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

 

Nothing to See Here: NIAA’s answers to recent Senate Questions related to Groote

Let’s talk of graves, of worms, and epitaphs,

Make dust our paper, and with rainy eyes

Write sorrow on the bosom of the earth.

Richard II, Act three, Scene two.

The NIAA has provided answers to a series of Questions on Notice lodged By Senator David Pocock following the last Estimates Hearings in November 2024 (link here). The questions related to the ongoing situation on Groote Eylandt, the status of various issues within the Anindilyakwa Land Council and the NIAA’s actions throughout this rather sorry and complex saga.

Given that there appears to be few external parties taking an interest in these issues (apart of course from the ongoing NACC investigation which may not report for months), I feel it is incumbent upon me to provide some commentary if only for the record. For the larger context, I recommend readers look at my previous post and in particular, the article I co-authored with Bill Gray in the Mandarin (link here).

In this post, I have focussed on those answers which I consider to be inadequate. In a subsequent post, I will address the issues raised by the answer to Question #8.

I have italicised the questions and the NIAA answers and indented my comments in relation to each answer.

 

Senator Pocock Question #1

Will the Minister initiate an independent, comprehensive, forensic audit into the administration and operations of the ALC and of those Aboriginal Corporations that received funding determined by the ALC, so that the new Board of the ALC can move ahead in confidence to regain the trust of the Anindilyakwa community and other key stakeholders, and achieve the standard of governance that will ensure the ALC can properly represent its people and achieve its mission? If not, why not?

NIAA Answer #1

The former Minister for Indigenous Australians, the Hon Linda Burney MP referred concerns regarding Anindilyakwa Land Council (ALC) governance and operations to the National Indigenous Australians Agency (NIAA) for review and action as required. In response, the NIAA commissioned an independent review of the ALC’s responses to the Australian National Audit Office (ANAO) governance audit and has subsequently been overseeing the ALC’s actions to improve its governance, transparency and accountability.

The NIAA has and will continue to refer all relevant matters to law enforcement and other agencies as required. 

Comment mcd #1

A preliminary and more general point: The NIAA is under the direct control of the Minister. Both she and her agency have regulatory responsibility for the ALC (and for the Registrar of Aboriginal Corporations who is the regulator for CATSI Corporations who are the beneficiaries of section 64(3) payments). Any shortcomings of the NIAA are ultimately the responsibility of the Minister. Any failure to answer questions asked are a failure of the Minister as well as her agency.

The Minister/NIAA have not answered the question regarding the forensic audit. The so-called ‘independent’ review commissioned from BellchambersBarrett was constrained in its terms of reference and focussed only on the formal ANAO recommendations and not on the wider issues which were identified by the ANAO in its fine-grained analysis. The NIAA and the ALC were involved in finalising the BellchambersBarrett Report, and for this reason it was clearly not independent. The answer refuses to contemplate an independent forensic review and fails to provide any assurance that this is covered off in some other way. The deeper question this raises is why? Why won’t the Minister initiate the action required to get to the bottom of what has transpired on Groote? Why doesn’t she want to the public to know?

Senator Pocock Question #3

Can the Minister confirm that the conflicts of interest identified by the ANAO in May 2023 and again more recently in the BellchambersBarrett review of August 2024, have now been addressed to the satisfaction of the Minister and NIAA?  If not, what are the issues still outstanding?

NIAA Answer #3

The ALC has developed a schedule of activity to address the ANAO and Bellchambers Barrett recommendations, including those associated with conflicts of interest management. The NIAA has been overseeing the ALC’s performance of those activities and is satisfied that implementation of acceptable arrangements for conflict of interest management will be progressive over the forthcoming months. The conflicts of interest noted in relation to the former ALC Chief Executive Officer (CEO) have been resolved following the termination of Mr Hewitt and his removal from positions in all associated entities. The current ALC Board Chair does not hold any of the positions that gave rise to the conflict of interest concerns in relation to the former Board Chair.

Comment mcd #3

The question has not been answered. The answer makes clear that the Minister is not yet in a position to be satisfied (“acceptable arrangements for conflict-of-interest management will be progressive…”), yet they have not gone on to identify the issues that remain in progress.

The unqualified assertion that the termination of Mr Hewitt and the election of a new Chair addresses the conflicts of the past is problematic. It ignores the complex web of influence previously exercised by the former CEO and his spouse, and the inevitable expectations on Groote that the benefits flowing form those prior arrangements will continue. The current status and oversight of the various positions and financial interests previously held by Mr Hewitt’s spouse remain completely obscure.

One important but unintentional revelation of this answer is the reference to Mr Hewitt’s ‘removal from positions in all associated entities.’ How was this achieved? Did the Minister and NIAA give Mr Hewitt and his spouse some kind of ultimatum to resign (and if so what was the quid pro quo) or did the ALC direct the ‘associated entities’ to dismiss him, thus confirming that they in fact exercise control over these entities? The public interest requires that clarification and answers to these questions be provided.

Senator Pocock Question #4

Has the Minister/NIAA approved any arrangements for the management of the conflicts of interest that were identified in the ANAO and Bellchambers Barrett reports? If so, will the Minister please table those arrangements.

