For Aboriginal Australians and many others, January 26 is not a day for celebration. To them the date signifies invasion and dispossession. In her 2000 Australia Day address, Dr Lowitja O'Donoghue made a strong plea for a change of date: "Let us find a day on which we can all feel included, in which we can all participate equally, and can celebrate with pride our common Australian identity." I endorse that view. It would be better to have a more inclusive date for our national day.

I also believe the relationship between indigenous and non-indigenous Australians deserves special attention. Aboriginal and Torres Strait Islander people are the first peoples of Australia and have special rights arising from that status. Their cultural heritage is protected by Commonwealth and state legislation. The common law recognises a functioning system of indigenous law, with property rights it calls native title.

From a purely pragmatic point of view, Aboriginal people are increasing as a proportion of rural and remote populations. Their birthrate is higher than the national average and more people are identifying as indigenous. They also are a critical part of some regional economies and they are starting to win seats in local government and state parliaments.

Australia's indigenous people have not been treated equitably. They have been dispossessed of their land and remain the most disadvantaged group in our society. They have a life expectancy about 20 years less than the rest of us and twice as many of their children die at birth. That is shameful for Australia. All the pedantic academic debate can't change those realities. For all these reasons, the indigenous agenda is not going to go away. The real issues are how best to accommodate indigenous aspirations, how long it takes, and what damage we inflict on ourselves along the way.

In my experience, the overwhelming priorities for Aboriginal and Torres Strait Islander peoples are to achieve greater economic independence and protect their culture and identity. The two go together. It's hard to maintain your own culture when you are dependent on a dominant culture's welfare.

There were great expectations that these priorities could be advanced after the High Court's Mabo decision in 1992 and the passage of the Commonwealth Native Title Act in 1993. Importantly, the legislation reflected a political compromise in a process begun by the High Court. There were high hopes that the basis of a national settlement with Australia's first peoples had been achieved.

However, a lot of Aboriginal people now believe that the 1993 compromise has turned out to be unjust - that they have been dudded. The Native Title Act has been amended significantly since then and the High Court, with new membership, has identified additional constraints on native title. The goalposts have shifted.

After the court's decisions in Miriuwung Gajerrong and Yorta Yorta, native title claimants now must prove a continual observance and acknowledgment of traditional laws and customs. That's a bit hard if you can't get to your ceremony grounds because you've been put on a mission or reserve, or because the pastoralist won't let you on to his lease, or because there is no record of your grandfather on his traditional country.

Native title now is confined basically to land where no one else has a permanent interest; where the traditional owners have never been forced to leave their country; and where they can prove to the satisfaction of a whitefella court that they have practised their laws and customs on a continuous basis since settlement.

Nine years after the historic political compromise on native title, Aboriginal people are the most disadvantaged party. Private landholders and the mining industry had their titles validated and the type of leases where co-existence can occur has been greatly restricted. Torres Strait Islanders have won native title claims because they have been able to remain on their traditional land and waters. However, there have been few determinations of native title on the mainland. The capacity for native title to assist Aboriginal economic development has been restricted largely to isolated areas and negotiations with the mining, oil, gas and electricity industries. The Native Title Act has not served its purpose. The first of its four main objects is "to provide for the recognition and protection of native title". Instead, it has become a mechanism to constrain and extinguish native title. It has not delivered a just compromise for Aboriginal people, and their position in our society has not improved.

As well, the transaction costs are enormous. Individual court cases have cost tens of millions of dollars - in some cases, exceeding state expenditure on Aboriginal programs. The annual cost of the National Native Title Tribunal and native title representative bodies is more than $50 million.

There has to be a better way. That has been acknowledged by the High Court. In his judgment in the State of Western Australia versus Ben Ward (Miriuwung Gajerrong), Justice McHugh noted: "The deck is stacked against the native title holders whose fragile rights must give way to the superior rights of the landholder wherever the two classes of rights conflict. And it is a system that is costly and time-consuming. At present the chief beneficiaries of the system are the legal representatives of the parties. It may be that the time has come to think of abandoning the present system, a system that simply seeks to declare and enforce the rights of the parties, irrespective of their merits."

Many Aboriginal people are totally frustrated and discontented with the extent to which native title has been able to advance their goals. I believe they would be prepared to consider alternatives, and the timing is right for such a discussion. Some new form of national settlement might be possible - the 1993 exercise clearly has failed.

It might include, for instance, an Indigenous Economic Development Fund that could be accessed by those who choose to opt out of native title claims, or who choose not to exercise their right to negotiate. That investment then could be leveraged by agreements with industry about projects.

In practical terms, such an arrangement could create a "win-win" situation where the costs of court cases, in both financial and social terms, are avoided and greater economic opportunities are delivered for Aboriginal people.

The possibility of settling some major unfinished business with Aboriginal Australians, and assisting their escape from the destructive spiral of welfare and substance abuse, is a golden opportunity - a fitting thing to contemplate on Australia Day. It would be a marvellous foundation for contemporary Australian values and a modern Australian identity, and it would be a magnificent legacy.

Rick Farley negotiated the passage of the Native Title Act for the National Farmers Federation and has been a prominent figure in the reconciliation movement since 1990. This is an edited extract from his Australia Day address, delivered in Sydney on 22nd Janaury 2003.