Each part depriv’d of supple government
Shall stiff and stark and cold
appear, like death.
Romeo & Juliet, Act four,
Scene one.
In a recent post (link
here),
I wrote about the relationship between the Anindilyakwa Land Council (ALC), the
Anindilyakwa Mining Trust (AMT) and the Anandilyakwa Royalties Aboriginal
Corporation (ARAC). That post argued, inter alia that the rules
governing the board composition of these three entities, and the direction of
funding flows under the ALRA framework, operated to ensure that the ALC
exercises very strong influence amounting to effective control over both the
AMT and ARAC.
In this post I seek to extend that analysis by taking a
closer look at ARAC, although the full story of its operations on Groote
Eylandt in relation to the direction of royalty distributions towards
particular retail outlets, and in relation to its support for the proposed
Winchelsea mine, are yet to be revealed.
ARAC’s financial culture
The analysis here is based in part on the provision of
access to ARAC’s financial reports for the years 2017 to 2021 by ORIC following
a request from me. These reports are yet to be placed on the ORIC website.
Each of the six ARAC financial reports from 2017 to 2022
inclusive include a statement, signed by two Directors and resolved by the
Board, outlining the corporation’s purpose as follows:
The Corporation's operations
purpose [in its first year] has been, to hold assets and manage statutory
royalty equivalents and negotiated royalties in such manners as determined
by the Anindilyakwa Land Council, consistent with its goals for effective,
responsible and sustainable use of such royalty flows [emphasis
added].
This statement appears to make plain that the ALC exercises
direct control over the operations of ARAC. While there is no explicit
provision of the ALRA that precludes a land council from exercising effective
control of a corporation, the requirement in section 35(2) of the ALRA for a
land council to disburse section 64(3) funds to a CATSI corporation clearly
intends that land councils should not be exercising direct control over the
distribution of these funds. Section 23AA
(5) which deals with how land council functions are to be performed (in
short, fairly!) is also relevant.
The 2023 ARAC financial report included an amended
statement that made no mention of the ALC’s role in determining ARAC
priorities. This report follows the publication of the ANAO audit of the ALC
which identified the influence of the ALC, and its CEO, over related corporate
entities.
The extent and specific consequences of the ALC control are
impossible to determine without access to ARAC’s financial accounts and board
minutes. This is why I have argued, including directly to the former Minister,
for a forensic audit of the ALC and its network to be undertaken, a step the Government
appears not to have taken to date. But some examples of the consequences of
that control can be identified, and are discussed below.
In the ARAC financial reports for FY2017, FY2018 and
FY2019, a distinction is made between actual and notional
s.64(3) income. While not explained in the FY2017 report, the FY2018
report, which identifies $5.8m in notional s.64(3) distributions, includes an
explanation:
The distribution of 5,800,000
from ALC as Royalty distribution to TO’s was not shown in ARAC’s bank account
because the transfer was made from the ALC NAB Royalty Trust to ALC’s Royalty
bank account.
Prima facie, this is a direct
breach of section 35 by the ALC. Of course, to the extent that the ALC
determines the end use of the actual s.64(3) payments, they achieve the
same outcome as the ‘notional’ payments that prima facie breach section 35. The
reason we can draw such a conclusion is that such payments deprive TO’s of actual
agency while extolling their ostensible involvement.
Once the degree of ALC control is apparent, other
expenditures in the financial reports begin to look intriguing at best, and
ominous at worst. I mentioned the issue of the use of ARAC to subsidise ALC
employment costs in my previous post, so will not go over that ground again,
apart form noting that it appears irregular at best and a breach of the legislation
at worst.
However, it is worth focussing on ARAC’s use of
consultants. Section 37(8) of ALRA requires a land council to list the
consultants it uses in the exercise of its functions and the amounts paid. The
ARAC financial reports from 2017 to 2023 identify consultancy expenditures
totalling in excess of $12m. To the extent that these represent ALC priorities
and not TO priorities, accountability related to the consultants and their
payments are obscured, and should be listed. Indeed, it might be argued that
they represent a breach of s.37(8) by the ALC.
Finally, in my previous post I noted that the payment of
$41m from the AMT to ARAC did not appear to be accounted for in the ARAC
2022 financial statements. With the availability of the previous year’s
reports, it was possible to track the recording of an amount of $39,147,311 as
an ‘AMT infrastructure debtor’ in the ARAC 2020 and 2021 financial reports. In
2022, the year that the AMT paid ARAC $41,324,957, there was no record in
ARAC’s Financial statements of any such grant being received. However, there was
a line item now called Payment in Advance (whereas it was previously termed AMT
Infrastructure Debtor) which showed an outstanding debt of $39,147,311 in the
previous year, but nil in the current 2022 FY. Rather than resolving the
problem, this treatment of the outstanding commitment, whether intentional or
not, obscures the recipient of the payment while acknowledging that the
commitment no longer applies. [The discrepancy between the amount of $39m and
$41m appears to be related to differing CPI treatments of the original
commitment by the AMT and the ALC].
