Dr Ros Kidd
Historian - Consultant - Writer
Held to account:
governments and Indigenous interests
For the last 15 years I have researched the primary evidence
relating to the Queensland government’s control of Aboriginal lives,
labour and finances. I had no idea, when I took this as my PhD field,
what an eventful journey it would be. My curiosity has taken me through
history, through the state’s financial priorities, and more recently,
into the field of jurisprudence.
My
starting point was a need to understand why governments would think it
constructive, or even expedient, to tightly control every aspect of the
lives of tens of thousands of people around the turn of the twentieth
century. I knew the general rhetoric was that this was to protect
people who were said to be unable to secure their own interests. And I
knew the outcome of these extraordinary discretionary powers; indeed we
all know the outcome of government management, it is apparent in the
substandard communities and general poverty of today. In all states and
the Northern Territory.
My
early task was to understand how governments in Queensland had
operated. I wanted to get within the machinery of power rather than
evaluate only its effects. How did politicians and bureaucrats
rationalise the restrictions they imposed and the powers they assumed
over the lives of Aboriginal people? How did their thinking change over
time? How did they respond to the faults in their systems? I was ever
mindful of the French philosopher Michel Foucault who described
governmentality as eternally optimistic and congenitally failing. By
governmentality he meant the whole sphere of knowledges, policies,
procedures, policing and economic strategies. And to the extent that
these operate to effect constructive changes on populations
(constructive in terms of making changes rather than in terms of
succeeding), he describes governmentality as eternally optimistic (in
its constant quest to resolve problems). At the same time, Foucault
argues, the field of government agency and influence is so complex there
is inevitable non-conformity in the range of programs, diversity in
their objectives, contrasting ‘expert’ opinions and conflicting power
agendas; that being the case, government operations as a whole are by
their very nature congenitally failing.
More and more as I worked through the official files I was struck by
other contradictions. Why control Aboriginal earnings and savings ‘for
their own good’ but retain a system where this private wealth was lost
to fraud and negligence, or, as it happened, was simply siphoned off to
relieve state revenue? Why freeze up to 80 per cent of private savings
to make a profit for the state when this traps families in abject
poverty? How do I interpret the government’s failure to respond to
criticisms and recommendations by its own officers, by state auditors,
by pubic service inspectors? Why, given all I have written and said
about these financial improprieties, has it made not one iota of
difference? In 2002 the government said it was generous in offering a
maximum payout of $4000 to those who might have lost decades of earnings
under this blighted system. It said people should just ‘move on’.
And, as another instance of our premier’s eternal optimism, he says he
has resolved the matter of the Stolen Wages.
But of course he knows better. He will have been briefed about the
mountain of evidence of government mismanagement; indeed in making the
reparations offer he said his government had already spent over $1.5
million preparing to defend itself against the claims of those whose
interests it was sworn to protect. In parliament he said I thought over
$500 million might have gone missing from Aboriginal private funds under
government control. He also said the records are so patchy it is
impossible to know what did happen. He is hoping to keep a lid on the
congenital failings of trust fund management. His hope is in vain.
One of the government’s many assertions around this sorry saga is that
it has legal advice it will win any action against it on this matter,
and indeed the system is stacked to its advantage. It is the
government which holds all the evidence relating to personal financial
controls; the people were never given any records of transactions on
their accounts. It is the government which produces to a claimant the
material it says it can find; it is the government which defines how
many staff will be available for these searches. The odds of someone
finding sufficient evidence to make a charge of fraud stick in the
courts, are long indeed. There must be a better way, I decided 18
months ago, to win justice. And so began my education in trust and
fiduciary obligations. Much of this, of course, you will already know.
I
want to begin by looking at trust and fiduciary obligations, in
Australia, Canada and the United States. I am particularly interested
in how courts in the latter countries have taken a different line than
courts here, in identifying a fiduciary duty enforceable at law. I
apologise if this summary is a little too brief; an expanded version is
in my forthcoming book.
Like Australia, the US and Canada are former colonies of Britain. All
expressed similar doctrine regarding the standing of their Indigenous
peoples: an obligation that they, as a more civilised nation must
protect the interests of native races who are deemed primitive and
vulnerable. All implemented pervasive controls and employed similar
interventions: alienation from land, ascribed definitions of status,
segregation onto state managed reserves, personal and community
disempowerment, restricted employment and commercial opportunities,
social marginalisation. Yet there was a crucial difference. Canada and
the US recognised the independent status of Indian tribes and struck
treaties to define the extent and management of reserve territories. The
prior occupation rights of Aboriginal Australians were simply denied.
Indigenous peoples were hostage to the extraordinary discretionary
powers of their colonisers. This vulnerability, those discretionary
powers, are the meat of legal argument regarding an enforceable
fiduciary duty owed by governments to those whose lives and property
they controlled.
A
trust creates a legally binding obligation under which those who control
the trust (trustees) hold the trust property for the benefit of another
(beneficiary) and not for themselves in their role as trustees. An
enforceable trust depends on a proprietary interest. In a fiduciary
relationship, on the other hand, the key component is power. A
fiduciary relationship arises when there is a material discrepancy
between the power of one person and the vulnerability of the other, when
there is scope for the party to exercise that power or discretion to
affect the other person’s legal or practical interests, and that other
person is vulnerable or at the mercy of the abuse of that power. While
trust law is well defined, fiduciary law remains a developing and
disputed arena. Fiduciary relationships and fiduciary obligations
depend on the demands of the particular circumstances. Courts in
Canada and the US accept relationships such as
parent–child that are not recognised as enforceable by Australian
courts.
