US Supreme Court Justice Gorsuch and Native American policy

 

We must not make a scarecrow of the law, 
Setting it up to fear [frighten] the birds of prey,
And let it keep one shape, till custom make it
Their perch and not their terror.

Measure for Measure, Act 2 scene 1.

 

On the New Yorker web site (link here), Amy Davidson Sorkin has an insightful and thought provoking analysis of conservative US Supreme Court Justice Neil Gorsuch’s surprising perspective on Native American rights. Her article is worth reading not just for the profile of Justice Gorsuch and his jurisprudential record, but for the analysis of the US Supreme Court’s recent decision in Arizona v. Navajo Nation, and the alternative interpretations of the treaty commitments that were at the core of the arguments. As Davidson Sorkin writes:

The case involved the future division of the waters of the Colorado River—an issue of existential concern to millions of people across seven Western states, including a hundred and seventy thousand who live on the Navajo reservation.

 

Davidson Sorkin ends her profile by referencing Elie Mystal in an article from The Nation. Mystal who ‘after puzzling over Gorsuch’s lack of empathy for other groups’ wrote that ‘Gorsuch is the staunchest defender of tribal sovereignty and Native American rights perhaps in the history of the Supreme Court, and I choose to be thankful for that’. Mystal goes on to elaborate on the rationale for Gorsuch’s support of Indigenous rights, and the limits of that support, based on his view that native rights were recognised in the US Constitution. Mystal quotes Gorsuch’s dissent in a recent case to elucidate his thinking:

“Instead, the Constitution’s text—and two centuries of history and precedent—establish that Tribes enjoy a unique status in our law.” For Gorsuch, in other words, Tribal nations are uniquely protected by a constitutional promise (often ignored) that they will be left alone. 

 

I strongly recommend readers have a look at both these articles. Reading these two articles led me to think more about a few issues of significance in Australia, and how the experience in the US may provide lessons or comparative perspectives of use to both policymakers and First Nations.

 

The first issue is the importance of water rights to Indigenous peoples, its centrality to their cultural perspectives and being, and its increasing commercialisation by governments struggling to regulate usage of a scarce resource by mainstream commercial interests. The dilemma for Indigenous interests is that the most obvious pathway to greater access to water, and to the protections of water resources is to participate in its commercialisation. This may suit some Indigenous groups, but is unlikely to suit all Indigenous groups. There is a growing literature on Indigenous water rights in Australia which confirms the existence of a complex and diverse policy agenda. My sense however is that governments are yet to comprehensively and substantively address the policy opportunities and challenges embedded in this policy agenda (link here).

 

The second issue relates to the increasing focus emerging in Australian public discourse on Indigenous issues related to the importance and potential of negotiated treaties. I won’t attempt to summarise the myriad issues involved, but will instead make one simple point: the US experience (confirmed in Arizona v Navajo Nation) demonstrates beyond doubt that whatever their advantages and merits (and they are potentially considerable), the propensity for governments, and even the courts, to avoid, undermine and ignore even formal treaty commitments is an existential risk both to the rights that are sought to be protected by the treaties and to the treaties themselves. The best long term protection for Indigenous citizenship and other rights is to progressively build and sustain deep support in the wider community.

 

The third issue I was led to contemplate is the ongoing role of the judiciary in Australia in driving substantive policy reform, and in particular, the role of individual jurists who have an understanding of the complexity of the policy challenges facing both the nation and Indigenous citizens. To put it bluntly, it is arguable that the capabilities of governments to drive policy reform has been progressively diminished and depleted over recent decades, and perhaps as a result, the influence of the judiciary has expanded to fill the vacuum.

