Dr Ros Kidd
Historian - Consultant - Writer
Taken on trust….
The evidence I will
share with you tonight is taken from documents which are held by the
Queensland government – or were held by them in 1990 when I
researched my PhD which examined how governments controlled Aboriginal
people in this state.
Although
all Australian legal systems derived from British jurisprudence, each
state operated independently in regard to its treatment of the
Aboriginal population.
(Amounts are
approximated to today’s value; full sources for the evidence is in
Trustees on Trial.)
In
1897 the Queensland government passed The Aboriginals Protection and
Restriction of the Sale of Opium Act giving itself the power to
declare anyone of Aboriginal descent a ward of state and confine any
person or family on a controlled reserve.
Leading police officers in each district were nominated as protectors.
This surveillance regime operated for 80 years during which time the
government
dictated where, when and on what wage children and adults could be
indentured to work; in fact no Aboriginal person could work except under
government-controlled ‘agreements’.
Regulations in 1899 required employers to provide shelter, blankets,
rations and clothing but made no provision as to how this would be
enforced. Protectors or JPs certified that the agreement had been
‘explained’ to the worker ‘who appeared to me to understand the same’
and over 1200 agreements were processed in the twelve months to June
1900. Under the Amendment Act (1901) the
government
assumed the power to manage Aboriginal property including retaining or
selling it; protectors could demand direct payment of workers’ wages and
supervise their spending. Minimum wages were set ranging from children
under 12 years and including domestics. Aboriginal stockmen were paid
only one-eighth the white rate although they were often described as
more highly skilled than their white counterparts.
From 1903 protectors took direct payment of all female wages; these were
banked in the name of each employee, with the protector as trustee. He
was
deemed to be a public accountant under the Audit Act (1874) and
had to keep a ‘proper record of wages’ available for inspection. The
protector was authorised to expend money on the worker’s behalf and to
supervise withdrawals ‘to protect the interests of the employee’,
commonly by way of vouchers at local stores. Wages of workers based on
missions or settlements were similarly paid direct to the
superintendents and accessed through store vouchers on the communities.
Workers could only access their money by asking the protector or
superintendent, and people, even with large savings, were routinely
refused. The government knew fraud on workers’ accounts was rife from
as early as 1904 when it introduced thumb printing to reduce it.
In 1914 the department increased minimum wages and demanded every
worker’s wage be paid direct to local protectors, lifting government
holdings of Aboriginal earnings to almost $4 million. 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 despite continuing testimonials confirming
the preference of many employers for Aboriginal workers. Workers had to
maintain their families on this fractional wage; failure to do so
triggered removal of children from families or deportation of families
to a reserve.
The
government controlled savings of more than $6 million in over 6000
accounts in 1919, when new regulations imposed a tax on gross wages of
5% (single) and 2.5% (married), although it didn’t inform workers of
this confiscation. This brought almost $300,000 into the new Aboriginal
Provident Fund by 1921, ostensibly for sick or unemployed workers; but a
public service inquiry in 1922 revealed the government had taken large
amounts from both this Fund and a second fund holding deceased estates
and unclaimed accounts, for construction on the settlements, subsidies
for missions and costs of compulsory relocations. The inquiry said
police calculations were so unreliable workers should be allowed to
appeal dealings on their accounts; this was rejected and frauds
continued.
An
inquiry in 1932 said supervision of accounts was ‘totally inadequate’
with no checks on wage payments or deductions, pilfering on the 4550
accounts was common, the accounts were at great risk and ‘the
opportunity for fraud existed to a greater degree than with any other
Governmental accounts’. The chief protector admitted there were no real
controls on dealings on workers’ accounts, currently totalling almost
$14 million. The chief protector admitted the rarity of inspections
allowed a culture of dishonesty, but he again refused to allow workers
to check their accounts. The government had taken around $3.5 million
from the two Trust funds ‘for departmental purposes’, rendering the
deceased estates’ fund technically insolvent. In 1933 the bulk of
workers’ savings was centralised under head office control in Brisbane,
ostensibly to ‘minimise fraud by members of the Police Force who are
Protectors.’ Almost $15 million - over 80 per cent of these private
savings - was promptly transferred to investment to raise revenue for
Treasury, a lucrative policy continued for over 30 years. Protectors
now sent a monthly cheque to head office of total wages received, and
withdrawals were listed on individual cards for reconciliation in
Brisbane. In reality protectors’ daily dealings on Aboriginal funds
continued largely unchecked, and the government admitted most account
holders were ‘illiterate and unable to comprehend the system of
recording and investing their funds’.