I
want now to turn to case law relating to fiduciary relationships between
governments and Indigenous peoples. In 1942, in Seminole Nation v
United States,1
the Supreme Court said it was through the range of self-imposed policies
and numerous acts of Congress that the government had ‘charged itself
with moral obligations of the highest responsibility and trust’. The
Court said this trust duty should ‘be judged by the most exacting
fiduciary standards’, and by a majority decision it upheld claims that
the government had failed to secure annuities promised under treaty. In
1944, in Menominee Tribe v United States,2
the Supreme Court said it was ‘settled doctrine’ that the US was a
trustee in its dealings with Indian property, and government dealings
would be adjudicated according to ‘the same principles of law as would
be applied to an ordinary fiduciary’. In 1973, in Manchester Band of
Pomo Indians v United States,3
the Court held that the Bureau of Indian Affairs had violated its trust
obligations by failing to pay interest on tribal funds lodged with
Treasury prior to 1956, and failing thereafter to invest funds for the
highest interest return.
In
1980, in Navajo Tribe v United States,4
the courts declared the pervasive system of US government controls over
tribal property was sufficient in itself to trigger a fiduciary
obligation to affected tribes. It was the act of taking ‘control or
supervision of tribal monies or properties’ which imported ‘a normal
fiduciary relationship’. This was restated in 1983 in United States
v Mitchell II5
where the court held a fiduciary relationship necessarily arises ‘when
the government assumes such elaborate control over forests and property
belonging to Indians’.
A
range of decisions in Canada in the 1980s and 1990s established similar
criteria for recognising an enforceable fiduciary duty. In the 1984
case Guerin v The Queen6
Justice Dickson of the Canadian Supreme Court held it was precisely the
Crown’s discretionary powers that transformed the relationship between
government and Indian tribe into a fiduciary obligation. An enforceable
trust arose because Indian land was inalienable except through surrender
to the Crown, at which point Equity would hold the fiduciary to the
strict standard of conduct of a trustee. Justice Wilson agreed. A
fiduciary obligation arose when the Crown received the surrendered land
subject to the trust of the Musqueam in the proposed lease: ‘the Crown
became a full-blown trustee by virtue of the surrender.’ In 1990, in
R v Sparrow,7
the Supreme Court held that the special trust relationship and
responsibility to the Aboriginals was a restraint on sovereign power
that must be reconciled with federal duty. The onus was on the Crown to
justify regulations that infringed or denied Aboriginal rights,
cautioning: ‘The honour of the Crown is at stake in dealing with
Aboriginal peoples’. In a hearing in 2005 in the case Buffalo v
Canada,8
the Federal Court held that by interposing itself between the Indians
and prospective purchasers or lessees of their land to prevent them
being exploited, the government had invoked a fiduciary duty that the
courts could ‘supervise and enforce’. It said that holding Indian
monies for the ‘use and benefit’ of the bands was also evidence of the
Crown’s fiduciary obligations.
In
Australia, meanwhile, not a single case relating to Indigenous claims
against governments upheld an enforceable fiduciary duty, but each of
the handful of cases has discussed the possibilities. In the 1987 case
Northern Land Council (No 2),9
Chief Justice Brennan speculated a fiduciary obligation might have
arisen if the Commonwealth had negotiated to receive payments from
Energy Resources Australia for the Land Council, thus becoming ‘the
conduit for the benefits provided’. But he said this had not been
argued and could not be determined in the abstract. In 1992, in Mabo
and Ors v Queensland (No 2)10
Justice Brennan briefly referred to fiduciary duty, stating that if the
Murray Islanders had surrendered their native title to the Crown in
expectation of a grant of tenure, then the Crown might have held a
fiduciary duty in the exercise of its discretionary power. But he held
there had been no such surrender and he did not consider further ‘the
existence or extent’ of such fiduciary duty. Justice Toohey declared
the Crown did hold a fiduciary duty to the Murray Islanders. He said
that if the Crown held the power to extinguish native title, then this
power was a matter for legal adjudication, independent of any action by
the Crown to extinguish. Justice Toohey identified additional grounds
for the government’s fiduciary obligation in the legislative framework
of protection and preservation incorporating special reserves, welfare
regulations and advisers, and in the general presumption that the
British Crown would respect the rights of the colonised Aboriginals. He
described the government power to destroy or impair Aboriginal interests
as ‘extraordinary’ and ‘sufficient to attract regulation by Equity to
ensure that the position is not abused’.
However in 1996, in The Wik People v the state of Queensland,11
Justice Brennan qualified Toohey’s Mabo interpretation. While he
acknowledged the people’s vulnerability to the Crown’s power to
extinguish native title, he said it would be self-contradictory for the
Crown to be under a fiduciary obligation to advance or protect
Aboriginal native title interests while at the same time exercising its
power — imposed by Parliament without guidelines — to alienate
Aboriginal land. Further, he said that the power to extinguish was not
sufficient of itself to attract a fiduciary obligation. There also had
to be an action or function to attract the fiduciary duty: for instance,
a reasonable belief by the people that the Crown would act in their
interests, or an undertaking by the Crown to act on their behalf.
