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A financial scandal

Ros Kidd, historian and consultant, 10 November 2009

ROS KIDD: I want to give a bit of a picture of the whole spirit of what stolen wages means to people and perhaps a little bit of the involvement in trying to make it public and trying to work towards getting justice.

If I was a young Aboriginal woman in Queensland between the 1920s and the late 1960s, there would be a one in two chance that my life was totally controlled by government. I’d have no rights about where I lived, where and when I worked, my own future, or the futures of my children. I’d probably be removed to a government settlement, where I’d be separated from my mother and siblings from the age of five and confined in a dormitory, taught only basic English and arithmetic, and trained as a domestic servant.

At 13 or 14, I’d be given some clothes and sent to a town or a remote cattle station to start my life of work. Many young boys were also sent to work on the stations, along with men and women, trapped in a 51-week labour cycle ‘working for the man’.

The files show there was nothing to protect external workers from abuses. There were initially no limits on how many hours they would work, how hard the labour, how bad the treatment, or provision of food and living quarters. Minimum conditions were introduced in 1919, but there were no inspections to enforce them.

In 1921, the Chief Protector admitted shelter for many Aboriginal workers was, and I quote, ‘worse than they would provide for their pet horse, motorcar, or prize cattle.’ In 1936, on one station families were forced to live in the open with no protection from rain or cold winds.

In the 1940s, it was reported many employees in the Gulf area thought, and I quote, ‘anything is good enough for a nigger.’ In 1959, one group of workers lived in an open shed without any bedding, light, or table, paid only tobacco and matches each week.

All these things the government knew because they are all still on file at Head Office, or they were when I did my research. Only in 1956, after the system had run for 60 years, did the government instruct industrial inspectors to include Aboriginal employees in their tours of rural areas.

Even then, as the records show, abuses continued: sexual assaults, wet living quarters, rough handling, beatings with chains, lack of water and cooking facilities, and widespread hookworm and ill health, especially among children.

As one of thousands of people under government control in Queensland, this would have been my life over many years: no idea what I was paid or if I was paid, my money going straight to the Protector except for a pittance of pocket money, and even that was not certain. If I asked for some of my own money to spend, the Protector might give me a little or none at all.

If I married, or when I was too old to work, I would live out my days in the poverty of the settlement, and often I might wonder what happened to my money.

One of the enduring myths is that the Australian economy was built on the sheep’s back, that our wonderful rural wealth during the late nineteenth and much of the twentieth century made us the lucky country we are today. We hear nothing about the huge, nameless army of unpaid and underpaid Aboriginal labour upon which this wealth depended, generations of workers who even now are rarely acknowledged.

I believe this is because official files that chart the critical value of the Aboriginal labour force reveal also the entrenched and shameful exploitation of work and wages by the governments that controlled Aboriginal employment into the early 1970s.

Each state government and the Commonwealth government in the Northern Territory between 1911 and 1928 carefully crafted laws controlling Aboriginal lives and labour and surveillance systems to force individuals to abide by them. Government dictated where and when you worked, the type and conditions of that work, what you might be paid, and if you could spend it.

In Queensland until 1968 in rural areas and until 1979 on government settlements, Aboriginal legislation overrode the whole raft of industrial protections enjoyed by every other Australian worker. So to understand the entrenched poverty over generations of working men and women, we have to analyse the actions of government.

Consider the facts from the government’s own files. By 1907 in Queensland, there more than 3000 contracted Aboriginal workers, many working where white labour was unavailable. Often regarded as more reliable and superior stock riders and bushmen, and that’s on the files, than their white counterparts, but they were sold to the pastoral industry for about 3 per cent of the white rate.

In the early 1930s, when white rural labour was described as ‘often useless’ and Aboriginal labour said to be ‘indispensable’, 4500 Aboriginal workers in Queensland were sold at about 40 per cent the award rate for more than a decade. By the mid-1960s, 5000 Aboriginal workers were paid 70 per cent the award rate.

After the equal pay judgment of 1966, workers under state control were simply termed ‘trainees’ and still sold at a discount, although most had decades of skill and experience. It was only after 1972 in Queensland that workers were finally free to choose their employment and demand a legal wage.

So the government’s own records confirm that the prime motivator for the Aboriginal labour market was the needs of the rural industries: the supply of as many men and women as required for a price that the market claimed it could bear - because the government, each time it was considering a raise, would survey the pastoralists and ask them whether they could handle it - send them out to remote areas that white workers shunned, arrest them and return them if they abscond. Don’t look too closely at hours and conditions.