NIAA Answer #4

Formal approval of the ALC’s conflict of interest arrangements is the responsibility of the ALC Board in consultation with the ALC Audit Committee and ALC management.

Comment mcd #4

The implication is that the Minister and NIAA have not approved any arrangements for the management of conflicts of interest. The ALC has been riven with actual and potential conflicts of interest for at least six years; this Blog has previously identified and discussed many of them. Without ministerial engagement and approval of the actions being put in place, there is no guiderail in place to prevent the re-emergence of conflicted influence over decision-making in the future. Moreover, without a forensic audit, it is unclear whether the pre-existing conflicts of interest led to misallocation of funding and resources (with detrimental impacts on individuals and corporations on Groote), and whether there is remedial action required to rectify such misallocations. The laissez-faire approach of the Minister and NIAA is patently inadequate and represents in my view a serious lapse of ministerial responsibility. The minister has numerous and far-reaching powers under ALRA to play a direct role in the ALC’s administration for however long it takes to establish a new set of watertight operational procedures.

Senator Pocock Question #5

Can the Minister confirm that the Aboriginal residents of Groote Eylandt have not been subject to predatory commercial behaviour and financial losses arising from the actions of the former CEO, his spouse and the former Chairman of the ALC? If not, what action is she taking to ascertain the extent of the potential losses to the community?

NIAA Answer #5

As previously noted, the former Minister referred concerns regarding ALC to the NIAA for review and action as required. The NIAA has and will continue to refer all relevant matters to law enforcement and other agencies as required.

Comment mcd #5

One obvious problem with this answer is that not all commercially predatory behaviour will be illegal or corrupt. If it is the case that legal and non-corrupt predatory behaviour has occurred, the question becomes: is the Minister prepared to allow the officers and staff of agencies within her portfolio to engage in such behaviour, and more directly, why was she not prepared to take action within her regulatory powers when she became aware of such activities rather than hiding behind the convoluted and time-consuming processes of law enforcement agencies?

Given the deliberate policy of minimising the disclosure of relevant information, we do not know if the issue of potential predatory commercial behaviour was even of concern to the Minister or her predecessors, nor whether it is of concern to her today.

What were the concerns that she referred to the NIAA and onwards to law enforcement? When were those concerns formally referred to the various agencies? Which agencies received referral? How long transpired between the Minister and her agency becoming aware of the concerns and referrals being made? Why won’t she indicate the general nature of those concerns? I am sure the people who are the subject of any investigations understand that investigations are underway. Why keep the public in the dark? What has the Government got to hide?

The bottom line is that the answer to this question is deliberately designed to hide crucial accountability information. This is not in the public interest.

Senator Pocock Question #6

According to the ALC website, in the period 2019 – 2023, the ALC distributed $361m of s64(3) monies to various corporations and organisations on Groote Eylandt. Can the Minister/NIAA confirm that these distributions were determined by the ALC in compliance with the provisions of the ALRA, including s23(3) & s23 AA of the Act?

NIAA Answer #6

Distributions were determined by the ALC in compliance with the provisions of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA).

Comment mcd #6

This answer exudes unwarranted confidence. In my view it is both misleading and wrong. Section 23AA requires the ALC to undertake its functions inter alia, in a fair manner. The ANAO identified a series of payments to corporations where the ALC CEO played a major role in the application and/or was on the Board or had a conflict. The obverse of this favouritism is unfairness to the traditional owners who might otherwise have been beneficiaries.

The ALC’s effective control of associated corporations (in my view implicitly acknowledged in the actions taken by the NIAA to have Mr Hewitt vacate all his positions on associated entities) is itself an effective breach of the legislative requirement that land councils pay 64(3) payments to (independent) corporations and not to an entity it controls.

The provision (s.23(1)(ea)) that allows land councils to assist local corporations has a rider that such assistance must not cause the land council ‘to incur financial liability or enable it to receive financial benefit’. The ANAO found instances where the ALC could not demonstrate that this was the case. More substantively, where a land council effectively controls a corporation, then the liabilities of the corporation are those of the land council. This inevitably leads to a breach of section 23(1)(ea).

In a grave error of judgment, the NIAA and Minister appear to have lost sight of both the first and second Laws of Holes (link here). They should stop digging, and the Aboriginal citizens on Groote are still in a deep hole.

Conclusion

The answers to the questions above are in my view deliberately obfuscatory, are incomplete and by failing to provide the full story have the effect of misleading the Senate. In some cases, they are just wrong. This is a continuation of the approach adopted from the first day the ANAO tabled its performance audit in May 2023, which is best described as a policy of ‘nothing to see here!’ At best, this involves putting the political interests of the Government above the public interest. At its worst, it is much more serious than that. It erodes trust in Government and diminishes the quality of our democracy.

