COMMERCIAL DEVELOPMENT AND NATURAL RESOURCE MANAGEMENT ON THE INDIGENOUS ESTATE: A PROFIT-RELATED INVESTMENT PROPOSAL

Authors

  • Jon Altman,

    1. Centre for Aboriginal Economic Policy Research, the Australian National University
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  • Michael Dillon

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    • **

      NT Department of Community Development, Sports and Cultural Affairs, Darwin. His views are expressed on a private basis and do not reflect those of the Northern Territory Government.

      This article is based on a paper initially prepared for an Academy of Social Sciences in Australia Symposium ‘Government as Risk Taker’ and presented on 8 November 2004. We were challenged to address an Indigenous theme for the Symposium. We would like to thank Bruce Chapman (convener of the Symposium), Ric Simes, Boyd Hunter, Matthew Gray, Nicolas Peterson, Melinda Hinkson, and Peter Whitehead for initial comments and then two anonymous referees and Hilary Bek for their subsequent inputs and helpful comments


Abstract

This article assesses the state of commercial development and resource management on Indigenous land in remote Australia. Indigenous landowners control significant assets—over one million square kilometres of land—often with substantial resource rights and income earning potential. The inactivity and missed opportunities on the Indigenous estate are of such magnitude as to represent a major risk both for Indigenous landowning communities, in terms of their future economic and social well-being, and for national and international interests in terms of ecological vulnerability. The article explores the role of government as risk manager in such circumstances and outlines the principles that might underpin any intervention program targeted to the commercial development of Indigenous land. Using the analytical framework for profit-related loans and elements of an existing venture capital support programme, the Innovation Investment Fund Program, we outline the hypothetical skeleton of a new investment scheme to assist development and natural resource management on the Indigenous estate. Our proposal can be conceptualised as a profit-related loan scheme or as a form of capped public investment. It seeks to address key elements of the market failure that exists in relation to financing development on remote Indigenous land, provides incentives for greater private sector investment, and ensures that commercial and social risks are shared equitably between government, private sector investors and Indigenous-owned corporations to avoid problems of adverse selection and moral hazard.

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