The Yunupingu High Court Decision: some downstream policy issues

 

When clouds are seen, wise men put on their cloaks;

When great leaves fall, then winter is at hand;

When the sun sets, who doth not look for night?

Untimely storms makes men expect a dearth.

Richard III, Act two, Scene three.

 

The Federal Court decision which led to the appeal to the High Court in this case was handed down in May 2023. I published two posts following that decision (link here and link here). In those posts I contemplated the potential policy implications in the event that the High Court ultimately were to endorse the Federal Court’s decision.

In early March this year, the High Court handed down its decision and upheld the Federal Court decision. I will leave the technical textual analysis to the lawyers, but it seems to me that the analysis I offered in May 2023 continues to hold true in broad terms. I recommend readers re-read those posts as they have continuing relevance. For a good summary of the implications of the High Court decision, I recommend the brief by international law firm Ashurst (link here).

The High Court decision has implications primarily for the NT, but also in theory for the ACT and perhaps other territories (link here).

In terms of the core future policy implications, I would nominate three related (and arguably intertwined) issues which will shape the ultimate outcomes:

1.    The nature of the compensable native title interests that were extinguished;

2.    The quantum of potential compensation likely to flow both to particular native title holding groups and overall; and

3.    How best to manage whatever compensation benefits ultimately flow.

As I pointed out in my previous posts, and as was reiterated by Ashurst, the flow-on effects of this decision will take time to emerge, and there may be an attempt by the Commonwealth to short-circuit future litigation and potential expansion of liability by negotiation of wider agreements along the lines of what occurred in Western Australia following the Mabo decision. Whether these flow-on implications arise from litigation or agreements, one insight which is indisputable is that the compensation funds that flow will essentially be one-offs (even if they flow over some negotiated period). Indigenous interests therefore have an incentive to prepare by building their capability to manage significant compensation flows. The obvious starting point therefore is to consider the feasibility of the development and use of mechanisms and policies which deliver perpetual benefit-flows. There are also strong arguments in favour of Indigenous interests considering the best policy architecture for managing such flows. However, the successful implementation of these types of arrangements are not straightforward.

Perpetual Funds

At present in Australia, we have a spectrum of governance arrangements for managing native title benefits rangeing from the ad hoc arrangements applying to native title payments operating in Western Australia (where there is limited visibility of their effectiveness) through to the more structured arrangements in Victoria where the Victorian Traditional Owners Funds Limited (link here) provides a financial investment service to the various Traditional Owner Trusts which have negotiated agreements with the Victorian Government. The NT of course has its own existing high level governance arrangements for managing royalty flows and native title financial agreements plus a range of subsidiary mechanisms essentially controlled or at least influenced by individual land councils or their constituents. Obviously, the NT’s existing overarching policy architecture will be the starting point for any consideration of necessary future arrangements. However it is clear (at least to me) that these extant structures are sub-optimal and require reconsideration and substantial improvement to meet future circumstances. In the rest of this post, I seek to outline at least in broad terms why I believe the current institutional architecture for managing financial benefits for Traditional owners in the NT are not fit for purpose.

The Aboriginals Benefit Account

The starting point for any consideration of the policy architecture for land rights and native title payments in the NT is the Aboriginals Benefit Account (ABA) established by the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). This account is an institutional policy mechanism whose roots can be traced back to Paul Hasluck’s time as Minister for the Interior. It involves the Commonwealth appropriating an equivalent amount to the mineral royalty revenues accruing to the NTG (and the Commonwealth in relation to uranium).

The ABA is effectively controlled by the commonwealth minister for Indigenous Australians and its funds are allocated for various legislatively specified purposes: land council administration, land council distributions to corporations representing those impacted by mining, and various sundry costs such as township leasing. In addition, the ALRA legislation provides for various payments to the recently established NTAIC, now known as Aboriginal Investment NT (AINT), comprising a one-off capital injection of $500m and three annual payments of $60m, as well as annual administration costs. Importantly, there has always been an element set aside for beneficial grants to the wider NT Aboriginal community.

The ABA does not represent the totality mining related payments to Aboriginal Territorians as payments negotiated by land councils are outside the ABA, and so are some older trusts such as the Groote Eylandt Aboriginal Trust established by missionaries before the advent of land rights.

