In 1979 the National Aboriginal Council (NAC) resolved to seek a treaty (later known as a Makarrata) between the Aboriginal nation and the Commonwealth government. The government told the NAC in 1981 that it was willing to consider acknowledging prior Aboriginal occupation, but not possession, of Australia, but that it would not entertain the idea of a treaty. In September 1981 the NAC presented the government with a list of 24 demands, including substantial land and resource rights, self-government in ‘tribal territories’ and 5 per cent of gross domestic product for 195 years. In April 1982 Aboriginal Affairs Minister Peter Baume prepared a Cabinet submission recommending rejection of the 24 demands because of their poor drafting and extravagant claims, but indicating a willingness to pursue the concept of a Makarrata. However the submission was subsequently withdrawn.
The government was concerned about the possibility of demonstrations at the 1982 Commonwealth Games in Brisbane. In June the NAC announced that it would send a delegation to African countries to urge them to boycott the games. In August Queensland asked for Australian Federal Police (AFP) assistance during the games, including policing the marathon route. Cabinet was concerned that the AFP might be drawn into clashes with protesters and perhaps also African athletes and officials. Cabinet expressed a preference for not involving the AFP, but noted that this might have 'wider consequences'. Administrative Services Minister Kevin Newman was told to discuss the issue with Queensland. A land rights march in Central Brisbane on 7 October saw the arrest of 239 people, including Ann Stephen, daughter of the Governor-General.
In May 1983 Clyde Holding, Aboriginal Affairs Minister in the Hawke Government, told Cabinet that the economic and social progress of Indigenous people and the granting of land rights had been slowed by opposition from sectional and states’ rights interests. However he recommended a conciliatory approach to the further development of Indigenous rights, because a hard-line legislative and coercive approach would merely antagonise opponents. He proposed to introduce a resolution into the Parliament that would present the broad issues in a way that would commit the whole Parliament. The resolution would note that Aboriginal people were the prior occupants and original owners of Australia, that there had been no settlement with Aboriginal people when Europeans arrived and that since then they had been dispersed, dispossessed and their rights totally disregarded. Cabinet agreed to introduce the resolution in the Budget session of Parliament, but this did not take place.
The Hawke Cabinet also addressed the long-standing issue of the underpayment of Aboriginal and Torres Strait Islander people who served with the Australian Army during World War II. Some had been paid less than 10 per cent of European rates and the Attorney-General's Department advised that the government still had a legal obligation to make up outstanding pay and allowances unless it claimed the statute of limitations, which it was not normally Commonwealth policy to do. Cabinet agreed to make the payments, multiplied by an inflation factor of 11.