant problems’, including failure
to muster, substantial shortages, and disappearances which were not
investigated. It is no surprise that cattle losses between 1975-1980
were $2.4 million, increasing to $11 million for the decade 1980 to
1990. And this is a trust fund ostensibly operating ‘for the benefit of
Aborigines generally’.
This is but one area of gross mismanagement relating to AWF dealings.
Housing construction and rentals were similarly the source of constant
criticisms. Commonwealth housing funds absorbed annually into the AWF
were $16 million in 1980, rising to over $29 million in 1990. By that
year around $133 million of commonwealth housing money had passed
through the AWF without any accurate accounting procedures nor any
assets register.12
Therefore, it is deeply disturbing that despite criminal overcrowding in
Aboriginal communities, the government maintained housing fund
‘surpluses’ totalling over $11 million during the 1980s. These surpluses
were invested in the high-interest short-term money market, the interest
going to Treasury. In 1990, it was discovered that rental income, which
was supposed to be returned to the housing pool fund, was being
improperly listed as ‘administration costs’ against the AWF. This was an
apparently ‘longstanding practice’ which contravened the Financial
Administration and Audit Act 1977-1988, and effectively credited
consolidated revenue.13
In 1991, it was stated that no housing register existed to itemize this
multi-million dollar asset pool.
In 1993, after intense lobbying the Queensland government finally
stopped dealing on the AWF, leaving a residue now estimated at almost $9
million for disbursement ‘to Aborigines generally’, which it is very
anxious to clear from its books. It has been suggested that distribution
is being delayed due to ‘indecision’ within the Aboriginal community.
However, in truth people want a detailed account of this trust fund, and
reinstatement of monies missing through misapplication, negligence and
incompetent dealing of government officers.
There is no doubt Aboriginal account holders in Queensland can pose the
same charges as their IIM colleagues: that it is up to the government to
provide an accurate account of its management of private wages and the
savings of account holders. The government must fully account for its
dealings on trust funds, acknowledge that it failed to properly manage
trust assets, that it refused to correct systemic defects in its
accounting system, and that its registration of assets was grossly
inadequate.
By June 1999 in the US, secretary of the Interior Bruce Babbitt admitted
that the fiduciary responsibilities of the US to the IIM beneficiaries
were not being fulfilled, and his Bureau of Indian Affairs counterpart
admitted that the asset management system was faulty. In December 1999,
a court ruled that the US government had breached its trust
responsibilities to individual trust beneficiaries, and directed that
the government reform the system. A government appeal was rejected, the
three-judge panel noting specifically ‘the magnitude of government
malfeasance at issue in the case’, and holding that the government had
an obligation to account for every dollar from the inception of the
trust.14
Queensland Minister Judy Spence is disingenuous to suggest that payment
of final balances to private account holders constitutes an adequate
acquittal of savings accounts. The Queensland government knows full well
the question is not distribution of pitiful residues but full
restitution of wages, savings, and associated trust monies managed by
government. During a century of Aboriginal labour there has never been
proper accounting, and there exists a wealth of incriminating evidence
from government agents demonstrating official knowledge of
enduring negligence, mismanagement and misappropriation. There can be no
dispute that the rightful ‘beneficiaries’ of this system were and still
are trapped in appalling poverty.
In December 1999, Judge Lambeth ruled that US mismanagement of the IIM
trust ‘is far more inexcusable’ than misuse of normal donative trusts
because of its involuntary nature and because the plaintiffs were among
‘the poorest people in this nation. Human welfare and livelihood are at
stake’.15
The Queensland case is no different.
There is a wealth of incriminating evidence in government files to
substantiate allegations of multiple breaches of fiduciary duty and
breaches of trust in its role as financial custodian. International
precedent exists to force the Queensland government to account in a
court of law for their endemic negligence and mismanagement. Its actions
over time have exacted an appalling, and too often fatal toll on the
‘beneficiaries’ of its ‘protection’ regime, a toll they are still paying
today.
Aboriginal people laboured long and hard. They earned this money. It is
theirs. They want it back.
2 Above n1, particularly ‘Duty of Care’
factsheet; Ros Kidd, The Way We Civilise; Ross Kidd,
Black Lives, Government Lies.
3 Above n1, particularly ‘Stolen Wages’
factsheet.
4 $2000 for people
aged between 45-50, $4000 for those older than 50. The wealth
generated by parents and grandparents is exempted from this
equation: it will remain a bonus for the government. See
http://www.indigenous.qld.gov.au/qgro.htm.
5 The government has promised to fund
‘independent’ legal advice for potential claimants and is about
to appoint its own ‘approved’ lawyers to explain the offer and
oversee signing of the indemnity. President of the Australian
Council for Civil Liberties, Terry O’Gorman, recently described
the offer as a ‘sick joke’ and ‘abysmally low’, and warned that
such lawyers could leave themselves open to future litigation by
claimants who felt ‘they had been conned’ unless these lawyers
also advise claimants to seek independent legal advice (National
Indigenous Times, 5 March 2003).
8 Queensland State Archives A/69634,
3.4.41.
9 Over ₤72,000 ($3.5 million) from the
trust funds, plus ₤19,000 ($935,000) from annual levies and
interest on private savings accounts.
10 ₤200,000 ($12 million) was invested
out of savings of ₤265,000 ($16 million).
11 Department of Community Services,
Audit Report 1987.
12 The Consultancy Bureau, “Final
Report: Investigation of the Aborigines Welfare Fund and the
Aboriginal Accounts’. March 1991.
13 Queensland State Archives TR254
1A/2124.
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