Sunday, 30 July 2017

Native title and the paradox of accountability

In a recent opinion piece in the Australian Financial Review, (Native Title needs reforming or more indigenous opportunities will be lost; link here) Senator Dean Smith from Western Australia, provided an exquisite example of political positioning masquerading as policy analysis.

Ostensibly, Senator Smith was making the case for review of the role and responsibilities of native title representative bodies (which represent native title holders in claims) and prescribed bodies corporate (which formally hold title on behalf of native title holders). Yet the subliminal message was that native title was a potential impediment to economic development, that this was the result of poor levels of governance and transparency within Aboriginal organisations, and by implication that it was up to Indigenous people to fix it.

Thus the article argues that the complexity of Aboriginal land ownership and the necessity for negotiation creates a system which ‘can become extremely costly and complicated’; that this can lead to ‘adversarial and opportunistic practices focussed on short term revenue raising’ in the name of claimants and native title holders; and that often ‘the lion’s share of revenue goes not to the traditional owners but the Native Title representative bodies and other native title business brokers’.

Then Senator Smith pivots to a recent ANAO audit of the Northern Land Council (NLC) which fulfils a number of roles including that of a native title representative body in the NT. Senator Smith shares the following quotation:

The report identified a ‘fundamental breakdown in in the governance framework at the NLC, resulting in serious failings in almost all aspects of the council’s administration’, including weaknesses in the NLC’s financial management, reporting ad internal management measures.

Senator Smith did qualify his point by adding the following paragraph:

Positively, the report did identify a commitment on the part of the NLC to implementing ‘a wide-ranging reform agenda covering almost all aspects of the governance and administration of the council’.  

Senator Smith then moves from the value laden and far from neutral heading ‘Opportunism rife’ to his more direct conclusion: ‘Lost Opportunities’.

He argues for review of the roles and responsibilities of native title bodies to improve their levels of governance and transparency, arguing they disadvantage both Indigenous citizens and the wider community. In Senator Smith’s view, the expansion of the Ord River Scheme and the northern cattle herd, the development of the Canning Basin onshore gas reserves, and tourism generally represent opportunities which ‘could easily be lost if we don’t call out the inefficiencies of a current native title regime that has evolved in a way that works against the long term community and economic interests of Indigenous and non-Indigenous Australians’.

So what’s going on here?

First, beneath the surface text which is carefully nuanced to appear objective, and which includes a number of points which are well made and with which I agree, there is nevertheless a clear propensity to attribute primary responsibility for the problems identified and for finding the solutions to Indigenous people and organisations. The glancing mention of Fortescue Metals Group as having negotiated in good faith (link here), the implication that representative bodies and advisers (‘native title business brokers’) are exploiting traditional owners, the overly simplistic reference to the ANAO report, and the framing of lost economic opportunities for the wider community and nation all reinforce this meta-message.

Second, it is worth noting that Senator Smith has been in the news lately advocating strongly for parliament to resolve the same sex marriage deadlock in our political system (link here, and here). For a Senator who is a member of the conservative wing of the Liberal Party, with a constituency being actively courted by Cory Bernardi’s Australian Conservatives Party and Pauline Hanson’s One Nation Party, it might be timely to send out a reminder to supporters that his liberal tendencies only extend so far.

Whether intended or not, the likely impact of the opinion piece is to provide reassurance to Senator Smith’s core constituency that he remains a staunch conservative. What it also unfortunately demonstrates is that allocating blame for complex policy outcomes primarily on Indigenous interests is alive and well as a political trope in Australia today. The comparative lack of Indigenous political power in Australian society makes them vulnerable to gratuitous criticism designed to advance other political agendas.

Third, the corollary of framing the problem as one caused by Indigenous interests is that alternative analyses are implicitly ignored or ruled out. In particular, what is the role of the government in ensuring that institutional frameworks such as in native title are working effectively? This is the issue which I wish to explore more fully below.

There are two broad arguments advanced by Senator Smith. First, that native title is not working as well as it could or should. I agree with the diagnosis, but not with Senator Smith’s analysis of the causes. Second, the NLC is suffering from a ‘fundamental breakdown’ in governance and administration. Again, this needs detailed unpicking.