ARAC and the Groote Township Lease
There is one further policy issue that in my view requires
consideration by the Minister and her agency given the level of influence
exercised by the ALC over ARAC (and I suspect various other corporations).
The Chairman’s report in the ALC Annual Report 2022/23
provides the following update:
Another key milestone during
the reporting period was the transfer of the Groote Eylandt Township Lease
under ALRA S19A from the Commonwealth Executive Director of Township Leasing to
the Traditional Owner (TO) led Anindilyakwa Royalties Aboriginal Corporation
(ARAC) in October 2022, with the consent of the Minister for Indigenous
Australians, the Hon Linda Burney MP.
The Hon Minister Burney attended the significant event held on Groote
Eylandt on 14 November 2022, to commemorate the transfer of the Groote Eylandt
Township Lease and for the signing of the Health and Wellbeing LDMA
Implementation Plan.
The 2022/23 Annual Report of the Office of Township Leasing
(OTL) (link
here)
includes some basic information regarding the transfer.
I have not been able to find a copy of the actual lease
documentation for Groote Eylandt nor the sublease, so will confine my comments
to matters of principle. In the Minister’s comments celebrating the transfer of
the sublease (quoted in the OTL Annual report) she stated:
‘Township leasing in the
Northern Territory is an important vehicle that drives Aboriginal
decision-making in communities and provides an opportunity for
whole-of-community management over economic activity on Aboriginal land. This
historic transfer reminds the country of the strength of existing leadership
structures in First Nations communities.’
To the extent that the ALC effectively controls ARAC, (and more
worryingly, to the extent that a small set of individuals within the ALC
dominate its decision-making) then the Minister’s aspiration for whole of
community management over land tenure will be thwarted. It is unclear what the
impacts might be, and they may well be invisible insofar as over the medium
term they may be comprised of lost opportunities more than opportunities taken
that fail. My fundamental point however is that given the evidence for
substantial effective influence over ARAC by the ALC, and the hands-off
regulatory oversight of the NT land councils by Ministers and the NIAA in
recent years, there is a strong case for strengthening regulatory engagement
between NIAA, ORIC, the OTL and the land councils.
Sum Up
ARAC is a significant element in the broader ALC strategy
to shift the allocation of mining payments towards economic development. My
previous post and this post provide clear cut evidence that the ALC exercises effective
control over ARAC’s operations at least in terms of key financial flows.
These posts have identified several potential breaches of
ALRA’s financial provisions, and perhaps more importantly pointed to areas
where the implicit assumptions that underpin the current legislative framework
applicable to land councils (and perhaps more broadly to native title bodies such
as PBCs) are no longer applicable. Standards of governance and accountability oversight
across the land rights policy domain, and I suspect more broadly, have in my
view significantly declined over recent decades.
My core argument is that the appropriate response to
accountability lapses should not be to curtail Indigenous agency. Rather, it is
to point to the political reality that self-determination and Indigenous agency
will always be threatened by two potential enemies: on one hand by external
forces seeking to constrain and ultimately eliminate First Nations’ agency and
self-determination; and on the other hand by internal actors (who may be either
Indigenous or non-Indigenous, and/or malign or just weak) who seek to pursue
individual advantage at the cost of a broader public or community interest.
Where shortfalls in internal governance lead to accountability failures, and
where the organisations involved are significant and high profile, there is a political
risk that antithetical external forces will take advantage and use poor
accountability to undo the hard work of those who have built up institutions to
expand Indigenous inclusion.
If Indigenous interests wish to strengthen the reforms that
have delivered institutional frameworks that recognise Indigenous rights, such
as ALRA, the Native Title Act, or agreements such as the National Agreement on
Closing the Gap, they must invest advocacy support in sustaining them. The optimal
strategy for Indigenous interests is to ensure that significant organisations
pay serious attention to the quality of their governance, and advocate for
finetuning reforms as required. For governments interested in maintaining stable
institutions and broader social cohesion, the optimal strategy is to invest in
proactive regulatory engagement.
If the current Commonwealth Government does not get on top of
the systemic issues causing significant internal corrosion to the NT land
rights system, and particularly to the systems for royalty distribution, then
it will leave the way clear for a future Government to potentially take much
more drastic action that could weaken Aboriginal rights and diminish the potential
for Aboriginal land owners to control their own future.
Ministers (whether state or Commonwealth) with
responsibilities in the Indigenous Australians domain who allow governance and
accountability standards to decline across their portfolio do their own
reputations no favours, and potentially harm rather than enhance the interests
of First Nations.
3 August 2024