The failure to get to the bottom of what has transpired on Groote (not all of which will necessarily meet the definition of corruption, or criminal behaviour) will lead to ongoing and deep-seated disadvantage to the Aboriginal population of Groote Eylandt and may have wider implications for the viability of the core institutions established by the Commonwealth’s NT land rights legislation. These disadvantages will certainly be political, and financial, but most importantly they will also have social consequences for the fabric of community life on Groote. This is the tragedy that is unfolding.

 

21 February 2025

 

 

 

 

Royalties, flawed governance and non-transparency: a potent brew

 

Thou monstrous injurer of heaven and earth!

Call not me slanderer; thou and thine usurp

The dominations, royalties and rights

Of this oppressed boy…

King John Act two, Scene one.

 

This post provides a high-level overview of how the institutional structures related to payments to traditional owners related to mining on Groote Eylandt have evolved in recent years.

In 1963, prior to the existence of land rights, the Church Missionary Society which had a presence on Groote presciently had secured mining tenements on Groote as a means of protecting Aboriginal interests. They used their commercial leverage to negotiate a royalty arrangement with BHP to ensure that the local Anindilyakwa people would benefit from mining. As part of that negotiation, royalties began to flow in 1965 and in 1969 the Groote Eylandt Aboriginal Trust (GEAT) was established. While the Trust has had a chequered history, it appears to be operating well and has accumulated a balance of over $200m based on royalty payments from GEMCO and its ongoing investments (link here).

GEAT provides an annual grant program aimed at benefiting the traditional owners of Groote. In the 2022 and 2023 financial years, the grants made were around $$5m. and $7m respectively. The following analysis does not deal with GEAT, which is independent of the ALC, and it is mentioned here for the sake of completeness. As I understand it, the more recent mining agreements on Groote under ALRA in effect net off the benefits directed to Groote GEAT in calculating the payments made to the ALC for on payment to the AMT.

This post focusses on the complex and I suggest problematic financial and governance arrangements between the Anindilyakwa Land Council (ALC), the   Anindilyakwa Mining Trust (AMT) and the Anindilyakwa Royalties Aboriginal Corporation (ARAC). The aim is to identify points of potential concern in terms of good governance, to raise some questions regarding what appear to be some problematic financial transactions, and finally to explore some broader policy reforms that these issues suggest may be required. It is not intended to be a comprehensive analysis.

In 2007 the AMT was established to receive the negotiated payments arising from a revision of the revised agreement between manganese miner GEMCO and the ALC. Under the current mining agreement between GEMCO and the ALC, GEMCO pays a negotiated royalty to the ALC, a portion of which is then transferred to the AMT to be invested and distributed in accordance with the Trust Deed. The original Trust Deed was revised in 2010, and sets out the rules governing the operation of the AMT. The revised Trust Deed is available on the ACNC website (link here).  

As I understand it, the more recent mining agreements on Groote under ALRA which provide for payments to AMT in effect supplement the continuing payments directed to GEAT.

For our purposes, key elements of the AMT Trust Deed include the power of the ALC to approve the appointment of new Trustees, a requirement for there to be at least two ‘responsible persons’ appointed as Trustees (essentially fulfilling roles akin to independent directors), the provision of quite broad powers to allocate royalty funds for community purposes, the inclusion of standard conflict of interest provisions, and of a power for Trustees to delegate their powers to an individual or individuals. Normal provisions for minute taking and annual meetings apply. The current Trustees are listed on the ACNC website (link here) noting however that Mr W, the former Chair of the ALC, is recently deceased.

The most recently available financial statements, for the year to June 2023, indicate that the AMT controls net assets of $274 million, and is in receipt of an annual income of almost $20 million in negotiated royalties and just over $8m in investment income. These income flows clearly vary from year to year.

The ALC is also in receipt of section 64(3) payments, often referred to as ‘royalty equivalents’ because they derive from provisions of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) which appropriate an equivalent amount from the Commonwealth Consolidated Revenue for all royalties received by the NT Government from mines on Aboriginal land. In turn the ALC is required by section 35 of the ALRA to disburse these funds within six months of receipt to Aboriginal Corporations representing traditional owners. These corporations must be incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) to facilitate more intensive governance support (a legislative constraint that makes good policy sense in my view given that ASIC incorporation is looser and is less intensively regulated).

The ALC distributes its section 35 funds to a range of corporations located on Groote Eylandt, many focussed on clan affiliations. Increasingly however, the ALC appears to have been directing section 35 funding to corporations focussed on social and economic development opportunities linked to the proposed Winchelsea mine; see my earlier post outlining the ALC strategy (link here).

In April 2016, a new corporation was registered with the Office of the Registrar of Aboriginal Corporation (ORIC). Its name is Anindilyakwa Royalties Aboriginal Corporation (ARAC), and it is unique insofar as the members of ARAC must be Aboriginal Trustees of the AMT. While the list of documents related to ARAC on the ORIC web page is incomplete, a revised Rule Book issued in December 2023 (link here) requires that all members of ARAC be members of the AMT. Directors of ARAC must be either members (ie Aboriginal trustees of AMT) or a responsible person (ie a non-Indigenous Trustee of AMT).

