No wiser than a daw: the case for stronger regulation of funeral insurance

“But in these nice sharp quillets of the law, Good faith, I am no wiser than a daw.” William Shakespeare, Henry VI, Part One, Act 2, Scene 4.

In October 2015 the Australian Securities and Investments Commission issued a report Funeral Insurance: A snapshot. This report dealt with the mainstream insurance industry, and raised a substantial number of consumer protection issues.

Key findings were reported as follows:

On the whole, premiums rose steeply for persons over 50, as most consumers held stepped premiums that increase with age. For consumers aged 80–84, the average annual premium was four times as much as for consumers aged 50–54. There was a high rate of policy cancellations, with nearly 55% of cancellations occurring during the first year of the policy. Of the cancellations, 65% were actively initiated by the customer, while the rest (35%) were cancelled by the insurer for non-payment of premiums. Most insurers identified the cost of premiums as the most common reason for cancellation. While over half (51.2%) of consumers with funeral insurance were aged 50–74, funeral insurance sold to Indigenous consumers had a much younger age profile (50% were aged under 20). A higher proportion of Indigenous consumers also had their policies cancelled for non-payment of premiums. (emphasis added).

The report also noted that for some welfare recipients, funeral insurance premiums comprised up to ten percent of their pensions.

In relation to Indigenous consumers, the report noted:

While a few insurers had unusually high numbers of young persons insured due to offering free additional cover for children, there was only one insurer with significant numbers of persons insured under 30 for which premiums were being paid. This insurer’s products were marketed to Indigenous consumers and their age profile of persons insured was anomalous compared with those of other insurers we reviewed. For this insurer, 50% of persons insured were aged under 20 and 33% were under 15. A higher proportion of Indigenous consumers also had their policies cancelled for non-payment of premiums.

Notwithstanding efforts by ASIC to highlight the potential pitfalls and costs to Indigenous consumers of funeral insurance policies (see links here and here), it seems that this is an issue which won’t go away.

In November 2015, Minister Scullion told the ABC that he would look into the reports and:

would write to Aboriginal land councils for advice and speak with consumer affairs about ensuring safeguards and education for people as to what they were getting for their money.

There appears to have been no outcome to date announced by the Minister arising from this promised action. There would be merit in an update being provided by the Minister to the public at large.

The latest development is a Federal Court decision which overturned a Government decision to prevent the use of Centrepay (which automatically deducts payments from a welfare recipient’s entitlements at source). Media report here.

The decision of Logan J in this case is somewhat curious. The first two paragraphs provide a succinct account of the history of state paternalism in relation to Aboriginal peoples. However the decision taken by Centrelink, based on a policy decision of former Minister for Human Services Marise Payne in 2015, was framed as applying to the use of Centrepay for all funeral insurance services, and not indigenous services specifically. The focus on Aboriginal policy arose because only one insurance company, The Aboriginal Community Benefit Fund Pty Ltd (and its associated corporate entities) utilised Centrepay, and the vast majority of its customers are Indigenous citizens. The reasons for the decision of Justice Logan, while extremely convoluted (at least to this non-lawyer), appear to boil down to a finding that there is no power within the relevant statutes authorising the CEO of Centrelink to make such a decision. In other words, Logan J’s formal reasons do not relate to paternalism, but are based on statutory interpretation of the relevant legal framework.

Putting aside the legalities, there appear to be strong grounds for Government to put in place a robust regulatory framework which ensures that consumers (whether indigenous or not) are adequately informed prior to making purchases of funeral insurance policies.

The weight of evidence appears to be shifting towards a conclusion that there is scope for government to strengthen the regulatory regime. It also seems to be a no-brainer that government ought not to allow its Centrepay system to be accessed by private sector firms without robust checks and balances. It appears that such a situation does not currently exist. In relation to Indigenous welfare recipients, it is arguable that they are may be particularly vulnerable, and that this merely increases the weight of argument in favour of more general protections.