As for the native title issue, my starting point is to make the obvious point that Senator Smith is a member of a Government which has been in place for almost four years, yet has delivered very little on native title. One of the Government’s first moves in this space was to reinstate provision for funding of non-native title respondents to native title claims (link here). In June 2015, the Government received a report from the Australian Law Reform Commission reviewing the Native Title Act (Connection to Country: Review of the Native Title Act 1993; link here); they have received a report from an expert Panel established by COAG to investigate Aboriginal Land Administration and Use (link here). In neither case has any substantive comprehensive reform eventuated. The recent requirement for urgent reform of the Native title Act to fix the McGlade decision in the Federal court (link here) merely serves to reinforce the ad hoc and reactive approach of the current Government to native title issues.

Thus even if one were to accept in full Senator Smith’s characterisation of the issues to be addressed (I don’t), there are strong grounds for concluding that the Government has dropped the ball on the native title reform task. It is particularly telling that Senator Smith’s article omits all reference to these reviews, and omits all reference to the role and responsibility of government to ensure that the institutional infrastructure of society is fit for purpose.

 I have previously commented on native title and land issues in earlier posts (link here and here), so will not take this discussion further at this point. My own take on the strategic challenges facing both policymakers and indigenous interests in the native title space can be found a recent Discussion Paper on the CAEPR website (link here).

Turning to the issue of the Northern Land Council (NLC) and the ANAO audit (link here) to which Senator Smith referred, and the role of government in maintaining institutional resilience, there are a number of points to make.

First, a key point to note is that while the NLC is a native title representative body, it is also (unlike most native title representative bodies) a Commonwealth statutory corporation subject to the PGPA Act, with a range of other functions, and governed by its own legislation which is the responsibility of the Minister for Indigenous Affairs.

Second, the key quotation attributed to the ANAO by Senator Smith is in fact a finding of a 2013 review by Deloittes into the NLC, not a 2017 ANAO audit. The implication is that the ‘fundamental’ issues which Senator Smith infers are of current significance are instead some four years old. 

The Deloittes report was instigated by the NLC and the Department of Families Housing Community Services and Indigenous Affairs (FaHCSIA) following a critical Department of Finance Audit of the NLC’s governance in 2009 (link here) was followed by a qualified financial statements audit from the ANAO which identified financial weaknesses, and this led to a Senate Estimates Hearing which was highly critical of the NLC, and led subsequently to the ANAO audit referenced by Senator Smith.

Third, the ANAO appear to have adopted a particularly low key approach to its formal recommendations, as a close reading of the report reveals numerous adverse findings particularly in relation to PMC oversight, and suggests that a set of much more robust recommendations, particularly in relation to the PMC oversight responsibility, was warranted.

Fourth, in relation to the NLC’s functions as a native title representative body, the ANAO audit notes (at para 2.25) that the Minister for Indigenous Affairs Senator Scullion wrote to the NLC in May 2016 that he was ‘satisfied that the NLC satisfactorily performs its existing functions as a representative body under the Act and would be able to continue to do so’. This directly contradicts the messaging in Senator Smith’s article, yet was not addressed by Senator Smith.

Fifth, while the audit identifies substantial progress by the NLC in implementing necessary reforms, it does not provide the NLC with a clean bill of health. For example, the ANAO note that the NLC’s administrative arrangements ‘do not yet effectively support the work of the council’ (page 9).

So for example, the ANAO notes (para 3.12) that prior to February 2016 ‘the NLC executive and senior staff had no visibility of the organisations allocation of resources and internal budgets (para 3.12); that as at 1 March 2017, the NLC did not have a procurement policy, and procurement practice did not meet requirements set out in the Commonwealth Procurement Rules (para 3.14); that issues with the road worthiness and safety of the NLC’s vehicle fleet management procedures have been reported since 2011-12, but remain outstanding as at March 2017 (para 3.18). Apart for the questions which clearly ought to be directed to the NLC and its leadership, the obvious questions is: where was the Ministers Department and its oversight function as these problems emerged? It is not as if they were not warned!

In response to the 2015 issues the Minister requested the NLC develop a plan that outlines its approach to addressing concerns about its performance. The ANAO states that ‘while many of the actions in the plan have been completed and others are underway, the NLC has not provided progress reports on outcomes against the plan, although agreeing to do so’ (para3.65). Where was the Department as this emerged?

In Chapter Four of its report, the ANAO consider in detail the NLC’s planning and budget processes, and in particular examine the relationship between the NLC and the Minister’s Department in relation to budget issues.