Moreover, all the Indigenous members of the AMT, and therefore ARAC, are members of the ALC. ARAC has four independent Directors Adam Simpson, Rodney Tidey, Russell Barnett, and Simon Longstaff. Of these, Adam Simpson and Simon Longstaff All four are also Trustees of AMT. Rodney Tidey is a former staff member of the ALC, and Russell Barnett runs a consulting firm that appears to have done work for the ALC. To be clear, I am not suggesting any wrongdoing on the part of these individuals, merely pointing to the tangled web of connections that has been constructed by the ALC during the term of its CEO Mark Hewitt.

The ALC thus effectively exercises influence over both the AMT and ARAC by virtue of its control of the AMT membership. This aligns with my observations in previous posts that the ALC exercises a degree of influence over corporations receiving s.35 payments that aligns with the definition of ‘effective control’ under the Corporations Act. If the ALC CEO and former Chair exercise disproportionate influence over the ALC Board, as was identified by the ANAO in its May 2023 performance audit, and explicitly alleged by sources consulted by The Saturday Paper for its recent exposé (link here), then that influence will likely permeate the decision-making of both the AMT and ARAC.

Given this background, I wanted to explore two issues that arise from these entwined sets of responsibilities and issues.

The first is a series of financial commitments and subsequent transactions reported in the AMT financial statements from 2016. The second relates to funding by ARAC of ALC employee costs.

The AMT/ARAC financial transactions

The notes to the 2016 Financial statements for the AMT which are available on the on the ACNC website (link here) include the following text:

12 Commitments During the year ended 30 June 2016, Anindilyakwa Mining Trust committed to contributing $3,500,000 to the Economic Development Unit (which has been established by the Anindilyakwa Land Council) on or prior to 30 June 2018. The first instalment of $500,000 was made during the 2016 financial year. 

The notes to the 2017 AMT Financial Statements state that the first instalment of $500,000 was made during the 2016 financial year and the second instalment for the first year of $500,000 and the first instalment for the second year of $750,000 was made during the 2017 year.

The notes to the AMT 2018 financial statements comment:

12 Commitments During the year ended 30 June 2016, Anindilyakwa Mining Trust committed to contributing $3,500,000 to the Economic Development Unit (which had been established by the Anindilyakwa Land Council) of which $1,000,000 was paid during the 2016 financial year and $750,000 was paid during the 2017 financial year. During the 2018 financial year, an instalment was made for $1,250,000. Therefore, as of 30 June 2018, the Trust has a $500,000 outstanding commitment.

During the year ended 30 June 2017, Anindilyakwa Mining Trust committed to contributing $51,122,311 to Anindilyakwa Royalties Aboriginal Corporation (ARAC) for costs associated with the purchase of infrastructure and funding of the operational budget. During the year, $6,000,000 was paid to ARAC. Therefore, as of 30 June 2018, the Trust has a $45,122,311 outstanding commitment.

The 2019 AMT financial report included a note indicating in relation to the 2016 commitment, a further instalment of $500,000 had been paid thus meeting that initial commitment. The note also states that in relation to the 2017 commitment, the AMT had paid an instalment in the 2019 FY of $5,975,000, thus leaving an outstanding balance to be paid of $39,147,311.

The 2020 and 2021`AMT financial reports note that no payments had been made and the outstanding commitment remained at $39,147,311. The Notes to the 2021 AMT financial report note that the outstanding amount was paid in FY 2022; this suggests the payment was made in the first half of the financial year. The 2022 AMT financial report lists under the heading Grants a payment to ARAC of $41,324,957. No rationale is provided for why the amount has increased from $39m to $41m.

There are no further payments reported in the 2023 AMT financial report.

The 2022 financial statement for ARAC is available on the Registrar of Aboriginal Corporations website (link here). Under revenue, it records a s.64(4) grant from the ABA of $9.6million (which would have been approved by the Minister) and a grant of $14.3m in s.35 payments from the ALC (the equivalent amount in 2021 was $34.8m). Total net revenue is listed as $23.0m. There is no record of any grant being received from the AMT. Nor is there any record of such a grant being banked in the following financial year.

That a payment of $41m appears to have disappeared is somewhat strange. It is even stranger when one considers that the AMT has no staff and its administration appears to be undertaken by the ALC Mutual Trust, an established and highly experienced financial services firm; that ARAC has no staff (see the 2022 ARAC General Report) and its office is at 58-62 Macleod Street Cairns, the same address where the Commonwealth transparency portal lists ALC’s Finance and Royalty Development Unit (RDU) employees being located. Thus while the AMT and ARAC have different auditors and accountants, The staff servicing ARAC Board meetings and probably implementing ARAC Board decisions (including managing income and payments) are likely part of the ALC's Royalty Development Unit, a small team in Cairns. Clearly a forensic audit is required to determine the reason for the apparent disappearance of these funds. I should acknowledge that I was alerted to the issues around the missing $41m by the recent story in the Saturday Paper (link here).

 

ARAC funding of ALC employee costs

The ARAC 2023 financial report includes under expenses a line item for ALC employee costs of $7.2m in 2021 and $8.0m in 2022. This strikes me as potentially problematic as it appears to suggest that the ALC is making payments to ARAC which are then used to pay ALC employee costs. In effect, this can be characterised as the ALC using funds that are required to be allocated towards corporations representing Traditional owners diverting the funds to financing its own activities.

