The Emperor’s New Clothes: remote disability, the ABA and ministerial responsibility

Through tattered clothes small vices do appear / Robes and furred gowns hide all.         King Lear, Act IV, scene vi.

The MJD Foundation provides support services for around 500 remote NT citizens, mostly in north east Arnhem land and virtually all Indigenous, who suffer from or are at risk of succumbing to the Machado Joseph disease, a neuro-degenerative disease similar to Huntington’s disease. Its clients must number amongst the most extremely disadvantaged Australians. The MJD Foundation is a small well run community organisation, and won an excellence in community accessibility award in the 2015 National Disability Awards.

The ABA is an account based on regular appropriations from consolidated revenue of amounts equal to the statutory royalties received by the Commonwealth and the Northern Territory governments (so called royalty equivalents) derived from mining on Aboriginal land in the NT, and must be utilised for the benefit of Aboriginal people resident in the NT. All payments from the Account are made and approved by the Minister on the advice of an Advisory Committee established under the legislation. See this previous post outlining concerns regarding the transparency of reporting on grant decisions made from the ABA: link here.

The previous Labor Minister Jenny Macklin approved a grant from the Aboriginal Benefit Account in 2013 of $10m to be invested in perpetuity (by the Myer Family Company) to provide a core of secure funding for MJD Foundation operations.

Early in his tenure, Minister Scullion overturned this grant. He also apparently decided to not approve grants to three other community organisations which had been recommended by the Advisory Committee, at least one of which, the Karrkad-Kanjdji Trust, is a registered charity with a focus on natural and cultural resource management. Unlike the MJD decision, these applications had apparently not been considered by the former Minister.

The MJD Foundation took legal action given that the grant had been publicly announced, and was for a considerable sum. Justice Flick of the Federal Court overturned Minister Scullion’s decision, finding that there was no statutory basis allowing the Minister to remake Minister Macklin’s earlier decision.

The Minister decided he would appeal that decision to the Full Federal Court. The MJD Foundation published a media release outlining its concerns with the Minister’s decision to appeal and listing a range of inconsistencies in the Minister’s public explanation of his actions: link here.

Following a hearing in May last year, the appeal was finalised on 3 March 2017. Two judges (Mortimer J and Perry J) rejected the Minister’s appeal, while one judge (Perram J) upheld it. As a consequence, the Minister has now suffered two consecutive defeats in the Federal Court.

Coincidentally, Senate Estimates Committee was considering Indigenous Cross Portfolio issues when the judgment was handed down and the outcome of the case was raised in the hearing by Labor’s Senator McCarthy. The Minister acknowledged the loss, and indicated that his provisional view was that there would be no further appeal (Hansard is not yet available). He also indicated he would be examining legislative amendment to the ALRA to require the Minister to follow the advice of the ABA Advisory Committee, albeit retaining a veto power. He subsequently issued a media release (link here) which merely indicated that the Government would examine the judgment before making further comment. The judgment is not yet available on the Federal Court website. Update: link here.

The MJD Foundation also issued a media release (link here) calling on the Minister to accept the court’s decision, citing the moral and ethical grounds in favour of supporting the grant as much as the legal issues at stake.

Minister Scullion has used a number of at times intertwined rationales to justify his decision to reverse the $10m grant and to pursue an appeal after Justice Flick’s first decision:

First, in his 2013 letter to the MJD Foundation advising his decision to overturn the previously announced decision, he stated:

 It has been a longstanding policy and practice to not provide recurrent funding from the Aboriginals Benefit Account. Notwithstanding the undoubted value of your project, I am of the strong view that providing a cash advance is an unsustainable and indefensible mechanism to work around this existing policy. This Aboriginal Benefit Account grant would set a dangerous precedent for the fund and the previous grant of $6million should not have been approved in my opinion. (Letter to MJD Foundation dated 18 December 2013 cited in Perram J’s judgement).

Second, at times he has appeared to suggest that his concern is with the sustainability of the Aboriginal Benefit Account as opposed to a policy position on what should be funded. Thus in a media release in December 2015, he elaborated:

 “Eroding the ABA is an inappropriate use of this fund and threatens the integrity and sustainability of this legacy fund that is meant to be used to support Aboriginal people in the Northern Territory for many years to come, including for the operation of land councils. (Link here).

