A counter-intuitive proposal to expand rooftop solar in the bush

 

The self-same sun that shines upon his court

Hides not his visage from our cottage but

Looks on all alike.

The Winter’s Tale Act four, Scene four.

 

My previous post was essentially a high-level review of an excellent book titled Guide to Housing and Infrastructure Standards in Town Camps (link here). I recommend readers peruse that post before reading this post.

In this post, I delve a bit deeper into just one of the thirty essential services issues addressed by the Guide — the under-reliance on rooftop solar power in remote communities — and make a high-level policy proposal to break the current structural deadlock that contributes to energy insecurity, poor health, and the sheer liveability of remote community housing infrastructure.  

The Guide’s analysis of rooftop solar

The Guide (section 2.28 on pp. 148 – 151) identifies solar energy as one of the thirty issues it deals with. The Problem is identified as energy insecurity. The combination of temperature extremes, poor housing design, associated high demand for electricity, in a context of high reliance on prepayment meters amongst town camp residents leads to high levels of energy insecurity. The Guide references academic research to report on extraordinary rates of multiple power disconnection events affecting 91 percent of prepayment meter households across the NT (link here). Under Regulations, the Guide notes inter alia that the payback term for installed rooftop systems is often less than five years, and suggests that the introduction of rooftop solar systems could be the key to climate proofing homes in Aboriginal Town Camps (link here). Under Solutions, the Guide points out that while the upfront costs of incorporating solar energy systems into community and housing infrastructure has often been used as an excuse for not installing them, it calculates for one town camp that the payback period from installation would be four years, and points to the additional benefit of reduced health costs arising from avoiding the adverse implications of temperature extremes.

The Guide backs up this analysis with an aerial photo of a town camp showing nine houses, with no obvious solar alignment, and with no use of solar panels: the heading is Roof-top Solar Panels are not often used in Town Camps. On the facing page is an aerial photo of 23 houses in Alice Springs, of which 16 appear to be utilising solar panels. Furthermore, it is striking that the houses are all solar aligned to maximise the benefits of solar radiation in winter and minimise costs and radiation in summer. The Heading is Roof-top Solar Panels and Solar Oriented Houses in Alice Springs.

Subsequent sections in the Guide deal with the related issues of Passive Cooling and Heating, and the use of Outdoor Rooms and Courtyards.

In a rapidly warming world, the importance of addressing these issues is inarguable. Yet very few people would be aware or conscious of the fact that there are systemic disparities between the way mainstream and Aboriginal communities are designed and operate in relation to these issues. The consequences for communities are both real and deeply unfair. The degree of unfairness is magnified when it is recognised that over the past decade there have been substantial subsidies available to homeowners designed to encourage the take up of rooftop solar infrastructure, but that social housing ‘owners’ (ie governments) have not seen fit to invest in installation of rooftop solar on public housing in the NT — and I suspect elsewhere. The levels of recognition amongst policymakers and the informed public of the degree of inequity and unfairness in solar provision appears to be close to zero.

Again, as pointed out in my previous post, the policy context is complex, but it is not beyond the technical capacity of governments to address. It does however appear to be beyond their political and policy capacity, even in circumstances where addressing the issues would harvest both financial and social benefits for disadvantaged First Nations communities and for society as a whole.

Given the lack of proactivity from governments on the issue of energy insecurity for remote community residents, it struck me that an alternative approach might pay dividends (so to speak).

A strategic reform proposal

The relatively new NT Aboriginal Investment Corporation (NTAIC) which has adopted the name Aboriginal Investment NT: (link here).  I have opted to use the name used in the legislation that establishes the entity. NTAIC is a Commonwealth statutory corporation established to administer a proportion of ABA funds. I was one of a number of critics of the design of this entity when it was first proposed in late 2021 (link here). While I am yet to be persuaded that I was wrong, the establishment of NTAIC provides a degree of Indigenous agency over the allocation of significant ABA funds which are broadly designated as being for the benefit of Aboriginal people across the Northern Territory.

My proposal (for the NT) is that NTAIC should consider initiating negotiations with the NT Government based on an offer to assist in accelerating the take up of roof top solar across remote community housing in the NT. Almost all remote community housing is social housing managed by the NTG. While arguably the responsibility for rolling out roof-top solar across remote communities belongs to the NTG, it is a responsibility that is patently not being implemented. Moreover, due to the systemic incentives in play which shape the allocation of scarce government funding, the NTG is unlikely to unilaterally initiate the roll out of roof top solar over remote community housing anytime soon.

Given this context, the NTAIC might offer to fund a significant proportion (or even all) of the capital costs of a multi-year roof-top solar installation program on the condition that the NTG commits to the ongoing maintenance of the infrastructure along with the associated repairs and maintenance of the social housing assets. A second and crucial component of any such deal would be a commitment that the financial benefits in terms of lower power costs of the installation of rooftop solar would accrue to the householder and the local community. Such an arrangement would appear to fit squarely within the statutory functions of NTAIC as laid out in section 65BB of the Aboriginal Land Rights (Northern Territory) Act 1976 (link here). While it is not entirely clear to me whether this fits within the NTAIC current Strategic Investment Plan (link here), this need not be an absolute barrier to initiating good and common sense ideas.