The rationale that the ALC will use in its defence is that section 23(ea) of the ALRA allows land councils to assist Aboriginals in the area of the land council to carry out commercial activities. The ALC CEO has relied on this provision on a number of occasions in Estimates Hearings. However, the provision reads as follows (emphasis added):

The functions of a Land Council are (inter alia)

(ea)  to assist Aboriginals in the area of the Land Council to carry out commercial activities (including resource development, the provision of tourist facilities and agricultural activities), in any manner that will not cause the Land Council to incur financial liability or enable it to receive financial benefit;…

It is clear that the engagement of staff by the land council incurs a financial liability, and also that the payment of employee costs by ARAC can be characterised as receiving a financial benefit. While section 33A and B allow a land council to charge fees for services, this likely is limited to services which a land council is allowed to provide. Accordingly, it seems clear to this bush lawyer that the arrangements adopted since 2016 have breached that provision of the legislation. The appropriate way to have provided the assistance envisaged in my views would have been for the Minister to approve estimates of expenditure of the Land Council under section 64(1) of the Act. Why this was not done is unclear.

Similar issues arise in relation to the ALC economic development unit which the AMT funded in 2016, 2017 and 2018.

In relation to the arrangements which were adopted, it seems that there are two possibilities: either the arrangements have been undertaken with the approval and knowledge of the Minister and NIAA, in which case it places an additional onus on them to monitor and mitigate the risks of fraud or misappropriation, or even just poor management. Or alternatively, the arrangement has not been approved in which case it appears to breach the financial management provisions of the ALRA and probably the PGPA Act. Which is it?

 

Policy implications

The two issues outlined above raise numerous policy issues.

In the short term, both issues are serious enough to require a detailed forensic audit. These are both issues that fall within the regulatory oversight responsibility of the Minister and her agency, the NIAA. If they are to handball them off to an alternative ‘appropriate authority’, then they must identify the issues explicitly and directly. Otherwise there is a risk that the issues involved will be overlooked in the tangled web allegations that are currently in play (see my previous post link here).

Beyond the issues involving the ALC, NIAA should in my view undertake an immediate internal review of its approach to the regulatory oversight of portfolio bodies, the extent to which its Audit and Risk processes and fraud control processes are fit for purpose in relation to portfolio bodies for which the NIAA has an oversight responsibility.

In the medium term, these issues raise questions regarding the level of due diligence applied by the Registrar of Aboriginal Corporations when she approves the registration of corporations that are intended or likely to receive section 35 payments from a land council in the NT. The ALRA requires these payments to be directed to CATSI corporations, but this requirement can be undermined if the land council exercises effective control over the corporation. The Registrar should in my view initiate an internal review to identify what actions might be taken to ensure existing and yet to be established corporations likely to receive section 35 payments are properly independent of the land council making the grant.

The issues raise questions regarding the adequacy of the ANAO’s financial audits of statutory corporations, in circumstances where there are subsidiaries (such as with IBA and ILSC) or as in this case, with corporations where there is no formal ownership, but effective control is exercised by other means. Similarly, while the ANAO performance audits of the NT land councils has been perhaps the watershed in allowing greater scrutiny to be undertaken in relation to the ALC, in retrospect, it is clear that they should have adopted a much wider frame of reference once they realised that an intricate web of interconnected financial transactions was involved. In the light of the revelations that have emerged since the ANAO performance audit was published, its recommendations appear increasingly inadequate and short-sighted. In my view, there would be merit in the ANAO undertaking an internal review of its performance in relation to the ALC and associated entities aimed at identifying any shortcomings or ways to improve its effectiveness. Further (and to reiterate a point I have made previously), it is time that the ANAO conducted a detailed performance audit of the implementations of the financial provisions of ALRA.

Finally, the ongoing imbroglio on Groote points to two further general points with broad policy significance.

First, the NIAA apparently has no permanent presence on Groote Eylandt despite the extraordinary complexity of the policy issues that shape and confront the local population. This was not always the case and reflects a much broader pull back by the Commonwealth of on the ground staff across regional and remote Australia. Without eyes and ears on the ground, Ministers cannot hope to obtain the quality information and advice required in a rapidly modernising and changing demographic, social and economic environment. Th incoming minister for Indigenous Australians would be well advised to immediately place staff on the ground in Groote Eylandt, and to commission a review of NIAA staffing aimed at reshaping its staffing profile to better reflect the locus of the major policy challenges it faces.

