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Dozens of indigenous people are living in a "refugee camp" at Heirisson Island in protest against the planned closure of up to 150 remote communities.
Colin Barnett said in November that the State Government could close between 100 and 150 smaller communities in the next few years because of Federal funding cuts, potentially displacing more than 1000 people.
The Premier said though the closures would cause "great distress", the State Government did not have a choice.
In a statement given to media at the island yesterday, the people of the self-proclaimed Djurin Republic described Mr Barnett's comments as an "act of war".
"The actions by the WA Government, supported by the Commonwealth of Australia, are an act of warfare against Aboriginal citizens which is now resulting in genocide," the statement said.
"The lands of Heirisson Island (Matargarup) have now been designated as a refugee camp for all such Aboriginal persons and their families."
The protesters said closing the communities would create homelessness, higher arrest and imprisonment rates, family breakdowns and suicide.
They said the refugee camp was a "defence mechanism" to a looming humanitarian crisis.
The scene at Heirisson Island yesterday was reminiscent of the February 2012 Noongar tent embassy, set up to protest against a $1 billion native title deal between the State Government and the South West Aboriginal Land and Sea Council. That protest ended when riot police, mounted police and the dog squad helped City of Perth rangers evict the campers.
Visitors to the camp, including tourists, are being told to leave.
Local bylaws prohibit camping or starting fires on Heirisson Island. A City of Perth spokes- woman said staff were "assessing the situation".