My thoughts are whirled like a potter’s
wheel;
I know not where I am, nor what I do.
1 Henry VI, Act two, Scene four.
Aboriginal Investment
NT (AINT) is a corporate Commonwealth entity established in November 2022 under
the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). Initially
named NT Aboriginal Investment Corporation, the operational name was
changed by ministerial fiat from Northern Territory Aboriginal Investment
Corporation (NTAIC) to Aboriginal Investment NT (AINT) in August 2024.
There are 12 board
members: two appointed by each of the four Northern Territory land councils,
two appointed by the Australian Government, and two appointed by the board. Board
membership is specified in section 65EA of the ALRA. The board appoints a CEO
who is responsible for day-to-day administration. Under the PGPA Act, the board
is the accountable authority for Aboriginal Investment NT.
AINT was funded from
the Aboriginals Benefit Account (ABA), with an initial $680 million over three
years to invest and provide grants to Indigenous businesses and communities
across the Northern Territory. The ABA is established by the ALRA to receive
and distribute funds generated from mining on Aboriginal land in the Northern
Territory. Section 64AA of the ALRA sets out funding arrangements for the
Northern Territory Aboriginal Corporation, also known as Aboriginal Investment
NT. The $680m for investment and grants was allocated under subsection 64AA of
the ALRA. AINT’s purpose is:
• To promote the
self-management and economic self-sufficiency of Aboriginal people living in
the Northern Territory (NT); and
• To promote social
and cultural wellbeing of Aboriginal people living in the NT.
The outline above was
taken from the 2024 ANAO Performance Audit (paragraphs 1.9 to 1.12). The text
has been paraphrased to incorporate some footnotes and improve accessibility:
The ANAO 2024
Performance Audit
In December 2024, the
ANAO published a Performance Audit examining the management of conflicts of
interest by three portfolio agencies within the Aboriginal Australians
portfolio, including for present purposes AINT (link
here). The report is useful for a number of reasons, including for the high-level
overview of the formal legislative and regulatory approach of the Commonwealth
to conflict-of-interest issues in relation to Commonwealth agencies. Paragraphs
1 to 4 of the Summary and Recommendations section of the ANAO Report outline
these, and Appendix 3 provides more detail in respect to the relevant
legislative provisions.
AINT was established
in 2022, and the ANAO audit was clearly designed to provide an early snapshot
of the state of compliance.
The ANAO high level
conclusions are outlined in paragraphs 13 to 15:
13. … Aboriginal Investment NT …. [was] partly effective in the
management of conflicts of interest. While there were frameworks in place to
manage conflicts of interest, there were shortcomings with the implementation
of those frameworks. There were deficiencies with the documentation of board
consideration of conflicts and documentation of conflicts of interest
declarations and management actions for procurement, recruitment and grant
activity.
14…. Aboriginal Investment NT [has] developed largely appropriate
arrangements to manage conflict of interest consistent with legislative
requirements of corporate Commonwealth entities …
15. The entities were partly effective in
implementing arrangements for managing conflicts of interest. Board assessments
of declarations of interest were not sufficient to record whether the board had
determined declarations to be material personal interests. Aboriginal
Investment NT’s board did not include declarations of interests in three out of
session meetings and a workshop and did not always record the nature and extent
of declared conflicts. There were instances of Aboriginal Investment NT Grants
Committee members with declared conflicts of interest recommending grant
applications for board approval …. Aboriginal Investment NT did not adequately
document conflict of interest management for procurement as required by its
policy.
Most of these issues
appear to have been addressed subsequent to the performance audit, but their early
emergence demonstrates both the internal pressures in play in what are
cross-cultural organisations, and the risks that continue into the future.
The AINT 2024-25 Annual
Report
Under the PGPA Act, the
AINT report was due on October 30, 2025. The AINT advised the Minister that the
ANAO had experienced delays in finalising the audit, and as a result the
Minister initially agreed to an extension to the end of November and then
extended it to the end of February (link
here). In the event the Annual Report was published on the AINT website in
the first week of March 2026. The Chair wrote to the Minister providing a copy of
the audited financial statements on 18 February, the accountable authority
statement was signed by the AINT Chair, CEO and Chief Operating Officer on 19 February
2026, the unqualified ANAO audit opinion was signed on 20 February 2026. We
live in strange times where time appears to move backwards (at least in the
NT). The financial statements (without the ANAO audit opinion) are also
available on the ACNC web site as the AINT has charitable status. Somewhat
bizarrely, the Annual Report has since been removed from the AINT website and
is not available on the Department of Finance Transparency Portal. To my
knowledge, there has been no explanation provided by either the Minister or AINT
for this action.