The same model might be explored across WA, QLD, SA, and indeed the NT by Indigenous Business Australia (IBA), or in the NT potentially by NTAIC and IBA jointly. I acknowledge that the negotiation of a pure funding transfer with state and territory jurisdictions may not fall directly within the remit of IBA (see sections 147/148 of the Aboriginal and Torres Strait Islander Act 2005: link here). However, if developed along with arrangements for the utilisation of Indigenous firms to install and maintain infrastructure on behalf of these jurisdictions, the proposal could be easily brought within he IBA remit. This constraint would not apply to NTAIC in the NT, but would nevertheless be worth considering in any case.

I understand that this idea is counterintuitive insofar as it lacks a commercial rationale and may also appear to undermine the responsibilities of the relevant governments to provide and pay for social housing. However, when governments are not delivering on their responsibilities, and thus failing in their raison d’etre, and as a consequence Indigenous people are worse off than they should be, it seems to me that there is a case for Indigenous leaders appointed to roles on boards such as NTAIC and IBA to take action. While there is not a commercial return to the potential funders under my proposal (ie NTAIC and/or IBA), there is clearly a strong economic rationale.

The findings of the Guide discussed above that roof-top solar effectively pays for itself within 3 to 5 years (let’s say five years for simplicity) in effect tells us that there is a rate of return on the investment of at least 20 percent. I venture to say that NTAIC and IBA would struggle to identify any other broad scale placed base initiative across remote Australia that could match this return on investment.

The sticking point will be the definition of ‘investment’. It turns upon the difference between a commercial return (where the financial returns accrue to the investor) and an economic return where the financial returns accrue to the householder. Bearing in mind that both NTAIC and IBA are Commonwealth corporations utilising what are effectively public funds to operate, it strikes me that they should decide whether they exist merely  to beef up their own bottom lines, or to address the financial exclusion of a swathe of disadvantaged Indigenous communities. My point is strengthened when we take into account the positive externalities of addressing energy insecurity earlier rather than later, in terms of improved health, improved food security, and poverty mitigation.  

The proposal I have made has the potential to drive tangible increases in real incomes for remote families and thus deliver myriad financial and health benefits for thousands of Aboriginal and Torres Strait Islander residents of the north. Moreover, the adoption of my proposal by NTAIC and/or IBA would mean that action is initiated much sooner on what would necessarily be a multiyear effort and would ensure that governments would eventually accept that they had the responsibility to replace roof top solar infrastructure as it reached its end of life as a normal part of social housing provision.

Of course, a potential argument against my proposal is that it implicitly means that other opportunities will not be funded. If so, I suggest that the responsibility falls to NTAIC and IBA to identify just what those higher priorities are. One way of mitigating this consequence, and simultaneously driving further strategic change aimed at underming structural inequity, would be for the NTAIC and/or IBA to seek to have the NAIF provide concessional finance to assist in financing their contributions. See my recnt post on the NAIF (link here).

Conclusion

We hear a lot about self-determination, and Indigenous leadership as the prerequisite for effective policy outcomes. It strikes me that the opportunity to drive a major upgrade of rooftop solar across remote communities presents the boards of NTAIC and of the IBA with a once in a generation fork in the road: they either take the initiative to drive strategic change or they accept that failing governments should be left to continue to fail remote Indigenous communities.

The evidence of egregious and myriad policy exclusion by governments is inexorably accumulating. It is incontrovertible that remote communities have unequal access to essential services and are at greater risk arising from energy insecurity in a warming world. Governments, and our system of politics and policy development, have failed because they design and implement exclusionary policy frameworks which treat remote community and town camp residents worse than the residents of major urban centres. In these circumstances, the NTAIC and the IBA should step up and use their undoubted financial leverage to drive strategic policy reform.

 

Further reading:

Longden, T., Quilty, S., Riley, B. et al. Energy insecurity during temperature extremes in remote Australia. Nat Energy 7, 43–54 (2022). https://doi.org/10.1038/s41560-021-00942-  (link here).

 

Solar solutions could be the key to climate-proofing homes in Aboriginal town camps By Stephanie Boltje, The Drum  (link here).

 

18 December 2024

 

Ministerial appointments in the Indigenous Australians portfolio: time for reform

 

There is a law in each well-order'd nation
To curb those raging appetites that are
Most disobedient and refractory.

Troilus and Cressida Act 2, scene 2

 

This post is assesses the recent Ministerial appointments in the Indigenous affairs portfolio, and makes a series of reform recommendations.

