On the Tanami Road in Central Australia, the distant rocky mountains of the Western MacDonnell Ranges all pink and blue like a Namatjira watercolour, six wedge-tailed eagles surround their breakfast on the bitumen.

The winged predators look up defiantly as a four-wheel drive brakes to stop, slowly abandoning the bloody big red kangaroo carcass to flap away across the mulgas and spinifex. These powerful opportunists will be back.

Some 290 kilometres north-west of Alice Springs – the last 100 a road of bronze sand and rocks – Warlpiri man Shorty Jangala Robertson, believed to be older than 80, sits cross-legged on a concrete verandah, all concentration under his Akubra as he applies light blue dots to a dark blue canvas.

“Ngapa,” he says, looking up. Water. Shorty’s painting interprets his dreamings of water. He takes some tobacco out of a tin from his trouser pocket. His white beard is flecked with yellow paint. Shorty’s wife, Lady Nungarrayi Robertson, believed to be about 75, lies curled next to him, softly murmuring, ill with age, a beanie on her head, her thin legs curled under her floral dress.

Lady is wife number three, the youngest and last surviving of three sisters promised to Shorty as wives under Aboriginal custom. Noone is exactly sure which year they married. Lady’s minor painting career is over, having suffered two strokes, but her husband is among the top collectible artists of the 400 painters here in the remote Yuendumu community, pronounced yoo-en-doo-moo.

Born at Jila, a large soakage and claypan north-west of here, Shorty has told a bilingual English-Warlpiri speaker that he met virtually no white fellas in his youth, and that as an infant he and his family had “to hide” from being shot. It is thus believed Shorty must have been born some time around or before the 1928 Coniston massacre – the last recorded mass shooting of Aboriginal people in Australia, when at least 31 people, probably more, died.

Shorty’s solo shows – three at Melbourne’s Alcaston Gallery and two at Sydney’s Cooee Aboriginal Art near Bondi Beach – have been well received. “I could have sold my first work from him six times over,” says Cooee director Adrian Newstead. “Its celebratory spirit is fantastic.” Shorty’s canvases are held in the collections of the National Gallery of Australia, the National Gallery of Victoria, and the Art Gallery of NSW.

Remarkably, Shorty started painting only in his 70s. Robert Nelson, an art critic with Melbourne’s Age newspaper, says Shorty’s paintings have the “gravity of the ancient tradition of the Dreaming but also the levity of contemporary colour and invention”. Shorty’s brightly coloured works combine subtle dots with curvy lines to represent the ngwarra, or flood waters, and bars to represent mangkurdu, or clouds.

Expat Sydney art critic Benjamin Genocchio, who now works for The New York Times, says Shorty’s first solo show – extraordinarily late in his career, in 2003 – was both a “popular and critical success”.

Yet Shorty and Lady live in a battered brown tin shed; his earnings divided among his extended family, as is Aboriginal custom, with almost nothing left over. Such paucity of individual artists’ earnings is exacerbated by carpetbaggers – commercial gallery owners, backyard dealers and private agents who swoop into Aboriginal communities and snap up indigenous art as a fraction of its value, handing out tiny amounts of cash, say $50 or $100, then reselling the work in galleries, on the internet and eBay at inflated prices.

Last June, a Senate inquiry into Australia’s indigenous visual arts and crafts sector, Securing the Future, found Alice Springs is the worst place in Australia for carpetbaggers, and its recommendations included a new $25 million infrastructure fund and a new arts centre be established in the town. The Arts Minister, Peter Garrett, says the Federal Government still intends to respond to the inquiry, but declines to say when. “There's no doubt that carpetbagging and unauthorised copying issues, particularly in remote regions, are a real concern,” he says.

Shorty’s stature in the art world has grown through the work of the respected Warlukurlangu Artists Centre at Yuendumu, which pays artists a fair and reasonable 50 per cent of the retail price of an artwork, including an upfront advance when a canvas is completed. But even he has fallen foul of the carpetbaggers.

