First published in The Australian

WHEN federal Indigenous Affairs Minister Jenny Macklin stepped before the cameras last Sunday to announce her plan to take over the squalid town camps of Alice Springs, there was a firm set to her jaw, and a determination lurking in her eye.

A year and a half since the election of the Rudd Labor Government, and almost two years since the launch of the commonwealth intervention into the remote communities of the Northern Territory, the new architecture of indigenous affairs in the north and centre is at last taking shape.

It is an architecture that bears, at least on the surface, Macklin's distinctive stamp: it is engaged and pragmatic, and freighted down with goodwill and the atmospherics of consultation - consultation to the bitter end. In the wake of a flurry of significant policy announcements during the past month, several key features of this new order are now clear. The intervention's next phase will be one of "sustainable development".

The Racial Discrimination Act's sway over the remote communities of the NT, cancelled by the emergency response laws, will be restored but a "special measure" will be enacted to allow beneficial race-based policies to continue in force. Detailed discussions with the affected Aboriginal societies will be held during the next two months before the modifying legislation is introduced. The long-delayed drive to provide better housing for remote community residents will be pushed forward, improved health services will remain a priority, large infrastructure investments in the main communities will go ahead, at least once township leases have been extracted by the commonwealth. Action: intervention still, but with a softer, kinder face.

Beneath this shining surface, though, very little change in the governance of Aboriginal communities is being achieved by Canberra's reforms, and there is, in truth, little idea of how to promote revolutionary, liberating change. As a nation, we now confront a perfect policy trap on the Aboriginal frontier: seismic shifts are occurring in the blueprints being handed down to communities, but no successful formula for building a modern remote area indigenous economy has been implemented. The old-established Aboriginal organisations of the NT have failed, and have neither credible authority nor a clear road map for their people; the veteran white adviser cadres who dot the bush seek chiefly to protect the status quo; and most politicians simply refuse to speak with any candour about the state of things.

How is the intervention playing out on the ground? There have been the easy, short-term gains that follow from constraint and Macklin lists them in her new discussion paper on the "next phase". The alcohol and pornography bans and the income-management regime that requires residents to spend half their welfare payments by debit card on basic food and supplies have succeeded in pacifying many of the 73 prescribed remote communities now under tight management: women are happier, there is increased school attendance, nutrition is improved. A sharply extended police presence in the communities has given a broad guarantee of security, and it may even be that drug consumption and sexual aggression are contained. The mood has been upbeat in many places visited by Inquirer in recent months.

And yet this picture is incomplete. Community residents vexed by the new order now spend long periods in the NT's main towns, where they can drink with ease and where violence flares. The crisis in the bush has thus been neatly exported to Katherine, Tennant Creek and AliceSprings.

The face of the remote communities has also shifted in other ways. They are now awash with outsiders: trainers, administrators, family services counsellors, resource centre workers, tradesmen, consultants, federal and NT public servants on rotation passing through: 100 white advisers and workers for a community of 700 is quite normal. Whatever the benefits of the range of services this well-paid incoming army provides, they can hardly be said to encourage initiative and self-reliance in the communities they tend. Indeed, the intervention's most profound mid-term effect may well be its continuing support for the non-Aboriginal economy of the centre and the north.

Let's step back, and see how we got to where we are on the policy map. In the late 1990s, the scale of the crisis in the remote territory became plain to key public servants in Canberra. The communities were in free-fall: no school attendance to speak of, no employment. The population was exploding. A lost generation was growing up. The need for change was urgent. The cost of doing nothing would be greater, down the line, than massive investment right away, in housing, education, health and jobs. This was the so-called "opportunity cost". Statistics were compiled. Urgent plans were prepared.

One key was the realisation that the Aboriginal population was too dispersed. It would cost too much to service them everywhere. Thus a new model was formed: the key social services would be provided to a range of towns, "growth communities". They would get the schools and clinics and workshops. The others, "non-growth" places, would be left to wither in time. This model was well developed before the July 2007 intervention by John Howard and his minister, Mal Brough. Of course the intervention's trigger was the reported crisis of sexual abuse but its measures went much further, and advanced the bureaucracy's social engineering program: the hub-and-spoke model that has emerged from Canberra, and which will guide new investment in the bush.

This month the NT Government endorsed that model and capped its spending on outstations. The long-term vision is one of integration and economic advancement: it is much closer to the 1960s model of large, productive bush settlements than to the '70s ideal of subsistence homelands where traditional culture could flourish on its own terms.

To advance this vision, Macklin and her team must swiftly deliver on three fronts: housing, education and jobs. The record, to date, is mixed. The housing saga is well known. Some $550 million, first committed by Brough, is ready to be spent in the remote territory: progress has been delayed while Canberra secures its township leases; a large fraction of the money is being chewed up in management costs.

Education is the responsibility of the NT Government, but the system is in such chaos that many traditional Aboriginal communities choose to send their children to southern boarding schools. Both the Anindilyakwa Land Council on Groote Eylandt and the Tiwi Land Council use a large fraction of their resources royalties on their respective educationschemes.