 

Appointments to Board positions in the Indigenous Australians portfolio generally fly under the radar. Yet, they involve the management and oversight of billions of dollars in Indigenous-directed assets, and bestow considerable power and influence, not least the power to appoint Individuals to the Boards of myriad subsidiaries of statutory corporations, which themselves control substantial financial resources. These appointments, and the actions of Boards, receive far less media attention than Ministers and senior bureaucrats. Accordingly, the appointments of Directors to government owned corporations, and the actions of those corporations, deserve far more attention than they normally receive both by the media and (dare I say) academia.

 

Perhaps the most consequential recent appointment was that of Ms Jodi Broun as CEO of the NIAA. She has a term of five years, which took effect on 14 February. The Minister’s 12 January 2022 media release provides some biographical background (link here). Broun is an experienced public servant and I expect her to make a positive and well informed contribution to the administration of NIAA and the Indigenous Australians portfolio.

 

In relation to the Indigenous Land and Sea Corporation (ILSC), the Minister has made a number of new appointments (link here, link here). Following the expiry of the term of the former Chair, Mr Eddie Fry, Mr Ian Hamm has been appointed. A Yorta Yorta man and experienced public servant, Mr Hamm’s three year term began on 1 December 2021. Also appointed were Ms Gail Reynolds-Adamson, Ms Kate Healy and Mr Nigel Browne. On 15 February, the Minister announced that Ms Kristy Masella would join the ILSC board for a three year term beginning 16 March 2022. On 7 April 2022, the Minister announced the reappointment of Mr Roy Ah-See, but did not mention the term.

 

In relation to Indigenous Business Australia (IBA), the Minister announced on 21 December 2021 the appointment of Mr Richard Callaghan from South Australia, and the reappointment of three Directors, Mr Eddie Fry (chair), Mr Rick Allert, and Ms Shirley Macpherson. The Ministers media release made no mention of the terms of appointment (link here).

 

Shortly after the Minister’s December announcement, on 21 December 2021, I published a post regarding these reappointments (link here) based on the absence of any information regarding the terms of the reappointments. Information in the Government Business Directory at the time indicated that the reappointments would expire in February 2022. In that post I focussed on a number of unanswered questions regarding serious governance issues within the ILSC Board and the Minister’s own acknowledgement of his loss of confidence in Mr Fry as Chair. It now transpires that the Government Directory entry for the IBA Board has been updated to show that the terms of appointment for the reappointed IBA Directors are not three months, but three years, ending on 17 December 2024 (link here). With regard to that eventuality, my previous post made this comment:

A more worrying possibility is that the Ministers recent announcement applies to the post February terms of the three Directors. If so, this would lock in a serious failure of good governance principles.

For the full context of this comment, I recommend readers consult my earlier post (link here) and the links included there.

 

More recently, the Minister announced the appointment of Mr Joshua Gilbert to the IBA Board (link here). While the media release makes no mention of the term, the Government Directory indicates it is a three year term.

 

The Minister has also made a number of other recent statutory appointments. Ms Vonda Malone has been appointed as CEO of the Torres Strait Regional Authority (link here), Ms Tricia Stroud has been appointed as Registrar of Indigenous Corporations (link here), perhaps the key regulatory appointment in the Indigenous Australians portfolio. The Minister also announced the appointment of Mrs Suzanne Hullick and Mr Justin Ryan to the Interim Board of the Northern Territory Aboriginal Investment Corporation on 6 April 2022 (link here). For a discussion of some of the risks facing this new corporations, see my earlier November 2021 post (link here).

 

Other recent non-statutory appointments made include Ms Fiona Cornforth and Ms Catherine Liddle as co-chairs of the Indigenous Expert Group guiding the implementation of Supporting Healing for Families (link here) and the reappointment of Mr Daniel Bourchier to the Board of Outback Stores (link here).  The Government also announced the appointments of Ms Gina Castelaine and Ms Cara Peek, two new members of the revamped Indigenous Reference Group on Northern Australia, on 24 December 2021 (link here). This body has recently been renewed by Minister Littleproud after it was effectively sidelined by Minister Pitt. To date, there has been no critical assessment of the success or otherwise of the IRG in advancing the interests of Indigenous Australians within the Government’s Northern Australia policies. The processes for the appointment of members of the IRG are particularly opaque, it not even being clear which Minister makes the appointments, and which portfolio is responsible for taking any policy recommendations forward.

 

Discussion

 

Given the number of Ministerial appointments, the significance of the bodies they are charged with managing, and the powers bestowed on Boards to appoint Directors to subsidiaries of Commonwealth corporations, the information provided by governments should be much more extensive and accessible than it is.

 

There is no requirement for a Minister to announce appointments, and as is apparent from a close reading of Minister Wyatt’s announcements, there is no requirement for the Minister to identify the term of the appointments, nor the basis of appointments (merit based selection process or ministerial selection). Nor is there any requirement for the Minister (or appointees) to publicly identify potential conflicts of interest nor to explain how they are to be managed. The quality of transparency in relation to the management of portfolio bodies is underwhelming, and contributes to the creation of an environment where the public interest can be set aside in favour of political agendas and machinations.