In a letter to the Editor of the Australian, he stated:

The ABA is a legacy fund which holds accumulated reserves from mining royalties and provides funds for one-off projects that benefit Aboriginal people in the Northern Territory. It is facing diminishing returns. The ABA is not intended to provide an investment pool for organisations to fund recurrent expenditure….…It is not appropriate, in my view, to use the Aboriginals Benefit Account as an investment vehicle to fund administrative costs of such organisations. (Link here)

Third, he asserted that his appeal would have ‘no impact on the Government’s support for the foundation’ (link here).

Fourth, he has argued that Indigenous owned or sources funds (what he has sometimes erroneously called Indigenous specific funding) should not be utilised:

Minister Scullion said the fact the majority of people suffering from MJD were Aboriginal did not mean Indigenous-specific funding should be spent on it….“Aboriginal people with serious health issues should not have to fund their own support services and this Government will stick to this fundamental principle.” (emphasis added).(Media release 11 Dec 2015 Link here)

“The ABA is Aboriginal money and should not be used to fund basic health services,” the Minister said. “We do not ask that of people living in other communities. The Australian Government, rightly, has the responsibility to provide funds for social housing, health and education to Australians, regardless of their background or where they live.” ….The Minister said his announcement today upholds the fundamental principle that the ABA should not be used to fund services that the Commonwealth should be providing directly.  (Media release 28 February 2014 Link here).

It is worth considering the policy merits of each of these arguments in turn.

The Minister’s first argument rests on a view that the ABA should not fund recurrent expenses, but should focus on capital investments. The underlying rationale for this distinction in some government programs, based on my own experience of funding programs in the Indigenous sector, is to ensure that governments do not start initiatives which they will not be able to afford to continue, thus leading to complaints in the future that funding is being cut. This is essentially a pragmatic argument driven by bureaucratic and political imperatives based on what is essentially an arbitrary accounting criterion.

Thus the fund has often been used to fund capital items like store buildings, morgues, heavy machinery for earthmoving, ranger facilities, boats for sea rangers and so on. However it has also been used for the recurrent costs of festivals (Garma is the most notable, but a particularly infamous example was former Minister Brough’s decision to provide ABA funding to a festival in his Queensland electorate on the basis that some NT performers were in attendance (Link here). 

While the Minister asserts the funding model used by MJD is a ‘work around’ to avoid the recurrent funding rule/guideline, in conceptual terms, there is no difference between the ABA funding a capital asset (a store building say or earthmoving equipment) which provides ongoing revenue and other benefits to the Aboriginal group, and the grant of a capital fund which provides ongoing benefits to the MJD Foundation and their clients. Indeed, arguably the capital fund model is more effective as it will produce revenue in perpetuity, whereas most capital items funded by the ABA have finite (and often very short) effective lifespans.

The Minister’s second argument that the fund is limited and facing diminishing returns makes little practical sense since all expenditures from the ABA (including related provisions for funding land council administration (which the minister controls) contribute to the diminishment of its balance; there is no logic in focussing on this one funding proposal. Moreover, as the Minister has noted, the majority of current revenues are derived from royalty equivalent appropriations which can be traced back to the manganese mine on Groote Eylandt; it seems perverse to punish the very people whose lands have been affected by mining on Groote. 

The PMC 2016 Annual Report which includes the financial statements for the ABA lists the total equity of the account at $580 million, up from $514 million the year before (refer page 153; link here). While perhaps it was diminishing in 2013, it no longer appears to be diminishing. My memory tells me the account’s net equity was around $400 million in 2010, so the long term trend for the account appears to be growing.

The Minister’s third argument can be addressed succinctly. Of course, if he had been successful in his appeal, the MJD Foundation would have lost the $10m grant that was allocated by the Commonwealth, and would lose access to the perpetual investment stream which would flow from the investment account which has been set up for the grant. Minister Scullion has made no commitment (and nor could he) to perpetual funding for the MJD. His statement is clearly hyperbole.

The Minister’s fourth argument is based on two points: the ABA is Aboriginal money; and second, that Aboriginal money and thus the ABA should not be allocated to government services. He nominates this as a ‘fundamental principle’ to which the Government is committed.