This brief journey through national and international case law suggests
a range of grounds where courts might find an enforceable fiduciary
obligation in government dealings with Indigenous people. It might be
the network of ‘humane and self-imposed’ policies by which governments
‘charge themselves’ with moral obligations of the highest responsibility
and trust, as in Seminole, or the ‘control or supervision of
tribal monies or properties’ (Navajo 1980). It might be, as was
argued in Guerin, that the surrender of title to government in
the expectation of a particular transaction creates the discretionary
power that invokes a fiduciary obligation. In Mabo Brennan made
a similar point, suggesting that the fact of surrender of land, if it
were in expectation of specific tenure, might be sufficient to attract a
fiduciary obligation because those who surrender their title would be
critically vulnerable to abuse by government of its discretionary powers
to alienate their interests in the land. In Northern Land Council
Brennan also emphasised people’s vulnerability to abuse of discretionary
powers when he speculated that a fiduciary obligation might pertain if
the government acted as conduit for Aboriginal money, for instance as
distributor of royalties to the Land Council. Clearly, in both
scenarios, the Aboriginal people concerned would hold a valid
expectation the government would act in their interests.
Keeping those points of law in mind, I want now to look briefly at how
governments in Queensland controlled the lives and finances of
Aboriginal people.
Around Australia, interaction between the races was characterised by
blatant abuses of contemporary laws, encouraged by a shameful
disinclination of authorities and the courts to extend available civil
protections to Aboriginal people. In Queensland it has been estimated
there were over 2000 people working on stations and in the sea trades
around Cape York by the end of the nineteenth century. They were rarely
paid apart from scant food and shelter, and were commonly subjected to
physical and sexual abuse. The protection regime was implemented to
bring under control relations between Aborigines and Europeans.
Under The Aboriginals Protection and Restriction of the Sale of Opium
Act (1897) the government took
control of all aspects of Aboriginal lives. People could be deported to
missions or settlements and detained there for life, or they could be
contracted out to work for 12 month periods. The state had the power to
deny marriages to non-Aboriginal men and, since the Industrial School
and Reformatories Act (1865), it had the power to send any
Aboriginal child to an institution for training and employment.
Under the 1897 Act it was illegal for any Aboriginal to work except
under contracts which set the rate of pay, always at a discount despite
knowledge that Aboriginal labour was at a premium in many pastoral
areas. In the twelve months to June 1900 over 1200 work agreements were
processed. The minimum wage was introduced in 1901, ranging from
children under 12 years and including domestics. Comments in the
department’s 1904 Annual Report indicate the value placed on many
Aboriginal workers: ‘more reliable than the general class of white
stockmen’, ‘as good and, in a great many instances, better’, ‘They know
the country better, and are more biddable’, ‘As stock-riders and bushmen
in many cases superior to the general station hands.’ Yet these men
were paid only one-eighth the white wage.
From 1903 protectors were instructed to take direct payment of the wages
of all female employees, and the system of thumb printing all
transactions was initiated to reduce frauds. Wages were banked in the
name of each employee, with the protector as trustee. Detailed cash
books were to be kept and audited each year. Workers could only access
their money by asking the protector, and people, even with large
savings, were routinely refused. The government knew police fraud was
rife from as early as 1904 when it introduced thumb printing to reduce
it.
When John Bleakley took over as chief protector in 1914 he expanded the
compulsorily contracted workforce, increased minimum wages, and demanded
every worker’s wage be paid direct to local protectors, thus increasing
government holdings of Aboriginal earnings from around $875,000 to
almost $4 million in that year alone. In 1919 the government lobbied to
exclude Aboriginal workers from the Station Hands Award, striking a deal
with the pastoral industry to freeze Aboriginal wages at 66% the white
rate. This was despite a raft of testimonials over several years
confirming many employers thought Aboriginal workers were equally or
better skilled than their white colleagues. Workers were responsible
for maintaining their families on this fractional wage; failure to do so
trigged removal to a reserve. A public service inquiry in 1922 revealed
that head office did not supervise the 8000 rural savings accounts and
police practices were so unreliable the commissioners insisted workers
be allowed to appeal dealings on their accounts. The government
rejected this recommendation.
Also in 1919, the government imposed a tax on Aboriginal
earnings, taking 5% from single worker’s wages and 2.5% from married
worker’s, although of course it didn’t inform workers of this
confiscation. This levy went into a new trust fund, the Aboriginal
Provident Fund which was supposed to provide for sick or unemployed
workers. But the inquiry showed that the government had stripped large
amounts from the Provident Fund, and from a second trust fund of
unclaimed wages and deceased estates held for workers’ dependents,
diverting the money to construction on the settlements, funding for
missions and costs of compulsory deportations.
An inquiry in 1932 found that ‘the opportunity for fraud existed to a
greater degree than with any other Governmental accounts’. The chief
protector again admitted there were no real controls over official
dealings on private accounts, and again rejected the recommendation that
workers be allowed to see what was done with their money. The
government was again exposed for raiding Aboriginal money: during and
after the 1929-32 depression years, it simply transferred around $3.5
million out of the two Trust funds ‘for departmental purposes’,
rendering the deceased estates’ fund technically insolvent.
In 1933 the government centralised the bulk of workers’ savings in
Brisbane, ostensibly to ‘minimise fraud by members of the Police Force
who are Protectors.’ But it immediately sidelined over 80% of these
private monies – almost $15 million – into investments to raise revenue
for Treasury. This earned interest of $320,500 in 1933 alone, money
which legally belonged to account holders. The government continued
this manipulation of bulk savings until 1970.
