Andrew Forrest plan is just the job

Release Date: 
19 October 2013

Labor had big promises with good intentions, but made little headway on indigenous employment. It was telling that Jenny Macklin, in her summary of her government's achievements, mainly spoke about delivery of public housing to Indigenous communities, not employment.

In Macklin's critique of the Howard government, the supposed killer line was that the Coalition had built only 64 houses in the Northern Territory in 2007, but "we built more than 350" in 2011.

This service delivery mindset - the idea that "we" can build a future for Indigenous Australians in the form of passive welfare housing and other programs - has been discredited by decades of failure. The best welfare policy for indigenous Australians is jobs.

The self-esteem and empowerment that comes with regular employment is the only viable foundation for a strong Indigenous community and equality between indigenous and non-Indigenous Australians.

A nationwide movement, largely based on private initiatives, has emerged in recent years for ending disparity between Indigenous and non-Indigenous Australians by getting indigenous individuals into jobs. More than 60,000 jobs have been pledged through the Australian Employment Covenant.

The Abbott government will strongly support the new private sector-led initiatives to end disparity. Our main funding commitment in indigenous employment is to support GenerationOne with $45 million initially. GenerationOne is playing two main roles in bringing indigenous Australia and corporate Australia together.

First, GenerationOne is managing the AEC, which lodges employer commitments. Of the 60,000 jobs committed, 12,000 of those positions have been taken up by Indigenous employees.

The other branch of GenerationOne is the creation of Vocational Training and Employment Centres. VTECs are based on Fortescue chairman Andrew Forrest's key insight that has underpinned his company's success in engaging Indigenous people: that one must start with an existing job and work backwards to find and support the employee into work.

This is a fundamental break with conventional policy, which is to start with the individual and train him or her without any particular job in sight. Too easily Indigenous employment policy becomes "training for training's sake" - only 37 per cent of training results in a job.

This week I visited Fortescue's operations in the Pilbara in Western Australia. The results achieved by Fortescue's VTEC are impressive. With passion and compassion, the VTEC staff at Fortescue are helping Indigenous applicants to overcome barriers to indigenous employment such as legal and licensing problems, health and housing. In addition to a guaranteed job at the end of training, the workers get the opportunity to purchase a home through salary sacrifice.

There are 458 indigenous Australians directly employed by Fortescue and 481 employed with contractors. The lasting impression from Pilbara, though, was not the numbers, but listening to Indigenous trainees and workers. Their backgrounds were the same as other remote Indigenous people - schooling that was mediocre at best and various degrees of family and community dysfunction - but the opportunity to get a real, well-paid job and a house had changed the course of their lives.

There are other corporate employment schemes that are equally successful. At Rio Tinto Alcan's Weipa operations, 25 per cent of employees are Indigenous Australians who have made the transition from school-based traineeships and apprenticeships into permanent employment.

In the Shepparton area in Victoria, many young Indigenous people are now in jobs as the result of a partnership between Wesfarmers and the local community under the leadership of Paul Briggs. I am told that the industry cluster approach in South Australia is delivering well.

The model of employers offering real jobs and working with local communities is indeed promising to convert the nation's goodwill into real jobs. But circumstances are different in different places. In particular, there are remote places where there is no large employer such as Fortescue who can house a support team such as VTEC in the Pilbara. Or no employer at all.

Therefore, the Coalition government's second major commitment in Indigenous employment is to launch a review into all Indigenous employment and training programs, led by Forrest. Within six months the review will report to the Prime Minister as to how Indigenous employment policies can be linked to the genuine and large job commitments by employers.

The review will attempt to make a definitive break with the cycle of entrenched indigenous employment programs that don't lead to jobs. The existing employment model (Job Services Australia) seems not to be working for Indigenous people: after three months of employment almost half of those placed have already dropped out.

Without pre-empting the review, a major problem is that remote housing today ties individuals to a life of passive welfare dependency. If you stay in a place where there are no jobs, you get a free house; if you move to get a job, you lose the house. The housing program I saw in the Pilbara was the very opposite of this perverse incentive.

To advise on solutions to such fundamental problems will be the task of the new Prime Minister's Indigenous Advisory Council, chaired by Warren Mundine, which has been established in addition to the six-month review to work across all Indigenous policy areas with the long perspective in mind.

Both the Forrest review and the Advisory Council are reporting directly to the PM, and all the important parts of Indigenous policy have been brought into the Department of Prime Minister and Cabinet. For the first time we have a Prime Minister for Indigenous Affairs: a Prime Minister who is convinced that making substantial headway into disparity is the measure by which he and his prime ministership will be judged.

Our government's realisation, though, which differs from that of the former government, is that government cannot end the disparity alone.

It requires government commitment and sound policy, but in concert with efforts of business and indigenous people themselves. The ingredients are there. As the Prime Minister pointed out: "There is so much goodwill; the challenge is to convert this into change for the better."