 

Issues that I would point to as potential or actual issues of concern in the Indigenous Australians portfolio include:

·         attempts to co-opt Boards to ensure that they will give favourable consideration to Ministers’ views and wishes;

·         attempts to stymie future governments’ capacity to bring new expertise or skills onto Boards; or to build in a level of internal conflict beyond a Ministers term of office to ensure a continuity of policy;

·         the use of appointments as rewards; and

·         making appointments that assist in moderating the capacity of key intermediary organisations to exercise truly independent judgment on issues that may come before the intermediary in the future. 

 

I have necessarily articulated these issues at an abstract level, and note that they often involve what might be termed preparatory moves by a minister akin to a general positioning troops on high ground in advance of a possible battle. In other words, they involve strategic political management and do not necessarily involve inappropriate action. Nonetheless, to the extent that they occur, they are highly likely to be inconsistent with the public interest.

 

A particular issue of more serious concern is the reappointment of Mr Fry to the IBA without any explanation from the Minister in regard to his previous loss of confidence in him at the ILSC, and without any formal response being published to the recommendations of the Thom report. This report commissioned by the Minister only came to light as a result of an FOI request. The previous ILSC Board had also lost confidence in Mr Fry (expressing a formal lack of confidence in his leadership on a number of occasions). Adding to the aberrant sense of distorted reality around the Minister’s decisions regarding the ILSC and Mr Fry was the Minister’s decision to reappoint Mr Ah See, — one of those ILSC Board members who had expressed deep concern with Mr Fry’s governance approach — to the ILSC Board. Mr Ah-See is widely respected in Government circles and was a former co-chair of the Prime Minister’s Advisory Council under the current Government (link here). Rather than setting a benchmark for standards of governance in the portfolio, the Minister seems to be having a bet each way. The real issue here is this: is the Minister focussing on the wider public interest, or has he cobbled together a shabby compromise due to pressure from deeper political forces in play protecting Mr Fry? My money is on the latter. 

 

Other issues raised by these appointments include the overlap between government activities in general and the appointments of some individuals. For example, Mr Bourchier is an ABC journalist, and Ms Kate Healy is a partner in PwC’s Indigenous consulting arm. Both of these organisations can be expected to have dealings of one sort or another with the Minister and his portfolio. While both individuals appear eminently qualified for their appointed roles and it seems unlikely that either individual would place themselves in a position of actual or potential conflict of interest, there is a risk that the Government is attempting to exercise a more nuanced form of influence directed to subtly encouraging a pro-government attitude in matters of a general nature within both the ABC and PwC Indigenous Consulting.

 

At a more systemic level, the lack of diversity in appointments suggests the risk of governance failures is built into the present selection processes.  The current Government appears to have made many appointment decisions that suggest a process of churn has been underway from within a small group of appointees, By 2025, Mr Fry and Mr Allert will each have had in excess of ten years as remunerated appointees on the IBA, ILSC, and various Commonwealth subsidiaries such as Voyages Pty Ltd. Ms Reynolds-Adamson was previously a Director of IBA for eight years from 2006 to 2014. Mr Joseph Elu who (understandably in my view) resigned from the ILSC in the middle of its governance issues (clear evidence of the cost of the dysfunction) had previously been Chair of the IBA for 11 years. Mr Ah-See had been a Director on the IBA before being appointed to the ILSC. Ms Shirley Macpherson was previously a longstanding Chair of the Aboriginal Development Commission (forerunner of IBA), a longstanding Chair of the ILC (forerunner of the ILSC), and is now a member of the IBA Board. By 2025, she will likely have accumulated around thirty years on key Boards in the Indigenous portfolio. Taken together, this accumulation of repeated appointments suggests an extremely serious level of insularity and resistance to bringing in fresh talent. It is no wonder that the ILSC experienced the internal crisis of governance discussed above.

 

To be clear, I am not suggesting that the individuals appointed are necessarily unqualified, nor that this is an issue limited to the present Government. Lax selection processes have an inbuilt tendency to encourage Ministers to re-appoint from within a small select group of potential appointees. I am suggesting, however, that this is a real issue, and that it is unacknowledged and under-recognised. To the extent that poor governance is the result, Indigenous Australians are the losers.

 

So what are the solutions?

 

Listed below are some high level ideas that would in my view improve the systemic quality of corporate governance within the portfolio bodies across the Indigenous Australians portfolio. While I am under no illusions that governments of any stripe will be attracted to reforms of this kind, I do consider that these are issues that the Coalition of Peaks, and the yet to be established Indigenous Voice might take up and prosecute.

 

First, there is a need for the establishment of a legislated multi-partisan/independent selection committees that proposes a merit based short list to the minister for each vacancy on the Board of a portfolio body. The process used for the ABC (link here), and largely ignored by recent Prime Ministers, is one potential model.

 

Second, I would go further and propose that any legislation should provide that where Ministers ignore an independent selection committee shortlist in making an appointment, the nominee should be required to stand down with a change of government.

