Dollar dreaming: A literature review of economic assessments of indigenous social investment

by Rosa Bishop and Rod Campbell

Developing northern Australia is a priority for the Turnbull Government, like many governments before it. The focus of these efforts is often on capital-intensive major projects such as irrigation dams or mining infrastructure. Such investments generally provide terrible returns to the taxpayer, generate few jobs and fail to ‘develop the North’. For example, the Ord River irrigation scheme has returned just 17 cents for every dollar and while recent expansion did increase employment, it was at a cost of $6 million per job.

By contrast, investment into social and environmental programs that focus on Indigenous communities can provide large economic benefit, as well as social and environmental improvements. This paper reviews four economic assessments of such programs:

  • A cost benefit analysis of the Yuendumu Mediation and Justice Committee by University of Canberra economists estimated net benefits of $14.1 million at a benefit cost ratio of 4.3:1. Major benefits included reduced prison, policing and justice centre costs, as well as increased productivity in the community.
  • Assessment of the Mornington Island Restorative Justice Project by research agency Colmar Brunton commissioned by the Department of Prime Minster and Cabinet found the project had helped restore order in the community and increased community safety and trust. The assessment did not quantify benefits such as reduced crime rates and policing costs but found that they were ‘significant’.
  • Analysis of five Indigenous Protected Area and Work on Country programs by Social Ventures Australia, commissioned by Department of Prime Minster and Cabinet found these programs delivered returns on investment of between 1.5:1 and 3.4:1. Key benefits include better environmental management, increased skills and confidence in indigenous workers and increased economic opportunities in the protected areas.
  • A cost benefit analysis of Healing Centres by Deloitte Access Economics estimated average benefit cost ratio of 4.4:1 for indigenous healing centres. These centres focus on reducing intergenerational trauma and disadvantage in communities and creating physically, socially and culturally safe spaces led by and for Indigenous people.

These economic assessments show that investing more in Indigenous communities should be a priority for governments wanting to ‘develop the North’.

Full report