 

However, it is difficult to nominate a single Justice of the High Court who might be described in terms akin to those used about Justice Gorsuch as the staunchest defender of Indigenous rights in the history of the Court. In part, this is a result of a different legal culture, less overtly political, and more grounded in a culture of reasoned judicial impartiality (a feature which I am grateful for). Still, clearly a number of Justices have made enormous contributions: Chief Justice Gerard Brennan in his lead judgement on Mabo, Chief Justice Robert French in expanding the extent of native title rights to pastoral leases in Wik. Justice John Toohey was in the majority in Mabo and Wik, and perhaps more importantly, made a major contribution in his time as the first Aboriginal Land commissioner under the Aboriginal Land rights (Northern Territory) act 1976. Interestingly, each of these justices had serious involvement in Indigenous legal issues earlier in their careers.

 

Yet it is the dissenting contributions that have foreshadowed potential directions for the development of the law that stand out for me. Justice Toohey’s judgment in Mabo (supported by Justices Deane and Gaudron, but not by Justices Brennan, Mason and McHugh) argued for the existence of a fiduciary duty by the Crown. In 1997 in Newcrest Mining v The Commonwealth, Michael Kirby was one of the minority arguing that the 1969 case of Teori Tau (which held that the Commonwealth was not obligated to pay just terms for the acquisition of property in a Territory) should be over-ruled. In 2009, Wurridjal V Commonwealth finally overturned Teori Tau. In the 1996 case Hindmarsh Island Bridge Case, Kirby’s lone dissent argued that while the race power in section 51(26) of the Constitution  permitted special laws for people on the grounds of their race, it should not be read so as to discriminate adversely against such people on that ground. Unfortunately, Australia continues to this day to have a Constitution that allows the Parliament to make laws that adversely discriminate against the members of a race.

 

The fourth issue worth reflecting on in the comparison of the US and Australian legal systems is the shared preparedness of both systems to contextualise contemporary issues with detailed historical analysis and research. Clearly in the US context, Gorsuch is highly adept at weaving historical narratives into his reasoning. So too has the High Court in Australia been prepared to build its legal decision making on detailed historical analysis of the treatment of Indigenous citizens. This is also a feature of the land claim process under the Aboriginal Land Rights (Northern Territory) Act 1976, and under the Native Title Act 1993. As an aside, one might make a similar argument for the under-appreciated role of anthropology in these far reaching legal processes that are changing the institutional shape of the Australian nation.

 

One of the less well understood positive implications of land rights legislation and the Native Title Act has been their ongoing contribution to educating the judiciary and the supporting cohorts of legal functionaries of the complexity of intercultural engagement and the innate intelligence and functional integrity of Indigenous cultural practices. Australia is a better place for those ongoing processes.

 

28 June 2023

 

 

 

Political and media narratives on alcohol policy in Central Australia

 

Before him he carries noise,

and behind him he leaves tears…

Coriolanus Act 2, scene 1

 

Late last week the media reported the release of NT Police crime statistics which indicate a significant drop in alcohol related crime. According the Guardian (‘Incredibly noticeable’: alcohol bans have cut family violence and crime in Alice Springs, advocates say):

NT police statistics collated by the Central Australian Aboriginal Congress revealed a 37% decrease in domestic violence assaults from January to April. All other assaults dropped 35% while property offences were down 25% over the same time period.

 

It is clear that the reinstatement of the alcohol bans on town camps in Alice Springs and surrounding communities (subject to the potential for Alcohol Management Plans to be negotiated and approved by the NT Government) has had a significant and positive impact on crime in Alice Springs and surrounds.

 

According to a 23 June 2023 front page story in The Australian (Grog bans put brake on Alice Springs violence, (link here $): “…total recorded assaults dived from more than 260 in January to 170 in April…”. The Australian also published an editorial on the issue (A sober Alice Springs starts to get its life back on track’) (link here) which is worth reading both for what it gets right and for what it gets wrong or omits.