 

Third, there should be a legislated requirement in the First Nations portfolio for the NIAA to maintain a current, comprehensive and publicly available register in one location on its web site of all Ministerial appointments and re-appointments to portfolio bodies over the previous twenty years. Further, when Directors are listed, a footnote should list all prior appointments within the portfolio (and in related portfolios e.g. Indigenous health). A separate register of short Director biographies should be linked to the main register.

 

Fourth, there is an urgent need for much greater transparency over the appointments of Directors to subsidiaries of Commonwealth statutory corporations, their terms and remuneration, and any identified potential conflicts of interest. Indeed, these appointees should be included within the register recommended above. Further, there is a need for much greater financial transparency over these entities. To mention just one example, they are Commonwealth owned bodies, yet access to their accounts is only available from ASIC upon the payment of a fee. Indigenous Australians in particular deserve to have full access to this information without a fee. This could be achieved by a requirement that all documents with ASIC should also be made available on the relevant websites.

 

Fifth, an independent body such as the Law Reform Commission should be tasked to undertake a short and sharp inquiry with public submissions to draw out any other reforms that might be required to appointments processes for portfolio bodies in the Indigenous Australians portfolio.

 

Finally, I would note that one of the reasons for improving the quality of governance in key portfolio bodies such as the ILSC and IBA in particular is that it is clear to me that their shelf life as statutory corporations within the Australian government system is within one or two decades of coming to an end. In a chapter in a recent book on Self Determination (link here), I argued the case for transitioning these bodies into a form of First Nations ownership and control. Amongst the key preconditions for such a process is to ensure that they have been governed effectively in the periods leading up to such a transition, and that their Boards are truly governing these corporations in the interests of First Nations rather than facilitating the political machinations of Governments. Any such transition will be complex and will require careful planning from within the existing corporations. In turn, this will require Boards that are prepared to think long term, and undertake the hard work of persuading governments of the potential benefits of giving up control of these key institutions.

 

Unfortunately, I have very little confidence that Australian governments, present and future, or the current Boards in the Indigenous Australians portfolio would bring the level of vision required to even start this process, let alone bring it to a constructive conclusion. This is why Board selection processes are strategically important for First Nations interests, and why the Coalition of Peaks and the future Voice should work together to persuade the Australian Government to change these processes for the better.

 

IBA appointments: More questions than answers

 

The Minister for Indigenous Australians has this week announced new appointments to the Board of Indigenous Business Australia (IBA) (link here). There is only a single new appointment, Mr Rick Callaghan (link here). On its face, this appears to be a sensible appointment of a qualified and experienced Director.

 

The Minister has announced the reappointment of the Chair Mr Eddie Fry and two other existing Directors. The Minister’s media release omits mention of the terms of the new appointments, but notes that each of the three re-appointees have been on the IBA Board sine 2014.

 

There are a number of intriguing issues at play here. Good governance principles would normally dictate that after seven years, there would be significant  rejuvenation of the Board. This might particularly apply to the Chair, not least as the Minister previously expressed a lack of confidence in him in relation to his chairmanship at the ILSC (link here). Mr Fry was recently replaced as Chair of the ILSC (link here). The Minister has never explained how it was that Mr Fry lost his confidence as the ILSC Chair, but was able to stay on for the best part of a year as Chair of ILSC and has now been reappointed as IBA Chair.

 

Second, the IBA page on the Government’s online directory (directory.gov.au) lists IBA’s Directors and their terms. In relation to the three reappointments, the Directory includes start dates of 1 December 2021 and end dates of 28 February 2022. The page indicates that it was last updated on 25 October, but that may be an error. In any case, it appears that the three reappointments are for only three months.

 

So what might be the explanation for this ?

 

Perhaps the Minister’s reluctance to mention the appointment terms stems from a concern that by announcing what are clearly interim arrangements, it might suggest that he has been unable to obtain Cabinet approval for his preferred choices, and thus lacks influence within the Government.

 

An alternative , and more cynical, explanation might be that the Government is determined to make new appointments before the election that extend through the term of a potential new Labor Government.

 

A third explanation might be that the Minister just didn’t get his act together in time to make new appointments and was forced into making interim appointments.

 

None of these explanations reflect well on the Minister and has administration of the portfolio. It would have been better if the Minister took interested citizens into his confidence and provided a fuller explanation for his decisions.

 

A more worrying possibility is that the Ministers recent announcement applies to the post February terms of the three Directors. If so, this would lock in a serious failure of good governance principles.

 

Finally, the fact that the Minister has left us unclear as to what he has actually done, while purporting to keep us informed of his actions, reflects poorly on his commitment to open government and the highest quality of public administration.

 

The deeper issue that underlies the process of appointments to statutory offices within the Indigenous Australians portfolio (and no doubt beyond) is the increasing levels of politicisation of appointments.

 

It is time that the Parliament stepped up and legislate for much more transparency around the basis for appointments. The fiasco within the Board of the ILSC over the past two years (link here and link here) demonstrates unequivocally that the present system is broken. These most recent interim appointments confirm that conclusion. In particular, while there is a case for Ministerial decision making, there is a need for the establishment of multi-partisan/independent selection committees that propose a merit based short list to the minister for each vacancy. The process used for the ABC (link here) and largely ignored by recent Prime Ministers is one potential model. I would go further and propose that where Ministers ignore an independent selection committee shortlist, their nominees should stand down with a change of government.

