[Go]
Wisely and slow; they stumble that run fast
Romeo
and Juliet, Act two, Scene three
The ILSC has now finalised the sale of the Ayers Rock
Resort (ARR). According to this week’s media release (link
here):
The Indigenous Land and Sea
Corporation (“ILSC”) is pleased to announce, the successful completion of the
sale of its subsidiary, Voyages Indigenous Tourism Australia Pty Ltd
(“Voyages”), operator of Ayers Rock Resort at Yulara and Mossman Gorge Cultural
Centre (MGCC) in Far North Queensland to Journey Beyond, effective 27 February
2026.
The ILSC announced the agreement for the sale in December
2025. The media release (link
here)
outlines the broad structure of the sale agreement that has now been finalised
and is worth reading in full. The purchaser, Journey Beyond, issued a
shorter media release at the same time (link
here).
The sale encompasses two separate Voyages operations / assets, the ARR and the
Mossman Gorge Cultural Centre (MGCC) in North Queensland. This post focusses on
the ARR which is the largest element of the transaction.
The key elements of the transaction are laid out in the
ILSC media release announcing the sale. I recommend reading the full media
release, but key elements include:
[The agreement] …is to be
completed by the sale of the shares in Voyages currently held by the ILSC and
is the first in a series of transactions that will, once completed, formalise
the transfer of land and buildings at both sites for the benefit of the respective
Traditional Owners; Anangu Pitjantjatjara Yankunytjatjara of Yulara and
the Kuku Yalanji of Mossman Gorge.
The new partnerships between
the Traditional Owners and Journey Beyond will bring significant ongoing
economic benefits to Indigenous communities at Yulara and Mossman Gorge. Later,
following the transfer of land to the Community corporations, both communities
will be paid rent from Journey Beyond’s leasing of the sites under 90 and 10
year leases respectively….
… The sale agreement between
the ILSC and Journey Beyond will only pass control of the operational assets of
Voyages to Journey Beyond. Land and buildings at Yulara and Mossman Gorge will
ultimately be transferred to the appropriate Community corporations
representative of the relevant Traditional Owners. The ultimate transfer at
Yulara will mark the largest single return of land to Traditional Owners in the
ILSC’s history in terms of both value and area.
For those interested in understanding of the detail
involved in the transaction, the discussion in the Senate Estimates Committee hearing
on 10 February 2026 is essential reading (link
here).
The ILSC discussion is at pages 12 to 18. It is, in my view, one of the best
examples I’ve seen in recent years of how an Estimates Committee discussion can
add value. I should also add that the design and structure of the transaction
is clearly commercially sophisticated, highly innovative and in some respects
counterintuitive. For those interested in reading my own comparatively
simplistic 2021 prospective analysis, I refer you to this previous post (link
here).
The Estimates Hearing transcript covers issues such whether
the ARR transaction clears the outstanding ILSC debt (it does); the transition
process before finalisation of the divestment of the underlying land,
infrastructure obligations after divestment, the impact of ongoing native title
claims, the future of the National Indigenous Training Academy that operates
from Yulara (it will continue), the cost of the consultants used in the
transaction, and the major achievements of the ILSC over its almost thirty year
history. On this latter point, the ILSC CEO Joe Morrison noted the size and
significance of the Yulara divestments and pointed to a recently released web
summary (link
here).
The media release celebrating the 30th anniversary noted that the
ILSC had over its history invested more
than $1.48 billion through 323 acquisition projects and 1,052 management
projects which delivered cultural revitalisation, economic development, environmental
stewardship, and social connections (link
here).
There is absolutely no doubt that over its thirty-year
lifespan the ILSC has much to celebrate, and much has been achieved.
As Mr Morrison suggests in his Senate Estimates evidence, the
ARR transaction and its concomitant divestment represents an enormous outcome
for the traditional owners insofar as they and their descendants will gain
ownership over land which they failed to obtain in an earlier native title
claim and yet is of enormous significance to them.