Paternalistic policies in relation to Indigenous citizens have played a sorry part in our history, and racism, segregation, and repression often hid under the guise of ‘protection’. But there is a place for regulation of inappropriate behaviour by firms, particularly in relation to vulnerable citizens. Not all regulation is inappropriately paternalistic.

So what policy conclusions should be drawn from these most recent developments?

First, as I have argued previously, poor financial literacy is a major issue of concern in Indigenous affairs, and needs urgent and significant policy priority. The range of issues around financial literacy and banking would benefit from further sustained attention from one of the Parliament’s Committees.

Second, the Commonwealth should urgently examine the available options to address the use of Centrepay by private sector firms, and in particular ensure there is a robust set of checks and balances around any such use. This may require legislation.

Third, the Commonwealth should initiate action to strengthen the regulatory regime around the same of funeral insurance products, particularly to vulnerable consumers.

Fourth, the Commonwealth should release the results of the investigations undertaken by Minister Scullion and his Department in response to the November 2015 revelations of issues of concern around Indigenous people’s purchase of funeral insurance policies.

Election outcome: provisional thoughts on the implications for Indigenous affairs

As I write this, the outcome of the election remains uncertain. It is likely to be days, and potentially weeks until we see a new Government and ministry sworn in. Clearly, the devil will be in the detail, so it is perhaps unwise to even venture a view on what it is likely to mean for Indigenous issues in Australia.

However, I think there are some general conclusions which can be drawn.

Whichever party forms government, they will have a more challenging time obtaining senate support for their legislative agenda, and in particular, there is likely to be a bias towards more populist views in the Senate. A minority government or narrow majority, combined with a challenging Senate increases the odds considerably of circumstances arising which would lead to an early election in the coming term.

This adds a sharper partisan edge to the ideologically significant issues which divide the nation; indigenous issues fit within this category, particularly issues around recognition, treaty, and over-representation in the criminal justice system.

In relation to constitutional recognition, the desirability of substantive change, and indeed the increasing expectations of Indigenous Australians for such a change are increasingly significant elements in our national political dialogue. However the likelihood and political feasibility of substantive (as opposed to merely symbolic or semantic) change appears to have been receding over the last year, and the election outcome reflecting strongly polarised views across both the nation’s political elites and the community at large appear unlikely to reverse that trend.

If Malcolm Turnbull is able to muster a majority on the floor of the house and hence retain the Prime Ministership (as currently still seems most likely), he will have reduced authority, and will likely be required to grant an even greater say to conservative elements within his party (who tend to have strong views on key Indigenous issues such as constitutional recognition).

The Nationals relative influence within the Coalition appears to have been strengthened as the majority of seats lost by the Coalition are within the Liberal party room. The likelihood of Nigel Scullion retaining his current portfolio (or an equivalent Cabinet post) is thus strengthened.

However, we can expect a lift in the priority and profile which Labor allocates to Indigenous issues with two high profile and high calibre Indigenous MP entering Parliament: Linda Burney in Barton and Patrick Dodson as a Senator for WA. There are a number of other possible incoming Indigenous parliamentarians, notably Kado Muir who is a Nationals Senate candidate in WA. The result is that there will be a strong case for a Turnbull Government to consider appointing Ken Wyatt as Minister for Indigenous Affairs. He would immediately blunt the potential for Dodson and Burney to set the agenda on key Indigenous issues, and would also facilitate a shift in emphasis to Indigenous health issues (Wyatt’s background and strength).

If Bill Shorten is able, against the odds, to form a minority Government, he will face formidable obstacles in the Senate, and serious budget challenges. He would likely think very seriously about appointing Dodson or Burney as Indigenous affairs minister. They would in turn face huge expectations from the Indigenous community and their supporters, but would also confront a more sharply polarised community, and an Opposition with a rather more conservative bias on Indigenous issues than under Prime Minister Turnbull.