 

Statutory corporations such as IBA are given independent remits for a reason. Governments should not be able to control their activities by default through informal influence over appointments.

 

 

 

 

Governance disorder within the ILSC

 

Shame and confusion! All is on the rout:

Fear frames disorder, and disorder wounds

Where it should guard.

2 Henry VI, Act 5, scene 2.

 

The Indigenous Land and Sea Corporation (ILSC) recently published on its FOI disclosure log an extensive cache of documents related to the communications between the ILSC Board and its Directors and the Minister over the past two years (link here); [see FOI cache #19]. Running to 121 documents and 460 pages, not always chronologically ordered, they are not a particularly accessible resource.

 

The documents portray a fascinating internal battle within the Board over the future direction of the ILSC, and its subsidiary corporations. A superficial and selective reading would concentrate solely on the admittedly mesmerising cut and thrust between strong personalities and their efforts to induce the minister to intervene in their favour. While the personal political aspirations and motivations of the individuals involved are inevitably key drivers of the events portrayed, such a reading would gloss over the important underlying policy issues at stake for the ILSC, and also Indigenous Business Australia (IBA).

 

The ILSC and IBA are arguably the two largest and most important statutory corporations in the Indigenous Australians portfolio. Each has formal independence from ministerial direction, have significant budgetary independence, and are endowed with powers to operate commercial businesses. These statutory attributes mean that it is extremely important that both organisations are subject to proactive regulation by the Minister and the Department of Finance (they are PGPA Act organisations), and that their activities are transparent and accountable vis a vis First Nations communities.

 

While the ILSC and IBA are complementary in many respects, they have fundamentally different histories and underlying mandates. In particular, IBA was established to support and engage strategically on behalf of First Nations communities in commercial and economic business activities, whereas the ILSC was established in the wake of the passage of the Native Title Act 1993 to provide some measure of compensation for the prior dispossession of First Nations peoples. See my chapter ‘Unmet Potential’ in the recent monograph edited by Rademaker and Rowse (2020) Indigenous Self-determination in Australia (link here) for a more detailed history of these two organisations.

 

Turning to the document cache released recently, at least five separate but related issue threads can be discerned.

 

The first thread relates generally to the issue of the quantum of debt carried by the ILSC primarily due the purchase of the Ayers Rock Resort (ARR) and more particularly to the NAIF loan for the upgrade of the Yulara airport servicing Voyages Ayers Rock Resort (ARR). Voyages is a wholly owned subsidiary of the ILSC, and has a problematic history since its acquisition in 2010 of ARR at an inflated valuation (link here and link here). I have posted a separate analysis of the NAIF issue thread in this related post (link here). The issue of the ILSC’s ongoing debt management challenges, particularly following the onset of the pandemic, is beyond the scope of this post.

 

Second is the internal ILSC argument over whether ILSC Directors should sit on subsidiary Boards. For well over ten years, this has been the practice within the ILSC, the main objective being to assure alignment between the ILSC and its various subsidiaries. The current Chair sought to change this practice in May 2020 when seeking Board support for a set of principles embedded within a wide-ranging proposal for a structural transformation of ILSC operations (FOI document 78). The underlying rationale for this proposal is not entirely clear, but it would seem to be both a means of strengthening the Chair’s personal control over the operations of the ILSC current subsidiaries, and into the future, reducing the level of operational control by the Board over a key element of the Chair’s transformation proposal.

 

A third issue thread (intertwined with thread two) has been the unilateral approach adopted by the Chair on various key policy issues, most notably his proposed transformation of the ILSC structure, and the reaction engendered within the Board. This culminated in the meeting of 7 May 2020, variously described by one Director as ‘really robust’, ‘heated’ and ‘quite fiery’, and by others as involving ‘constant berating’, ‘excessive berating and bullying’, ‘aggressive badgering’ and so on (Thom review, p.24, FOI document 99). The complainants argued that the meeting involved inappropriate pressure on Board members by the Chair, where a set of policy principles proposed by the Chair at short notice (including the subsidiary issue described above) were considered. The Board split 4/3 to vote down the Chair’s proposals, and passed a resolution of no confidence in him, before exiting the meeting and removing the quorum. It is worth noting the background and experience of the disenchanted Directors (for want of a better term). Roy Ah See is a former chair of the Prime Minister’s Indigenous Advisory Council. Patricia Crossin is a former longstanding NT Senator. Dr Donna Odegaard is Co-Chair of the Minister Wyatt’s National Codesign Group considering an Indigenous voice (link here) and a member of the Indigenous Reference Group on Northern Development (link here). Bruce Martin is a former member of the Prime Minister’s Advisory Council and a member of the expert panel for Minister Ley’s Environment Review (link here). The obvious point is that all of these Directors are experienced and highly regarded individuals within government circles.