 

The editorial’s headline is clearly misleading: Alice Springs is not yet sober and alcohol abuse remains a significant and deadly problem. The Australian’s own article notes that police continue to be concerned about illegal sales of alcohol, and quotes the Police Association President as saying that police on the ground ‘have definitely seen an increase in secondary supply…’. The article goes on to quote NT Police Acting Deputy Commissioner as stating that ‘volumetric restrictions’ on how much alcohol individuals could buy would ‘go further in helping to reduce the alcohol-related harm across the community’.

 

It is not clear what the Deputy Commissioner of Police had in mind when he referred to volumetric restrictions, but it has long been recognised by social scientists that volumetric taxation of alcohol is both more efficient and has considerable health benefits (link here). It is also widely recognised by health professionals that the harms due to alcohol consumption (and particularly over-consumption) are extremely serious. See the Australian Institute of Health and Welfare web report on Alcohol, tobacco & other drugs in Australia (link here) for a discussion of alcohol related harm. To take just two mainstream data points from that report:

(i)            AIHW analysis of the National Hospital Morbidity Database showed that alcohol accounted for nearly 3 in 5 drug-related hospitalisations in 2020–21 (57% or 86,400 hospitalisations); and

(ii)          In 2019–20 alcohol-related injuries resulted in 30,000 hospitalisations (118 per 100,000 population). The most common causes of alcohol-related injury hospitalisations were falls (39%), intentional self-harm (24%), assault (15%) and transport (7.2%)

 

The editorial goes on to allocate blame to the NT and federal governments, as well as to the NIAA and other paid advisers (it names KPMG) for being ‘too distant from the realities of life in the areas they claim to represent’. While the editorial doesn’t name former Minister for Indigenous Australians Ken Wyatt, it does correctly acknowledge that the decision to allow the Stronger Futures alcohol controls to lapse was made under his watch. The editorial correctly notes that Senator Jacinta Price predicted that the removal of the alcohol bans in the NT would result in an upsurge of violence against women and children. Offsetting that, it might be observed that she was not prescient enough while the preselected candidate for the NT Senate seat to persuade Minister Wyatt to maintain the Commonwealth controls across her electorate.

 

The most egregious omission from this Editorial, and indeed from the whole political narrative related to alcohol consumption and harm (both to individual and to their families including children) is the effective capture of governments of all political persuasions in both Canberra and the NT by the alcohol production and retail industry, and those involved in the associated supply chains. There is a deep-seated and widespread pro-drinking culture across the whole NT population, and governments are terrified of antagonising industry interests because of the nascent potential for those interests to heighten and leverage political opposition in the electorate. Political donations also play a part in both Canberra and Darwin.

 

Meanwhile taxpayers nationally and in the NT are meeting the costs of the health services, the policing, the incarcerations, and the infrastructure damage associated with alcohol induced dysfunction. Aboriginal people and communities bear the direct social and psychological costs of endemic domestic and lateral violence which are exacerbated and in large measure caused by the easy availability of alcohol.

 

Australia provides almost $3bn per annum to businesses to incentivise Research and Development that would otherwise not occur because R&D is a positive externality (link here). The explicit rationale for R& D subsidies to business arhe the existence of positive externalities. That is, businesses do not accrue all the benefits of their R&D and are thus not adequately encouraged to invest in it. There is a public interest in maximising R & D. Yet alcohol harm has extensive negative externalities without government taxation linked to the harm to society generally. That is, the alcohol producers do not bear all the costs arising from the sale of their product, and are thus incentivised to over invest in producing it (and to also lobby against any regulation in the public interest).

 

While governments do tax alcohol, the taxation of alcohol is not driven by the need to internalise the costs, but rather by governments’ revenue raising strategies mediated by the counter-lobbying of particular segments of the alcohol industry. Higher rates of tax on alcohol — ideally related both to the volume of alcohol involved and the the levels of harm arising (link here) — would both reduce the demand and thus the levels of societal harm caused by alcohol consumption, and coincidentally strengthen the abilities of governments to invest in harm minimisation. The AIHW web report cited above notes that the levels of alcohol related harm are higher in remote regions than elsewhere.