In addition to the apparent
reversal of time, there is an unfortunate error in the heading to the figures
in Note 10 to the (original) financial statements page 92 which has the
effect of multiplying the relevant management personnel salaries one thousand
times. It is not clear if this will be remedied when the Annual Report is
finally republished. I do not believe that this is the reason for the
withdrawal of the report as this error also occurs in the equivalent section on
page 82 of the previous AINT 2023-24 Annual Report.
Given the comparative
complexity of the AINT financial statements, and the delayed release of the
report, the 2025 ACNC Annual Information Statement (link
here) provides the best current snapshot of the AINT’s overall financial
status. This shows that in June 2025, the AINT held net assets/liabilities of
$693.3m. This comprised current assets of $422.9m (comprising according to the
more detailed financial statements $300m in cash and cash equivalents and $100m
in ‘other investments’), and non-current assets of $272.5m. Liabilities were
only $2.1m. It seems likely that the non-current assets are all invested in the
AINT Unit Trust (see below). It is unclear if any of the current assets
are also in the Unit Trust.
The AINT Strategic
Plan (available on its website) is built around the establishment of two Funds,
the Future Fund and the Community Ready Fund. The Future Fund
invests the AINT corpus, the Community Ready Fund is utilised for financing
AINT operations and ongoing grants. See page 32 of the Strategic Plan for the
best description of the Future Fund so far made public. Section 7 of the
Strategic Plan describes the approach of the Community Ready Fund including
some one-off allocations which allow the project grant profile to continue in
the short term above the long-term level available from the Future Fund. See the
graph on page 51 displaying the forecast grant spend from the Fund into the
next four years.
The Annual Performance
Statement in the Annual Report (pages 32-37) reports that both funds delivered
above target returns over the past year.. In a section titled Investment
Performance, AINT reports that the Future Fund achieved an
annualised return of 5.8%, exceeding its benchmark target of CPI plus 3%. (In
contrast, on page 36, the report states that the Future Fund achieved a
5.9% return). At 30 June 2025, the Future Fund held $522.5m in assets,
comprising $100m in term deposits and $226.3m in cash awaiting investment. This
suggests that $182m was invested. The Community Ready Fund delivered
4.9% return against its more modest target of CPI plus 1%. Its balance on 30
June was not stated, but the report notes that the fund ‘was fully invested
with $120.6m deployed…’ While the investment returns are useful, without
knowing the quantum of the funds invested, readers have little idea of their
real significance.
Somewhat confusingly,
the section on Financial Results (pages 68-69) refers to the
commencement of investment activities through the AINT Unit Trust, a
controlled entity established to manage long term investments. The AINT financial
statements provide just a single column which consolidates the operations of
both the AINT and the Unit Trust. A more transparent approach would be to do as
the ILSC did before the recent sale of Voyages and list both the ILSC and the
consolidated financials in separate columns. The Notes to the Financial
Statements (Note 11) refer to the expenditure of $305m to purchase units in
the Unit Trust during 2024-25, but this figure cannot be tracked into the
financial statements themselves. The AINT Unit Trust presumably holds
the $182m invested in the Future Fund and the $120.6m ‘deployed’ by the Community
Ready Fund, which totals $302.6m.
Apart from Note 11
to the Financial Statements which lists fees of $717k in 2024-25 to advisory
firms CIML and JANA paid from the Unit Trust, there is no reference in
the Annual Report to the management fees and investment advice fees that
underpin the Unit Trust arrangements. However the Senate Entity Contracts Listing
for 2024-25 published on the AINT website lists contracted management fees
for CIML over five years to 2029 as $19.24m and for JANA for investment
advice over the five years as $1.9m. Combined, these two contracted firms will
cost an average of $4.2m per annum for the next five years to manage the AINT
investments within the AINT Unit Trust.
Not only is the Annual
Report’s description of the relationship between the AINT Unit Trust and
the two Funds operated by AINT opaque and indeed, confusing, but it is also unclear
just how the AINT exercises its control over the Trustees as the Trust Deed between
AINT and CIML does not appear to have been published or summarised in any
public documentation. What is clear is that the AINT Investment Committee and
in particular its Chair Peeyush Gupta and member Richard Brandweiner (both of
whom come from finance backgrounds) play crucial roles in managing the Future
Fund, and the Unit Trust investments. These two were the only Investment
Committee members to attend all 7 meetings of the Committee during the
financial year (see page 51 of the Annual Report).
