The opportunity costs of the status quo in the Thamarrurr Region

Abstract

Given the substantial deficits in economic activity, infrastructure and human capital identified by the ICCP/COAG trial in the Thamarrurr Region of the Northern Territory, questions were asked by the COAG partners as to the opportunity cost—both to governments and the local community—of sustaining the status quo. This report presents the findings of a study aimed at answering these questions. It follows a methodology first deployed by the Canadian Royal Commission on Aboriginal Peoples. Using secondary data sources and information on program expenditures provided by Commonwealth and Northern Territory government departments it quantifies both costs due to foregone production and costs due to the remedial actions necessary to compensate for low socioeconomic status as benchmarked against an average set of costs—in this case those incurred in the Northern Territory as a whole. Analysis of these costs reveals that the value of output forgone at Thamarrurr amounts to $43.8 million per annum. As for remedial costs, these are found to be negative to the tune of $4 million per annum. Thus after accounting for all government dollars and transfer payments expended on residents of the Thamarrurr region, far less is spent on them per head than is spent on the average Territorian. What emerges is a structural imbalance in funding at Thamarrurr, with lower than average expenditure on positive aspects of public policy designed to build capacity and increase output, such as education and employment creation, and higher than average spending on negative areas such criminal justice and unemployment benefit. This begs a very important question as to whether this situation serves to perpetuate the very socioeconomic conditions observed at Thamarrurr in the first place.