The government ran its contract-labour system for 70 years. It gave
employers the right to pay into workers’ hands between 30-80% of wages.
Decade after decade the government was warned workers were not getting
this ‘pocket money’, yet it never fixed the system. The 1932 inquiry
stated it could be ‘reasonably assumed’ that workers were cheated. In
1943 protectors described the system as a farce and a direct profit to
employers, in 1956 they said it was useless, futile and out of control,
with workers ‘entirely at the mercy’ of employers who simply doctored
the books. In contempt of this knowledge, the government rejected
auditors’ calls for external inspectors as ‘too costly’. In the
mid-1960s it admitted pocket money was probably not paid ‘in many
instances’. And the financial loss to workers? The pastoral workforce
numbered between 3000 and 5000 people in the 50 years to 1968.
Potentially an average of 50% of their wages may never have been paid;
that’s many millions every year that the government knew was not
paid ‘in many instances’.
In 1956 a department survey confirmed the pastoral industry was entirely
dependent on Aboriginal workers, particularly in remote areas where
white stockmen were rare. The inspector said the entrenched mentality
was to pay ‘as little as possible for Aboriginal workers’, while ‘white
men of markedly less ability and industry receive higher wages and
better living conditions than Aboriginals who are better workmen’.
Records show the government frequently failed to demand even the 66%
wage parity. Rates for the 4500 workers fell to only 31 per cent in
1949 and 59 per cent in 1956 – millions more dollars ‘stolen’ through
government negligence. Only after 1972 did Aboriginal pastoral workers
get equal wages and control over their own labour. For the first time
elderly family members and wives who had been compelled to work for free
on the stations could refuse to be exploited.
It was only right at the end of this appalling saga of financial
deprivation that Aboriginal people were finally given bank books to
check money going in and out of their accounts. But these books
recorded only the balance left in accounts at 1968, showing nothing of
what had happened prior to that time. Many people were shocked at how
little was there despite decades of work and decades of financial
denial. Those who protested then, and now, were told the government has
lost many of the files and can rarely account for their money.
Records show that the government intercepted workers compensation,
inheritances, child endowment and pensions. Endowment was paid by the
Commonwealth from 1941. Queensland’s department of Native Affairs
immediately applied to receive the endowment direct and control its
distribution to mothers on the settlements. It also cut government
grants to missions to reflect the endowment income. In 1953 it had
stockpiled over $400,000 (today) of child endowment funds just for Palm
Island mothers at a time when epidemiological studies revealed
malnutrition as the key factor in deaths of 50 per cent of children
under three and 85 per cent of children under four. Concerned that the
Commonwealth might discover the stockpile authorities decided to spend
the money on construction. When baby welfare funds suffered budget cuts
of two-thirds in 1959 settlement superintendents were told to meet the
deficit of around $55,000 from the child endowment accounts.
Even before the pensions were made available to Aboriginal people the
government was discussing in 1959 how it could divert these welfare
payments to revenue; it applied to take control of the bulk payments,
passing on only one-third to pensioners, and cutting annual grants to
missions to reflect the pension income. In 1960 the director told
superintendents over $500,000 of pensions ‘goes direct to Revenue’.
When the compulsory wage levy into the Welfare Fund was dropped after
1966, the government began to merge child endowment income through the
Welfare Fund, which was used to develop the settlements, for wages, and
– as the files now reveal – to cover government liabilities. Endowment
was paid into this Fund as late as 1984.
After 1975, when the federal Racial Discrimination Act made it illegal
to underpay workers on the basis of their race, the Queensland
government continued to underpay its Aboriginal employees despite top
level legal advice confirming this was unlawful. The policy of paying
illegally low wages continued until 1986, when Aboriginal community
councils took over community administration and paid the legal rate. By
simply calculating the wage differential against the number of community
employees in that eleven-year period, it seems that the Queensland
government saved itself over $180 million. I’ll return to the matter of
under award wages shortly.
In considering this extraordinary system of controls and this incredible
congenitally failing financial system, I’d like to revisit some of the
points I raised earlier about enforceable fiduciary duties.
Certainly, as in Seminole, the Queensland government ‘charged
itself’ with moral
obligations of the highest responsibility and trust; in Mabo
Justice Toohey also identified the comprehensive legislative framework
and practices of Queensland’s protection and preservation regime as
grounds for a fiduciary obligation. He said the government’s
extraordinary power to destroy or impair Aboriginal interests were such
that Equity might intervene to ensure the position was not abused, and
certainly there was no self-contradiction, such as Brennan identified in
the Wik case over land title, in the government having the power
to take control of Aboriginal finances and a fiduciary duty to protect
those interests. Indeed in successive laws and regulations the
government quite specifically undertook to do just that, and Aboriginal
people – indeed all Queenslanders – held a reasonable belief that it
would do so.
Like the US government in Navajo (1980), the Queensland
government controlled and supervised Aboriginal monies and property.
People unwillingly surrendered control of their labour and finances and
were certainly critically vulnerable to abuse by government of its
discretionary powers to alienate their financial interests, a point
which echoes Brennan in Mabo. And in acting as a conduit between
people’s earnings, and their entitlements such as endowment and
pensions, people’s vulnerability to abuse of those discretionary powers
echo Brennan’s observations regarding a possible enforceable fiduciary
duty if the Commonwealth government had acted as conduit for royalties
to the Northern Land Council.