Given the potential
complexities involved I asked my AI research assistant Claude for its
view on the rationale for using such a structure. Given the tax-free status of
the AINT, it responded inter alia as follows:
Compliance and reputational signalling arguably becomes the dominant remaining
rationale. A [tax free] charitable entity established by Commonwealth
legislation faces heightened scrutiny — from the ACNC, from its enabling
legislation's oversight mechanisms, and potentially from parliamentary
accountability processes. Holding investments through a formally constituted
unit trust with a corporate trustee, a trust deed, and defined investment
mandates demonstrates structured stewardship of assets in a way that direct
holding does not. It creates a paper trail and governance architecture that can
withstand external scrutiny.
The candid assessment is that for a sole-owner tax-exempt
charitable entity, the unit trust structure offers relatively thin functional
advantages compared to direct investment or a subsidiary company. The structure
makes most sense if the trust deed itself — through its investment mandate and
distribution rules — serves a constraining or accountability function, or if
there is a genuine prospect of admitting other investors in future. If neither
applies, the administrative overhead of maintaining a separate trustee,
trust deed, and unit register may outweigh the residual benefits. [emphasis
added]
The question worth asking in this context
is whether the structure was chosen for sound governance reasons at the outset,
or whether it persists as inherited architecture that has never been critically
examined against the entity's actual circumstances.
These are more
substantive questions that the AINT has not, so far, envisaged being asked, let
alone answering. In my view, the AINT would be well advised to consider
reframing future statutory reports to provide clearer and more transparent
information about its investment operations.
A critique of the AINT
Investment Strategy
I should begin by noting that I was (amongst
many others) a critic of the legislation establishing AINT for several reasons.
My post from November 2021 titled Opportunities and Risks (link
here) provides a high level critique of the proposed legislation (as it
then was) establishing NTAIC (now AINT). For those interested in exploring the
issues raised in more detail there is a link to the various submissions to the
Legislation Committee considering the Bill and unsurprisingly I recommend reading
my submission. It takes a wider lens than just the proposed corporation, and
deals with the systemic conflicts that I suggested would inevitably emerge. I
don’t propose to focus on this wider picture here but instead will focus on the
potential alternative investment strategies available to NTAIC.
In relation to the
operations of the Community Ready Fund, I don’t wish to say too much. It
is clearly the ‘front of house’ for the AINT, and until recently there has
clearly been a legacy of approved grants that had to be processed and
finalised. In the discussion in the Strategi Plan of its objectives, there are four
separate areas of focus, plus a vague commitment to focus on sector-based activities.
The four foci are (i) grants, (ii) collective impact initiatives, (iii) place-based
investments, and (iv) strategic investment. Areas (iii) and (iv) together encompass
so called nation building investment. This strikes me as on over-engineered
attempt to make the grants process look coherent and rational. To my mind it is
both too all-encompassing (‘everything is a potential focus and priority’) and
thus easily subverted for political or other reasons.
I will make two high
level conceptual points that in my view the AINT should consider seriously. First,
there is much greater impact in supporting high quality grass roots
organisations with positive track records which deliver valuable services on
the ground. It would be particularly valuable to identify elements of their
activities that governments are not prepared to fund and/or elements that build
organisational resilience. Second, for small Indigenous businesses, I
would suggest that instead of grants that the AINT consider experimenting with
low value interest free loans that are repayable once the business meets
particular revenue or profit thresholds and are written off after a set period
(say ten years) if those thresholds are not met.
In relation to the Future
Fund, I have more serious reservations about the utility of the strategy
that has been adopted. The current investment corpus appears to total around
$500m to $600m. Taking $500m as the base, if the investment target is met, and
there were zero distributions the Future Fund will compound each year
and grow to $672m in current dollars over ten years. If the 3% growth ($15m pa)
is fully distributed, the fund will continue to be valued at $500m over the
decade. If say half of the growth was distributed each year ($7.5m) then the
fund would grow to $581m over the decade. It is unclear if the target growth
rate is net of management fees, but at $4m per annum that either cuts into the
available funds for distribution or adds an effective premium of 0.7% to the
target (i.e. it must actually return CPI plus 3.7% to allow $15m pa to be
distributed on average). A long-term investment return of around $15m per annum
will not sustainably fund the projected level of grant expenditure of $40m. Such
a spend rate will either require additional injections of capital or lead to a
reduction in the AINT investment corpus over time.
Given the passive
nature of the Fund at present, and the current level of advisory fees, there may
be merit in considering whether it would be more cost effective to utilise the
Commonwealth Future Fund as a fund manager. This is the course adopted by the
Commonwealth to manage the Land Fund which provides the annual revenue base for
the ILSC.