 

The ABC too has a report on the new statistics (link here), based on evidence given to an ongoing coronial inquiry into the deaths of four women in NT communities arising from domestic violence by their intimate partners (link here). Two of the cases occurred in Central Australia. The Coroner will undoubtedly make finding in relation to the role, if any, alcohol abuse played in the extended cycles of domestic violence these women suffered, and which ultimately ended with their violent deaths.

 

One problem with the media coverage of many of the challenges facing remote communities is that the coverage inevitably focusses on events and not on underlying processes or causes. However, they also often go further, and actively frame the issues in ways which have the effect, or are designed, to avoid and mislead the consumers of media by focussing on trite but plausible narratives rather than acknowledging the existence of systemic and institutional forces that hold sway over virtually the entire span of public policy in Australia. Yet the government decisions in both Canberra and Darwin can be framed in different ways.

 

The decisions to allow the lapse of alcohol controls, to then resist reinstating those controls, and ultimately — in the face of irresistible political pressure from mainstream interests arising from social chaos engendered by the uncontrolled flood of alcohol into town camps and communities — to lead the Commonwealth Government to intervene and effectively coerce the NT Government to reinstate controls were both geographically and temporally complex.  The Australian editorial frames these decisions as the result of governments not listening to local (Aboriginal) voices.

 

In doing so, The Australian editorial effectively ignores an alternative framing, namely that governments do not listen to Aboriginal voices because they are beholden to the alcohol industry. The sorry history of the NT Labor Government’s approach to the proposal for a Dan Murphy superstore near Darwin airport is redolent with obsequious pandering to alcohol interests (link here). Both the NT and the Commonwealth Parliaments have strong Indigenous representation, including amongst the Ministers who were ostensibly responsible for taking these decisions. It strains credulity to conceive that these decisionmakers were somehow ‘removed from those whose interests they were supposed to protect’, or were not prepared to listen to local voices. These decisionmakers do not spend their entire lives in Canberra nor in Darwin. At their core, these decisions were political decisions, not policy decisions, and were taken because of the systemic power of the alcohol industry.

 

Subsidiary framings (also not explored by the recent media reports) include the possibility that the NT Government was committed to abolishing alcohol controls in order to reduce the flow of itinerants into Darwin and other major centres, and the federal Labor Government was unwilling to itself re-legislate in order to minimise friction with the NT Labor Government, and the concomitant perception of incompetence were it to do so directly. Hence the elaborate charade of a joint media conference to announce Commonwealth funding and the NT Government backflip (link here).

 

I do not absolve the decisionmakers in Canberra and Darwin, on both sides of politics, for their poor and socially destructive decision-making both on this issue and in relation to other shortcomings across the Indigenous policy domain. Decisions that have led to the continuation of extraordinary levels of social harm both for drinkers, but more importantly for their partners and children and local communities.  But nor should media outlets be absolved when they effectively run interference for commercial interests that are the direct cause of so much societal harm.

 

Alcohol abuse is clearly an important contributor to the challenges facing remote Indigenous communities across at least four jurisdictions. It does not however represent the totality of the challenge, and there are no panaceas. A first step however is to understand that the promulgation of misleading or tendentious policy narratives and framings will not lead to effective policy reform. A second step would be to actively consider policy options designed to limit the unrestricted supply of full strength alcoholic beverages across the whole community.

 

Addendum

For those interested, a selection of some previous posts related to alcohol issues in remote Australia are set out below:

 

Alice Springs crisis: observations on remote policy (link here)

Alcohol policy reform in remote Australia: a potential roadmap (link here)

Neil Westbury article on regressive changes to remote alcohol laws in the NT (link here)

Regulating Alcohol in the Northern Territory: in whose interest? (link here)

Alcohol policy reform: addressing the underlying economic incentives (link here)

Alcohol Regulation in Remote NT Communities (link here)

 

Good news: the ANAO audit of the CLC

   

Wisely and slow, they stumble that run fast

Romeo and Juliet, Act two, scene three.