In 1935 thumbprinting was reintroduced as a check on dealings on
Aboriginal accounts. Although auditors stressed in 1940 that
thumbprints were ‘the only valuable evidence that expenditure is
correctly chargeable against individual accounts’ they found many prints
were ‘so carelessly taken’ they were ‘useless for verification’, and
only one-third were checked against identification cards. By 1941 the
department controlled over 18,000 people; a new investigation said
records at head office were hopelessly muddled, accounts were not
properly kept and no effective checks were in place. Although the
Criminal Investigation Branch (CIB) subsequently checked the prints,
auditors complained protectors commonly held thumb printed vouchers for
goods not yet provided or not supplied at all.
Again in 1950 auditors stressed the high importance of accurate
witnessing ‘owing to the more or less illiterate condition of natives
subject to the Act’, yet the department had no database to check
thumbprints on the accounts of the hundreds of workers based on the
northern missions and in 1964 there was still no double check for
workers controlled through the Brisbane office or from the settlements,
nor for child endowment accounts holding almost $450,000 which had
operated since 1942. Auditors warned it was highly unlikely a worker
could detect errors and frauds because all knowledge of dealings on
their accounts was denied them. In 1965 there was still no signature
database and therefore no certainty ‘that witnesses do, in fact, witness
all payments’; public service inspectors warned the accounts were
therefore exposed to ‘potential loss by fraud’. In response, the
department introduced only sample signature checks.
Passbooks and child endowment books were issued from February 1966 but
only after 1971 could account holders finally control their own
accounts. The bank passbooks gave only the balance remaining at that
date and many people were shocked at how little remained despite decades
of work and decades of financial denial. It may well be true, as the
government now claims, that all balances were paid out in the 1970s, but
these balances of course conceal the decades of loss through the
entrenched flawed management so clearly detailed by auditors, internal
investigations and on administration files. People who protested then,
and now, were told the government has lost many of the files and cannot
explain what happened to their money. In 2002 premier Peter Beattie
told parliament it was ‘impossible to say’ how much each worker is
owed.
I’ll turn now to the matter of pocket money. During its 70-year
contract labour system the government allowed employers to pay into
workers’ hands between 30-80% of wages, supposedly detailed in a special
book. These books were never checked by head office although it knew
fraud was rife. The 1932 inquiry said the system was so easily abused it
could ‘quite reasonably be assumed’ workers were being cheated even
where books were fully itemised and endorsed; protectors in the 1940s
described the system as a farce and a direct profit to employers.
Auditors’ demands the books be returned for inspection by head office
were rejected as too costly. Protectors in 1956 said the pocket money
system was useless, futile and out of control, with workers ‘entirely at
the mercy’ of employers who simply doctored the books; auditors in the
mid-1960s said the department ‘appears to exercise no direct supervision
… over the payment of pocket money by employers’, and the department’s
director conceded pocket money was probably not paid ‘in many
instances’. In a workforce numbering annually between 3000 and 5000
people in the 50 years to 1968, potentially an average of 50% of their
wages was lost ‘in many instances’. That equates to over $18 million
for just the 1957 year, which authorities admit could ‘quite reasonably
be assumed’ to be defrauded from the grossly discounted wages because
the government refused to apply essential safeguards.
Turning now to the matter of 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,
effectively profiting by $40,000 quarterly in reduced outlays to the
Presbyterian missions alone. From mid-1947 the government retained the
full endowment for all settlement children under 5 years of age,
asserting it was supplying ‘luxury food and clothing’ as well as
‘complete maintenance.’ But this is belied by medical surveys of that
time that show the settlements were mired in poverty: there was chronic
malnutrition, children’s diets were grossly deficient in milk,
vegetables and fruit, and infant mortality rates were 15 times the
Queensland average. And one year later, when the stockpile of endowment
for settlement mothers was $240,000, these funds were earmarked for
dormitory fridges and recreation halls.
In 1951 over $51,000 from endowment funds was used to build a child
welfare centre at Cherbourg settlement. In 1953 the endowment stockpile
for Palm Island mothers stood at almost $420,000 and the director said
the superintendent had ‘that much money, you don’t know what to do with
it’. Concerned that the Commonwealth government might ‘find out we are
holding that money’, they decided to allocate $52,000 apiece on domestic
science and manual training centres. In 1954 over $166,000 of Palm
Island endowment was used to build a hostel on the mainland plus another
$58,000 in 1957 to complete the project. In the 1966/67 year the
government gave settlement mothers less than half the $685,000 it held
to their credit and from 1968 it processed endowment through the
Aboriginal Welfare Fund, replacing revenue lost when the 1919 tax
ceased. Meanwhile the children sickened and died: a 1970 survey found
malnutrition was the key factor in deaths of 50 per cent of settlement
children under three and 85 per cent of children under four, and
stillbirths and premature baby deaths were over four times the rate for
white babies. Only after 1971 – thirty years after its introduction –
was endowment paid in full to mothers to use for the benefit of their
families.
