Pause for thought: the ILSC sale of the Ayers Rock Resort

                               [Go] Wisely and slow; they stumble that run fast

Romeo and Juliet, Act two, Scene three

 

The ILSC has now finalised the sale of the Ayers Rock Resort (ARR). According to this week’s media release (link here):

The Indigenous Land and Sea Corporation (“ILSC”) is pleased to announce, the successful completion of the sale of its subsidiary, Voyages Indigenous Tourism Australia Pty Ltd (“Voyages”), operator of Ayers Rock Resort at Yulara and Mossman Gorge Cultural Centre (MGCC) in Far North Queensland to Journey Beyond, effective 27 February 2026.

The ILSC announced the agreement for the sale in December 2025. The media release (link here) outlines the broad structure of the sale agreement that has now been finalised and is worth reading in full. The purchaser, Journey Beyond, issued a shorter media release at the same time (link here). The sale encompasses two separate Voyages operations / assets, the ARR and the Mossman Gorge Cultural Centre (MGCC) in North Queensland. This post focusses on the ARR which is the largest element of the transaction.

The key elements of the transaction are laid out in the ILSC media release announcing the sale. I recommend reading the full media release, but key elements include:

[The agreement] …is to be completed by the sale of the shares in Voyages currently held by the ILSC and is the first in a series of transactions that will, once completed, formalise the transfer of land and buildings at both sites for the benefit of the respective Traditional Owners;  Anangu  Pitjantjatjara Yankunytjatjara of Yulara and the Kuku Yalanji of Mossman Gorge.

The new partnerships between the Traditional Owners and Journey Beyond will bring significant ongoing economic benefits to Indigenous communities at Yulara and Mossman Gorge. Later, following the transfer of land to the Community corporations, both communities will be paid rent from Journey Beyond’s leasing of the sites under 90 and 10 year leases respectively….

… The sale agreement between the ILSC and Journey Beyond will only pass control of the operational assets of Voyages to Journey Beyond. Land and buildings at Yulara and Mossman Gorge will ultimately be transferred to the appropriate Community corporations representative of the relevant Traditional Owners. The ultimate transfer at Yulara will mark the largest single return of land to Traditional Owners in the ILSC’s history in terms of both value and area.

For those interested in understanding of the detail involved in the transaction, the discussion in the Senate Estimates Committee hearing on 10 February 2026 is essential reading (link here). The ILSC discussion is at pages 12 to 18. It is, in my view, one of the best examples I’ve seen in recent years of how an Estimates Committee discussion can add value. I should also add that the design and structure of the transaction is clearly commercially sophisticated, highly innovative and in some respects counterintuitive. For those interested in reading my own comparatively simplistic 2021 prospective analysis, I refer you to this previous post (link here).

The Estimates Hearing transcript covers issues such whether the ARR transaction clears the outstanding ILSC debt (it does); the transition process before finalisation of the divestment of the underlying land, infrastructure obligations after divestment, the impact of ongoing native title claims, the future of the National Indigenous Training Academy that operates from Yulara (it will continue), the cost of the consultants used in the transaction, and the major achievements of the ILSC over its almost thirty year history. On this latter point, the ILSC CEO Joe Morrison noted the size and significance of the Yulara divestments and pointed to a recently released web summary (link here). The media release celebrating the 30^th anniversary noted that the ILSC had over its history  invested more than $1.48 billion through 323 acquisition projects and 1,052 management projects which delivered cultural revitalisation, economic development, environmental stewardship, and social connections (link here).  

There is absolutely no doubt that over its thirty-year lifespan the ILSC has much to celebrate, and much has been achieved.

As Mr Morrison suggests in his Senate Estimates evidence, the ARR transaction and its concomitant divestment represents an enormous outcome for the traditional owners insofar as they and their descendants will gain ownership over land which they failed to obtain in an earlier native title claim and yet is of enormous significance to them.

Balanced against this and not mentioned in any of the discussions of the sale has been the enormous costs of the initial decision to purchase the ARR in 2010.

In 2020, in an academic volume focussed on Indigenous self-determination (link here), I wrote about the challenges facing the ILC (as it then was) and inter alia identified the ARR acquisition as one of two major strategic mistakes made by the ILC over its life (the other was its retreat from assisting pastoral enterprises across northern Australia):

…  the architects of the ILC’s initial and amended legislation intended that any subsidiaries would work in partnership with Indigenous groups of landowners.