To date, under Shadow Spokesman Shayne Neumann,  Labor has appeared to hold back on a proactive Indigenous affairs agenda, in favour of a more restrained stance emphasising  ‘bipartisanship’ and a focus on the relatively abstract ‘motherhood’ of constitutional recognition.  This has facilitated an ongoing emphasis on their core messaging around health, education and fairness for the community as a whole.

This strategy is likely to come under increasing internal pressure over the coming term, and in the event Labor forms a minority Government will necessarily change. Perhaps the largest risk for a Labor Government (since Indigenous interests appear to expect more from Labor than the Coalition) will be in attempting to craft a specific proposal for constitutional recognition which simultaneously meets the legitimate Indigenous expectations for substantive change and avoids a negative campaign from conservative interests which sabotages its chance of success.

So whichever party forms Government, Indigenous issues are likely to increase in profile in the next parliament. However, a combination of increased profile and increased expectations will quickly hit the fiscal reality wall. What seems clear from the election campaign we have just had, and the external uncertainties which dominate much global financial policymaking, is that (notwithstanding Keynes insights into the appropriate role of government in stimulating overall demand) whoever takes the government benches in the next parliament will seek to work hard to cut government spending and reduce the budget deficit.

We are likely to see a further cross government effort to find savings, involving the early convening of the Expenditure Review Committee of Cabinet, or perhaps the creation of a specialist ad hoc committee of ministers; what the tabloids used to refer to as a ‘razor gang’. The Department of Finance will have a swathe of savings options, across every portfolio, and indigenous affairs will not be excluded. Austerity will be the name of the game; the only issue really is whether it is a ‘hard’ or ‘soft’ version. The only conceivable brake on this would be a view within the incoming Government that an early election will be necessary or desirable.

 My point, however, is that Indigenous interests are not well positioned to resist further budgetary cuts, as they lack the generalised political support in the community necessary to do so and their peak bodies are not influential on detailed policy issues being fought out within the interstices of government.

Consequently, the task of protecting Indigenous specific programs as well as mainstream programs which service large proportions of Indigenous citizens will largely fall to the minister, and those inside the government who take an interest in Indigenous issues. The current minister does not have a great record of protecting the Indigenous budget from cuts. If there is a new minister, he or she will face a major challenge, and may not have the experience or party networks to assemble and maintain the necessary coalition of support to successfully resist cuts.

To sum up, whichever party forms government, Indigenous issues are likely to attract a higher profile and increased expectations from Indigenous citizens in the next term of Government. The Indigenous budget (broadly defined) is likely to come under increased pressure. Substantive constitutional recognition is necessary yet highly unlikely, although there may be a chance of a purely semantic change. Such an approach however would likely increase Indigenous citizens’ sense of alienation, and in my view would likely be counter-productive in the long term. For what it’s worth, I have long held the view that the best opportunity for substantive recognition will be as an integral element of a move to a republic. But that is clearly some way off!

In the meantime, there are a range of important and very real policy challenges in Indigenous affairs which the next Government will need to address and manage. They require focus and attention if the nation is to make progress towards reconciliation, recognition and ending Indigenous disadvantage. In doing so, the incoming government would be wise to considerably ramp up proactive and constructive engagement with Indigenous Australia.

Moral hazard and police services on Groote Eylandt

This week saw an intriguing joint media release from NT Chief Minister Giles and federal Minister for Indigenous Affairs (and Senator for the NT) Nigel Scullion.

The pair announced funding of $15m for increased police facilities and resources on Groote Eylandt.

Here is the text of the announcement, with emphasis added:

More support for policing on Groote Eylandt

Community safety on Groote Eylandt will be increased through a greater police presence and improved police infrastructure, thanks to a joint investment from the Turnbull Coalition and Giles Country Liberals Governments. 

Minister for Indigenous Affairs and Country Liberals Northern Territory Senator, Nigel Scullion and I announced a $15 million investment in policing on Groote Eylandt to upgrade local police stations and increase police resources in the region. 

