Howard is no longer fighting the culture war against Paul Keating. His indigenous policies are no longer defined by negatives: refusing an apology (despite its justice), refusing to admit the stolen generations and refusing the legitimacy of elected bodies with the abolition of the Aboriginal and Torres Strait Islander Commission.

The Coalition has entered a new phase with its own positive agenda free of Labor's reconciliation paradigm. This represents probably the most sweeping rethink since the 1967 referendum and it embodies the application of Howard's values to indigenous affairs. Within the Government it is described as a revolution.

The aim is to terminate passive welfare delivery and substitute instead "shared responsibility agreements" between local communities and government. It is about changing individual behaviour and community culture around the concept of mutual responsibility.

Pearson has been a decisive influence on this policy. His intellect, courage and understanding of his people has facilitated this rethink. More than two years ago, Pearson said Aboriginal society was an "inferno of social disintegration" and demanded that the "reality-evading progressive Left" either get real or get out of indigenous affairs.

He admitted his stance would help Howard in political terms but his main obligation was to the survival of his people, not to the Labor Party.

It should be no surprise, therefore, that Pearson organised at Port Douglas 10 days ago a meeting of a dozen Aboriginal leaders for a soul-searching session about their political strategy. It is significant that Dodson who fell out with Howard so bitterly, has enunciated the new strategy.

"We want to reopen the dialogue with the Prime Minister," Dodson told this paper. "Such a dialogue would be about clarification and trying to find common ground with him in the social arena. We are prepared to move beyond the past. We want to put our people first, not ourselves."

The decisive point in the Port Douglas meeting was when Dodson declared that the concept of mutual obligation was embedded in Aboriginal culture through kinship. This meant "it had a grounding within our culture and society" and that "it is not just a Western concept".

This gives a legitimacy to Aboriginal negotiations with the Howard Government over mutual obligation and the shared responsibility agreements. On the ABC Insiders program Dodson offered the concession that Pearson had been "far more insightful" on these matters "than certainly I've been".

But it was Pearson who put the bedrock position: "We have to see the Howard prime ministership as an opportunity rather than as a threat to indigenous Australians."

This is not just a recognition of political reality. It also recognises that the direction of public policy towards Aborigines over four decades has largely failed. (Of course, not everything has been a failure and this cannot deny the enduring and heroic achievements of those who have fought racial discrimination and championed genuine reconciliation.) But the humanitarian crisis of Aboriginal Australia creates the opportunity for Howard's approach and a partnership of sorts between indigenous communities and the Howard Government.

In his response, Howard welcomed the Dodson-Pearson olive branch. "There's goodwill in the Government towards trying to find lasting and better solutions to underprivileged Aboriginal communities," Howard said. But he stressed his policy was based on localism -- empowering local communities -- and that meant when they decided on alcohol or other restrictions "we should support that strategy" and not get hung up on the 1970s and '80s agenda of rights and liberties. Howard has written off that agenda.

This constitutes an epic and traumatic switch by Aboriginal leaders. But Dodson and Pearson have the authority to withstand the inevitable attacks from their people and chart such a political realignment. Howard, in turn, needs to help them and signal that he will work with them as well as with his new advisory council. This point is crucial.

But the core conclusions seem irresistible. Pearson asserts that "passive welfare" has become the main component of the indigenous economy; that passive welfare leds inexorably to social and cultural breakdown; and that it is false to believe a political settlement is a precondition to social and economic recovery.

Anybody who thinks this is just Howard playing wedge politics misses the entire story. The point is that the policies of the progressive Left have collapsed -- and the failure of these policies in relation to Australia's most underprivileged minority is pivotal in its own right and prophetic for the course of politics.

Pearson said in 2002 that indigenous people had to terminate their alliance with the progressive Left because it was destroying their lives. The case could not have been put more bluntly -- yet its political logic is still not seized.

On a far wider front -- welfare policy, industrial relations, getting jobs into jobless households (our biggest social problem) -- the policy edifices of the progressive Left are collapsing like falling dominoes.

Mark Latham's tragedy is that this was his insight. He went to Cape York years ago -- he saw, he understood and he knew that Labor had to change. But Latham as Labor leader has been unable to turn around the party's entrenched mind-set. Labor's crisis is that it has embraced the progressive Left's social agenda almost to the point of an identity. Now it is humiliated and rendered irrelevant by the Dodson-Pearson break-out.