 

The ANAO yesterday released their audit of the Central Land Council (link here), the third in a series of four audits of the NT Land Councils established under the Aboriginal Land Rights (Northern Territory) Act 1976.

 

The headline findings include:

•           The CLC’s governance arrangements under the ALRA and NTA are largely effective. 

•           The CLC’s arrangements to promote the proper use and management of resources under the PGPA Act are largely appropriate, except for arrangements to manage risk of fraud and conflicts of interest.

 

The ANAO have provided a succinct, thorough and comprehensive outline and assessment of the internal workings of the CLC. The audit describes an organisation that appears to be well run and with systems that are fit for purpose in a demanding cross cultural governance environment. My own take on the audit findings is that the CLC’s governance systems provide a highly useful template that the other land councils would do well to consider and emulate.

 

There are only two issues that struck me as worth highlighting.

The first relates to the CLC’s internal auditors, PwC, which has also been providing auditing services to corporations that are in receipt of royalty and other payments by the CLC’s internal Aboriginal Associations Management Centre. The ANAO point out that a decision apparently made by the Audit and Risk Committee to move to different auditors for the CLC and the separate corporations had not been reflected in the formal documentary record. See para 4.40, and footnote 69. While perhaps an insignificant technical matter, it points to the risks that outsourcing key functions like ‘internal’ audit can create incentives for conflicts of interest to emerge.

 

The second issue relates to the comparative costs of the various audit and risk committees (ARCs) across the four land councils, and in particular, the costs allocated to the various chairs of the ARCs. The CLC has established a truly independent ARC, in contrast to the ALC which includes three TLC Council members on the Committee whose accounting skills are not made apparent as well as a consultant with extensive other business with the TLC (see paras 4.69-70 of the ANAO Tiwi Land Council Report (link here).

 

In the CLC report, the ANAO include a comparison of the fees paid to the chairs of the four Land Council ARCs (see para 4.71 and footnote 79). The ANAO note that total remuneration for the CLC Chair was $6700. In comparison, in 2021–22 the other NT Land Councils provided the following annual remuneration to the Audit Committee Chairs (excluding travel and other expenses): Anindilyakwa Land Council — $58,352 (three meetings); Northern Land Council — $3048 (four meetings); and Tiwi Land Council — $2780 (five meetings). This data speaks for itself.

 

The ANAO are to be congratulated on the thorough way they have gone about analysing what are complicated governance structures within unique statutory authorities.

 

The CLC is clearly well managed and appears to be providing valuable benefits to its diverse and geographically dispersed constituency.

 

We now await the final audit of the NLC.

 

Typographical errors: ANAO audits of the Tiwi and Anindilyakwa Land Councils

 

Here are a few of the unpleasant’st words

That ever blotted paper.

Merchant of Venice Act 3, scene 2.

 

There are four land councils established in the NT under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA): the Tiwi Land Council (TLC), the Northern Land Council (NLC), the Central Land Council (CLC), and the Anindilyakwa Land Council (ALC).

 

In the last fortnight, the ANAO has published two important audit reports on the smaller two land councils, the TLC (link here) and the ALC (link here). Land Councils are Commonwealth statutory corporations albeit with a range of unique elements relating to the appointment of members, their funding, and their linkages with other Indigenous institutions in the Northern Territory. They are also native title representative bodies under the NTA. Over and above their narrow legislative roles, they have developed into important Indigenous institutions in both the NT and nationally.

 

The ANAO notes that the rationale for these audits is provide independent assurance to Parliament that the Land Councils’ governance arrangements are effective in meeting legislative obligations under the ALRA, the Native Title Act 1993 (NTA) and the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The ANAO has indicated that an audit of the CLC will shortly be published and an audit of the NLC is expected to be published in a couple of months.