The first proposition is in fact incorrect; the ABA is replenished each year by government appropriations, calculated on the basis of the royalty equivalents which are paid to government from mining on Aboriginal land. Aboriginal traditional owners do negotiate ‘private’ royalties from mining on their land in the NT, but the funds in the ABA are government funds which are statutorily required to be allocated for the benefit of Aboriginal people in the NT. This is why the Minister approves the grants. This is why the fund reports in the PMC Annual Report. This is why the Account is audited by the ANAO. These are government funds appropriated for the benefit of Indigenous citizens, just like the Indigenous Advancement Strategy.

There is a strong policy argument for transferring control of the ABA to Indigenous control and ownership, but no government has to date been prepared to do this. In continuing to assert that ‘the ABA is Aboriginal money’ the Minister is behaving like the Emperor with no clothes; the department seems incapable of advising him how the Account actually works, and thus setting him straight about his inaccurate rhetoric. Of course, while this reflects poorly on the bureaucracy, the responsibility for creating a situation where the bureaucracy is not prepared to correct his errors falls squarely on the Minister.

The second proposition falls away once the first is accepted. But say it didn’t. How fundamental is the principle to which the Minister claims to adhere? The answer can only be found in assessing actions and not rhetoric.

The reality is that much of what the ABA has always funded, and to this day continues to fund is a substitute for government service provision. The morgue in the ACT is government provided. So are the facilities for running the environment department rangers in ACT national parks. So is the multicultural festival and the acclaimed Floriade festival. But in remote NT communities the Minister and his predecessors from both sides of politics have been happy to use the ABA to fund these types of services. Many are justifiable, some are not (the most egregious again being former Minister Brough’s extraordinary decision to use the ABA to contribute $4 million to the funding of the Alice Springs swimming pool: link here).

The level of commitment by the Minister to this ‘fundamental principle’ is demonstrated in his involvement only last year in funding the expansion of police services on Groote Eylandt with the former NT Government in an arrangement which required the local Groote community to use their own funds (presumably royalties) to contribute to the investment (link here). The joint media release issued by then Chief Minister Giles and Minister Scullion (link here) indicated that the funding of $15m for the upgrade of police stations came from the AIS (it is not clear whether it went through a comprehensive application process), and that there was an unspecified but significant co-contribution from the Anandilyakwa Land Council which is funded from the ABA and also has access to so called ‘affected communities’ monies from the ABA So much for a ‘fundamental principle’.

To sum up, the Minister has clothed himself an assortment of rhetorical raiments all designed to justify his decision to retrospectively deny the ABA grant to the MJD Foundation, a charitable organisation advocating for and providing important ancillary support for MJD sufferers and importantly their families and carers. These various arguments have one thing in common: they don’t stand up under detailed scrutiny.

This raises the possibility that other factors influenced the Ministers decision making in this case, a possibility given greater credence by the revelations in the recent ANAO audit report on the Minister’s approach to decision making under the AIS (see my post on this matter here), the major grant program available in his portfolio. It seems unlikely that he would operate in one way in relation to the AIS and in another in relation to the ABA.

Of course, the issues pertaining to a single grant from the ABA will not in themselves close the gap. But the way these issues are dealt with are emblematic of the approach of the Government to Indigenous disadvantage, and in particular to the extremely challenging issues facing disabled Indigenous citizens.

It is time that governments got serious about remote Indigenous disability. The larger issue at stake, not dealt with here, is the longstanding deficit in government services to remote disabled Indigenous citizens, and the very real specific and unique challenges they will face into the future as the NDIS is brought on stream,

The numbers of remote citizens living with disability may not be large in an absolute sense, however they and their families and carers face enormous challenges. Yet they end up being doubly penalised, victims of disability itself and victims of government neglect and care-less-ness (in the sense that the evidence suggests that governments couldn’t care less!). How else does one explain the convoluted contortions which have been gone through to justify retrospectively denying Indigenous disabled citizens access to a grant which had been recommended by the ABA Advisory Committee and was intended to fund ongoing support services by a charitable foundation with strong and enduring links into Aboriginal communities?