“This investment will upgrade the police stations at Angurugu and Alyangula and support additional police and a new police dog unit," Minister Scullion says. 

“Community safety is one of the key priorities of the Turnbull Coalition in Indigenous Affairs and this funding will ensure police are spending more time in community working with local residents. 

“Importantly, the investment includes funding to support local Aboriginal community police officers to make sure police work in partnership with communities to improve community safety. 

“I would also like to express my appreciation to the Anindilyakwa Land Council Chairman, Mr Tony Wurramarrba, for the significant co-investment that traditional owners have provided for these police facilities.” 

The Northern Territory Government has been working hard to combat crime and improve safety throughout the Territory. Our Remote Policing Model helps to ensure that police operations in remote areas across the NT are well supported and resourced. It's a flexible policing model that maximises community engagement across remote communities, which means we can deploy our resources when and where they are needed most. The funding has been provided out of existing resources from the Indigenous Advancement Strategy.

No-one is going to begrudge the Groote community access to adequate policing resources, and the focus on community safety and community policing is clearly a major priority in anyone’s terms.

There have been ongoing community safety issues on Groote for many years, and NT Governments have not been prepared to stand up to the policy union’s longstanding antipathy to its officers being based, or staying overnight, in the communities of Angurugu and Umbakumba, preferring to reside in the mining town of Alyangula.

Most recently, in November last year a riot involving up to 60 people led to two deaths and six convictions. See press reports here and here and here. The media reported police admitting that four police officers were unable to control the affray. The media reports indicate that a number of the men convicted are from the community of Umbakumba (which is not a beneficiary of the announced funding).

The announcement appeared to coincide with a ceremony on the Island attended by both Ministers to celebrate the renewal of the longstanding manganese mining agreement between local Traditional owners and South 32 which owns the Groote Eylandt Mining Company (GEMCO).

The rights of citizens to safe communities and safe lives are clearly still a very live issue on Groote (and in many other remote communities). Apart from issues of community safety, the communities on Groote (and many others) continue to face significant shortfalls in housing, infrastructure, health services, disability services, and financial literacy. Issues around the robustness of local community governance are a continuing challenge.

The community is also a major node of an insidious neurological disease, the Machado Joseph Disease, which places increased social and health pressures on many families across Groote Eylandt (and beyond). Minister Scullion reversed a $10m grant to the MJD Foundation soon after being appointed as Minister, and is currently appealing a Federal Court decision overturning his decision.

Labor and Coalition Governments have done much in the last decade to invest in major communities such as those on Groote through programs such as National Partnership Agreement on Remote Indigenous Housing, the Stronger Futures National Partnership, and in general purpose funding to the Northern Territory Government from GST revenues. Yet the current Commonwealth Government appears intent on rolling these National Partnership Agreements into recurrent grant programs where they are much more vulnerable to annual savings decisions, and fail to lock in complementary state and territory policy and program contributions.

To their credit, the Groote traditional owners have over the past decade sought to leverage their royalty income through a regional partnership agreement with the NT and Commonwealth Governments which led to a number of joint projects involving contributions of their own mining royalty resources to a range of communal projects, including a contribution of $5m towards the sealing of the road to Umbakumba. Unfortunately, in recent years, governments appear to have backed away from this formal engagement and commitment of resources, presumably because it injected a degree of inflexibility into their newly centralised funding arrangements, and diminishes government capacity to find savings.

So what are the policy issues raised by joint announcement on policing?

The fundamental issue raised is why the Commonwealth must fund facilities which are core responsibilities of the NT Government.

And of course, the decision involves a large dose of what economists term ‘moral hazard’ for the Commonwealth: every time it funds these responsibilities, it sends a signal that the NT Government is not expected to fund this function.

The suggestion in the release that there is a ‘joint investment’ by the two governments appears farfetched given the indication in the last sentence that funding is from the Commonwealth’s Indigenous Advancement Strategy program.