The ANAO find that there is a need for better alignment between the NLC’s performance and planning frameworks and the Commonwealth’s performance framework set out in the PGPA Act 2013. The ANAO examines in some detail the role of PMC in setting the budgets for the NLC. It recounts in some detail the process followed in the 2015-16 and 2016-17 budget discussions, which involved a formal written requirement by the minister to implement a zero-based review of all budget bids and items. The ANAO notes that PMC held meetings to discuss the changed approach, and in a telling point, noted that:

No records of these meetings were kept, and there was no evidence as to the outcomes of the discussions and if they met their stated aims. There was no documented advice or guidance provided to Land Councils on the new approach (para 4.21).

In a classic example of audit understatement, the ANAO conclude:

Broadly, there are shortcomings in the process for providing funds to the NLC under s64(1) of the Aboriginal Land Rights Act. There was little evidence that zero based approach and application of the funding principles had been followed by the NLC in submitting bids or by PMC in assessing the bids, and a lack of transparency of the basis for the funding decisions. (Emphasis added).

It is difficult to interpret or understand this mutual dynamic of inconsistent formal rhetoric of good budget practice and informal reality of total lack of process as anything but a cynical ploy to avoid accountability for decisions. It is inconceivable to me that the department would subvert the written requirements of the minister without his implicit consent. The ANAO finding goes to the heart of ministerial responsibility, and (assuming the minister is not incompetent) leads to the inevitable conclusion that good process was being deliberately subverted. To what ends we can only guess.

The ANAO went on to footnote the Full Federal Court decision which overruled the Ministers attempt to overturn a decision made by his predecessor in relation to a grant to the MJD Foundation (link here), a clear example of ministerial over-reach consistent with the lack of transparency in his decision-making around land council budgets and it is worth noting the billion dollar Indigenous Advancement Strategy program (link here). As if to reinforce the point to the cognoscenti, the ANAO goes on to list the advice from PMC over a number of years for more rigorous budget processes (see paras 4.24-25), advice which appears to have been ignored or dismissed by the Minister. In reading this report, it needs to be remembered that the ANAO is not authorised to examine the actions of ministers, and its remit is focussed on the actions of agencies. It is no surprise then that it appears to hold back.

So the sixth point to make is that PMC and its responsible Minister appear to have comprehensively failed to establish and maintain an effective process of regulatory oversight of the NLC (and by implication) the other NT land councils. The ANAO specifically note that their report (footnote 3, page 7) may be relevant to other land councils.

Given the sustained absence of effective regulatory oversight of statutory corporations by the responsible minister, his or her department, and the Department of Finance which has responsibility for the PGPA Act 2013, attempts to criticise the statutory corporation for alleged misdeeds will always be highly problematic.

Senator Smith’s sideways slap at the NCL based as it was on a fundamental misreading of the currency and time frames of the issues he raised, and complete absence of any analysis of the role of the Minister for Indigenous Affairs in ensuring that agencies such as the NLC in his portfolio are operating effectively, falls squarely within this set of problematic critiques. While we should not be surprised when politicians pursue political agendas, it does seem important that we hold them to a level of accountability in relation t the factual accuracy of their claims, both in terms of what they say, and what they omit to say.

Finally, my own take on the rather sorry saga of which the NLC audit was culmination of almost a decade of poor administrative and governance performance is that that the cross cultural nature of organisations such as the NLC and other native title bodies makes them extremely vulnerable to governance challenges which have the potential to disadvantage their constituents and Indigenous citizens more broadly. The solutions lie in the promotion and support of leadership within these organisations by all who engage with them (whether they are commercial partners, philanthropics, governments or individuals) and in the establishment by government of robust regulatory and governance frameworks which adopt high expectations and hold Indigenous organisations to the highest standards of accountability on a sustained basis. Noel Pearson’s concept of the ‘soft bigotry of low expectations’ (link here) is particularly apposite in this context

The paradox of course is that our own political system appears incapable of holding ministers to account for ongoing and systemic shortfalls in regulatory performance. I am unaware of any academic or media reporting of this NLC audit which examines the shortfalls identified on the government side of the ledger, let alone any concern or criticism of the supposedly responsible minister for the identified shortfalls of his department.

For those who wish to drive substantive and sustained positive change for native title outcomes, rather than see native title as an impediment to economic development and a problem caused by Indigenous citizens, they might encourage governments to focus on improving the regulatory oversight of native title bodies, building their capacity, and strengthening the support offered by governments to ensure native title institutions work effectively and Indigenous organisations involved contribute to the delivery of sustained outcomes for all Australians.