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The concept of self-determination has, since 2003, become a topic of some debate in Australia in relation to Aborigines (indigenous Australians). In the 1980s, the Aboriginal community approached the Government of Australia and requested the right to administer their own communities. This encompassed basic local government functions, ranging from land dealings and management of community centres to road maintenance and garbage collection, as well as setting education programs and standards in their local schools.

The Federal Government assented (with certain conditions) and a central Aboriginal administrator called ATSIC (Aboriginal and Torres Strait Islander Commission) was appointed and constituted to allocate and distribute funds to the various Aboriginal communities and to liaise with the Federal Government regarding the welfare of Aborigines areas that requirement improvement and/or funding. Some argued that this was a form of self-determination or were, at the very least, initial step towards self-determination because the Aborigines were becoming a 'self-contained' people within Australia. In addition, Aborigines had recently acquired native-title land rights following the Mabo decision of the High Court of Australia in the late 1980s.

However, others have argued that this was not sufficient to be described as self-determination, simply because the Federal Government retained and at times exercised its power over the Aboriginal communities and ATSIC. It would seem (although this view may be disputed) that a people's independent law-making power may be the great dividing line between self-determination and merely "steps towards" self-determination.

The reason that the distinction came into dispute was because ATSIC was surrounded by controversy in 2004-2005. There were allegations of mismanagement and a few rumours circulated about substantial amounts of money that had "gone missing" or been given to third parties under unusual circumstances. Furthermore, a senior member of ATSIC was accused of rape and a trial followed. In any case, the Federal Government terminated ATSIC's commission and reassumed full control of Aboriginal welfare and allocating/distributing funding.

In terms of self-determination, this would be regarded as a backward step. But some in the Australian Federal Government have attempted to use this "mess" to argue that self-determination is destined to fail or not a viable option. However, those who believe in self-determination argue that the establishment of ATSIC and so on was not really self-determination and therefore, we should not look at recent events to dismiss the possibility of self-determination working in the future.

Hence, self-determination has been held to be an example of an advancement of the fundamental political rights of politically bounded 'peoples' at work, but also as an example of an abstract theory that has been implemented in contexts with sometimes severe political and national conflict.