There is no indication of the assessment process adopted in relation to the grant; presumably the federal minister has used his discretion to approve the funding without a comparative assessment of alternative needs and opportunities. The admission that the funding is from within existing appropriations means that it comes at the expense of other Indigenous priorities.

The release is deliberately vague on the breakdown of the financial support, and the timeframe over which the recurrent elements (such as the dog support unit or the employment of local community police) will be offered.

Crucially, the announcement fails to provide any clarity on whether police will be posted 24 hours a day to Angurugu, and by implication, we can assume that they won’t be posted 24 hours a day to Umbakumba. This is the single most important decision government could take to increase community safety on Groote, but it appears that it has been squibbed.

While the announcement thanks the local community for their contribution, it fails to indicate both the source and the quantum of this contribution. While it is commendable that there has been a community contribution, it is surely unprecedented for a local community to have to contribute to its own policing investment. If governments are not prepared to fund adequate levels of policing within their jurisdictions, then they fail a core test of legitimacy.

And of course, the announcement has been made within a week of the federal election. Presumably Minister Scullion made his decision before the caretaker period began and held it over.

Setting aside the politics which so clearly infuses this announcement, it provides a clear cut example of the structural lack of transparency in government decision making in remote communities, at both process and output levels.

And counter-intuitively, the very necessity of Commonwealth and local community funding for what is a core NT Government responsibility provides yet a further example of the chronic underinvestment by responsible governments in their core responsibilities in remote Australia.

The Monthly: 'no one can tell us we are not from here'

The July Monthly is a must read for anyone engaged with or interested in the relationship between Indigenous citizens and the Australian nation state. There are at least twelve articles, comments, notes, or reviews canvassing a broad array of contemporary issues from a largely Indigenous perspective.

The lead essay by Galarrwuy Yunupingu, Rom Watangu: The Law of the Land is at once a paean to the cultural wealth and knowledge bestowed on him by his forefathers, an incisive analysis of the history of misunderstanding between owners and interlopers, and a call for a new understanding. It is also infused with Yunupingu’s sombre recognition that it is time for others to take on his life’s work of mediating and promulgating his culture. It is a powerful statement which will resonate for a long time to come.

Rachel Perkins, in a very moving essay, explores the work of Central Australian Arrente women – her family and relations - to reclaim their songs, their cultural identities, their very identities.  It mirrors Yunupingu’s comments about the importance of song cycles: ‘it relates to the past, to the present, and to the future’.

The horrifying reality of violence against Indigenous women is laid out by Marcia Langton in a rhetorically and analytically powerful expose of the injustice of the legal system‘s dealings with two cases involving the excruciating deaths of two women.

In shorter pieces, Wesley Enoch makes a cogent, but emotionally restrained case for greater transparency and public discussion around arts funding, including Indigenous arts funding. Bruce Pascoe describes the invisibility of Indigenous histories in the operations of the Tasmanian tourism industry. Luke Davies reviews Ivan Sen’s Goldstone, and the ABC’s Cleverman; and Anwen Crawford in a review titled  ‘Smart black man with a plan’ interviews Shepparton rapper, writer, performer and record label owner Adam Briggs. Plus First Dog on the Moon reprises a biting comparison of two Indigenous whistle blowers, and Russell Marks in a celebration of 50 years of the ABC’s Play School recounts a deliciously funny anecdote about Christine Anu, a nursery rhyme, and Piers Akerman’s extraordinary response.

I have left Megan Davis’s commentary entitled “Seeking a Settlement’ till last. She makes a highly persuasive case (contra Prime Minister Turnbull) that recognition and a treaty need to be seen as complementary and indeed synergistic in their effects. In contrast to her scintillating essay ‘Listening but not hearing: when process trumps substance’ in Griffith Review 51 this year, ‘Seeking a Settlement’ is more overtly passionate, perhaps less patient with our broader political system and its incapacity to address and deal with issues which are real, legitimate and indeed have been put on the nation’s table by the nation’s leaders.

