Abstract: This paper has applied a new conceptual framework, based on capabilities, to set out the case for a radical policy reform agenda for Indigenous Australians on Cape York. It is well-known that capabilities in the Cape are in very poor condition. But our focus on capabilities highlights that the first cause of the vicious cycle of disadvantage and dysfunction in Cape York is a lack of economic and social development, compounded by a passive system of delivery of services and income support. Unfortunately, the current approach to tackling the crisis in capabilities is still primarily based around the supplementation of income through the welfare system. These current policies perpetuate the incentive structure that is driving Indigenous Australians on Cape York to a poverty trap, and then on to the neglect of their community, the neglect of their families, and the neglect of themselves. Addressing symptoms rather than the first cause not only fails to resolve the essential issue, but in fact even makes the symptoms themselves worse, sustaining and deepening the deprivation of the Indigenous people of Cape York. The Cape York reform agenda therefore needs to focus, at its core, on the issue of developing a real economy in Cape York. This requires a reform agenda across a wide range of prerequisites for economic and social development. Each of these prerequisites is a necessary condition for development on Cape York, but, individually, none are sufficient. Instead, the development literature emphasises that reform must span the full set of prerequisites if economic and social development is to be successful and long-lasting. This is the challenge that the Cape York reform agenda must meet to enrich the choices available to the people of Cape York in a sustainable manner. The current continuing state of crisis in the Cape means that urgency of this task cannot be overstated. We hope for a future in which Cape people can truly have the same capabilities as mainstream Australians to choose a life that they value.