But that’s only half the story, and the other half, and more shameful in my opinion, was the rank financial exploitation of this captive workforce. There is no doubt that generations of Aboriginal people were mired in poverty despite decades of contracted work, and while they were trapped in poverty, the government grew fat on their earnings.

At the start of the twentieth century, to protect Aboriginal earnings from European cunning and Aboriginal incapacity, wages were paid direct to local police protectors who controlled Aboriginal access to their own money. The government knew from the start that these agents were often incompetent and fraudsters, yet even in 1922 there were absolutely no checks on 8000 rural Aboriginal accounts.

When the government did centralise the bulk of rural savings accounts in Brisbane in 1933 - ostensibly, as they said, to minimise police fraud - it promptly locked about 80 per cent of those savings - that’s over $12 million in today’s terms - into investments and kept the interest bonus for itself.

Until the late 1960s, only about 20 per cent of their savings was available at any time for Aboriginal workers, and the files are full of rejections for those asking for a few dollars from their own money.

In 1904, a trust fund was set up to hold monies owing to or saved by missing or deceased workers for distribution to their families. A second trust fund was set up in 1919 for simply taxing all Aboriginal savings for an unemployment relief fund. I guess I shouldn’t assume, but nobody was ever given any written record of what was happening.

Internal investigations show both of these trust funds were consistently raided for government costs, and audit report after audit report criticises the government, which takes no notice.

In the decade from 1925, including the harsh Depression times, the government simply transferred to itself over $930,000 in today’s money from the savings accounts and over $3.5 million from the two trust funds, and that money has never been repaid.

Vast sums from Commonwealth child endowment paid to Aboriginal mothers after 1941 was also transferred into state revenue by paying only a fraction to the settlement mothers and by reducing the grants to the missions by the amount of incoming endowment.

From 1960, invalid, aged and widows’ pensions were diverted to revenue, and that is their term, bringing a bonanza of over half a million dollars today in 1960, rising to almost three-quarters of a million dollars in 1964. Meanwhile, the people whose lives were intended to be improved by the pensions struggled and died in poverty.

When Aboriginal people in Queensland finally got control of their lives and their finances in the early 1970s, many found to their horror that their new bankbooks showed pitiful balances despite decades of work and financial privation. Those who queried Head Office were told that the records were too inconclusive. So many files were lost and destroyed, it’s impossible to calculate the accuracy of their accounts.

This dismissive hypocrisy continues today. At a 1996 Human Rights Commission hearing into a charge by seven Palm Islanders that the Queensland Government’s entrenched underpayment of community wages was illegal after passage of the 1975 Racial Discrimination Act, the government said I could be sued for damages if I presented evidence from their own files to the commission, evidence that convinced the commission to find that the government had, and I quote, ‘intentionally, deliberately, and knowingly’ underpaid six of the seven claimants.

It recommended compensation of $7,000 each, but the [then premier, Rob] Borbidge coalition government refused to pay, even while it held records showing the amounts due to those claimants varied between $8,500 and $21,000. It was only when legal action was launched in the Federal Court that the government capitulated.

In 1999, when the [then premier, Peter] Beattie Labor government offered compensation of $7,000 to all other post-1975 ex-employees, internal files show it had already settled 22 actions out of court, one for $4,000, which was about a quarter of the debt on their own records, and 21 for $7,000, where official estimates of underpayment range between $13,000 and $27,000.

Fewer than half the potential claimants took that $7,000 because they had to sign away all their legal rights to further compensation, even though most had never seen any written record of what they might be owed. In all, the government paid out almost $40 million on under-award wages, but this was effectively $140 million-plus profit that they had made underpaying community workers in the decade from 1975.

In 2004, two claimants took the government to court, and the government settled. Their claims were for $100,000, so I’m assuming they got close to what they wanted. In 2006, on appeal, several hundred settlements onto former Lutheran communities were paid out based on individual records. Many received $20,000, and one was for four times that amount.

Now this is just for the ten-year period of underpaid wages, so now I want to turn to the stolen wages. In May 2002, Beattie admitted there were 4,000 potential litigants waiting to sue the government for the stolen wages, that is, the wages, savings, endowment, pensions lost during 70 years of government mismanagement.

He offered compensation of $55.6 million, which he said was generous despite admitting my own research indicated about half a billion dollars is in question. This offer was a maximum $4,000 per person. Thousands of deceased account holders were simply disqualified, and again, claimants had to sign away their legal rights.