 The most egregious example of the ILC’s misplaced confidence in operating unilaterally via its subsidiaries has been the $300m acquisition of the ARR. The ILC paid a price above commercial valuation for this asset and borrowed significant sums to finance the acquisition. Servicing this debt has effectively crippled the ILC’s ability to fulfil its primary legislative remit. Even if the ARR eventually becomes commercially successful, and the ILC’s outstanding bank borrowings are repaid, there will have been an effective 20-year hiatus in land acquisition and management across the nation, with all the opportunity costs which that entails.

I do not have the space to recount the details of the political and policy conflicts that emerged following the original acquisition, but this article (link here) from The Saturday Paper in August 2015 titled Fresh calls for inquiry into Ayers Rock Resort purchase provides a sense of the issues in play.

A Question on Notice from Senator David Pocock following an Estimates Hearing in December 2025 requested advice on the sale price negotiated with Journey Beyond and information on the accumulated net profit of loss arising form ownership of the ARR from 2011 through to the present, as well as the accumulated capital expenditure invested in the asset over the same period.

The answers provided (QoN 1820: link here) are eye watering. The answer does provide several caveats that aim to dissuade those inclined to make simplistic comparisons, and argues such comparisons are problematic. For example, the current transaction is for the shareholding in Voyages held by the ILSC and not the asset per se, some existing loan liabilities remain in Voyages and are taken into account in the sale process, and of course the price paid by Journey Beyond excludes any freehold land acquired by Voyages which the ILSC note has been independently valued at $215m; a valuation that I find questionable, but which is somewhat moot insofar as the land will likely never be sold as it will be transferred to the traditional owners when the land is divested.

The answer goes on to provide the information requested. The purchase price payable to the ILSC by Journey Beyond for Voyages is $123.5m. This will allow the ILSC to repay external debt currently recorded at $122.4m. The ILSC is left with $1.1m cash in hand.

The accumulated net loss over the fifteen years of ILSC ownership was just under $101m, and the accumulated capital expenditure on the asset over the period was $250.5m. Much if not most of this capital expenditure was sourced from the ILSC. These are nominal figures and thus do not reflect the real value of the losses and expenditures in 2026 dollars. It is unclear whether the costs of negotiating the transaction are included in these figures; in an answer to a Question on Notice from Senator Liddle, (QoN NIAA 1766: link here), the ILSC advise that the total costs of negotiating the transaction were $15m, including $13m for consultants and professional costs.

The bottom line here is that over the 16 years since the ARR was acquired, the ILC put up $300m; lost a further $100m, expended $250m in capital expenditure and has been left with $1m in the bank. The net cost of the acquisition to the ILSC over the sixteen years was $650m but is likely closer to $700m in 2026 dollars.

While the enormous financial costs of this investment will be offset by the divestment of the land involved to its traditional owners, this is not what drove the initial decision in 2010, and nor would the ILSC today likely make a similar investment for any other First Nations community. The valuation of $215m for the land involved is a benefit for the APY traditional owners but does not mitigate the financial losses (and concomitant constraints on new activities) carried by the ILSC.

We can contextualise this by remembering the Land Fund was established by the Keating Government following the passage of the Native Title Act in recognition of the fact that based on the High Court decision in Mabo No.2, much of settled Australia would not be subject to claim given that native title would have been extinguished by grants from the Crown. The fund was appropriated on ten years and totalled $1.4bn. The Fund has since grown to $2.43bn, and under a legislated formula a varying amount (initially designed to maintain the Fund in perpetuity) currently provides for a drawdown of around $65m per annum to fund the operations of the ILSC. In other words, the losses involved in the ARR acquisition amount to almost one third of the total amount set aside nationally in perpetuity as a compensatory mechanism to acknowledge the limits of the High Court’s decision in Mabo.

This framing also suggests that the Land Fund corpus, notwithstanding being very substantial and historically unprecedented, was fundamentally inadequate from the start, but that is a subject for a different discussion.