 

I don’t have the space here to provide a comprehensive summary of each of these reports, and will instead cherry pick a small number of issues that appear to me to have significant governance implications both for the individual land councils and the broader institutional framework they operate under.

 

The ANAO is to be congratulated on the quality and accessibility of its analysis given the innate complexity of these institutions, including their cross cultural responsibilities. Nevertheless, as I have previously noted on this blog, the ANAO has a propensity to cloak its findings in heavily qualified bureaucratic prose and extreme understatement. The result is that an ANAO report reads like a novel written in a foreign language. Those proficient in bureaucratese know exactly what is being said while those unfamiliar with the language (eg in the media and the general public) are left largely untroubled and unaware of the significance of what has been said.

Tiwi Land Council Audit

 

The ANAO headline findings for the TLC were:

The Tiwi Land Council's (TLC) governance arrangements under the ALRA and the PGPA Act are partly effective….The TLC’s arrangements to promote the proper use and management of resources under the PGPA Act are largely inappropriate. (page 5).

 

The ANAO notes that in 2021-22the TLC budget was $4.3m, and it distributed $5.9m in land use payments to Traditional owners (TOs). These are not particularly large amounts, but will add to around $100m over the span of a decade.

 

In para 2.9, the ANAO noted that its analysis of Management Committee and Council meeting minutes identified multiple instances where the Management Committee made decisions without delegation between 2008 and 2020.  

 

A core statutory function of the land councils is to consult Traditional owners and ascertain their consent to proposed activities on their land. The ANAO identified significant shortfalls in the TLC’s approach to exercising this function:

3.64 The ALRA determines that, in carrying out its functions, a Land Council shall have regard to the interests of, and shall consult with, the Traditional Aboriginal Owners of the land in its area and any other Aboriginal people interested in the land. The ALRA further specifies that a Land Council shall not take any action unless it is satisfied that: •the Traditional Owners of that land understand the nature and purpose of the proposed action and, as a group, consent to it; and •any Aboriginal community or group that may be affected by the proposed action has been consulted and has had adequate opportunity to express its view to the Land Council…

…3.66 The TLC subcontracts the organisation and conduct of the clan meetings to Tiwi Resources, an Aboriginal corporation owned by the eight clans. The TLC presents at these meetings, however does not take minutes, and does not request the minutes from Tiwi Resources. The TLC was unable to provide information to the ANAO about the discussions or decisions made at clan meetings and cannot demonstrate it has conducted effective clan consultations. 

 

In the summary at the start of Chapter Four, the ANAO note (page 51):

The TLC’s arrangements to promote the proper use and management of resources are largely inappropriate. The TLC’s policy framework and arrangements for risk management, fraud control and managing conflicts of interest are incomplete, not appropriately established, and inconsistently implemented. The TLC’s corporate plan and annual report, including performance statements, are not fully consistent with legislative requirements.

 

Finally, in what I took to be a damning indictment of the level of engagement of the National Indigenous Australians Agency, the ANAO laid out the functions of the NIAA set out in the formal order which established it (see para.2.26), which includes roles ‘to lead and coordinate policy Commonwealth policy development’ and to ‘build and maintain effective partnerships…’, and then noted (in para 2.27) the NIAA’s advice of its perception of its role in relation to the NT Land Councils which adopted a much more passive approach. Then to ram home the point, in para 2.28, the ANAO stated without further comment:

2.28 As part of this audit, the ANAO approached the NIAA regarding a potential recommendation to the NIAA to support the Tiwi Land Council to develop appropriate delegation instruments. The NIAA responded that ‘This is a matter for the Tiwi Land Council’.

 

Anindilyakwa Land Council Audit

The ANAO headline findings for the ALC were:

The ALC’s governance arrangements under the ALRA and PGPA Act are partly effective …. The ALC’s arrangements to promote the proper use and management of resources under the PGPA Act are partly appropriate (page 6).