Second, I cannot resist noting, indeed emphasising, that the Groote imbroglio has only surfaced because of the serendipity of the ANAO audit and the persistent delving of the media. The trend towards ever less transparency by government in general and the Indigenous Australians portfolio in particular, is in my view of deep concern for its implications for democracy, but just as important, because it allows First Nations peoples aspirations and interests to be ignored. So much of what has occurred on Groote can be traced back to failures of Ministers to uphold their responsibilities, failures that are facilitated and arguably encouraged by the endemic lack of transparency across the public sector. How is it that we only learn this year that in 2018 a minister of the Crown approved in principle a mining agreement on Aboriginal land, and the formal agreement was approved by his successor in March 2021 (whose terms have never been made public) where the Chair and CEO of the land council were sitting on both sides of the negotiations leading to the agreement. They had a conflict of interest, but in my view, it is the former Minister who approved the agreement who should be held to account. The consequences of that decision are playing out today and the outcomes are as yet unclear; but may well lead to ongoing economic and social losses for the Aboriginal residents of Groote Eylandt.

 

26 July 2024

Addendum 280724

It has been brought to my attention that the AMT was originally assisted in its administration by the Myer Family Company which in 2017 merged with Mutual Trust (MT) (link here). It may be that MT continues to provide adminstrative assistance to the AMT, and not the ALC Royalty Management Unit in Cairns as was surmised in my original post. I have not been able to confirm this either way. Even so it does not change the broader underlying point that was being made.

Addendum 140125

Strike through and highlighted text represent corrections made on 25 January 2025

 

Huckitta: tragedy and opportunity

 

                                        Why do you start, and seem to fear

Things that do sound so fair?

Macbeth, Act one, Scene three.

 

Inside Story have just published (link here) a short article I wrote built around developments related to Huckitta station on Arrernte and in the NT. The article explores the fascinating historical intersections between Huckitta, its traditional owners, the criminal justice system, the Native Title Act, and the role of individual agency in driving developments across these disparate policy spheres.

While the article stands on its own, it is also an attempt to acknowledge that policy reform is never easy, nor straightforward. Developing, reforming, and at times resisting policy is inherently a collective exercise in the widest sense of that term. Policy is necessarily communal in nature, although it is rarely inalienable. It is inevitably shaped by the past and can only aspire to shape the future.

While social, cultural, economic and legal structures and systems are ubiquitous and determine in large measure both what is feasible and the order in which policy change might occur, the roles of individuals for better or worse, whether deliberate or random, are also crucial in shaping and determining policy outcomes.

 

4 July 2024

Correction

In the Inside Story article linked to above, I wrote that Bill Gray had overseen the preparation of the 1976 Aboriginal Land Rights Bill in the Northern Territory. Bill has contacted me to advise that the preparation of the legislation within the Department was overseen by former patrol officer Jeremy Long. Bill was the senior public servant repsonsible for the administration of the legislation over its first decade or so. I apologise to readers and of course to Bill for this error for which I am solely responsible.

18 July 2024

 

Typographical errors: ANAO audits of the Tiwi and Anindilyakwa Land Councils

 

Here are a few of the unpleasant’st words

That ever blotted paper.

Merchant of Venice Act 3, scene 2.

 

There are four land councils established in the NT under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA): the Tiwi Land Council (TLC), the Northern Land Council (NLC), the Central Land Council (CLC), and the Anindilyakwa Land Council (ALC).

 

In the last fortnight, the ANAO has published two important audit reports on the smaller two land councils, the TLC (link here) and the ALC (link here). Land Councils are Commonwealth statutory corporations albeit with a range of unique elements relating to the appointment of members, their funding, and their linkages with other Indigenous institutions in the Northern Territory. They are also native title representative bodies under the NTA. Over and above their narrow legislative roles, they have developed into important Indigenous institutions in both the NT and nationally.

 

The ANAO notes that the rationale for these audits is provide independent assurance to Parliament that the Land Councils’ governance arrangements are effective in meeting legislative obligations under the ALRA, the Native Title Act 1993 (NTA) and the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The ANAO has indicated that an audit of the CLC will shortly be published and an audit of the NLC is expected to be published in a couple of months.

 

I don’t have the space here to provide a comprehensive summary of each of these reports, and will instead cherry pick a small number of issues that appear to me to have significant governance implications both for the individual land councils and the broader institutional framework they operate under.

 

The ANAO is to be congratulated on the quality and accessibility of its analysis given the innate complexity of these institutions, including their cross cultural responsibilities. Nevertheless, as I have previously noted on this blog, the ANAO has a propensity to cloak its findings in heavily qualified bureaucratic prose and extreme understatement. The result is that an ANAO report reads like a novel written in a foreign language. Those proficient in bureaucratese know exactly what is being said while those unfamiliar with the language (eg in the media and the general public) are left largely untroubled and unaware of the significance of what has been said.

Tiwi Land Council Audit

 

The ANAO headline findings for the TLC were:

The Tiwi Land Council's (TLC) governance arrangements under the ALRA and the PGPA Act are partly effective….The TLC’s arrangements to promote the proper use and management of resources under the PGPA Act are largely inappropriate. (page 5).

 

The ANAO notes that in 2021-22the TLC budget was $4.3m, and it distributed $5.9m in land use payments to Traditional owners (TOs). These are not particularly large amounts, but will add to around $100m over the span of a decade.

 

In para 2.9, the ANAO noted that its analysis of Management Committee and Council meeting minutes identified multiple instances where the Management Committee made decisions without delegation between 2008 and 2020.  