Facing a barrage of public condemnation and poor uptake of only $20 million, in August 2008, the [then and current premier, Anna] Bligh Labor government reopened the scheme and increased the maximum payments to $7,000. In November last year, with $20 million still unclaimed, it said it would tip it into the notoriously misused Aboriginal Welfare Fund and distribute it for education scholarships.

But it had run a survey in which over 90 per cent of the Aboriginal respondents wanted the whole of that money distributed for stolen wages claimants. The minister said, ‘Yes, but of course that didn’t take into consideration the wishes of people who didn’t bother to respond.’ It’s just mindboggling.

I’ll have to shorten this a bit. We looked at doing a national report to bring up the issue in all of the states, and I did a summary based on Fiona and other people’s work. That is published by ANTaR [Australians for Native Title and Reconciliation] in 2007 called Hard Labour, Stolen Wages. It’s available free online. That gives you a bit of a summary for around Australia.

Now I won’t go into the Senate inquiry - it’s been mentioned - but I get to where I am now. Given the overwhelming evidence of negligence and mismanagement by successive Queensland governments, I have long been convinced that it is the government that should be in the dock and on the defence, not an individual trying to provide cast-iron evidence of fraud on his or her account, evidence which the government may have lost, stolen, or destroyed, or said it had done so. It’s amazing how many files they said have disappeared that I’ve got copies of.

I’m inspired by the case of Elouise Cobell, an enterprising woman of the Blackfeet tribe of Montana, who brought action against the US government in 1996 for losing and misusing not only the funds of thousands of individual Indian men and women, but the evidence of that maladministration. In 1999, the US courts found in favour of the Cobell claim, which comprises half a million living and deceased claimants and is estimated by the US government at potentially $40 billion. The amount is high because, of course, with the treaties, all the investment that the government has managed on Indian treaty land, all of that profit is in question. Not surprisingly, they are still fighting for their money.

There is a major hurdle for such a case in Australia. In the US, the courts had already declared that in their stewardship of the enterprises on Indian reserves and management of the individual bank accounts, they said the US government was a legal trustee of those Indian interests with full legal obligations. Of course, a breach of trust case there has no statute of limitations, another thing that I was interested in.

In Australia, as many supportive lawyers in our battle inform me, our courts see things differently. In their view, it’s the people who empower the governments to implement the protection schemes, and the courts would likely be reluctant to interfere and judge how that government’s carried out that mandate. The way the cases have run on the Stolen Generations confirms that view.

But I believe with stolen wages cases on the financial evidence will prove different. It’s much harder to argue benign intent in illegally - no, I have to rephrase that - in fraudulently using private savings than in removing children from their family.

To convince the legal profession and the courts, I wrote Trustees On Trial in 2007, analysing national and international cases relating to trust law and fiduciary duties and applying these legal prohibitions and responsibilities to the negligent and exploitative conduct of the Queensland administrations.

Just a few of the legal duties of a trustee: he must protect the trust property that he controls. He must keep proper records of accounts and provide full information to any beneficiary requesting it. He must not profit from nor have personal interests that conflict with the trust. So you can see the connections.

Loss of records is not a defence. It’s a fundamental breach of trust duties. Two months ago, the Queensland Council of Unions launched court action for breach of trust on behalf of a former community worker, and I believe there are further actions happening.

If I were an Aboriginal woman who’d been trapped in this system, I would be hoping that my day in court would not only bring me justice and reparations, but inscribe on the public mind the vital labour of myself and my race in the generation of our national wealth and our long participation in the national economy. Thank you. [applause]

MAN IN AUDIENCE: Thanks, Ros. Government agencies often need external prodding to respond. Has the Auditor-General been called on in this case?

ROS KIDD: No, the audit reports are very interesting.

WOMAN IN AUDIENCE: You should probably stand there, in front of the microphone.

ROS KIDD: The audit reports are extremely revealing. Year after year, they do expose the government. All the information I have is written on the government’s files and on words on official files where they are saying that the money is being fraudulently used. To challenge the Audit Department in Queensland, you were saying, the Auditor-General in Queensland to account, that would be a rather interesting sidestep, wouldn’t it? And yet, knowing the reports, is he going to say ‘Well, we consistently warned the government it was wrongly using the funds’?

This was particularly in the decade up till about 1941 where they were consistently raiding the trust funds for their own purposes, and being ticked off for it, and doing nothing about it until they started a new trust fund in 1943, the Aboriginal Welfare Fund.