 

The ANAO notes that in 2021-22 the ALC budget was $7.4m, and it distributed $70.2m in land use payments to traditional owners (TOs). These are substantial amounts appropriated for Aboriginal benefit, and will add to around $770m over the span of a decade.

 

Notwithstanding this rather anodyne description, I was quite astonished to read the detailed analysis contained in the ANAO audit. While the audit focusses on a single organisation, the ALC, it necessarily describes a network of parallel organisations with interlocked directors, and senior staff, and a complex web of financial flows between them. Yet the financial books of the parallel organisations (and their commercial subsidiaries) are beyond the ANAO remit, leaving the readers to ponder the implications of a series of questionable arrangements and decisions taken within the ALC.

 

The high level conclusions of the ANAO are outlined at pages 8 to 10, followed by a series of technical recommendations. The following extracts pick out some of the more salient high level conclusions:

17. …. Key interests held by the CEO and Council members (including the Chair) in corporations that receive funding based on decisions of the Council, are not consistently declared and are ineffectively managed. (See paragraphs 4.19 to 4.51)…

18….The 2021-22 Annual Report was not published as at March 2023. Although the draft 2021–22 Annual Report mostly complies with PGPA Act and Rule and ALRA requirements, it lacks transparency in relation to operations.

19. The Audit Committee does not provide adequate oversight and scrutiny of the ALC’s operations. The Audit Committee is not independent from management and is not effective in the delivery of some of its key mandatory functions under the PGPA Act. It does not appropriately review the ALC’s performance reporting; system of risk oversight and management; and system of internal control. The Audit Committee secretariat is not effective. (See paragraphs 4.64 to 4.85)

 

The issue of conflicts of interest is at the core of this audit. In plain English, a conflict of interest opens the way for those conflicted to accrue inappropriate financial benefits. The ANAO has identified no instances where that has occurred, however its remit is limited to the ALC and it has not examined the financial affairs of the various parallel and subsidiary organisations. Figure 4.1 on page 68 provides a useful summary of the complex relationships involved. The key must read paragraphs are 4.45 to 4.50.

 

Some extracts:

4.32 The CEO’s declaration identified an interest arising from the ALC’s employment of his spouse (who was first employed by the ALC in 2014). The ‘notes’ section of the declaration was left blank, and no management plan was included in the register or elsewhere. The CEO had not made a written declaration of the interest prior to 2022...  

4.47 The involvement of the ALC Chair, CEO and CEO’s spouse in organisations that, in 2021–22, received the majority of royalty equivalents and that, in 2020–21 and 2021–22, received the majority of NT Indigenous Economic Stimulus Package funds, creates a risk of conflicted interests….

4.48 In Council funding decisions, the ANAO observed disproportionate benefit to the entities with which the CEO is associated. During the two 2022 Finance Committee meetings (at which the ALC CEO was present), 112 requests for funding valued at $109.1 million were reviewed… In summary, requests submitted by the ALC CEO represented 24 per cent of funding applied for, and 36 per cent of approved funding; and the success rate for requests submitted by the ALC CEO was 99 per cent by value, compared to a success rate for the other applicants of 53 per cent by value. 

4.50 Given the influence of the Chair and CEO over the ALC’s funding and management decisions; the financial benefit that AAAC, GHAC and consequently Winchelsea Mining obtain from the ALC; and the ALC Chair’s, CEO’s and CEO’s spouse’s positions in GHAC and Winchelsea Mining; the risk of conflicts of interest is high. The current management strategies applied to this risk are either insufficient or not implemented. 

 

The ANAO analysis of the ALC Audit Committee is also eye watering. The ANAO identifies that the ‘independent chair’ costs nine times more than other land councils expend on their audit committee chairs (para. 4.73), and is engaged by the parallel organisations that are also effectively controlled by the CEO and ALC Directors.

