From The AGE

Small Start Offers Big Hopes

The AGE reports on Gerhardt Pearson and Kevin Fong's Speech to the United Nations Conference on Micro Credit

Tony Parkinson's article published in The AGE on Chairman Gerhardt Pearson and Deputy Chairman Kevin Fong's speech to the United Nations Conference on Micro-Finance held in Melbourne on the 30 August, 2005

CRITICS call it a way of inflicting capitalism on the poor, but microcredit is a simple, yet compelling idea whose time has come.

It has been embraced by the United Nations and the Asian Development Bank as a way of building a robust self-help culture in some of the world's most deprived communities. Now, it is beginning to emerge as a credible "grassroots" alternative to 40 years of failed welfarism in indigenous Australia.

Leading the push for this radical rethink of how to confront the social and economic crisis in Aboriginal communities are two of Australia's most prominent indigenous activists, Gerhardt Pearson from Cape York, and Kevin Fong, from the Kimberleys.

Disillusioned by the serial failings of government bureaucracy, and appalled by an epidemic of substance abuse sweeping indigenous society, the two are seeking to bring about a tidal shift in attitudes: governments must reassess their role, recognising that welfare dependence is part of the problem, not the solution; for their part, indigenous Australians must be given the chance to rediscover the value of being rewarded for hard work.

The two outspoken community leaders were in Melbourne yesterday to brief an international seminar hosted by the UN Association of Australia on the efforts to use microcredit as the mechanism for getting an enterprise culture up and running in their communities.

Microcredit is based on the principle of providing small start-up loans at affordable interest rates for people with little or no credit history, no experience in running a business, and no prospects of gaining access to standard commercial banking loans.

Only two years after Pearson and Fong set up the Indigenous Stock Exchange, there are 139 companies
listed: from far north Queensland to remote Western Australia; from Redfern in inner Sydney, to Shepparton, and suburban Melbourne. One is Willie Gordon's "Guurbi Tours", which is becoming something of a legend on the backpackers' trail.

A qualified tradesman, Gordon was holding down well-paying jobs in north Queensland but his family wasn't doing as well. One brother was sleeping rough in Cooktown, spending welfare payments on cask wine. So Gordon wanted to start a private family business taking tourists to traditional rock art sites.

Willie sought, and won, approval for a $2000 start-up loan through the ISX. That first loan was repaid within two months as the business prospered. Willie's brother now works full time as a tour guide.

Pearson and Fong hope the fostering of many hundreds of similar small-to-medium businesses might help reverse a mentality of defeat and resignation in indigenous communities; give women greater financial independence, and more control over the destiny of their children; and help reduce the debilitating effects of alcohol
addiction on Aboriginal men, and the lives of those around them, by
reducing reliance on the drip-feed of welfare, and restoring
self-esteem.

Critics might say this is a Band-Aid solution, that risks letting
governments off the hook for the huge gaps in health and education
services in remote communities. But Pearson
is undaunted: "We have to get away from this notion that Aboriginal
people are not interested in business. Encouraging the growth of small
business can empower the individual in a dysfunctional community. It
can rebuild families, rebuild leadership."

The older brother of Noel Pearson Gerhardt is an equally adventurous thinker, anxious to redefine the debate by
putting more emphasis on the individual and less on government
intervention. He admits this is a confronting approach for many in the
welfare industry: "Some people feel threatened by that. Absolutely."

But he argues it requires merely that communities rediscover skills
lost in the last generation or two: "In the first half of the 20th century, through to the 1960s, our parents and grandparents in Hope Vale were working on dairy farms, growing crops, supplying timber, as well as producing arts and crafts. These were self reliant and industrious communities, built on the hard work of black people. So this concept of micro-business is not foreign to us."

Back then, of course, the fruits of their labour went elsewhere. On the missions, profits paid the wages and salaries of white staff, while Aboriginal workers were paid in subsistence rations of flour, sugar, tea and tobacco. Then came the 1967 referendum.

Full citizenship brought voting rights, equal pay provisions and welfare entitlements. But the shake-up of the rural economy meant many Aboriginal men seeking unskilled work on pastoral properties found themselves priced out of the market.

They came back to their communities, and went on the dole. Says Pearson "Equal pay and the advent of welfare. That changed things for us."

Pearson and Fong believe the top-down approach to economic development is simply not working for their communities. They argue microcredit brings into play new and vibrant partnerships and networks -- not just within the communities, but also with the "whitefellas" of
corporate Australia.

Big players to line up behind these micro-business initiatives include Westpac, Boston Consulting Group, and The Body Shop. There is also philanthropic support from the Myer Foundation, and non-government organisations such as Opportunity International, which has run similar projects in the Philippines, East Timor and Africa.

Microcredit has become a well-tested model for reducing the
vulnerability of low-income families in some of the world's poorest regions. Says Fong: "We have seen the benefits elsewhere in the world. Why not see what can be done in our own backyard?"

But Pearson says it calls for a dramatic change in mindset, on all sides of the debate: "Governments have to stop doing everything themselves. They have to see their role as that of an enabler. And to stop their bureaucrats acting like they are God."

Tony Parkinson is a senior columnist.

NB The ISX wants to acknowledge that Willie Gordon's Guubi tours was very much due to the work of Balkanu's Business Hubs, Indigenous Enterprise Partnerships and also Willie's business mentor Judy Bennett. The point that the Chairman was making in his speech was that more microfinance and resources needs to be made available in conjunction with supporters and mentors to replicate the success of Willie's tours. The ISX is trying to make this happen across Australia through its trading floor, alliance with micro-navigator and supporting Indigenous organisations

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