O, it is excellent to have a
giant's strength,
but it is tyrannous to use it
like a giant.
Measure for Measure, Act two,
Scene two
Two weeks ago, the Senate Finance and Public
Administration Legislation Committee held estimates Hearings where inter
alia the NIAA, the Office of the Registrar of Indigenous Corporations (ORIC)
and three of the four NT land councils were called to give evidence. The ALC was
not called to appear (for reasons that seem difficult to comprehend given the
extraordinary delay in the tabling of its annual report (link
here) and other unresolved issues that I will endeavour to address in the
coming weeks).
However, the high-level issue I wish to explore here relates
to the comparative effectiveness of the two primary mechanisms in our system of
democratic accountability which are designed to keep the Executive arm of government
up to the mark. The first is the Parliament, and in particular the system of Senate
Estimates Committee hearings which convene three times a year. The second mechanism
is the performance audit function of the ANAO. The case study which has presented itself to
us relates to the effectiveness of NIAA’s and ORIC’s regulatory oversight of
the obligations of corporations established and incorporated under the CATSI
Act.
These corporations are a major conduit for the delivery of
many government programs across the Indigenous policy domain, and are also mandated
entities under the NT land rights Act for the distribution of royalty
equivalents (under s.64(3), and are the mandated incorporation mechanism for
Prescribed Bodies Corporate, the land holding entities which must be established
to hold native title on behalf of native title holders. The implicit rationale
for these mandates to is to ensure that oversight and regulation is both culturally
informed and able to be fine-tuned to meet emerging contingencies and policy
needs.
The ORIC website (link
here) provides an accessible overview of the numbers and financial
significance of CATSI corporations nationally in the regularly updated State of
the Sector reports.
Senate Estimates and ORIC
The following extracts are taken from the transcript of the
Hearings held by the Senate Finance and Public Administration Legislation
Committee on 26 May 2026 (pages 40 to 44) (link
here). I have added bold text and cut out irrelevant material indicated by
ellipses. Ms Tricia Stroud is the Registrar of Indigenous Corporations, a
statutory officeholder within the NIAA portfolio.
Senator NAMPIJINPA
PRICE: Given that there are obviously large sums
involved when it comes to royalties and compensation, do you think that
governance risks are significant in this space? Do you think the act captures
all the risk that is involved?
Ms Stroud: I
think the basis of our regulatory posture is that corporations, including PBCs,
are member owned and controlled. … The two fundamental accountability
requirements which we have a focus on and have gone hard on is annual general
meetings and annual reporting. That is because the annual reporting is the
opportunity each year for members to ask questions, hold their directors to
account and understand the finances of their corporation. They can make their
own member informed decision about whether they still have trust and confidence
in those directors or whether they wish to remove them. That is why we have
gone hard on prosecuting corporations that don't hold AGMs and do not lodge
reports. Financial reports is where members and common law holders can understand
the health of their corporation and how their money is being managed.
….
Senator NAMPIJINPA
PRICE: I will go back to you, Tricia. If a
corporation does not meet its AGM and annual reporting obligations, which you
say you've gone hard on, is it still eligible to receive Commonwealth grants or
be successful in tendering for Commonwealth contracts?
Ms Stroud: That
would be a question for each of the individual funding agencies. Under the
C(ATSI) Act, there's not a direct relationship between non-lodgement of annual
reports and non-holding of AGMs with funding. Some funding bodies would have
requirements or conditions in their funding contracts that a corporation has to
be compliant with its regulator, be it ASIC or ORIC. We encourage funding
bodies to always look at the public register when undertaking due diligence of
corporations. We publish corporations that have been prosecuted for failing to
hold AGMs. There have been two of them in recent years. And there are
corporations that have failed to lodge their reports. There have been over 60
of them in the last couple of years. They are published on the website. Funders
and donors as well as members and the general public are encouraged to look for
those corporation details to see signs that things are not well with
corporations that they might fund as well as corporations that we are
deregistering. We've recently deregistered 25. This week, we issued notices
to over 600 corporations that we intend to deregister them. Again, funding
bodies are constantly reminded that the public register of Aboriginal and
Torres Strait Islander corporations is the single source of truth in terms of
regulatory action and the standards and compliance of a corporation when they
are making decisions about funding them.
Senator NAMPIJINPA
PRICE: What powers exist for ORIC or the
Commonwealth to intervene where there are allegations of serious governance
failures, misuse of funds, conflicts of interest, breaches of director duties
or failure to comply with C(ATSI) Act obligations?