 

The ANAO identified several significant issues in relation to the independence of the Audit Committee Chair (para. 4.70):

• The Chair of the Audit Committee is the founding director of Enmark Pty Ltd (Enmark). Between 2014–15 and 2021–22 the ALC paid $896,056 in fees to Enmark for services. Between 2017–18 and 2021–22 Enmark was one of the top three consultants by value engaged by the ALC.

• Enmark provides consultancy and other services to several Aboriginal corporations receiving royalty equivalent funding from the ALC. This includes GHAC and AAAC.  The ANAO identified numerous deficiencies in the approach of the Audit Committee to its responsibilities.

 

One further issue that I won’t explore in detail relates to the ALC’s use of royalty payments to third party organisations which were then effectively reallocated to the land council for the payment of salaries (see paras 3.51 and 3.52). The ANAO correctly identifies this mechanism as a potential source of fraud, but fails to note that it effectively undermines one of the Minister’s tools available to ensure the land council is appropriately focussed on its legislated remit. Under the ALRA, the Minister approves the budgets of the land councils, but the ALC has effectively been redirecting royalty equivalent funding away from community benefit and towards its own operations, thus undermining the fiscal constraints that incentivises good priority setting.

 

Finally, the ALC Board and CEO provided a ten page response to the Audit report, which needs to be read in full. The response focusses on the undoubted achievements of the ALC and its associated organisations in a range of areas. It documents a massive increase in staff of the ALC, many from the local communities. It also notes that the former Minister for Indigenous Australians Ken Wyatt was kept fully informed of development on Groote Eylandt, and that the CEO of NIAA has been briefed. It points to the ALC’s involvement with the ANU in documenting the social indicators on Groote; a matter I commented on in an earlier post (link here).

 

Clearly whatever its other deficiencies, the capability of the ALC Board to write entertaining prose far exceeds that of the ANAO. The ALC response provided my favourite line from the whole report in a comment on the ANAO’s conclusions on conflict of interest:

The ALC has effectively managed conflicts of interest in the context of this operating environment and accepts that we have not always properly documented these practices. Therefore, instances of typographical errors have given the auditors a negative overall impression.

 

Conclusion

These two audits raise important issues regarding the quality of governance in two of the four NT land councils. The TLC appears to have taken a series of remedial actions and should hopefully make good progress. The ALC faces more deep-seated issues and notwithstanding its response, I for one am unconvinced that it is yet on the right path.

 

The existence of these issues however is not just an issue for the Land Council directors and management. It seems to me that the relevant Ministers over the past decade have allowed the quality of regulatory oversight of the NT land councils to significantly weaken and in some cases to perhaps disappear. Not only has this laissez faire approach opened up the opportunities for conflicts of interest to emerge (and thus to opportunities for fraud against local communities and the Commonwealth), but it has also undermined the overall effectiveness of the land councils in fulfilling their statutory obligations and remit.

 

To address the issues raised in these audits, it strikes me that there are two essential actions required.

 

First, to provide an assurance to the ordinary members of the Groote community, there appears to be an overwhelming case for an independent forensic investigation into the financial affairs of the ALC, its associated organisations, and its key staff and Directors. It seems to me imperative that Minister Burney should both initiate such an investigation immediately, and initiate a short sharp review of the way in which NIAA oversights portfolio bodies.

 

Second, given that it is now almost fifty years since land councils were established, and that there has been no overarching review for two decades or so, there is a strong case for a high level independent review of the appropriate regulatory framework for the operations of the NT land councils. Such a review should reconsider their statutory remit, their funding arrangements, and importantly, how land councils relate to associated Indigenous entities that have responsibilities for utilising the royalties, royalty equivalents, and other land use payments that accrue to landowners and affected communities. Such a review should not have any overt political agenda apart from considering the best way to meet the future needs and aspirations of Aboriginal landowners and native title holders in the NT into the future.