 

There followed a spate of letters to the Minister from the Chair (FOI documents 56, 57A, 57B,58, 59, 63, 64)and the disenchanted Directors (FOI documents 111,114, 117). The disenchanted Directors sought to have the Minister take action to curb the Chair’s unilateralist propensities and implicitly made the case to have him removed for misbehaviour (one of the grounds for removing a Director under the ILSC legislation). The Chair sought to have the Minister replace two Directors immediately and a third later, in the process making a series of allegations regarding their conduct as DIrectors (FOI documents 57A, 57B, 58, 69 and 71). The Minister responded cautiously, initially by requesting the Chair to temporarily stand aside to allow his Deputy to chair a meeting to progress necessary business, including related to the ILSC’s internal budget. That meeting took place, a second resolution of no confidence in the Chair was passed, and the disenchanted Directors again removed the quorum. The following day, the Deputy Chair resigned, apparently keen to distance himself from what had come to pass. His letter of resignation (FOI document 104) is significant for its understatement (‘…considering the recent events at the ILSC and my having served on Boards dealing with Indigenous matters from over 25 years’). As well, he reveals that there had been no contact from the Minister or his agency in relation to the expiry of his original term, a matter that should be seen at best as bad form, and given the circumstances, perhaps incompetence. ILSC Directors’ terms are ongoing until a replacement is appointed.

 

Following this second motion of no confidence, on 9 July 2020 Minister Wyatt appointed an independent investigator, Dr Vivienne Thom, to review the situation. Dr Thom’s report (FOI document 99) was completed on 25 August 2020, and provided to ILSC Directors on 12 October 2020. The Minister sought responses by 4 November.

 

Dr Thom’s report goes a long way to disentangling the issues, but she does not make findings that would require a minister to take action. Nevertheless, it is clear from a close reading of the report that she was not persuaded that the Chair’s policy approach was the best course for the ILSC. She made ten recommendations, including a recommendation that the Board should clarify and document the role and powers of the ILSC Chairperson in relation to governance of ILSC subsidiaries (rec.3). In relation to the Minister, her sole recommendation was:

The Minister could consider using processes including public advertising or the use of executive search processes independently of the ILSC Board to help ensure appointments are drawn form the best possible field of candidates (recommendation 8).

 

The key point here is the focus on the quality of Board appointments, including their capacity for collaborative contributions. There is a very faint implication that the Minister responsible for the composition of the current Board (Minister Scullion) did not ensure his appointments were drawn from the best possible field of candidates. While unstated, it is widely recognised in corporate governance circles that a core responsibility of the Chairperson is to ensure that the Board develops a collaborative culture. This is clearly not the case at the ILSC at present.

 

The fourth issue thread has been the intense and heated battle within the Board over the role and effective allegiance of the CEO, That is, does he /she report to the Board or the Chair? This issue arose during the ILSC’s slow, convoluted and fraught process to fill the position substantively after the previous CEO resigned 14 months ago. This led to a (contested) Board decision to remove one acting CEO, Mr Bator, at the 7 May Board meeting, apparently because he was seen as working to the Chair’s directions and not necessarily in accordance with the Board’s decisions. Mr Bator had headed the ILSC Strategic Reform Unit that developed the Chair’s proposed transformation agenda, and returned there after being stood down as CEO. As time wore on, the documents indicate that the Minister became increasingly exercised at the failure to appoint a substantive CEO. The position has recently been filled when the Board recommended, and the Minister endorsed, the appointment of Mr Joe Morrison (link here). If the conflict within the Board is not resolved soon, Mr Morrison may find himself in an increasingly untenable position.

 

Finally, a fifth less obvious but crucial thread runs through the released FOI documents, namely, the extent to which relevant ministers have exercised their regulatory oversight responsibilities (broadly defined) in relation to a key portfolio agency. Thus, for example, Minister Scullion’s Board appointments appear to have been designed to ensure the Board’s acquiescence in his political agenda (see the NAIF post link here). Even the appointment of Ms Patricia Crossin, a former Labor Senator from the NT who lost her preselection in acrimonious circumstances appears designed to simultaneously demonstrate an apparent apolitical or bipartisan appointments process, while giving a metaphorical ‘up yours’ to the Labor Party, and particularly the NT Labor Party, remembering Minister Scullion was an NT Senator.

 

Similarly, it is unclear what action (if any) Minister Wyatt has taken since receiving the Thom report and the requested comments in response from Directors. The levels of distrust and antipathy amongst ILSC Directors were clearly very high, described by one Director as ‘untenable’, and this will inevitably affect adversely the overall performance of the corporation in fulfilling its core mandate. As Dr Thom notes (p.5):

The future of the ILSC will to a large extent depend upon the quality and performance of its Board.

 

Notwithstanding the risk, there is no indication of any ministerial action to date.