The real cost of the acquisition of the ARR however is not the financial losses, but the opportunity costs which fell (and continues to fall) directly upon numerous — unknowing — Indigenous groups which meant that very many land acquisition and land management projects across the nation were unable to be funded. Or to put it another way, the very considerable achievements of the ILSC over the past thirty years, and particularly the last 15 years, would have been considerably and tangibly greater had the then ILC Board not decided to ignore the written warnings of then Ministers Wong and Macklin, and locked in a decision to proceed with the purchase of the asset in the lead up to an election that many expected the Labor Government to lose.

The ILC decision in 2010 benefited the former owners of the Ayers Rock Resort (as it dug them out of a hole with a premium price), and indirectly the NT Government which had invested millions in Yulara. It solved an expected problem for the NT Senator who expected to be Minister for Indigenous Affairs within months and was contemplating the potential insolvency of the most significant tourism enterprise in his electorate.

The current ILSC Board and staff have in my view pulled off a major achievement in finalising this transaction. They deserve all the accolades that come their way. I am not at all critical of the choices and decisions that they have made. They have drawn a line that staunches ongoing losses, and in effect have achieved a positive (or perhaps least negative) outcome from a potentially disastrous starting position not of their making.

However, while I understand the desire to place the most positive spin on this possible, there are serious lessons that should be considered and remembered. Foremost among them is the Government’s comparatively recent pivot towards Indigenous economic empowerment (link here) thus legitimising widely held expectations that commercial investments are the panacea for Indigenous disadvantage.

The ILC Board which decided to purchase the ARR in October 2010 was not short of commercial acumen and expertise, but they allowed hubris and perhaps encouragement from political quarters in the Northern Territory to blind them to the risks involved. And the risks of any commercial investments are always considerable and often enormous. Some investments succeed, some spectacularly, but many fail. The ARR acquisition failed spectacularly. Strong governance, strong risk management, and an ability to identify challenges as well as opportunities are the key to sustained commercial success. Moreover, every decision to invest in a commercial opportunity represents not just a decision not to invest in an alternative commercial opportunity, but a decision not to invest in a social or cultural investment such as improved healthcare, improved education, or language maintenance. In my view, particularly when legitimised by government, these lessons too often run the risk of being ignored or underappreciated.

For Commonwealth Ministers, and their bureaucratic advisers in Treasury, Finance, NIAA and PMC, and the Opposition Shadow Ministers who aspire to one day sit on the Treasury benches, and indeed anyone else inclined to uncritically promote Indigenous economic empowerment as a policy panacea, the history of the acquisition, operation and sale of the Ayers Rock Resort should give pause for thought.

 

6 March 2026

 

Declaration of interest: I was an officer in PMC involved in oversight of the drafting of the ILC legislation in 1994-5; an adviser to Minister Macklin in 2010 when the ARR was purchased by the ILC; and was the CEO of the ILC for a number of years in the period 2013-2015.

How effective is the Commonwealth’s Indigenous Procurement Policy?

My mind misgives

Some consequence yet hanging in the stars.

Romeo and Juliet Act one, Scene four.

 

The ANAO has just released a performance audit (link here) with the unwieldy and somewhat opaque title Targets for Minimum Indigenous Employment or Supply Use in Major Australian Government Procurements — Follow-up. This audit deals with the ongoing management of the Indigenous Procurement Policy, which is invariably cited by Commonwealth Governments as a crucial and successful element in its policy approach in relation to Indigenous Australians.

In this post I focus on NIAA’s management of the Indigenous Procurement Policy (IPP), a central plank in the Government strengthening focus on Indigenous economic empowerment (link here).

I previously published posts on the IPP which assessed its performance in positive terms while warning against over-reliance on the single minded focus on commercial businesses as the core of economic development policy (link here and link here).

Here are some key quotes from the ANAO’s report (paragraph numbers are from the Report; footnotes have been removed; emphasis added):

            Background

2. The Indigenous Procurement Policy (IPP) was established in 2015 with the objective ‘to stimulate Indigenous entrepreneurship, business and economic development, providing Indigenous Australians with more opportunities to participate in the economy’. One of three elements of the IPP are the mandatory minimum requirements (MMRs), which are targets for minimum Indigenous employment and/or supply use for Australian Government contracts valued from $7.5 million in certain specified industries.  The National Indigenous Australians Agency (NIAA) is responsible for administering the IPP, including the MMRs….