 

A core statutory function of the land councils is to consult Traditional owners and ascertain their consent to proposed activities on their land. The ANAO identified significant shortfalls in the TLC’s approach to exercising this function:

3.64 The ALRA determines that, in carrying out its functions, a Land Council shall have regard to the interests of, and shall consult with, the Traditional Aboriginal Owners of the land in its area and any other Aboriginal people interested in the land. The ALRA further specifies that a Land Council shall not take any action unless it is satisfied that: •the Traditional Owners of that land understand the nature and purpose of the proposed action and, as a group, consent to it; and •any Aboriginal community or group that may be affected by the proposed action has been consulted and has had adequate opportunity to express its view to the Land Council…

…3.66 The TLC subcontracts the organisation and conduct of the clan meetings to Tiwi Resources, an Aboriginal corporation owned by the eight clans. The TLC presents at these meetings, however does not take minutes, and does not request the minutes from Tiwi Resources. The TLC was unable to provide information to the ANAO about the discussions or decisions made at clan meetings and cannot demonstrate it has conducted effective clan consultations. 

 

In the summary at the start of Chapter Four, the ANAO note (page 51):

The TLC’s arrangements to promote the proper use and management of resources are largely inappropriate. The TLC’s policy framework and arrangements for risk management, fraud control and managing conflicts of interest are incomplete, not appropriately established, and inconsistently implemented. The TLC’s corporate plan and annual report, including performance statements, are not fully consistent with legislative requirements.

 

Finally, in what I took to be a damning indictment of the level of engagement of the National Indigenous Australians Agency, the ANAO laid out the functions of the NIAA set out in the formal order which established it (see para.2.26), which includes roles ‘to lead and coordinate policy Commonwealth policy development’ and to ‘build and maintain effective partnerships…’, and then noted (in para 2.27) the NIAA’s advice of its perception of its role in relation to the NT Land Councils which adopted a much more passive approach. Then to ram home the point, in para 2.28, the ANAO stated without further comment:

2.28 As part of this audit, the ANAO approached the NIAA regarding a potential recommendation to the NIAA to support the Tiwi Land Council to develop appropriate delegation instruments. The NIAA responded that ‘This is a matter for the Tiwi Land Council’.

 

Anindilyakwa Land Council Audit

The ANAO headline findings for the ALC were:

The ALC’s governance arrangements under the ALRA and PGPA Act are partly effective …. The ALC’s arrangements to promote the proper use and management of resources under the PGPA Act are partly appropriate (page 6).

 

The ANAO notes that in 2021-22 the ALC budget was $7.4m, and it distributed $70.2m in land use payments to traditional owners (TOs). These are substantial amounts appropriated for Aboriginal benefit, and will add to around $770m over the span of a decade.

 

Notwithstanding this rather anodyne description, I was quite astonished to read the detailed analysis contained in the ANAO audit. While the audit focusses on a single organisation, the ALC, it necessarily describes a network of parallel organisations with interlocked directors, and senior staff, and a complex web of financial flows between them. Yet the financial books of the parallel organisations (and their commercial subsidiaries) are beyond the ANAO remit, leaving the readers to ponder the implications of a series of questionable arrangements and decisions taken within the ALC.

 

The high level conclusions of the ANAO are outlined at pages 8 to 10, followed by a series of technical recommendations. The following extracts pick out some of the more salient high level conclusions:

17. …. Key interests held by the CEO and Council members (including the Chair) in corporations that receive funding based on decisions of the Council, are not consistently declared and are ineffectively managed. (See paragraphs 4.19 to 4.51)…

18….The 2021-22 Annual Report was not published as at March 2023. Although the draft 2021–22 Annual Report mostly complies with PGPA Act and Rule and ALRA requirements, it lacks transparency in relation to operations.

19. The Audit Committee does not provide adequate oversight and scrutiny of the ALC’s operations. The Audit Committee is not independent from management and is not effective in the delivery of some of its key mandatory functions under the PGPA Act. It does not appropriately review the ALC’s performance reporting; system of risk oversight and management; and system of internal control. The Audit Committee secretariat is not effective. (See paragraphs 4.64 to 4.85)

 

The issue of conflicts of interest is at the core of this audit. In plain English, a conflict of interest opens the way for those conflicted to accrue inappropriate financial benefits. The ANAO has identified no instances where that has occurred, however its remit is limited to the ALC and it has not examined the financial affairs of the various parallel and subsidiary organisations. Figure 4.1 on page 68 provides a useful summary of the complex relationships involved. The key must read paragraphs are 4.45 to 4.50.

 

Some extracts:

4.32 The CEO’s declaration identified an interest arising from the ALC’s employment of his spouse (who was first employed by the ALC in 2014). The ‘notes’ section of the declaration was left blank, and no management plan was included in the register or elsewhere. The CEO had not made a written declaration of the interest prior to 2022...  

4.47 The involvement of the ALC Chair, CEO and CEO’s spouse in organisations that, in 2021–22, received the majority of royalty equivalents and that, in 2020–21 and 2021–22, received the majority of NT Indigenous Economic Stimulus Package funds, creates a risk of conflicted interests….