“One day,” says Gloria Morales-Segovia, the assistant manager at Warlukurlangu, “Shorty came to the art centre and asked me, ‘Can you ask the man to give me the money?’ I asked, ‘Which man? Which money?’ Shorty said, ‘I painted these canvases, three canvases, and he took them, and he hasn’t given me the money.’

“I asked, ‘Who is the man?’ He did not know, because the man had not given him a name or anything.”

Shorty never saw his money.

“We try to get artists promoted to get well known,” explains Morales-Segovia. “And then the carpetbaggers come and take the pick of the lot. They are very aggressive, targeting top artists.” To western eyes, the practices of some carpetbaggers would be seen as kidnap, coercing artists into motels or the carpetbagger’s own home, paying off family members with cash or cheap second-hand cars, obligating the artist to churn out cheap copies. The market is thus flooded, further diminishing returns for masterful painters such as Shorty.

But part of the complex issue is also that community elders have cultural responsibilities, and painters such as Shorty must each provide for something like 50 extended family members, Benjamin Genocchio writes in his new book Dollar Dreaming: Inside the Aboriginal Art World (Hardie Grant, $39.95).

Genocchio, who himself travelled to Yuendumu and met Shorty, recounts how the art centre manager had bought a shoeless and cold Shorty some shoes and blankets, “but when she saw him next, soon after, they’d disappeared: he’d given them away to his relatives”.

For decades, Shorty lived a nomadic hunter-gatherer lifestyle with his parents, only settling at Yuendumu after the successful 1967 referendum to recognise Aborigines as Australian citizens.

As Shorty sits on the verandah and applies brush to canvas, with Lady by his side, money hardly seems the object, beyond having enough to buy soup, bread and meat at the local mining store, and beyond a few dollars for a family member or several. There is a much bigger Dreaming out there.

A former employee of an unnamed Alice Springs motel provided the inquiry with a deposition outlining the “squalid” conditions artists were living in. Art centre coordinators and artists say that motel is not the only offender.

Anyone can call their enterprise an “art centre”, says Warlukurlangu manager Cecilia Alfonso, and some carpetbaggers adopt Aboriginal tribal names for their businesses without permission.

If people buy an Aboriginal artwork, they must thoroughly research whether the dealer is reputable and how much the artist receives, Alfonso says.

“The artists get dragged here and there,” she says. “They seem incapable of saying ‘no’ because there is such poverty. One woman in her 70s paints for us during the day and then works at night for other people. You wonder sometimes if you’re doing them a favour [building up their professional name].

“One carpetbagger has threatened the life of an art centre coordinator. He plucked her two top artists out of an old people’s home, and has got them painting in town. That is completely immoral.”

Another Warlipri man, Otto Jungarrayi Sims, 48, who is Warlukurlangu’s chairman, paints his father Paddy’s stories handed down by the family through millennia. Sims, sporting a goatee and a black T-shirt, says he tries to tell Yuendumu people to ignore the carpetbaggers. “There’s more of them now and they’re very tricky,” he says shyly. “They’re sly as a fox ... But they’re flooding the market.”

His father, who cannot walk, is sitting outside painting next to Shorty. Art is the major form of employment in the community – the centre supplies paint, brushes and canvas to any would-be painter for free – although some young men have found trainee mechanics jobs with the local copper mine, notwithstanding a high drop-out rate. Perhaps the mooted uranium mine at Yuendumu will provide more employment for this largely welfare-dependent community.

IN THE Alice Springs township, half a dozen different Aboriginal languages or dialects are spoken. Artists who can otherwise command good prices will sell a painting as cheaply as $50 to tourists at the Todd Street mall at weekends to make ends meet.

Mervyn Rubuntja, a town camp artist with thick, long wiry hair, was born at the historic Telegraph Station at Alice Springs, and paints in watercolours, taught by his father at Hermannsburg – once a mission established by German Lutherans – and by Maurice, Oscar and Keith, sons of Albert Namatjira. But a lack of an estate “left nothing for the family of the famous painter Albert, nothing for the sons,” he laments.

