Abstract: Research on a range of agreements between Indigenous people and extractive industries suggests that equitable benefits from such activity on Indigenous land are rare. In Central Australia, the Central Land Council has piloted a new approach to generating benefits from land use agreements by establishing a community development unit and encouraging Indigenous traditional owners to apply some of the income from land use agreements with mining companies and similar parties to community development activities. This paper discusses the variety of community development projects this unit is undertaking with traditional owners and Aboriginal community members, and the challenges it is facing as it tries to utilize community development principles in its projects. It indicates some of the issues that may need to be considered in government policy which seeks to assist Indigenous landholders gain optimum benefit from land-related payments. In particular, the paper demonstrates that the priorities of Indigenous people to support and promote social and cultural activities, including maintaining micro-communities (outstations) on homelands, may conflict with government views as to how to ‘optimize benefits’ from land use agreements.