4.48 In Council funding decisions, the ANAO observed disproportionate benefit to the entities with which the CEO is associated. During the two 2022 Finance Committee meetings (at which the ALC CEO was present), 112 requests for funding valued at $109.1 million were reviewed… In summary, requests submitted by the ALC CEO represented 24 per cent of funding applied for, and 36 per cent of approved funding; and the success rate for requests submitted by the ALC CEO was 99 per cent by value, compared to a success rate for the other applicants of 53 per cent by value. 

4.50 Given the influence of the Chair and CEO over the ALC’s funding and management decisions; the financial benefit that AAAC, GHAC and consequently Winchelsea Mining obtain from the ALC; and the ALC Chair’s, CEO’s and CEO’s spouse’s positions in GHAC and Winchelsea Mining; the risk of conflicts of interest is high. The current management strategies applied to this risk are either insufficient or not implemented. 

 

The ANAO analysis of the ALC Audit Committee is also eye watering. The ANAO identifies that the ‘independent chair’ costs nine times more than other land councils expend on their audit committee chairs (para. 4.73), and is engaged by the parallel organisations that are also effectively controlled by the CEO and ALC Directors.

 

The ANAO identified several significant issues in relation to the independence of the Audit Committee Chair (para. 4.70):

• The Chair of the Audit Committee is the founding director of Enmark Pty Ltd (Enmark). Between 2014–15 and 2021–22 the ALC paid $896,056 in fees to Enmark for services. Between 2017–18 and 2021–22 Enmark was one of the top three consultants by value engaged by the ALC.

• Enmark provides consultancy and other services to several Aboriginal corporations receiving royalty equivalent funding from the ALC. This includes GHAC and AAAC.  The ANAO identified numerous deficiencies in the approach of the Audit Committee to its responsibilities.

 

One further issue that I won’t explore in detail relates to the ALC’s use of royalty payments to third party organisations which were then effectively reallocated to the land council for the payment of salaries (see paras 3.51 and 3.52). The ANAO correctly identifies this mechanism as a potential source of fraud, but fails to note that it effectively undermines one of the Minister’s tools available to ensure the land council is appropriately focussed on its legislated remit. Under the ALRA, the Minister approves the budgets of the land councils, but the ALC has effectively been redirecting royalty equivalent funding away from community benefit and towards its own operations, thus undermining the fiscal constraints that incentivises good priority setting.

 

Finally, the ALC Board and CEO provided a ten page response to the Audit report, which needs to be read in full. The response focusses on the undoubted achievements of the ALC and its associated organisations in a range of areas. It documents a massive increase in staff of the ALC, many from the local communities. It also notes that the former Minister for Indigenous Australians Ken Wyatt was kept fully informed of development on Groote Eylandt, and that the CEO of NIAA has been briefed. It points to the ALC’s involvement with the ANU in documenting the social indicators on Groote; a matter I commented on in an earlier post (link here).

 

Clearly whatever its other deficiencies, the capability of the ALC Board to write entertaining prose far exceeds that of the ANAO. The ALC response provided my favourite line from the whole report in a comment on the ANAO’s conclusions on conflict of interest:

The ALC has effectively managed conflicts of interest in the context of this operating environment and accepts that we have not always properly documented these practices. Therefore, instances of typographical errors have given the auditors a negative overall impression.

 

Conclusion

These two audits raise important issues regarding the quality of governance in two of the four NT land councils. The TLC appears to have taken a series of remedial actions and should hopefully make good progress. The ALC faces more deep-seated issues and notwithstanding its response, I for one am unconvinced that it is yet on the right path.

 

The existence of these issues however is not just an issue for the Land Council directors and management. It seems to me that the relevant Ministers over the past decade have allowed the quality of regulatory oversight of the NT land councils to significantly weaken and in some cases to perhaps disappear. Not only has this laissez faire approach opened up the opportunities for conflicts of interest to emerge (and thus to opportunities for fraud against local communities and the Commonwealth), but it has also undermined the overall effectiveness of the land councils in fulfilling their statutory obligations and remit.

 

To address the issues raised in these audits, it strikes me that there are two essential actions required.

 

First, to provide an assurance to the ordinary members of the Groote community, there appears to be an overwhelming case for an independent forensic investigation into the financial affairs of the ALC, its associated organisations, and its key staff and Directors. It seems to me imperative that Minister Burney should both initiate such an investigation immediately, and initiate a short sharp review of the way in which NIAA oversights portfolio bodies.

 

Second, given that it is now almost fifty years since land councils were established, and that there has been no overarching review for two decades or so, there is a strong case for a high level independent review of the appropriate regulatory framework for the operations of the NT land councils. Such a review should reconsider their statutory remit, their funding arrangements, and importantly, how land councils relate to associated Indigenous entities that have responsibilities for utilising the royalties, royalty equivalents, and other land use payments that accrue to landowners and affected communities. Such a review should not have any overt political agenda apart from considering the best way to meet the future needs and aspirations of Aboriginal landowners and native title holders in the NT into the future.