At the community level, local community councils and organisations which have run CDEP (indigenous work-for-the-dole programs) are soon to be stripped of their role. At Cape York peninsula, two of the best-performing CDEPs - at Cooktown and Old Mapoon (see Tony Koch's article in The Weekend Australian last Saturday) - have this month been informed that private-sector companies will take over their CDEP programs.

Old Mapoon has made impressive progress with the development of its new community. It is financially sound, has employed good staff over the years, has developed several enterprises in the community and has run a good CDEP program. Audit reports and reviews unanimously support the assessment that indigenous governance is working there.

The new policy lacks confidence in indigenous Australians and is utter madness.

Such policy ignores the role that government has played in the indigenous social disaster in the first place. There is no appreciation that passive welfare has included passive service delivery by governments.

One of the biggest problems faced by indigenous communities is that our lives are dominated by our dependency on and relationship with government. Government and its ubiquitous service deliverers affect our lives to a degree most Australians would not understand.

Non-indigenous Australians have forgotten about the limits of government competence because their lives are not so much dependent upon government as our people's lives are.

In the past five years, Cape York peninsula people have entered into partnerships with corporate and philanthropic organisations through the aegis of indigenous enterprise partnerships. The main features of this model are that the reform agenda is led by indigenous leaders, the private-sector partners provide financial and in-kind support for the reform agenda, and senior corporate leaders champion his or her company's commitment to a long-term partnership. The most important contribution of our private-sector partners is competent personnel.

These partnerships have given us freedom to take action without being dependent on government authorisation and for government funding approval. Where government could not be persuaded to face up to chronic failure and to try new approaches, our private-sector partnerships have enabled us to try something new.

The lesson: government is at its best when it realises its limitations. To be sure, governments are a welcome partner, but they are ideally junior partners who should limit themselves to playing a supporting role.

The task of reconstructing indigenous Australia socially and economically is so difficult that the logical thing for the government system would be to build a long-term partnership with each and every individual and organisation that is honest, well-intentioned and reasonably competent. Governments and bureaucracies should not be distracted from the long-term goal of indigenous self-reliance by making the flaws and problems of indigenous people the main determinant of policy direction.

We are not arguing for relaxed standards of accountability for indigenous people and organisations. We urge governments to adopt indigenous capability building as the goal of all programs and actions, even when the indigenous party is struggling.

We from the Cape York peninsula would advise political leaders and senior officials to see intervention, reform and rebuilding of capabilities in indigenous communities in three distinct phases.

The first phase is the immediate need for government to intervene in those communities where the safety and protection of children and community members is an urgent priority.

Simultaneously with emergency interventions, work must begin in partnership with responsible community members to rebuild functional social and cultural norms, which are much more important than simple compliance with law enforcement.

The second phase is the intermediate need to ensure that routine services and programs in health, education, housing and infrastructure are delivered as competently and efficiently as possible.

It is this routine service delivery and routine community development which governments that talk about whole-of-government coordination are concerned with.

However, it is our view in Cape York peninsula that routine service delivery will not solve the profoundly difficult questions involved.

Reform is necessary across all policy areas, and there is not the competence within government to locate and develop these reforms.

Co-ordination, while desirable, is not reform.

Therefore, reform innovation must be part of the intermediate phase. This is where partnerships between people and organisations from the private sector, working with indigenous people, can research, develop and trial social innovations.

The third, long-term phase is where successful reform innovations developed in the second phase become the mainstream programs administered by governments and indigenous organisations.

In this phase, the government's role should retreat so that it takes responsibility only for those things that are appropriate for them.

The present over-reach by government in response to the crisis in indigenous affairs will eventually be exposed as a failure. In the meantime, much good work and progress made by indigenous communities and organisations will be destroyed.

People might question our main contention here: that the political and bureaucratic top leadership does not have any strategy for the indigenous crisis. And consider this: things are admittedly still very difficult for people in Cape York peninsula. But during recent years there have been a large number of initiatives that have improved people's lives, or promise to do so in the near future: nationally renowned family income management, alcohol management, education trials, and Milton James's Work Placement Scheme.

Governments have given us vital legislative and financial support. But not one of these ideas came from the bureaucracies or the politicians. Indigenous people and the private and philanthropic sectors did it all.

Noel Pearson is director of the Cape York Institute for Policy and Leadership.