Ms Stroud:
There are a number of powers available to us under the C(ATSI) Act and which we
use regularly. They are just basic lines of inquiry when we get a report or
concern from a member, a funding body or a member of the public about suspected
breaches of the C(ATSI) Act or failings in a corporation. We might make lines
of inquiry, noting that we rely on some level of evidence when those sorts of
allegations are levelled. Second, we can issue a corporation a notice to
produce in which they are required to provide us with documents that might help
inform our inquiries around allegations. We can conduct examinations. The final
one before there might be regulatory action taken, including special
administration, is an examination of the corporation. That is an examination of
the corporation's books, which is examining the governance standards and health
as well as the financial standards and health of a corporation. There are other
powers. There are compliance notices, which isn't always out of an examination.
It might be where we have significant evidence that a corporation is not doing
the right thing. We issue them with a compliance notice. There is also a power
used to call a general meeting. It is a registrar initiated general meeting,
where I use my own initiative and powers under the C(ATSI) Act to call a
meeting of the members to pass resolutions or to resolve particular issues in a
corporation. They are usually around the board and instability or minimum
numbers of directors where a corporation is not being governed appropriately.
……
Senator NAMPIJINPA
PRICE: Thank you. What safeguards exist to ensure
royalty and compensation funds are being used consistently with community
developed and economic participation objectives?
Ms Stroud:
There's a line between what is a C(ATSI) Act matter and what is a matter under
the Native Title Act. Not all native titleholders are members of their PBC. Not
being a member of a PBC does not remove your native titleholder rights and
interests and obligations on the PBC to make native title decisions largely
around compensation funds and your country. A PBC has obligations to native
titleholders regardless of whether they are members. Native title consultation
and consent processes and native title decisions are not matters which are
regulated under the C(ATSI) Act.
The fundamental message here is that ORIC is ‘going hard’
and that by and large, everything is under control. The Registrar has issued
notices to over 600 corporations threatening deregistration. We should all
sleep soundly at night.
The ANAO and ORIC
This week, the ANAO published Auditor-General Report
No.37 2025–26 Performance Audit: Support and Regulation of Indigenous
Corporations (link
here).
I don’t propose to attempt a summary nor to delve into every
detail and revelation in the audit report. Interested readers should peruse it at
their leisure.
One salient set of conclusions struck a chord with me, not
just for what they say about ORIC and/or NIAA’s regulatory oversight of CATSI
corporations, but for what the conclusions say about the regulatory performance
overall of the Indigenous Australians portfolio, and the fact that successive
ministers appear to have consistently failed to take their portfolio oversight
and management responsibilities seriously.
Here are extracts from three paragraphs in the report
dealing with the quality of regulatory oversight, and its obverse, the
extraordinary levels of decline in compliance with reporting obligations under
the CATSI Act by CATSI corporations since 2015.
To flesh out the text below, I recommend interested readers
look at Figure 4.3 on page 74 (of the 76 page) audit report. The graph shows that
since 2015/16, there has been a dramatic fall in compliance levels for all
corporations from just over 75% to under 30% in 2024/25. For the subset of
large corporations, the compliance levels have fallen from over 90% in 2015/16
to around an estimated 65% in 2024/25. This is an astounding decline in overall
compliance with the core accountability requirements of the CATSI legislation;
the substantial size and sustained trend line revealed within the data points
to a systemic and sustained failure in regulatory performance by ORIC, NIAA and
successive Ministers.
Below I have pasted an extract from the audit report where
the ANAO discusses these shortfalls. As we have come to expect from the ANAO,
it is succinct, neutral, anodyne and emotionless. More problematically (in my
humble opinion) there is a brief mention, but no real sense of understanding of
the real-world implications of the wider disadvantage to Indigenous
individuals, families and communities that flow from poor corporate performance.
Readers are expected to draw their own conclusions. In addition to the unquantified
(and arguably unquantifiable) direct disadvantage to their members arising from
poor governance and compliance by corporations, the absence of legislated
reporting compliance presumably reflects to an extent the substantive
capabilities of the corporations which are failing to comply.
I have deleted footnotes and added emphasis.
24. ORIC undertakes a range of
activities that seek to deter non-compliance. Despite these activities,
compliance with reporting requirements has steadily declined over ten years for
small, medium and large corporations. Fewer than 30 per cent of corporations
overall were compliant with requirements to lodge 2024–25 reports by 31
December 2025. Non-compliance with reporting requirements reduces
transparency and information for corporation members, communities, creditors,
investors and government agencies as well as for ORIC. There is a general
lack of evaluation to identify the key drivers of non-compliance to inform
risk-based targeted compliance activities and to understand harm caused by
non-compliance. ORIC developed a project plan in January 2026 aimed at
increasing small corporations’ compliance with reporting obligations. (See
paragraphs 4.39 to 4.46)
….
