Township leasing was a significant 2006 reform to the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). It gave Traditional Owners the right to issue leases and licenses for economic activity over a given township on ALRA land, subject to the consent of the relevant Land Council.

This paper discusses township leasing from an institutional economics perspective. It argues that despite its noble intentions, ALRA created an extractive institutional framework for Indigenous people living on ALRA land that has contributed to economic deprivation and social breakdown. This is partly because the land rights structure, featuring powerful land councils, was designed to facilitate Indigenous land claims – that is, to acquire land – rather than facilitating the economic development of Indigenous land. The Land Council system has also been blighted by poor governance and a lack of transparency and accountability – further hallmarks of extractive institutions.

The paper then discusses the experience of eight remote Indigenous communities that have taken up township leases, creating a rental income stream that can be seen as a rough proxy for increased economic activity. However, further devolution of political power is needed to enhance local control. Alongside other recommendations for reform, this would help to return to Traditional Owners the actual decision-making power they once had for tens of thousands of years.