To set the scene for the Bligh case, I want to consider the situation on
the missions and settlements, keeping in mind that ‘care and control’ of
reserve inmates was a government responsibility. There were over 8500
people confined on reserves struggling to survive on rations when the
government introduced cash economies in 1968. But it set the wage for
its 2500 employees at only $116 per week, less than half the minimum
wage, and most of this was withheld for ‘amenities’. Living costs were
dramatically higher on these remote communities. The government knew
school absenteeism soared because many lacked food for children’s
lunches, it knew people could not afford even the grossly discounted
rent for new Commonwealth houses, it knew houses were therefore
dangerously overcrowded.
In 1972, when it was paying its employees 58% the basic wage, the
government knew poverty was so dire many families survived on bread and
syrup, most
homes lacked cupboards or beds, few could afford refrigerators, and the
electricity supply was so inadequate families were routinely refused
permission to buy them. A medical survey at that time showed deaths of
children under five from gastroenteritis and pneumonia were 34 times
that of white children, due to ‘massive infection loads resulting from
substandard living conditions’. Sickness and death were quite clearly
grounded in deliberate financial deprivation by the authority charged
with their ‘care and protection’.
Regulation
s 68 gazetted in 1972 under the Aborigines Act (1971) decreed
award wages had to be paid where due, other than on government reserves
where the wage was now labelled a ‘training allowance’, although many
employees had worked for decades. In 1974 heavy machine operators on
Palm Island were paid only one-third of the award rate.
After passage of the federal Racial Discrimination Act in 1975 it
was illegal to under pay workers on the basis of race, a fact the
government simply ignored. In 1978 premier Joh Bjelke-Petersen
demanded the federal government cover the costs of bringing community
wages to award levels, threatening to retrench 850 workers at the risk
of
‘massive social problems’ from unemployment and ‘other factors’. When
this demand was refused the Queensland government resolved to freeze
wages funding. As pay rates rose massive sackings drove workforce
numbers
from around 2500 in 1976 to under 800 a decade later, frequently
jeopardising essential services. And the government sat by and watched
the ‘massive social problems’ unfold.
Despite the desperate privation, in 1979 the department organised
changes in the state’s Audit Act so that personal social security
cheques could be redirected to meet rents owing.
The government’s illegal position was tested in 1979 when labourer
Arnold Murgha from the Yarrabah reserve, assisted by the AWU, brought an
action in the industrial commission for wages owing. The government
sought advice as to the validity of s 68 and was told its position was
untenable because the regulation did not state an intent to pay less
than legal rates. Senior Counsel said ‘the award is relevant and binding
…the claim must succeed’, and the Crown Solicitor concurred: ‘In the net
result there is a liability to pay the award rate of wages irrespective
of how or where that liability is enforced’. The state settled the
Murgha case, all union members were told their employment was
terminated, and the government held to its refusal to fund award wages.
In 1981, with work forces reduced to 7.5 per cent of community
residents, the government was sued by two Cherbourg nurses who sought
award wages, almost double their current pay. The Solicitor-General
warned the government ‘the prospect of resisting award wages was far
from good’ and award rates applied. Senior Counsel agreed: there was no
regulation clearly excluding award rates for Aboriginal employees on
reserves so the government was not exempt from state industrial law.
From at least August 1982 Cabinet discussed its underpayment of
Aboriginal employees but declared it would neither implement legal rates
nor provide funding for wage increases. By the time community wages
reached the state’s minimum rate in March 1983, one-third of the 1979
Aboriginal community work force had been sacked, a benefit to the
government of around $8 million (over $15 million) for that year. In
Cabinet, the minister for Aboriginal and Islander Advancement again
reminded colleagues that the department was moving towards award rates
‘in the knowledge, as previously conveyed to Cabinet, that payment for
labour below Award rates is in breach of State industrial law and
infringes certain laws of the Commonwealth’. Cabinet again refused any
funding for wage increases and, in an internal response to a Discussion
Paper on the matter by the Human Rights Commission, confirmed it would
maintain the current policy until it was challenged under the RDA. In
August 1984, Cabinet again acknowledged that underpayment of wages
breached state and federal law.
Early in 1986, with community wages around 72 per cent of the award, the
government faced writs for back pay from a range of unions on behalf of
Aboriginal community workers. The minister warned Cabinet that current
wage distribution was a ‘relic of past policy’, that the state was
liable to pay award rates and currently stood ‘in a position of extreme
vulnerability’. He said that the Solicitor-General and the ministers for
Justice and Industrial Affairs all confirmed that union-backed
challenges against the department were likely to succeed. He said that
it would be cheaper to implement award rates than to lose highly
punitive court actions; finally Cabinet approved the introduction of
awards but again refused to provide funding.
Around this time seven plaintiffs from Palm Island launched action in
the Human Rights Commission (now HREOC). It was lost in a bureaucratic
maze but was reactivated in 1995. The plaintiffs asserted that
underpayment by the government was illegal after passage of the federal
Racial Discrimination Act in 1975, and claimed damages for
discrimination for the period from 1975 until 1986. As an expert
witness, I prepared evidence to support my affidavit to the HREOC
inquiry held in a Palm Island classroom in April 1996, including copies
of records of government decisions to breach federal and state laws and
continue underpayment. Two days before the Inquiry was to start, Crown
Law suggested I might be sued if I presented this evidence to the
Commission.
