A minority of around 450,000 among a population of 21 million, Australia's Aborigines continue to suffer health and lifestyle problems more common to people living in developing countries. On average, they die almost 20 years earlier than other Australians and suffer significantly higher rates of drug and alcohol abuse, unemployment and imprisonment.

The landslide victory of Labor in the general election late in 2007 may present an opportunity for improved relations between central government and the nation's indigenous communities. But for the preceding months, indigenous communities found themselves under intense scrutiny and bore the brunt of new policy-making which some declared was frankly 'racist'. The spark was a report released in June 2007 – the result of a Board of Inquiry created by the Northern Territory government to investigate allegations of sexual abuse of Aboriginal children. The report revealed that Board had found cases of abuse in each of the 45 Aboriginal communities researchers had visited. Recommendations included the improvement of education services and the appointment of a children's commissioner. Greater cooperation with the police and awareness-raising campaigns on issues such as pornography, alcohol and gambling, were also advocated. However, John Howard's government immediately deployed officials, police and army personnel to remote communities and announced that the federal government would take over the administration of Aboriginal communities in the Northern Territory for the next five years so that new laws could be strictly enforced. He also introduced extensive alcohol restrictions on Northern Territory Aboriginal land (limiting the liberty of Aboriginals to purchase alcohol in some cases where white Australians and tourists are exempted from the ban) and linked welfare payments to child school attendance. The measures sparked widespread accusations by Aboriginal groups of racism and vote-scoring ahead of the November elections.

In August 2007, Indigenous Affairs Minister Mal Brough pushed a package of five bills through the House of Representatives and the Senate, sealing legislation on the statute books which rights activists say overrides the 1975 Racial Discrimination Act and gives the minister direct control of indigenous townships. Two months after the government's unprecedented intervention, the Aboriginal Legal Rights Movement in Adelaide said that indigenous people remained suspicious that the intervention was a 'Trojan horse for the takeover of Aboriginal land'.

The government's opposition to the September 2007 signing of the United Nations Declaration on the Rights of Indigenous People, at a time when the country had become so acutely aware of the plight of Aboriginal communities, made a mockery of a supposed renewed commitment to addressing the welfare of indigenous Australians. Australia expressed dissatisfaction with references to self-determination in the Declaration and complained that it placed international customary law above national law.

In July 2007, the Queensland Supreme Court acquitted a senior police officer of manslaughter and assault charges in the death of an Aboriginal man, Mulrunji Doomadgee, in a police cell on Palm Island in 2004. The prosecution was the first such case in Queensland, and the first homicide trial conducted against a police officer for killing an indigenous person anywhere in Australia since 1983 – despite the Royal Commission into Aboriginal Deaths in Custody, which investigated the deaths of 99 Aboriginal people in police custody or prisons between 1980 and 1989.

In October 2007, the Australian National Audit Office panned the work of government departments handling indigenous affairs since the demise of the Aboriginal and Torres Strait Islander Commission. After the Commission was abolished in 2005, the federal government arranged for indigenous programmes to be delivered by mainstream government departments, but the report suggests that the approach makes life more difficult for many communities.

On a positive note, an agreement was reached between the Natural History Museum and the Tasmanian Aboriginal Centre for the return of remains removed from Tasmania in the nineteenth century during forced land clearances for European settlers. MRG presented evidence in the case at the United Kingdom's High Court in February; however the case was resolved by mediation and the remains were handed over in May to be buried in Tasmania according to Aboriginal custom.

In November 2007, after a general election landslide victory which swept John Howard from power, the centre-left Labor Party leader and prime minister elect Kevin Rudd pledged that his government would be the first in Australia to make an early formal apology to Aborigines for the 'stolen generation' of indigenous children snatched from their parents. Earlier in the year, in a ground-breaking case, Bruce Trevorrow, an Aboriginal man taken from his family as a baby under the policy, was awarded A $525,000 (US $447,000) compensation. He is the first member of the 'stolen generation' to win compensation.

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