4.41 …. Annual reporting
compliance for all corporations when measured as the lodgement of all
required reports by 31 December has been in decline since 2015–16
(Figure 4.3). In 2023, ORIC attributed declines in reporting compliance to the
COVID-19 pandemic, with an expectation that as business returned to normal
corporations would meet their reporting obligations.
4.42 ….. The ANAO estimated
the ten-year trend in annual report lodgement rates by size. Figure 4.3
shows that the decline in lodgement has been greater for small and medium-sized
corporations, however this occurs for all size types…
….
4.45 Failure to deregister
inactive corporations, regardless of whether they hold assets, may create
opportunity costs for Indigenous communities as assets are not available for
repurposing or continued effective use or may be accruing debt. Failure to deregister
may also create an uneven playing field for corporations that comply with CATSI
Act requirements.
4.46 Resource Management Guide
128 Regulator Performance states that regulators should embed methodologies to
understand the costs, impact and outcomes of regulation and collect evidence of
this at a system-wide level, using insights to support and drive improved
outcomes. ORIC does not have an evaluation strategy or program to understand
whether the appropriate interventions are being used effectively or to
understand the relative impact of its activities.
Concluding comments
The contrast in the two narratives is striking. The
Registrar’s response to the ANAO audit report (see pages 79-82) was unusually
robust, pushing back against myriad assessments embedded within the report. Interestingly,
it was signed the same day as the Estimates Hearing. While there may be merit
in some of the points made, I do not think that the Registrar’s argument that
the ANAO assessment based on a ‘linear or formulaic approach to compliance’ is
not the appropriate basis for assessing regulatory performance because ORIC ‘considers
the unique circumstances of each corporation to determine the appropriate regulatory
action’ … I would argue that the Registrar’s argument is flawed insofar as it implicitly
ignores the wider impacts such as the signals being sent to other corporations,
the expectations in other corporations that are lowered; the precedents set which
lower the bar on corporate performance, and the impacts on the regulatory culture
within ORIC which makes taking tough decisions harder.
It must be said that the Registrar came into the role in
2022, and clearly inherited responsibility for a regulatory system under
serious challenge. While ORIC clearly faces serious problems, they are not all
down to the current Registrar.
But at the end of the day, when only 30 percent of
corporations are submitting statutorily required reports on time, and the
trendline (see Figure 4.3 in the ANAO Report) continues to be downward, the
regulator has a problem. In a world where ministerial responsibility means
something, so too would the NIAA and the Minister have a problem. Yet apart from
a lot of to-ing and fro-ing, ORIC emerged from the latest Estimates hearing largely
unscathed. This says more about the effectiveness of the Senate Estimates
process than the effectiveness of ORIC.
Of course, regulatory failure is ubiquitous in modern societies.
Think of the numbers of speeding drivers who drive irresponsibly and seemingly
without an incentive to comply with the road laws. Or the lack of enforcement and
low penalties that apply to the sale of black-market tobacco. But over time, without
effective regulation, the adverse impacts accumulate and undermine trust in government
generally. Arguably, across remote Australia at least, we are approaching a
point where the footprint of government is seen as either non-existent or
ineffective, or both. I have previously pointed to the low levels of electoral engagement
in the NT (link
here), another signpost along the highway to a democratic implosion that continues
apace across northern and remote Australia, and which perhaps we are now seeing
nationally.
At the end of the day, and notwithstanding its reticence
and reluctance to draw conclusions in its reports, the ANAO is far and away a
better mechanism for holding agencies (and indirectly ministers) to account. The
structural problem with Estimates in my view is that the Government controls
the agenda both formally and informally through a range of mechanisms
(timetables, a government chair, the ability to distract attention, the ability
to hide behind the bureaucracy, and the intellectual chaos that pervades each
hearing). If I wasn’t an optimist, my diagnosis would be that Senate Estimates
as a mechanism to hold governments to account is in terminal decline and should
be put down.
There is an urgent need for a reform agenda focussed on strengthening
the arm of the Parliament vis avis the Executive, and as part of this, for a
rejuvenation and revamping of Senate Estimates. This would involve, at a
minimum, tighter agendas focussed on a smaller number of high-profile issues, the
preparation of position papers by a new parliamentary research office, and perhaps
even the adoption of a ‘counsel assisting’ to ensure that agencies are truly
tested as to their priorities, and the substance of their performance. Institutions
such as the ANAO and the NACC should be brought within the ambit of
parliamentary control rather than executive control, and funding for such
institutions should similarly be proposed and determined by the Parliament and
not the Executive.
The fact that ideas such as these have a snowflakes chance
in hell of coming to fruition anytime soon tells us all we need to know about
the true state of our democracy.
10 June 2026
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