Here I will note three main points of defence raised by the government:
that settlement workers were employed in an institutional, social
welfare training setting; that payment at less than award rates was
lawful; and that underpayment complied with the ‘special measure’
provision of the RDA. In fact, as the Commissioner stated in his
Decision, the ‘social welfare training’ assertion ignores the reality
that many employees were highly skilled having worked for decades in
their field, several at full rates of pay on the mainland. It also, he
said, was grossly insulting and failed to acknowledge their considerable
skill levels. Payment at less than award rates was not justified under
the 1972 regulations cited by Crown Law: these regulations made no
provision that Aboriginal workers on reserves could be paid less than
the award, remaining silent on this point. Indeed, as I mentioned
earlier, the government had been specifically informed of this since
1979. And the Commissioner said the ‘special measure’ provision of the
RDA, which condoned those discriminatory practices implemented for the
advancement of a racial or ethnic group, could only be valid in this
case if the sole purpose of the differential rates of pay was to advance
the requirement of equal pay for equal work, when quite clearly the Act
and regulations effectively denied that right.
It
was not only the evidence of the complainants which persuaded the
Commissioner of the government’s untenable wages policy, but the
detailed contextual evidence I had supplied charting government
recalcitrance and denial of award wages. The theme of this material was
unmistakable, he said: ‘whatever the proper payment was for a particular
service provided by a non-Aboriginal worker, the payment to be made to
an Aboriginal worker doing the same work and providing the same level of
skills had necessarily to be less.’ He noted that in 1978 the
Queensland government was underpaying Aboriginal workers on reserves by
$3.6 million (almost $11 million today) compared to the state’s
guaranteed minimum wage, and $6.85 million (almost $21 million) compared
to award rates. That money should be law have been in the pockets of
workers on the Aboriginal communities; instead it remained in
consolidated revenue.
The Commissioner concluded the government had ‘intentionally,
deliberately and knowingly’ underpaid the claimants during the period
1975–1986. He suggested damages for loss of income of $7000 per person.
The Borbidge National–Liberal Party coalition government said it would
ignore the decision and the claimants lodged their case in the Federal
Court. In April 1997, the Borbidge government sent the minister to Palm
Island to apologise to the claimants and hand over the $7000 cheques.
Payment was conditional on workers indemnifying the government against
any legal actions relating to the ‘protection’ regime. At that time,
the records show the Palm Island claimants were owed between $8500 and
$21,000.
When the Labor government came to power in mid-1998 several subsequent
Federal Court claims had also been settled at considerable expense; by
May 1999 the government had settled 22 actions — one for $4000 (around
one-quarter of the debt showed on department records), and 21 for $7000
(where department estimates of underpayment ranged between $13 000–$27
000). A further 350 claims had been lodged with HREOC. To ‘resolve’
the issue the Beattie government provided $24.5 million over three years
in the 1999–2000 budget to settle ‘with people whose grievances are
legitimate.’ When this offer closed in January 2003, around 5700 people
had claimed the $7000 as compensation, at a final cost to the government
of almost $40 million. In 2002 the government was sued for over $100 000
by two former workers who settled out of court in 2004.
By illegally short changing the very people it was mandated to ‘protect’
the government effectively stole almost $187 million from these workers
between 1975 and 1986, in full knowledge that this underpayment was
illegal, and in full knowledge of consequential dire poverty. Rightful
payment of this money to community workers would have dramatically
altered living circumstances and prospects, then and now.
In
1990, in response to what she said were repeated claims from Aboriginal
people ‘alleging disappearance of wages and funds held in trust by my
department’, the minister commissioned a preliminary investigation of
the Welfare Fund and associated trust accounts. The minister said the
investigation had revealed Aboriginal funds were ‘raided in order to
cover financial shortfalls’ of the department but found no evidence to
suggest the money had ever been reimbursed. She said use of the Welfare
Fund as departmental funds ‘have continued in one form or another to the
present day’. In 1993 the Welfare Fund was frozen. In May 1999 the new
minister also declared her commitment ‘to settling the Welfare Fund and
its associated savings accounts’ through which successive Queensland
governments ‘denied Aboriginal people the opportunity to take control
over their own economic circumstances’. ‘We must be accountable for the
dishonourable actions of former Governments in this State’, she said.
In
May 2002 Premier Beattie made an offer of $2000 for people under the age
of fifty, and $4000 for those older, as ‘reparations for the decades of
control by former Queensland administrations of the wages and savings of
indigenous people.’ The government estimated there were 11 400 surviving
potential claimants in the first group, and 5000 in the second, giving a
total projected payout of over $55 million. The premier said the
payment would ‘deliver some overdue justice to ageing people’ rather
than forcing them to endure protracted court cases and the risk of dying
in the interim. Yet this ‘generous’ offer (his words) was closed to
descendants of those who had died before May 2002; the government had no
intention of compensating or repaying monies lost across generations
prior to that date. To get the payment people had to sign an indemnity
against taking legal action on any aspect of the ‘protection’ regime;
and the government is well aware than very few people have any idea of
what might be missing or owed, having never seen any documentation.
This, it seems, is justice Queensland style.
I’ll turn now to justice US style – namely the Cobell case.
As
trustee for Indian lands, it was the federal government that contracted
the sales and negotiated leases for grazing, mining, logging, oil and
gas production. It received and disbursed proceeds through the
Individual Indian Monies (IIM) account, established in 1887 under the
General Allotment Act. Under federal law Indian trust money
was deposited in the US treasury and since 1918 trust funds were
invested by the Bureau of Indian Affairs (BIA). Government management
of Indian trust money was criticised in general accounting office audits
in 1928, 1952 and 1955. By then it was so discredited that Congress
terminated the trust relationship releasing tribes from federal
supervision, although trust fund controls continued. From the 1960s
Congress recommended major reforms of trust fund management and in 1975
(when policy changed to self-determination) tribes were given a degree
of self-management over their accounts, including IIM funds held for the
tribe or its members.