Balanced against this and not mentioned in any of the
discussions of the sale has been the enormous costs of the initial decision to
purchase the ARR in 2010.
In 2020, in an academic volume focussed on Indigenous
self-determination (link
here),
I wrote about the challenges facing the ILC (as it then was) and inter alia
identified the ARR acquisition as one of two major strategic mistakes made by
the ILC over its life (the other was its retreat from assisting pastoral
enterprises across northern Australia):
… the architects of the ILC’s initial and
amended legislation intended that any subsidiaries would work in partnership
with Indigenous groups of landowners.
The most egregious example of the ILC’s
misplaced confidence in operating unilaterally via its subsidiaries has been
the $300m acquisition of the ARR. The ILC paid a price above commercial
valuation for this asset and borrowed significant sums to finance the
acquisition. Servicing this debt has effectively crippled the ILC’s ability to
fulfil its primary legislative remit. Even if the ARR eventually becomes
commercially successful, and the ILC’s outstanding bank borrowings are repaid,
there will have been an effective 20-year hiatus in land acquisition and
management across the nation, with all the opportunity costs which that
entails.
I do not have the space to recount the details of the
political and policy conflicts that emerged following the original acquisition,
but this article (link
here)
from The Saturday Paper in August 2015 titled Fresh calls for inquiry
into Ayers Rock Resort purchase provides a sense of the issues in play.
A Question on Notice from Senator David Pocock following an
Estimates Hearing in December 2025 requested advice on the sale price
negotiated with Journey Beyond and information on the accumulated net profit of
loss arising form ownership of the ARR from 2011 through to the present, as
well as the accumulated capital expenditure invested in the asset over the same
period.
The answers provided (QoN 1820: link
here)
are eye watering. The answer does provide several caveats that aim to dissuade
those inclined to make simplistic comparisons, and argues such comparisons are problematic.
For example, the current transaction is for the shareholding in Voyages held by
the ILSC and not the asset per se, some existing loan liabilities remain in
Voyages and are taken into account in the sale process, and of course the price
paid by Journey Beyond excludes any freehold land acquired by Voyages which the
ILSC note has been independently valued at $215m; a valuation that I find
questionable, but which is somewhat moot insofar as the land will likely never
be sold as it will be transferred to the traditional owners when the land is
divested.
The answer goes on to provide the information requested. The
purchase price payable to the ILSC by Journey Beyond for Voyages is $123.5m.
This will allow the ILSC to repay external debt currently recorded at $122.4m.
The ILSC is left with $1.1m cash in hand.
The accumulated net loss over the fifteen years
of ILSC ownership was just under $101m, and the accumulated capital expenditure
on the asset over the period was $250.5m. Much if not most of this
capital expenditure was sourced from the ILSC. These are nominal figures and
thus do not reflect the real value of the losses and expenditures in 2026
dollars. It is unclear whether the costs of negotiating the transaction are
included in these figures; in an answer to a Question on Notice from Senator
Liddle, (QoN NIAA 1766: link
here),
the ILSC advise that the total costs of negotiating the transaction were $15m,
including $13m for consultants and professional costs.
The bottom line here is
that over the 16 years since the ARR was acquired, the ILC put up $300m; lost a
further $100m, expended $250m in capital expenditure and has been left with $1m
in the bank. The net cost of the acquisition to the ILSC over the sixteen
years was $650m but is likely closer to $700m in 2026 dollars.
While the enormous financial costs of this investment will
be offset by the divestment of the land involved to its traditional owners,
this is not what drove the initial decision in 2010, and nor would the ILSC
today likely make a similar investment for any other First Nations community.
The valuation of $215m for the land involved is a benefit for the APY traditional
owners but does not mitigate the financial losses (and concomitant constraints
on new activities) carried by the ILSC.