Conclusion

… 9. Almost five years after the recommendations were agreed to, entities had partly implemented recommendations from Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements. Although the NIAA had improved guidance for entities and sought to increase MMR reporting compliance, a recommendation for the NIAA as the policy owner to implement an evaluation strategy was not completed. The NIAA has not demonstrated whether the MMRs are improving Indigenous economic participation. A risk related to the inappropriate use of exemptions was not managed. Recommendations intended to address the risk that reporting on MMR contracts is incomplete and inaccurate were partly implemented by audited entities. Reforms to the Indigenous Procurement Policy were announced in February 2025 without a clear understanding of the policy’s effectiveness….

…. Exemptions from Mandatory Reporting Requirements

16. Between July 2016 and September 2024, 63 per cent (valued at $69.3 billion) of all contracts recorded in the Indigenous Procurement Policy Reporting Solution (IPPRS) were exempted from the MRRs by relevant entities. The proportion of contracts exempted by entities from the MMRs has increased over time. …. The NIAA does not provide complete guidance on the use of exemptions, or assurance over the legitimacy of exemptions. The NIAA has not considered the strategic implications of exemption usage for the achievement of policy objectives….

In a box headed Effectiveness of the Mandatory Minimum Requirements, the ANAO make the following comments:

While the application of the MMRs is trending upwards, between July 2016 and September 2024, 1,475 contracts valued at $69.3 billion were ‘exempted’ by entities from the MMRs, often for reasons that are unclear. There is a lack of performance information and evaluation data that allows for the impact and outcomes of the IPP to be assessed. The NIAA’s public reporting on the IPP does not provide information on the MMRs’ effectiveness. It is unclear if the IPP’s objectives of stimulating Indigenous entrepreneurship, business and economic development, and providing Indigenous Australians with more opportunities to participate in the economy, are achieved. (emphasis added)

There is much more of interest in the report, albeit it is comparatively technical and thus somewhat inaccessible. While the Minister’s February 2025 media release (link here) announcing an expansion of the IPP’s targets aligns with the Government’s pivot to economic empowerment as its signature Indigenous policy focus, the fine detail in this report suggests that NIAA is a long way from being on top of the policy detail. The ANAO documents in considerable detail how the NIAA dropped the ball comprehensively on commitments made in response to previous Parliamentary Committee and ANAO reports and does not appear to have the internal mechanisms in place to ensure that the IPP will be effective in meeting its stated aims.  While increased ambition for the IPP’s formal targets is creditable, Figure 2.1 in the ANAO report (page 51) suggests that the announced increased headline targets for future years are still well below current actual performance at least in terms of the numbers of contracts, thus suggesting that the targets are not intended to stretch actual performance. Meanwhile, the Minister’s commitment to addressing ‘black cladding’ appears almost nonchalant. As she states in the media release mentioned above:

The Government will also work with regulators to tackle ‘black cladding’ – disingenuous conduct designed to gain access to programs like the IPP – and explore options to make it easier to report the practice.

Let’s be clear; black cladding occurs when non-Indigenous firms engage non-contributing Indigenous partners to front a commercial entity with the aim of winning contracts paid by the taxpayer that they would not necessarily win through a merit-based process. A more accurate definition of black cladding might read: ‘dishonest conduct designed to gain access to taxpayer funded contracts’. It has been an issue of concern for a decade (link here). Working with unnamed ‘regulators’ to ‘explore options’ to report the practice [to who?] reeks of rhetorical flimflam. The NIAA expand on this on their website where they state (link here) that

The NIAA will work with relevant regulators and support services to identify opportunities to make it easier for First Nations people to report black cladding that might amount to unlawful conduct and provide targeted education, guidance and support for First Nations business owners.

The problem here is that, by definition, black cladding involves the co-option of Indigenous individuals, often involving the provision of financial incentives. The suggestion that the regulatory approach to minimising black cladding should rely on or be based primarily on voluntary reporting by Indigenous people strikes me as both naïve and destined to fail.