After a further 30 audits in the decade from 1982 exposed continuing
serious accounting and fund management problems Congress issued a series
of explicit directives. In 1985 the BIA was ordered to implement a
comprehensive plan to overhaul management of the IIM accounts but did
not do so. BIA management of the trust funds was identified as a
high-risk activity in 1989, and again in 1991, at which time the BIA
admitted it had not distributed royalty income to account holders for
six years. In 1992 the Committee on Government Relations tabled a
report in Congress which blew the lid on decades of negligence and
malpractice. The Synar Report argued that the government had a clear
fiduciary duty to the individual Indians and tribes defined by federal
statutes and by the relationship between the government and particular
tribes. This was particularly the case, he said, since Indians were
deemed legally incompetent adults when IIM management commenced in 1887
and their participation in the BIA’s banking service was rarely
voluntary.
Synar affirmed that the most fundamental duty of the government and the
BIA was to make a full accounting of the property and funds it held in
trust for the beneficiaries each of whom was entitled to clear detailed
reports of transactions on their funds. There was also a duty to ensure
productive return on trust property and to maximise investment return on
trust holdings of the 300 000 current accounts that comprised the IIM.
Despite years of high-level reports documenting what Synar described as
an appalling array of management and accountability failures, the BIA
had neither corrected its faults nor implemented expert advice to
contain them. Endemic defects continued: inadequate accounting systems;
inadequate controls over receipts and disbursements; inability to
determine cash balances; absence of timely reconciliations; failure to
provide account holders with meaningful statements of their accounts.
Congress appointed veteran banker Paul Homan
as a special trustee to supervise reform of the system; he found such
chaos he said it was ‘akin to leaving the vault door open’. Treasury
retained funds owed to 50 000 of the 238 000 individual accounts because
it had no addresses for them; 16 000 accounts had no records at all, and
118 000 lacked vital documents. He said it was impossible to say how
many people were owed money.
It was against this background that Elouise Cobell and four
co-plaintiffs filed a class-action lawsuit in June 1996 against the
departments of Interior and Treasury on behalf of half a million past
and present Native Americans. They
charged the Secretary of the Interior and the Secretary of the Treasury
with failing to keep proper records, destroying evidence of breaches,
failing to account to beneficiaries for their money, and losing or
dissipating or using for their own benefit beneficiaries’ moneys. Over
decades the government had ignored all pleas to accurately account for
the trust funds according to its fiduciary duties, effectively
exhausting the only administrative remedies available to the plaintiffs.
They had no way of knowing the true state of their accounts unless the
court compelled the defendants to institute appropriate trust practices
and restore funds that had been lost or misused. In November 1996 and
again in May 1998 the Court ordered the government to produce all the
records of the five plaintiffs. The government refused to make them
available. In February 1999 the District Court found the defendants in
civil contempt of the Court, stating that he had never seen such
egregious misconduct by the federal government. It later transpired that
before and during the contempt proceedings, Treasury destroyed 162 boxes
of relevant documents and the departments were fined $US600 000 for
their failure to report the destruction. Court-appointed special master
Alan Balaran described a system ‘clearly out of control’. In June 1999
the government admitted the BIA deliberately did not tell account
holders that their balances were unreliable because it feared the risk
of lawsuits.
In
December 1999 the Court concluded the plaintiffs had achieved ‘a
stunning victory’. The judge said under both the 1887 Allotment Act
and the 1934 Indian Reorganization Act the US was trustee of
the IIM trust. He found that the plaintiffs had a statutory right to a
full historical accounting of their funds and acknowledged that they
only sought to recover what was rightfully theirs. The government’s
appeal was unanimously rejected in February 2001, the Court finding
there was ‘ample evidence’ of ongoing breaches by the government of its
trust responsibilities: the government didn’t know the proper number of
accounts or the proper balances in each IIM account, nor did it have
sufficient records to determine their value. The Court said the very
nature of the trust relationship with Native Americans required stricter
standards of accountability, and the duty to provide full disclosure of
all accounts was ‘black-letter trust law’. The legal breach of that
trust was the BIA’s failure to provide a full accounting; such
accounting, they confirmed, applied to all funds irrespective of when
they were deposited in the trust. A further judgment in September 2003
again confirmed the plaintiffs’ rights, and stated that an accounting
was due on all individual Indian assets held in trust since 1887 and in
accordance with the highest fiduciary standards.
The stakes are high. The US government has more than 100 lawyers on the
case and its costs are already over $US100 million; their own
investigation warned that liability could be as high as $US40 billion
(over $A50 billion). But as Cobell has said so often, they only ever
sought a full and complete accounting of their own entitlements, the
basic legal right for every trust beneficiary.
What are the chances of winning that basic right for Aboriginal
beneficiaries in Australia?
Australian case law has followed a different path to the US and Canada,
despite emanating from the same United Kingdom source. Each
jurisdiction for years adhered to the doctrine that trust relations
between government and constituents are grounded in the will of the
people, and the exercise of such discretionary powers were therefore
outside the province of the courts to adjudicate. This doctrine is
known as a political trust. Indeed in the 1860s a citizen could only
sue government in Australia if that government gave its consent to the
action. Since the mid-1930s, however, courts in the US and Canada have
not adhered to the doctrine of political trust; yet our courts still
hold a conservative line.