Pensions payable from 1959 were also ‘diverted to revenue’ by reducing
rations to pensioners in country areas, reducing subsidies to the
impoverished missions and withholding two-thirds of the pension for
‘clothing and incidentals’ for settlement pensioners. In 1960 the
director said almost $525,000 of pensions ‘goes direct to Revenue’; this
rose to around $720,000 in 1963/64, a direct profit to the government
which previously met all pensioner needs. Auditors warned there was no
provision in the Acts or regulations for such ‘contributions’ from
pensioners to consolidated revenue, but the government continued the
practice while widows, invalids and the elderly struggled to survive.
These are the Stolen Wages, although I haven’t mentioned the failure to
distribute workers compensation and deceased estates, and I haven’t
mentioned government raiding of private savings accounts to pay for
amenities on its country reserves. Do not forget that the Stolen Wages
regimes are grounded in, and themselves compounded, the unquantifiable
emotional and social cost of fractured families, unremitting and largely
unrewarded work, lousy conditions and physical and sexual abuses – these
are detailed in Trustees on Trial. These abhorrent regimes of
financial dispossession occurred around Australia, and are the focus of
the current Senate committee of inquiry into Stolen Wages nationally.
In 2002 the
Queensland government said it recognised the suffering caused by the
protection controls and offered a maximum of $4000 to an estimated
16,400 surviving potential claimants. The financial dispossession of
parents and grandparents is simply disowned. Claimants must indemnify
the government against legal action on any matter arising under the
protection Acts and very few people have any documentation to identify
what is missing from their accounts. Most said the offer was an insult
and rebuffed it; just over 5000 people were paid.
In 2004 the New South Wales government agreed to pay back what is
identified on its records as money held in trust for individuals but
never distributed to them; no indemnity is demanded. But successful
claims in both states are dependent on documentary evidence and both
governments are quick to stress many records have been lost. Indeed
over a
third of those who applied for payment in Queensland were rejected on
those grounds.
To
my mind this is a disgraceful miscarriage of justice. Successful
litigation for decades of lost finances is dependent on the government’s
ability to find sufficient scraps of evidence to sustain a plaintiff’s
charge of fraud or misappropriation. Meanwhile the whole appalling
array of management and accountability failures remains quarantined from
scrutiny: inadequate accounting systems, inadequate controls over
receipt and disbursements, inability to determine cash balances, failure
to provide accountholders with meaningful statements of their accounts.
These words, in fact, were cited by the District Court judge in the US
class action of which Dr Cobell will shortly speak, where Indian trust
fund management was described as so chaotic it was ‘akin to leaving the
vault door open.’ As I hope you now realise, that certainly applies for
Queensland. As in the Cobell case the Queensland government has
never accounted to the people for monies it held for them in trust, and
people have no way of finding out unless a court compels it to adhere to
standard trust practices. Like the Cobell case, people are
seeking to recover what was rightfully theirs.
There is no doubt the
Queensland government saw itself as trustee for the Aboriginal money it
held for private individuals. Legislation stated protectors ‘acted as
trustee’ for wages they controlled, successive Annual Reports
list
‘Aboriginal wages held in trust’ and detailed ‘Aboriginal Trust
Accounts’, and in 1956 the department’s director wrote of his authority
‘in his capacity as trustee for any Aboriginal on whose behalf money is
held’. Given its superior expertise and comprehensive authority, and
the fact account holders were denied knowledge of dealings on their
funds, it could be argued the government had a legal obligation to use
‘a greater degree of skill’ than the ordinary man of business in
preserving the trust funds in its control, and a requirement for a
higher standard of accountability.
I note the US court
confirmed in the Cobell case that the duty to account is ‘black
letter’ trust law; that losing the records is not a shield against
litigation but a primary breach of trust law. Indeed in 2003 the US
court demanded the federal government account for all money and property
controlled in trust since 1887.
There is also the wider trust duty adhering to a person or institution
that holds a discretionary power to adversely affect the legal or
practical interests of another, namely a fiduciary duty. The
vulnerability of Aboriginal people to the abuse of such discretionary
powers has been the focus of tonight’s paper and also of Trustees on
Trial, which investigates the Queensland evidence within the dynamic
of national and international case law relating to the fiduciary duties
of governments in their management of Indigenous money and property.
Trustees on Trial acknowledges that Australian courts recognise a
more limited range of enforceable fiduciary duties, and that the
‘accepted doctrine’ – according to the Federal Court in Cubillo v The
Commonwealth of Australia – is that in Australia such duties adhere
only to economic interests, an avenue I explore in more detail in the
current issue of the Alternative Law Journal. My thesis is that
the Stolen Wages constitute precisely such ‘economic interests’. No
other financial institution with such an abysmal record of negligence,
refusal to implement standard safeguards and outright misappropriation
of trust funds would be allowed to simply pay out a residue or a maximum
$4000 in reparations, dependent on the lottery of surviving records.
So
I ask the legal audience here tonight: given the evidence to hand,
surely there is a legal duty to account as breach of trust and/or breach
of fiduciary duty?
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