The combination of black cladding (at unknown levels) and exemptions from the mandatory minimum requirements (perhaps we should just call them ‘optional’ minimum requirements….though even this term is a contradiction in terms!) valued at $69 billion and comprising 63 percent of all contracts under the IPP since 2016 (see Table 3.1 on page 56 of the ANAO report) together have the potential to eviscerate the effectiveness of the IPP program. Yet despite having agreed to an evaluation after the ANAO’s previous audit of the employment programs, and after undertaking preparatory work for the evaluation, NIAA cancelled the evaluation. The ANAO in footnote 92 (page 49) note that NIAA advised it could find no evidence of the decision not to proceed. Presumably no officer within NIAA was prepared to take responsibility for the decision. It just happened! One is tempted to ask where were the members of NIAA’s Indigenous Evaluation Committee (link here) while this non-decision was rolling out? Perhaps the NIAA Audit and Risk Committee (link here) should consider how the non-decision to cancel the evaluation was made and what impact it might have on the effectiveness of the IPP. I guess not proceeding with the former commitment to undertake an evaluation does have the advantage of making it easier for the Minister to state with supreme confidence, as she does in her February media statement:

Given its success so far, the Government is also making the IPP more ambitious…

One final issue worth noting relates to ANAO Recommendation Four (see paras 3.10 to 3.13 in the ANAO report) dealing with exemptions to the minimum requirements. In para 3.11, the ANAO recommended (inter alia) that:

To ensure exemptions are accurately recorded in the Indigenous Procurement Policy Reporting Solution, non-compliance with the Indigenous Procurement Policy can be appropriately identified, all applicable contracts are subject to the mandatory minimum requirements reporting and assessment process, and the Indigenous Procurement Policy is achieving its policy objectives, the National Indigenous Australians Agency:

(d) implement a risk-based assurance process to ensure that reported exemptions or exclusions are legitimate.

In its response to this part of recommendation four, the NIAA stated:

Not Agreed to part d – The National Indigenous Australians Agency does not believe it is appropriate for it to be assuring the implementation of elements of the devolved Commonwealth procurement framework by Commonwealth entities. The National Indigenous Australians Agency maintains that it is the responsibility of each Commonwealth entity to ensure it meets its own obligations under Government legislation and guidance, including the Commonwealth procurement framework

Yet the 2019 Order establishing the NIAA as an Executive Agency, signed by the then Governor General (link here), listed the functions of the NIAA as including:

                             i.        to lead and coordinate Commonwealth policy development, program design and implementation and service delivery for Aboriginal and Torres Strait Islander people; and ….

                            ii.        to analyse and monitor the effectiveness of programs and services for Aboriginal and Torres Strait Islander people, including programs and services delivered by bodies other than the Agency…

 

The IPP is the responsibility of the NIAA, and while it is a fair expectation that other agencies will meet their obligations under the program, it is squarely within the NIAA remit for it to set in place processes that ensure all agencies involved in the program are meeting their obligations. The NIAA should view itself as the key regulator oversighting the effectiveness of the IPP’s implementation across government.

 

Conclusion

 

The takeout from this sorry tale is threefold:

·         it confirms that in relation to Indigenous economic policy, the Government is more concerned with appearance over substance;

·         it demonstrates that NIAA does not have the capability to ensure that it keeps its written commitments to the ANAO and the Parliament; and perhaps most importantly,

·         it reveals that no one inside government (including the Minister who is ultimately accountable), let alone outside government, actually knows whether the Indigenous Procurement Policy is effective or not.

 

The IPP opens a new conduit for rent seeking by businesses across the whole spectrum of government activities, and while its objectives are worthwhile, it ultimately stands or falls on the quality of the overarching regulatory oversight by NIAA as the policy owner and all the mainstream agencies in the Commonwealth responsible for letting contracts. Unfortunately, this is not the only public sector activity where regulatory oversight is in short supply (link here).

 

In relation to the IPP, the Commonwealth clearly prefers to operate in a state of blissful ignorance, a prisoner of its own rhetoric and good intentions ― assuming we give them the benefit of the doubt. If the program is in fact ineffective, or even partially ineffective, and the Government’s assessment of its undoubted success is wrong, the losers are Indigenous Australians, and taxpayers more generally.

 

The Commonwealth, and particularly successive ministers for Indigenous Australians and the NIAA, should do better.

 

 

5 June 2025