Patricia Karvelas
28sep05

A FORMER Reserve Bank board member who studied the economic decline of the middle class has sided with "conservatives" calling for Aborigines to leave remote communities if they wish to improve their health and standard of living.

Bob Gregory, an Australian National University economist appointed to the bank's board during the Hawke-Keating years, argues traditional Aborigines need to move into town in order to "significantly lift" their incomes. Professor Gregory, who in the 1980s studied how the middle class had been squeezed by the welfare-assisted poor and by the rich getting richer, says that while he does not want to be grouped with conservatives, remote communities will never provide standards of living and health close to those in the mainstream.

"I am sceptical that government support will be sufficient and I am not convinced that the long-run sustainability of small remote communities at low income levels and poor health is necessarily a desirable outcome," he says in a paper to be presented at the Australian Conference of Economists in Melbourne today.

"As a general rule, out-migration from small remote communities and towns is a necessary condition to significantly lift the income of those who leave and those who stay."

Warren Mundine, the incoming ALP national president and a member of the Government's National Indigenous Council, sparked the debate with his call for Aboriginal communities to adapt to the modern capitalist environment in order to survive.

Professor Gregory says that with welfare support for indigenous people slowly in decline, the debate on the future of the out-migration experiment is crucial.

"So it seems more important than ever, if indigenous incomes are to begin to catch up with those of all Australians, that the rate of successful out-migration should increase."

He says government policies have failed to create an environment in which unskilled indigenous Australians can successfully move into town and into work.

"If unskilled indigenous Australians leave small communities to go to the city, they are unlikely to find work and likely to find that their standard of living does not improve," he says.

For each 100 adults added to the indigenous population over the past decade, only about 15 had found mainstream employment.

"In the long term, it seems that the number of unskilled jobs will continue to fall and there will inevitably be a tension between shrinking jobs and the rapid growth of the indigenous unskilled population of workforce age," he says.

Welfare reforms forcing single mothers and disabled pensioners to look for jobs would make the problem even more intractable.

"As competition for unskilled jobs increases, employment outcomes for unskilled indigenous people will worsen," he says.

The increase in the number of indigenous Australians of workforce age and the low success rate of Job Network programs suggested a substantial increase in expenditure was required.

While policy had helped create an "indigenous Australian elite", it had been completely ineffective in putting less-skilled Aborigines in mainstream employment.

"With increasing government expenditure and increasing emphasis on education attainment, it might have been expected that indigenous non-elite mainstream employment would have improved," he says.

He says a substantial improvement in indigenous income and employment rests upon a substantial economy-wide improvement, but there is no obvious policy framework to bring this improvement about.