The bottom line here
is that the AINT has established what is effectively an endowment fund and
without further injections of capital, and effective and serious constraints on
transfers to the Community Ready Fund (which would lead to a loss of political
support for AINT within the NT Indigenous community), it is unlikely to grow
substantially beyond its current size. Even were a Commonwealth minister to
inject further funds into the Future Fund from the ABA, say to double it to
$1bn, the annual funds available for distribution would only be around $30m in
current dollars. This does have the potential (if targeted and sustained) to
make some difference in selected areas or sectors, but it is not going to
‘build intergenerational wealth’ for anywhere near the majority of Indigenous
Territorians. This is the objective of the Future Fund as laid out in the AINT
Strategic Plan, yet the rhetoric does not match the reality.
What then is the alternative?
My strong suggestion would be to adopt an entirely
different approach aimed at leveraging the available capital to invest directly
in a select number of sectors and enterprises in the NT that for one
reason or another have not attracted either government or private sector investment
in the past and which are also of direct relevance and significance to either remote
communities and/or the Aboriginal community writ large. Sectors that are crying
out for such a ‘social impact investment’ approach include establishing
community housing entity to operate across the Territory, building a Territory
wide disability coalition or service providing disability services funded by accessing
mainstream funds from the NDIS, building an expanded territory wide mobile
dental service, taking up an equity position across multiple Aboriginal owned
building companies thus allowing them to access more capital both directly and
indirectly. There are numerous other opportunities of a similar kind (see the
link to the Centrecorp Foundation below). My assumption is that the AINT investments
must be commercially based (i.e. designed not to lose money) and should
actively seek to leverage their capital and Indigenous access to find
commercial partners to take up influential stakes in commercial opportunities
which directly provide benefits for Indigenous Territorians. I accept that this
approach appears high risk but doing nothing (or a bare minimum) with available
capital while persuading yourself that you are building wealth delivers certain
failure. It will require sustained and strong governance, a disciplined
approach to strategy, and strong commercial acumen, but these are not an unthinkable
aspiration for Indigenous interests.
Examples of this broad approach include Indigenous Business
Australia in Canberra, and the extraordinarily impressive Centrecorp Foundation
in Alice Springs (link
here) which manages a portfolio of assets valued at around $250m. Centrecorp
has invested in core commercial real estate in the Alice Springs CBD, Darwin,
and a number of other regional centres, some residential housing opportunities
in Central Australia, and is a substantial owner of the major Toyota supplier
in Central Australia and a major hire car business. These businesses operate
across the Indigenous / non-Indigenous commercial domains and have been very
successful in building credibility for Indigenous interests within the
commercial circles in Central Australia. One consequence of such a strategy, if
executed successfully, would be to build real political influence for
Indigenous interests within the NT.
Confusion abounds
The confusion related to the delayed finalisation of the
audited financial statements and the stop/go/stop imbroglio with the 2025 Annual
Report are in the scheme of things of minor import. The early missteps over conflict-of-interest
processes identified by the ANAO are easily rectified.
The confusion arising from the opaque relationship between
the two strategic funds and the AINT Unit Trust is more significant as
it reflects a degree of transparency failure which works against clear and
rational thinking about the substantive reality and constraints facing AINT and
its current investment strategy. The most significant consequence of portraying
transparently the limited opportunities built into the AINT are the lost
opportunities that nevertheless might be harnessed from the not inconsiderable
quantum of financial assets under AINT management.
A major driver of these lost opportunities is the lack of
clarity in the AINT’s various governance reports around the serious limitations
in the outcomes negotiated by the Commonwealth and the Land Councils in 2021,
which in turn arise from the systemic and structural conflicts of interest
between the land councils and the wider Indigenous community in the NT, and the
separate desire of the Commonwealth to respond to the longstanding demand from
Indigenous interests for greater control over the ABA, while off-loading admin
costs for grant management yet retaining substantive control. For an
explanation of these in more detail, I refer readers (again) to my submission (#4)
to the Legislation Committee in considering the legislation that established
AINT in2021 (link
here). That lack of clarity around the reality of the limitations of the
legislation and thus the AINT, suggests that the confusion which pervades the
AINT’s operations is in fact built into its institutional architecture.
For AINT, the most important factor in its ultimate success
or failure will be whether it develops the capacity to think strategically
about the opportunity matrix it faces and the capacity to act decisively to
execute a cogent and considered plan. Confusion is the enemy of both
prerequisites. Or as Mark Twain is reputed to have said:
It ain't what you don't know
that gets you into trouble. It's what you know for sure that just ain't so.
7 April 2026
No comments:
Post a Comment