Of course, then they just made the rules that legitimised all the activities they’d been doing: taking money out of people’s accounts, using private monies for government purposes. I don’t quite know how - I’ll have to ask a lawyer, won’t I? - that might play out.

WOMAN IN AUDIENCE: I’d heard that many Aboriginal people in Queensland ended up not making a claim under the scheme, because if they did so they’d be waiving any legal rights to bring action against the government to recover what they’re actually owed. Does that mean that of the $55.6 million, there was a lot of money left over, and if there was, what happened?

ROS KIDD: Well, that year, that is the $20 million that is still unclaimed and that they’re going to tip into a notorious … The welfare fund is one of the worst-run, mismanaged funds, and they’re going to tip it into that. The reason I think they’re doing it is because the welfare fund still exists. It was frozen in 1993 after much agitating from the Aboriginal community, and I think the government is just desperate to get rid of it.

So what they’ve said is, ‘we’ll tip this money in and we’ll distribute it all as education scholarships’, which is a bit of a hoot given that it’s the government’s duty to provide education. The reason people are undereducated is that the government never provided the teachers, the schools, or the amenities.

But I have heard from somebody, and I hope they’re right, that even if that welfare fund does start to be distributed, we can still take them to court over the fund, because that fund was set up supposedly for Aboriginal benefit. That was the phrase. And it was so badly run that the money just leaked out of it, most of it into government costs.

So I think there would be vast sums there which could make a terrific funding pool for something that the community would decide was worthwhile. But that $20 million still sits. There are suggestions, too - and it’s one of my other hobbyhorses - that we have to challenge the signing of these indemnities by people who had no idea what they were signing.

They did tender, after much protest from us, to have independent lawyers. It’s a bit I couldn’t put in there, but in their tendered document it had to be people who have a proven inability to work cooperatively with the government. So it’s not independent, in my view.

WOMAN IN AUDIENCE: Just to correct something that, Andrew, you said earlier, the New South Wales government has now capped the amount being repaid to Aboriginal people in New South Wales, and it’s $11,000.

ROS KIDD: But that money, of course, was just what’s left on the books in New South Wales. It’s a different scheme than Queensland, where the government has tried to get in and cover its back in terms of all the money that’s gone missing in the meantime. So the New South Wales is quite specific, and the question of what disappeared up until those last few amounts that are left still showing to be owed is a separate matter, which I know New South Wales legal people are thinking about.

WOMAN IN AUDIENCE: I have just one question, Ros, quickly before we wrap up this session. Andrew talked before about the difficulty in getting access to all the evidence in relation to stolen wages.

I know that with the Aboriginal Legal Service we actually had to take out several FOI [Freedom of Information] applications, and the Department of Indigenous Affairs resisted for months and months handing over particular archival files in relation to investigations into pensions and trust accounts. What was your experience when you first started doing this research back in the ’90s?

ROS KIDD: Well, I’m afraid I’m the one that stuffed it up for everybody else, because I got into the files at a time when they had no idea what was there. Even the people I spoke to in the administration said, ‘Look, we know about the last five years or so, because we can look that up whenever a question comes up.’ But nobody had any idea of the whole of the history. It hadn’t ever been done, which is partly why I chose it. I had no idea, either. So having got access to the files - well, persistently writing to the government and getting a lot of well-meaning responses but no closer - I actually accosted Marcia Langton, who was briefly in a position working in the department there when the land laws went through in 1990 in Queensland. I accosted her at a conference actually and said, ‘This is what I’m trying to do.’ She said, ‘Write a letter.’

I said, ‘Well, I’ve been writing for two years.’ You can imagine Marcia’s … When she settled, she said, ‘Well, write another letter.’

Around six weeks, I had an access permission: ‘This woman can see anything at all that’s useful for her project,’ since my project was the life in the universe - apart from of course Cabinet documents, which is where we ran slightly astray in Palm Island, but that’s another story. And of course, the commitment not to reveal any personal information, which of course all of the files are personal. But for that reason, you just have to speak generically. They’re easy conditions to abide by.

The Cabinet submission one was quite funny because they’re highly secretive, of course, but being administrations they have copies of them all over the place, which of course they hadn’t realised. But they were very handy, the copies of the government discussing in Cabinet that it was breaching state law and federal law that would continue to underpay workers. That was on several years in the early ’80s, so that was I think why they got nervous when I threw in the copies of the statements I’d made. They realised they were toast, actually.

Date published: 7 June 2010