 

Moreover, notwithstanding recommendation 8 in the Thom report, it seems unlikely that Minister Wyatt (or Cabinet more generally since all these decisions go to Cabinet) will truly open up Board appointments in the Indigenous affairs portfolio. The former ILC Board chaired by Dawn Casey proposed amendments to the legislation providing for an independent and multi-partisan Board appointments panel to be established from which ministers would choose ILSC Board Directors. The proposal sank without trace.

 

Analysis and implications

 

The ILSC is clearly facing a complex array of governance challenges. The Thom Review adverts obliquely to many of the most important issues, but adroitly sidesteps making findings that would require or even encourage the Minister to act. Thus she focuses on the conduct of the Chairperson in one meeting on 7 May, and in particular whether his actions amounted to bullying, clears him of misbehaviour warranting dismissal, but notes that

…it would be open to a decision-maker to conclude, on the balance of probabilities, that Mr Fry’s conduct has breached the ILSC’s Code of Conduct. It is not, however, within the power of this review to make such a finding. That is a decision for the ILSC Board.

 

This is well and good. But the real issue to my mind is whether Mr Fry has fulfilled the role of Chairperson of a major statutory corporation to an adequate standard. By apparently sidelining the Board, and adopting a unilateral approach to managing the corporation and its subsidiaries, and by unilaterally driving the development of an ambitious and arguably radical transformation agenda for the ILSC, he has lost the support of his Board. The concern that he relies on selected loyalists (subsidiary Board appointees and ILSC staff) to advance his management agenda, if true, is inconsistent with widely accepted corporate governance principles. The deep levels of concern amongst not one, but four experienced Directors, suggest something has been seriously amiss. The Thom report considers multiple issues where the reviewer effectively questions the decisions taken by the Chair, and implicitly sides with the disenchanted Directors, but she does not make formal findings nor recommendations regarding these specific issues. In effect, she has provided a report that might be used to justify a non-interventionist approach by the Minister, or could be packaged up to justify action to encourage the Chair to move on, or in a last resort, to support, albeit indirectly, a case of misbehaviour warranting dismissal against him.

 

My assessment (for what it is worth) is that the Minister’s preference is to avoid intervening overtly, and to hope that the ILSC Board will settle down and not erupt into further open conflict before he has a chance to appoint a new Chairperson in November 2021 when Mr Fry’s term expires. While such a strategy may well be the most politically attractive, it will not ensure in the interim that the ILSC is fulfilling its statutory mandate in the interests of First Nations.

 

The Minister’s substantive options are limited. He could replace the two directors whose terms have expired and fill the vacancy created by the Deputy Chair’s resignation. This would implicitly back Mr Fry’s approach. Under the ILSC legislation, Directors remain in place until replaced. Unless any new Directors were entirely supine, their appointment would place them in an extremely invidious position.

 

Alternatively, he could encourage Mr Fry to step down, or seek to remove him for misbehaviour.

 

Of course, there may be scope for some more informal compromises to be worked out, but the Minister surely owes the wider community an explanation of how he is addressing the issues that have arisen.

 

At a deeper level, it is apparent that the strategy adopted by former Minister Scullion of effectively seeking to amalgamate the IBA and the ILSC via the use of numerous shared Directors was misconceived. It ignored the fundamental differences between the two corporations’ statutory mandates, and viewed their operations through a prism privileging private sector perspectives and commercial development at all costs. This strategy has failed. It also raises significant questions regarding the internal workings of the IBA, an organisation that Mr Fry also chairs and appears to dominate in ways he has failed to achieve in the ILSC.

 

The available evidence suggests that central to the relationship between the current Government and the ILSC (and IBA) is an implicit understanding that the Government would apply light touch regulatory oversight, turning a blind eye to poor governance (see for example this post), and providing corporate welfare when required (for example, the $65m bailout loan from the Commonwealth in 2016). In return, the ILSC adopts an acquiescent attitude in relation to the Government’s Indigenous affairs policies, for example as outlined in the NAIF post (link here), and provides an underlying flow of initiatives creating an appearance of government action. One example is the joint MOU between NAIF and the ILSC and IBA (link here).

 

In turn, it seems that the light levels of regulatory and policy oversight have allowed idiosyncratic policies to be pursued without any (let alone adequate) discussion with the wider Indigenous community. I have in mind here the Chair’s ambitious transformation agenda discussed above.

 

It is time that Ministers and the ILSC committed to a more open approach to managing the ILSC’s activities and to explaining the key financial and policy parameters and strategic choices that underpin the ILSC’s operations to First Nations citizens and the wider community.  

 

The ILSC is a valuable organisation, with the potential to make a larger contribution than it has. However, by placing politics ahead of policy, particularly in its Board appointments, the Government has placed all this at risk. By allowing disorder to continue within the ILSC Board, and failing to address the issues openly, Minister Wyatt is exacerbating that risk.

 

 

Disclosure: Given the topic of this post, I should disclose that I served as CEO of the Indigenous Land Corporation (ILC) from 2013 to 2015, and while working in the Prime Minister’s Department was involved in developing the legislation for the ILC in the mid-1990s.