Tuesday, 17 January 2017

The ABA financial arrangements and the PMC website



As You Like It, Scene Two

The Minister last week announced the latest round of Aboriginal Benefits Account grant approvals. His media release (link here) indicated $8m had been approved to some 27 organisations.

The ABA is just one part of the complex funding arrangements at the core of the Northern Territory Aboriginal Land Rights Act (ALRA). Without going into all the intricacies, under ALRA, the Commonwealth provides an equivalent amount to the ABA of all mining royalties levied on Aboriginal land by both the NT and Commonwealth governments. These funds are then allocated by the Minister to (i) fund the four Land Councils; (ii) to provide compensation to traditional owners directly affected by the resource development (30 percent of ABA revenues are set aside for this purpose), and (iii) to provide grants ‘for the benefit of Aboriginals living in the Norther Territory’; and (iv) various other administration costs, generally referred to as “section 64(4) grants”. Refer sections 64, 64A, 64B, and 65 of the ALRA for the details.

The PMC website (link here) provides details of the last three rounds of ABA Grants, the February 2015 round, the September 2015 round, and the August 2016 round just announced.

The February 2015 round results, announced on 16 June 2015, were published as a spreadsheet with the funding amount for each of the 43 organisations listed, with funding totalling $15.65m. There was also a column with a description of the likely employment outcomes for each project, although it was very patchy and heavily qualified.

The September 2015 round, announced on 29 April 2016, was for a total of “up to $6.1m” for 13 organisations. The spreadsheet released removed the proposed funding for each project, and now included a table of “new Indigenous jobs to be created” under each project, with a definite number against each project and a total listed as “up to 61 jobs”.

The August 2016 round, announced on 13 January 2017, was for a total of $8m (the PMC website refers to “over $8m”) and that it was “anticipated that there would be 175 new Indigenous jobs created” under the funded projects. Again, there was no indication of the funding approved for each project.

The announcement indicates that the Department will commence the preparation of a funding agreement with each applicant, and that once a funding agreement is finalised, the “”further details of each grant will be listed on the PMC website within 14 days as required by the Commonwealth Grant Rules and Guidelines” Rather unhelpfully, while the page provides a link to the Commonwealth guidelines (link here), it fails to provide a link to the location on the PMC website where the grant details are reported.

So contrary to the approach adopted in the February 2015 round, and in all previous ABA rounds at least over the past decade, the Minister and Department are no longer announcing the funding allocated to projects funded by the ABA. While there is a fig leaf of accountability in the eventual reporting of each grant, at a date which will differ for each project, and which might occur many months after the Minister’s announcement depending on the speed with a funding agreement is finalised, this appears to be a deliberate decision to decrease the level of transparency provided in relation to the ABA grants. Of course, apart from engendering further cynicism regarding the preparedness of Government to operate in an open manner, it raises the substantive issue: what is being hidden and why?

For comparison, it is worth comparing the Prime Minister’s recent comments when announcing the new Ministerial Guidelines for expenses:

The PM stated: 

"Australians are entitled to expect that politicians spend taxpayers' money carefully, ensuring at all times that their work expenditure represents an efficient, effective and ethical use of public resources," he said. "We should be, as politicians, backbenchers and ministers, we should be as careful and as accountable with taxpayers' money as we possibly can be." ….Describing transparency as key, Mr Turnbull said the new system would allow the public to view expenses in "as close to real time" as possible. "The system that manages entitlements will be modernised to allow monthly disclosure of parliamentarians' expenses in an accessible — that is to say, searchable — format," he said."[Currently] Most of the forms are filled in by the politicians by hand. It is all paper-based. The reports that you do find on the Department of Finance website are big PDF files. They are, you know, months out-of-date when they are posted." [Sourced from the Transparency and FOI Blog Open and Shut (Link Here)]

The Commonwealth Grant Rules and Guidelines (link here) which govern processes related to grant approvals in a Minister’s electorate (refer paragraph 4.12) require copies of relevant correspondence approving the grant to be provided to the Minister for Finance (presumably as a matter of transparency) although Ministers who are Senators are excepted from this requirement. In addition, it is worth noting that the Statement of Ministerial Standards (link here) require Ministers to act with integrity.

Of course, the ABA is limited to the Northern Territory, and it potentially provides any Minister from the NT with substantial opportunity to use it for political purposes and / or to reward supporters and punish opponents. The present Minister is currently appealing a Federal Court decision (link here) which overturned a decision he made to revisit and cancel a previously announced ABA grant approved by a former Minister.

The ABA financial statements are published each year in the PMC Annual Report (link here). The PMC website does not provide any background on the management of the Account generally in its section relating to ABA Grants. Given its overtly compensatory rationale, there is a strong case for much greater policy ownership of the account, more information on its size, growth prospects, and any strategic risks.

The ABA Advisory Committee which is established under ALRA to advise the Minister in relation to the allocation of section 64(4) grants, that is those available to Aboriginals living in the Northern Territory, is dominated by the Land Councils. Membership is listed on the PMC web page dealing with the ABA. The Annual Report indicates (page 203) that the Minister approved in 2015-16 reforms to the membership of the ABA Advisory Committee to provide for independent members. These reforms do not appear to have been implemented, with the only member independent of the Land Councils being the Chair (link here).

It is apparent that the approach adopted by the Minister and PMC to reporting ABA grants is far below the standards which the Prime Minister has announced for Ministerial expenses, yet the sums involved are substantial, and the potential for conflict of interest is considerable. Indeed, it is apparent that there has been a deliberate shift away from openness and transparency over the past few years in relation to the ABA grant process.

There is a strong case for review of the current reporting arrangements to improve transparency.

As to the substantive quality of the decisions being taken by the Minister, it is very difficult to ascertain without access to the project documentation, and greater detail on the purpose of the grants.

It is apparent that the Minister is giving greater priority to jobs over other benefits given his decision to list the numbers of new jobs created by each project. However, there appears to be no detail regarding the methodology used to ascertain these job numbers, nor is it clear whether they are permanent or casual, one-off or ongoing. The ABA Grants scheme funds one-off projects, so by definition, any new jobs created will only be ongoing if the projects funded are successful and commercially viable. We have absolutely no information on the public record regarding the success of the funded projects against the Minister’s chosen metric. Anecdotally, the story is very mixed, with some successes offset by at least as many failures.

Given PMC Secretary Parkinson’s comments last year on the need for greater evaluation of funded projects (link here), it might be timely for the Department to evaluate the success of the projects funded by the ABA over say the last five years.

In conclusion, there appear to be significant shortfalls in the levels of transparency being applied to the ABA and the ABA Grants process by PMC which don’t square with the Prime Minister’s stated commitment to openness and transparency. Moreover, the substantive effectiveness of the grants approved by the Minister are virtually impossible to assess, and the accuracy of his rhetoric regarding the numbers of jobs created open to significant doubt.

It is time for a policy review of the ABA generally, and the ABA Grants process specifically. In doing so, we should seek to emerge from the night, and allow the sun to shine in to a much greater extent than is currently the case.