It
would appear there has been a further watershed in international
jurisprudence as regards government obligations relating Indigenous
interests in the 1990 Canadian case R v Sparrow. In this case
the Supreme Court ruled that the special trust relationship and
responsibility to the First Nations was a restraint on sovereign power
that must be reconciled with federal duty. Indeed in 1993 the New
Zealand Court of Appeal12
praised Canada’s activism as ‘part of a widespread international
recognition that the rights of Indigenous peoples are entitled to some
effective protection and advancement’.
In
Australia however, with reference to a 1999 case relating to a
guardian/ward relationship, the New South Wales Supreme Court13
noted Canada’s ‘greater willingness’ to extend fiduciary doctrine into
new relationships but declared that such activism was not shared by
Australia or New Zealand, and the United Kingdom’s reluctance was ‘even
more marked.’ In rejecting the Canadian precedent, the judge said that
‘[i]f the common law [in Australia] does not impose a duty of care for a
variety of reasons … it is difficult to see why equity should
intervene.’ Yet there are exceptions to this convention in Australian
jurisprudence. Australian courts did find an enforceable fiduciary
obligation in a guardian/ward relationship in cases in 1992 and 1999;14
both of which involved the protection of an economic interest. And in
two other cases in 1996 and 1998,15
the High Court declined to intervene because economic interests were
not at stake. In the latter case, the Full Court observed that in
Anglo-Australian law, the interests ‘which the equitable doctrines …
have hitherto protected are economic interests’.
This principle was affirmed in 2000 in Cubillo v The Commonwealth of
Australia,16
where the High Court argued it would be inappropriate for a judge to
expand the range of fiduciary relationships to conflicts of interest
which did not include an economic aspect. In 2001, again in the High
Court,17
Justice Kirby remarked that authorities in Canada and the US were to
some extent ‘reshaping the law of [fiduciary] obligations’, and blurring
distinctions still maintained in the United Kingdom and Australia.
Confirming the ‘general disinclination’ of our courts ‘to expand
fiduciary obligations beyond what might be called proprietary interests
into the more nebulous field of personal rights’, he urged Australian
courts to stick to the ‘accepted doctrine’ that fiduciary duties adhere
to the protection of economic interests.
If
it is ‘accepted doctrine’ in Australia that fiduciary duties adhere to
the protection of economic interests, then it can be argued that an
enforceable fiduciary duty should adhere to the economic interests of
Aboriginal people whose wages, savings, inheritances and welfare
entitlements were intercepted and controlled by governments in the
states and territories. Each of these governments had a ‘judicially
prescribed’ duty to protect the finances of thousands of the ‘poorest
people in our nation’ who did not voluntarily choose to relinquish their
labour potential or their money. In standing between people and their
savings and entitlements, governments were a conduit for private
finances, grounds conforming with those hypothesised by Brennan in
Northern Land Council. Not only Aboriginal wards, but the parliament
and the wider public had a valid expectation that governments would
wield their extraordinary powers to the benefit of Indigenous interests;
grounds conforming with Brennan’s hypothesis in Wik. A fiduciary
obligation to do so is clearly expressed in the statutes and
regulations.
Like US management of Indian monies, analysis of Queensland government
controls of Aboriginal finances reveals an appalling array of management
and accountability failures; it shows the department neither corrected
its faults nor implemented expert advice to contain them. Like the
Indian experience, despite years of critical reports the endemic defects
continued: inadequate accounting systems; inadequate controls over
receipts and disbursements; failure to provide account holders with
meaningful statements of their accounts. Like the BIA, the Queensland
government failed to keep proper records, failed to account to
beneficiaries for their money, and lost or dissipated or used for its
own benefit beneficiaries’ moneys. Over decades it has ignored all
pleas to accurately account for the trust funds, effectively exhausting
the only administrative remedies available to Aboriginal account holders
who now have no way of knowing the true state of their accounts unless a
court compels the Queensland government to comply with standard trust
practices.
It is my belief that it is within the ‘accepted doctrine’ of Australian
courts to impose that requirement. I believe it is within current
jurisprudence for our courts to adjudicate government dealings on
private Aboriginal finances under the same principles of law as would be
applied to an ordinary fiduciary: namely that the trust must be
administered solely on behalf of the beneficiary, that trustees must not
profit from the administration of the trust, that there must be no
conflict of interest or intent to gain from the fiduciary position, that
trustees must not act for their own benefit or the benefit of a third
party. Above all, as was stated in the Cobell case, our courts
should enforce the ‘black letter trust law’ that beneficiaries are
entitled to a full accounting of all moneys held in trust.
12
Te Runanga o Wharekauri Rekohu
[1993] 2 NZLR 301,
citing R v Sparrow (1990) 70 DLR (4th) 385.
13
Williams v
The Minister, Aboriginal Land Rights Act 1983
[1999] NSWSC 843.
14
Bennett v Minister
of Community Welfare
(1992) 176 CLR 408;
Brunninghausen v Glavanics
(1999) 46 NSWLR 538.
15 Breen v Williams
(1996) 186 CLR 71; Paramasivan v Flynn (1998) 160 ALR
203.
17 Pilmer v The Duke
Group Ltd (in liq) [2001] HCA 31.
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