Aboriginal Investment NT

According to the most recent financial statements for the ABA (which can be found in an appendix to the NIAA Annual Report: link here), the ABA currently holds assets valued at $1.47bn offset by liabilities of $566m comprised primarily of the (tautologically described) ‘initial one-off endowment of $500m’ to NTAIC plus a further payment of $60m being the last of three legislated $60m payments designed to provide funding certainty to AINT its establishment phase. Any additional funding for the Future Fund and/or the Community Ready Fund is at the entire discretion of the Minister of the day. The ABA’s residual current net asset base is thus $907m. The annual appropriation to the ABA is based on the quantum of mining royalties levied by the NT Government which in turn is influenced by production levels in the various mines on Aboriginal land in the NT. By far the largest contributor to the NT Government mining royalties is the GEMCO manganese mine on Groote, scheduled for closure in the early 2030s.

According to the AINT financial statements in its annual report (link here), and its Strategic Investment Plan (SIP)(link here), AINT has allocated $500m to its Future Fund which is intended to finance its Community Ready Fund which is used to make community grants, and to invest in sector development and what the Plan terms nation-building investments. The Future Fund is designed to accumulate for at least ten years with the aim of providing a funding source into the medium/longer term. Its target rate of return is CPI +3%. The SIP notes that the AINT Board had allocated $155m to the community ready fund. The 2023-24 financial statements list AINT’s net equity holdings (assets less liabilities) as just under $680m.

There are two implications arising from the legislated framework for AINT. First, while its annual operational costs will be funded from the ABA, the funds available for distribution from its Community Ready Fund over the next decade will essentially be in the hands of the Government. This is the Fund which makes beneficial grants to community organisations across the NT.

Second, and importantly, the idea of a perpetual Future Fund is essentially a chimera. Assuming AINT achieves its target rate of return of CPI + 3%, then by 2035 it will have grown to $672m in 2025-dollar terms. From there on the use of an assumed 3% returns for distribution to the Community Ready Fund would finance a grant of $20m per annum in 2025 dollars in perpetuity. When one considers that previous annual grant levels from the ABA were around $40m per annum, and have recently dropped to around $25m, it becomes apparent that unless investment returns greatly exceed the target, the AINT Future Fund will require further endowments merely to ensure AINT can keep doing what the ‘old’ ABA was doing.

The more general and most important point deriving from this analysis is that the notion of establishing a perpetual fund to finance the economic transformation that is required in the NT (and the rest of remote Australia) is much more difficult than governments and the Indigenous leadership in the NT (which negotiated and agreed to the legislated architecture of the AINT) have been prepared to admit.

Implementation Challenges

The AINT was a signature reform, yet it will not deliver transformational change as presently funded and I would argue as presently designed. I will expand on what I consider will be necessary to drive such transformational change in a later post. While it is possible that a future Government will allocate more capital to the AINT from the ABA and/or that the AINT’s investment performance will be substantially better than its target, there is also a significant downside risk that governments will prefer to retain direct control over the balance of the ABA (and its significant automatic annual accretions) and/or the possibility of either poor or unlucky financial management by AINT. Moreover, the provision of automatic operational funding for the administration of AINT is in my view a potential structural flaw as it removes the crucial incentive that ensures management is financially rigorous and replaces it with an incentive to be politically attuned. Ultimately, this may be to the disadvantage of Indigenous interests in the NT.

Apart from highlighting the challenges of establishing financial Trusts or Future Funds that will maximise the longevity of any compensatory benefits that flow from expanded compensation arrangements due to Yunupingu, I wanted to focus on the ABA and AINT, because they each appear to provide a mechanism that could be used (or arguably misused) to fund compensation payments arising from future litigation in the NT.

When AINT [then referred to as the NT Aboriginal Investment Corporation or NAIC] was first foreshadowed during Minister Ken Wyatt’s term, there was widespread opposition from some quarters to its design. I was amongst those with concerns and published two posts on this blog (link here and link here). One of the concerns I raised then was that the establishment of the AINT was only partial leaving considerable funding in the hands of the minister. Moreover, this funding discretion was unfettered as the establishment of the AINT was the rationale for abolishing the ABA Advisory Committee. It is now crystal clear that the Minister retains considerable leverage over the AINT by virtue of her power to approve or not approve operational funding and the additional endowment top ups which will be necessary merely to maintain current levels of beneficial grants.