We can contextualise this by remembering the Land Fund was
established by the Keating Government following the passage of the Native Title
Act in recognition of the fact that based on the High Court decision in Mabo
No.2, much of settled Australia would not be subject to claim given that native
title would have been extinguished by grants from the Crown. The fund was
appropriated on ten years and totalled $1.4bn. The Fund has since grown to
$2.43bn, and under a legislated formula a varying amount (initially designed to
maintain the Fund in perpetuity) currently provides for a drawdown of around
$65m per annum to fund the operations of the ILSC. In other words, the losses
involved in the ARR acquisition amount to almost one third of the total amount
set aside nationally in perpetuity as a compensatory mechanism to acknowledge
the limits of the High Court’s decision in Mabo.
This framing also suggests that the Land Fund corpus, notwithstanding
being very substantial and historically unprecedented, was fundamentally inadequate
from the start, but that is a subject for a different discussion.
The real cost of the acquisition of the ARR however is not
the financial losses, but the opportunity costs which fell (and continues to
fall) directly upon numerous — unknowing — Indigenous groups which meant that very
many land acquisition and land management projects across the nation were
unable to be funded. Or to put it another way, the very considerable
achievements of the ILSC over the past thirty years, and particularly the last
15 years, would have been considerably and tangibly greater had the then ILC
Board not decided to ignore the written warnings of then Ministers Wong and
Macklin, and locked in a decision to proceed with the purchase of the asset in
the lead up to an election that many expected the Labor Government to lose.
The ILC decision in 2010 benefited the former owners of the
Ayers Rock Resort (as it dug them out of a hole with a premium price), and
indirectly the NT Government which had invested millions in Yulara. It solved
an expected problem for the NT Senator who expected to be Minister for Indigenous
Affairs within months and was contemplating the potential insolvency of the
most significant tourism enterprise in his electorate.
The current ILSC Board and staff have in my view pulled off
a major achievement in finalising this transaction. They deserve all the
accolades that come their way. I am not at all critical of the choices and
decisions that they have made. They have drawn a line that staunches ongoing
losses, and in effect have achieved a positive (or perhaps least negative) outcome
from a potentially disastrous starting position not of their making.
However, while I understand the desire to place the most
positive spin on this possible, there are serious lessons that should be
considered and remembered. Foremost among them is the Government’s
comparatively recent pivot towards Indigenous economic empowerment (link
here)
thus legitimising widely held expectations that commercial investments are the
panacea for Indigenous disadvantage.
The ILC Board which decided to purchase the ARR in October
2010 was not short of commercial acumen and expertise, but they allowed hubris
and perhaps encouragement from political quarters in the Northern Territory to
blind them to the risks involved. And the risks of any commercial investments
are always considerable and often enormous. Some investments succeed, some
spectacularly, but many fail. The ARR acquisition failed spectacularly. Strong
governance, strong risk management, and an ability to identify challenges as
well as opportunities are the key to sustained commercial success. Moreover,
every decision to invest in a commercial opportunity represents not just a
decision not to invest in an alternative commercial opportunity, but a decision
not to invest in a social or cultural investment such as improved healthcare,
improved education, or language maintenance. In my view, particularly when
legitimised by government, these lessons too often run the risk of being
ignored or underappreciated.
For Commonwealth Ministers, and their bureaucratic advisers
in Treasury, Finance, NIAA and PMC, and the Opposition Shadow Ministers who aspire
to one day sit on the Treasury benches, and indeed anyone else inclined to
uncritically promote Indigenous economic empowerment as a policy panacea, the
history of the acquisition, operation and sale of the Ayers Rock Resort should
give pause for thought.
6 March 2026
Declaration of
interest: I was an officer in PMC involved in oversight of the drafting of the
ILC legislation in 1994-5; an adviser to Minister Macklin in 2010 when the ARR
was purchased by the ILC; and was the CEO of the ILC for a number of years in
the period 2013-2015.