Rubuntja, who is council president at the reputable Tangentyere Artists – which supports 370 artists and is one of six community art centres in town – says the carpetbaggers “come into the camps and tell that artist how much they’re going to pay. Soften ‘em up, you know? They set the price because they’ve got the paint and the canvas”.

Leisl Rockchild, the coordinator at Tangentyere – where artists get 60 per cent of the retail price – says the carpetbagging problem “has been getting worse over the years, because more people realise they can start buying and selling Aboriginal art. They don’t have to be licensed; they don’t have to be ethical. They can do it any way they want.

“They can sell the works online, so there’s no shopfront. People don’t even know where they’re located. They take artists from communities, galleries, camps and off the street. And it’s a very difficult position for artists – who would refuse some cash up front?

“I’ve been trying to chase people’s number plates when they’ve trespassed into town camps and communities. They’re in hire cars or have interstate number plates; they drop off fresh canvases to pick them up later in the day.

“One of our artists, Kitty Collins – and she’s happy to have this story told – she was painting with us, and started painting with this dealer over at a lodge [on a nearby main road]. She was paid half the retail price for the painting, but then had to pay back most of it for accommodation and food.”

Rockchild says more financial support needs to be given to arts centres to support more artists – at present, art centre coordinators earn a comparatively low $40,000 to $50,000 a year. (While the legitimate art centres such as Tangentyere and Warlukurlangu employ Aboriginal staff, they are administered by non-indigenous Australians, given low literacy and numeracy levels among Aborigines.)

Tangentyere has submitted proposals to the Indigenous Lands Corporation to buy land and to the Aboriginal Benefits Association to build a new $2 million arts centre hub for all town camp artists to work, irrespective of tribe, to reduce carpetbagging by preventing artists going to less reputable private dealers to paint.

The Senate inquiry recommended a new art centre be added given the particular problems Alice Springs faces, but whether it will go ahead is uncertain.

Rockchild argues all indigenous art dealers should be forced by legislation to be licensed, and a tourism campaign promoting ethical art buying to educate the public is needed.

In the May, the Federal Government announced it would boost support to the indigenous arts industry nationally in 2007-08 by $1.6 million, spread across various centres.

Peter Garrett also announced the Government would spend $1.5 million over three years to fund the start-up and initial cost of a resale royalty scheme for visual artists. Garrett says the scheme will bring Australia into line with similar resale royalty arrangements operating in the United Kingdom and Europe, and “embody the recognition that visual artists’ rights extend beyond the first sale of an artwork”.

Unofficially, that figure will probably be 5 per cent on each resale, though some have questioned whether the administration of a resale scheme across the vastness of Australia will prove too costly and unwieldy to run.

Says Garrett: "What's striking to me is that we've seen a literal explosion in the amount of interest in indigenous art both locally and internationally. And so long as these artists are playing such an important part in their community, both as recorders of stories and describers of culture -- they're generators of really powerful cultural work, working quite often in key centres of economic growth -- then copying and carpetbagging are front and centre and certainly do need to be addressed resolutely."

The difficulty with carpetbaggers, says John Oster, the executive officer of Desart, the Association of Central Australian Aboriginal Art and Craft Centres, is that there is “no evidence that can sustain investigation”.

The only successful prosecutions have been for faking Aboriginal paintings. In 2001, an Adelaide art dealer pleaded guilty to selling fake works purported to be by the late central Australian artist Clifford Possum Tjapaltjarri. In November last year [2007] a Toorak couple, Ivan and Pamela Liberto, were found guilty in the Victorian County Court of forging four paintings supposedly by the late renowned West Australian artist Rover Thomas.

Oster says there still needs to be a large-scale feasibility study into the mooted new Alice Springs art centre for indigenous painters.

The Australian Competition and Consumer Commission, whose members have made several visits to Alice Springs to investigate unethical art dealing, is still waiting to hear whether it will receive increased funding to monitor the industry and to mount a public education campaign.

The Senate inquiry gave the industry two years to self-regulate or else face a prescribed code of conduct under the Trade Practices Act. The Sydney-based National Association for the Visual Arts is developing such a code, but Oster says “we’d like to see it move a lot faster”.