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Dr Ros Kidd
Historian - Consultant - Writer
The Aboriginal Welfare Fund
The Aboriginal Welfare Fund (AWF) operated as a Treasury Trust fund
between 1943-1993. It has been characterised by such habitual improper
expenditure and negligent account-keeping that its present status -
$9million – may well be understated by many times that amount. There
can be no acquittal of the residue until a full independent inquiry is
undertaken to ascertain its rightful value.
The Aboriginal Welfare Fund was established after internal inquiries and
audits over several years continually condemned departmental misuse of
existing Trust funds for items which ‘are definitely charges against
consolidated revenue’. The parameters of the AWF were wide enough to
legitimise these previously unauthorised transactions; no regulations
were ever formulated to define its proper operations.
AWF income derived from sale of produce and enterprises on reserves,
levies from Aboriginal wages (in addition to taxes), child endowment and
deceased estates deemed unclaimed. It was to be dispensed ‘for the
benefit of Aboriginals generally’. In 1960 the director stated that the
AWF was originally established to encourage industrial development
mainly on government settlements and to receive revenue derived from
them, generally retail stores, cattle and produce, and later bakeries,
potteries and artefacts. Often over 40 per cent of department costs
were carried by the Fund, and an estimated $300-$500 million was
processed through it before trading was frozen in the early 1990s after
concerted indigenous lobbying.
Although levies were taken for the AWF from the wages of pastoral
workers based on missions the department refused missions access to AWF
funds for development projects, declaring it was only for ‘the payment
of wages and material, plant etc involved in the industrial undertakings
on government settlements.’ Records show costs of blankets, clothing
and rations for the destitute were frequently and improperly charged
against the AWF, as were costs of compulsory relocations, which were
generally listed as ‘recoverable expenses’ but rarely repaid in full, if
at all.
Costs for developing and running two cattle properties purchased by the
department in 1945 and 1946 were wrongly charged against the AWF despite
protests from the director that the Fund was ‘neither competent nor
eligible’ to meet costs. With the AWF bankrupt by mid-1946, the
director complained it was carrying items ‘rightfully charged against
the Vote’, such as wages and ‘legitimate Vote expenditure’ such as cost
for ‘the cost of removal of Aboriginals, indigent, sick and
refractory.’ So excessive was expenditure charged against the AWF that
it was in debt six of its first ten years of operation. Yet the Fund
continued to be used for government liabilities: in the mid-50s for
wages of white overseers and $48,000 for land for a hostel near
Townsville (later constructed with $150,000 of Palm Island child
endowment funds).
In
1959 the chief accountant blamed a drop of almost $612,000 (today’s
value) in the AWF on the diversion of the Fund’s holdings to cover what
was otherwise Vote expenditure, which the director again deplored.
During the 1960/61 credit squeeze the AWF balance dropped by 56% as
greater amounts of community wages were charged against the AWF, as
were, for the first time, several vehicles. This blatant misuse was
described by the director as ‘a financial benefit to Contingencies Vote
and a drain on Welfare Fund to such extent that the latter is unable to
meet similar commitments in future.’ In 1963, after expenditure for
reafforestation at Hopevale mission, sewerage at the Aitkenvale hostel
and a new store on Palm Island, the Fund was again in debt.
The department’s vast cattle enterprises led the director to boast in
1970 it was the biggest ‘cattle baron’ in Queensland. These were
financed and stocked from AWF funds yet the department at that time had
no working accounts by which to measure its operating results. In
1978/79 auditors complained lack of musters precluded proper assessment
of stock numbers. In the mid-1980s auditors again criticised livestock
controls which comprised ‘the handwritten sheet attached to the inside
cover of the relevant file’, with quarterly returns were prepared from
the same handwritten sheet. In 1990 the auditors again complained of
‘significant problems with the department’s livestock operations’. Cost
of these basic business failures and negligence can be identified in
balance sheets of the AWF which carried cattle trading losses every year
after 1975, losing the equivalent of $2.4 million to 1980 and a further
$11 million to 1990.
From 1980 commonwealth housing money was handled through the Welfare
Fund as was any income from sales of houses and rental income. Direct
commonwealth inflow through the AWF rose from $6.3 million ($16 million)
in 1980 to $10.35 million ($17.6 million) in 1985 to $25.2 million
($29.2 million) in 1990, yet auditors continually criticised incomplete
control registers and massive longstanding rental debts. Despite
massive entrenched overcrowding the department ran ‘surpluses’ on
commonwealth housing funds totalling $7.5 million ($15.6 million)
between 1980/84 and a further $11.25 million ($17.5 million) between
1985/90. Much of this was invested on the short-term market, the
interest being a bonus to Treasury.
In
1983, forty years after its establishment, there were still no
procedures to evaluate ‘profitability or otherwise’ of the various
Welfare Fund activities, there being ‘little or no controls’ to evaluate
farming, pastoral viability, piggeries, fishing and oyster projects. In
late 1983, the executive officer warned the director the cash liquidity
of the Welfare Fund was ‘alarming’, because of a $1.25 million ($2.4
million) blow out of expenditure over receipts. In a ‘strictly
confidential’ letter the director notified the department’s manager at
Yarrabah that the financial position of the Fund ‘is occasioning grave
concern’; balance for the year fell by nearly 50% to only $1.9 million
($3.6 million).
In
1988 Cabinet agreed to the sale of the Comalco shares, purchased by the
Welfare Fund between 1970 and 1985 with proceeds ‘to provide funds for a
bank so that funds could be provided for individuals who have been
refused finance from other sources.’ The sale realised $570,353
($764,275) but no bank was ever set up for Aboriginal benefit; instead
the proceeds were absorbed into the Welfare Fund.
Estimated Welfare Fund income dropped sharply from the mid-1980s as beer
canteens were transferred to council control during the mid-1980s. In
1986/87 the deficit was almost $2.75 million in store sales alone, as
councils went elsewhere for bulk alcohol, and several retail stores were
transferred to private enterprise. Livestock sales generated only half
anticipated profits.
In
1988 minister Bob Katter sought half the expected $4.5 million from the
intended sale of the department’s Cairns office to fund community
projects such as upgrade of runways, wharfs, roads, bridges, pasture
development and water supplies, arguing: ‘The Aborigines Welfare Fund
cannot continue to support the expense of this type of initiative’ due
to its shrinking income pool.’
Public agitation over the Fund prompted an internal inquiry in 1991.
Conclusions were that many projects bankrolled by the Fund were probably
economically unviable, that no register existed of the ‘considerable
asset base’ and that ‘unwise decisions may have been made’ by the
executive officer. It was suggested that ‘illegality would be extremely
difficult to establish’ unless there was evidence of ‘abuse of trust’.
It is a basic duty of trustees to keep full and detailed accounts; and
the basic premise of a fiduciary relationship is that the trustee must
at all times act in the interests of the beneficiaries, and is not
entitled to profit from the fiduciary relationship.
The AWF was set up ‘for the benefit of Aborigines generally’ and
comprised monies from wages, child endowments, deceased estates, and
profits from their labour on community reserves. There is a strong case
to be made that decades of official mismanagement has drastically
depleted the balance remaining in the fund.
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