In my second post, I pointed to the major increase in funding for the land councils announced by Minister Wyatt and suggested that it was not coincidental in ensuring that the land councils supported the amendments. I thought then, and think now, that this was a short-sighted decision by the land councils. Whether the land council leadership realised it or not, an objective assessment suggests that they and their advisers were outmanoeuvred and collectively co-opted by the Commonwealth.

The most recent ABA financial statements indicate that last financial year the Minister approved over $80m in grants to private sector entities from the ABA (it was $60m in the previous year) [see page 186 of the ABA financial statements (link here)] with minimal transparency while the AINT committed in principle grant funding of $20.6m and $8.7m (see pages 27 and 29 of the annual report) and actually spent only $9m (see page 75 of the Annual Report). The ABA’s revenue growth has slowed over the past year following damage to the wharf at Alyangula, however it can be expected to continue at around $300 to $400 million per annum over the next decade. In other words, the ABA’s financial assets are growing at a faster rate than AINT’s financial assets generally and particularly the AINT Future Fund.

The bottom line was that the Minister retained access to the largest slice of the ABA pie with unconstrainted flexibility to make beneficial grants from the ABA while Aboriginal interests have through AINT gained access to a smaller slice of the pie, with constrained flexibility and high expectations from the communities seeking to overcome economic and social disadvantage.  

Risks

The design architecture of the ABA following the establishment of the AINT creates a significant risk that is considerably heightened by the Yunupingu decision. Given that the ABA is funded by appropriations to be spent for the benefit of Aboriginal people in the NT, it is theoretically possible that the Commonwealth might decide to utilise the ABA funds under the control of the Minister to finance any compensation liabilities it accrues into the future because of the High Court Yunupingu decision. More likely (given that the Commonwealth has form in this respect) the Commonwealth might seek to use its control and the financial heft of the ABA to negotiate a financial settlement of all potential litigation with the land councils and their constituents (either separately or together).

We are already seeing the Commonwealth seeking to constrain the likelihood that the land councils will ‘rock the boat’. It is clear that the political salience of the land councils has increased in recent years as both sides of politics have searched for ways to engage with disenchanted voters across the NT (link here).

The risk for Indigenous interests generally is that the land councils have a limited policy remit and perspective yet effectively operate as proxies for Aboriginal interests generally. The risk for land based Aboriginal interests is that the land council leadership and bureaucracies become increasingly vulnerable to co-option by governments.  The level of payments to the land councils from the ABA has increased considerably over the past five years. In just one year, from 2023 to 2024, ministerially approved administration payments to the four NT land councils rose from $109m to $138m, an increase of $28.9m or 21%. This generosity does not come free; it has an ulterior purpose and also has an opportunity cost in foregone investment by the ABA in pressing Indigenous priorities.

Of course, a new conservative government might revert to the earlier tactics and seek to dismantle what they see as the hegemony of the land councils (link here). Either way, Indigenous interests stand to lose out.

Way forward

In my view it is time for the Indigenous leadership in the NT to reconsider their strategic vulnerabilities and begin to strengthen the ramparts defending their key institutions. A key element in such a reconceptualised strategic approach would be to focus on building stronger governance capabilities, committing to stronger transparency (no matter how uncomfortable it seems) as an insurance against poor governance, and working harder to build a unified advocacy capability. Self determination is never handed to anyone on a plate; it must be argued for and grasped. And once gained it must be defended and used carefully. It is not possible for any group entirely dependent on government funding to exercise real self-determination.

The Yunupingu decision is the latest in a long line of High Court decisions seeking to remediate the incapacity and unwillingness of executive governments through time and across the nation to address deep-seated disadvantage, inequality and discrimination. The decision is important, but transforming newly acquired rights for Indigenous interests into tangible and transformational gains requires building the advocacy capabilities to reform institutions and the political unity to protect the incremental gains made in previous times. In both these arenas, a commitment to high quality governance and maximum transparency will be the friend and not the foe Indigenous interests, not least in undermining the proclivity of governments to co-opt those whose interests they decide to ignore or set aside. There are reasons that governments avoid transparency and seek to operate in the shadows.

Conclusion

The downstream policy implications of the High Court decision in Yunupingu are potentially significant. The expand the footprint of Indigenous rights in the Territories and particularly the Northern Territory. Yet taking advantage of those rights will not be easy and will require not just the preparation of new compensation litigation, but the development of strategically sophisticated political and advocacy capabilities, and a preparedness to resist the propensity of governments to co-opt emerging leaders who might otherwise constrain their attempts to maintain the status quo ante.

 

17 April 2025