Job creation remains an elusive goal in the communities: the changeover from community development employment project make-work to salaried jobs in public positions has been slow, and the obvious path of large-scale employment in land management has yet to be grasped by Canberra in earnest, despite the perfect fit between environmental need and large, youthful labour supply.

Macklin's chief focus has perforce been rather more short-term. Party politics compels her to manage the appearances of the intervention, and appease the concerns of progressive-minded, Labor-voting constituents and parliamentarians in southern seats. This explains the intense concentration on restoring the provisions of the Racial Discrimination Act, the protracted delicacy in dealing with the Alice Springs town camps, beloved of human rights advocates, and the quandary she feels she faces over income management.

Last year, the special review of the intervention, conducted for Macklin by Kimberley indigenous figure Peter Yu, concluded that income quarantining should be made voluntary. Macklin, who professes to regard income management as a success, will now "consult" widely, with a voluntary scheme one option on the table. But it is an open secret that the federal Government is considering a move, after a year, to scrap compulsory income management, the heart of the intervention's first phase, its most coercive and its most life-changing measure. In its place will come some system where "good" citizens can opt out: a path that is sure to be widely followed, as pressure mounts from community residents keen to gain renewed access to untied cash. This shift, coupled with the new emphasis on infrastructure and housing, will bring to an end the punitive first chapter of the "emergency response".

But what next? There are strict limits to the reforms the Rudd regime will contemplate. Macklin and her team have pointedly refused to take strong steps to reshape the troubled Aboriginal institutions of the north. Instead, a new-look national indigenous consultative body is being set up, despite the obvious differences between the needs and attitudes of Aboriginal societies in remote areas and urban regions. The two large land councils of the NT remain big players in Macklin's world, though their role as land claimants is done, and they function chiefly as gatekeepers speaking on behalf of traditional land-holders who are keen to gain their own independent voice.

Local government reforms in the NT over the past year have set up shire councils, many with controlling indigenous representation: these are the legitimate regional institutions of today, and this realisation is slowly dawning on the great commonwealth social service departments.

But crafting a future for Aboriginal remote communities requires above all else a clear sight of what they are now. The communities are a welfare state and, thanks to Cape York activist Noel Pearson, the rotting effects of passive welfare provision in the Aboriginal realm are plain, and the virtues of work-for-welfare programs are accepted across the board. But the communities form a welfare zone with unusual, complicating characteristics. They have Third World living conditions but they are not in the Third World.

Rather, they are in a much stranger place: a place quite hard to see and understand. We might call it the Fourth World: a deeply deprived space contained within the borders of a modern, prosperous First World state. Absolute poverty is not the limiting economic problem: a controlled, regular, yet inadequate supply of transferred money is, along with its inevitable outcome, relative poverty - a fate both grinding and comforting for those locked out of the productive economy. Capital formation is impossible under such circumstances, unless land use can be traded.

The inhabitants of this zone are welfare pensioners, who have subsisted for decades without strong incentives to acquire skills or seek jobs. In this Fourth World of the communities, there is a strong awareness of positional disadvantage: the men, women and children there know they are at the bottom of the social pyramid of Australian life, but they have no idea of how to change their status. The younger generation's members are encouraged to share the expectations of the wider society but geography and the lack of educational pathways prevent them from taking part in the outside world on even terms.

How to resolve this impasse? Education is the obvious key. Strangely, it is also the policy lever Macklin and Rudd have failed to pull in concerted fashion. While the Rudd Government has invested its billions in stimulus spending, it pointedly failed to meet the one crying need in regional Australia, a set of high-quality, federally supported boarding colleges for remote-area students, each located at the heart of its region, each backed by a large foundation that would fund world-class teachers. This is the preferred model of many indigenous leaders; it would be the natural horizon for the intervention's next stage. It is quite beyond the NT Government's scope, and could only be done as a high-priority national initiative. But it is not under serious discussion, and additional teachers are being placed into small, remote schools instead.

The strongest reason for Macklin's caution in her management of the NT's indigenous affairs is that the emergency response was not a Labor initiative: it stemmed from a very different political philosophy. Labor, which is the party of Aboriginal rights campaigning, has been obliged to transform the road map to make the intervention its own, hence the new atmospherics of sustainable development, and the spectacle of coercive measures being slowly watered down.

But finding the new road has not proved straightforward for the policies discreetly being shredded under the intervention are all cherished Labor dreams: the dream of viable homelands, the dream of self-determination, the dream, above all, of a successful, reconciled partnership of equals between the indigenous and mainstream worlds. Instead, Macklin is condemned to patrol the boundaries of remote Aboriginal Australia, exercising strict controls over a disadvantaged minority.

It is one of the darkest nightmares a minister in a social democratic government could face. And yet there is wide agreement among Aboriginal community leaders that the problems of the bush, which took a generation of misjudged policies to produce, will take a generation of strictly guided remedial action to alleviate. For the foreseeable future, Macklin is trapped in her post-colonial role as the controller of the purse strings, the director of all projects, consulting widely with her subjects to secure a degree of consent.