My own reaction to reading this edition of The Monthly was a contradictory mix of pessimism and optimism. Pessimism that as a nation we are unable to deal with the hard issues which go hand in hand with our colonial history and its insidious and long-lasting consequences. Optimism that we have Indigenous voices across the whole span of our public and cultural life standing up for a better future. In effect, these voices are like a reverberating echo off a mountain top, mirroring the words of one of the Arrente women in Perkin’s essay: ‘Now no one can tell us we are not from here’.

The issue for mainstream Australia is what will our response be?

The Monthly, and its authors, deserve our congratulations.

A new Approach to Tiwi Land Development

A media release from the NT Chief Minister presages a new development in NT Land Rights policy development. It links to a joint announcement with the Tiwi Land Council (TLC).

The release refers to a 2013 Memorandum of Understanding between the NT Government and the Tiwi Land Council, to support economic development on the Islands.

The NT Government and the TLC have entered into a strategic partnership to encourage commercial development on the Tiwi Islands, and have now released a suite of documents outlining the proposed processes.

 The key NT Government agency is the Land Development Corporation (LDC), described on its web site as the NT Government’s strategic land developer, and the Tiwi Land Council and Tiwi Land Trust.

The key document outlining the proposed approach is titled Tiwi Islands Investment Opportunity: Private Sector Investment Opportunities . There are links to a range of other fact sheets and background materials. The document outlines the existence of the Tiwi Development Framework Agreement, entered into in 2015 between the NTG and the Tiwi Land Council and the Tiwi Land Trust. This agreement apparently provides for a process of identifying potential development sites, agreement for prospective developers to inspect potential sites, and for a template approach to leasing development sites for commercial development.

Central to the proposed approach is a lease of up to 99 years to the Land Development Corporation, which will then sub-lease the proposed commercial site to the business proponent. The prospectus suggests there are opportunities in tourism, aquaculture, agriculture and industry available.

The core of the proposed approach, and the new element in NT land rights policy which is implicit, is that the LDC, and thus the NTG, propose to act as an intermediary between commercial proponents interested in pursuing opportunities on Aboriginal land and Indigenous interests represented by the Tiwi Land Council.

The proposed approach has strong similarities with the Township Leasing model established in 2007, and which operates on the Tiwi Islands and Groote Eylandt. That model interpolates a Commonwealth statutory office, the Director of Township Leasing between traditional owners and residents and land users within particular townships. Its rationale is effectively to streamline negotiations over leases within townships and thus reduce transaction costs. However the model has not been supported by the two major land councils and thus its take up has been quite limited. This article discusses some of these issues in greater detail.

It will be interesting to observe whether the new approach, which potentially applies across all Aboriginal land on the Tiwi Islands (and not just within townships) will be taken up by the other NT Land Councils.

On its face, there appear to be advantages insofar as the LDC will have a pre-existing relationship with the Tiwi Land Council and the key traditional owners which will operate to build the trust necessary to facilitate effective negotiations. The LCD will also have an interest in ensuring that its proposed sub-lessors are serious and above board, with viable proposals. The LCD may also operate to persuade external investors to consider adding Indigenous owned equity to their proposals thus ensuring that Indigenous interests have both a stake as ‘’landlord’ and as commercial operator.

Nevertheless, there are also risks which may be harder to discern and guard against. Perhaps the most significant is that the implementation of the framework agreement model may precondition the Land Council to seek to find ways to approve commercial proposals which either are not supported by the Traditional owners, or even if they are supported which do not drive the best possible commercial outcome for traditional owners. There is a history on Tiwi of failed or flawed commercial projects being approved following significant hype and considerable doses of back-room politics. The fiasco of the Tiwi forestry project and the separate fiasco of the later port development are stark reminders of the risks for all involved.

Accordingly, the quality of financial governance within the Land Council will be of increasing importance, and potential risks (which are unfortunately very real in remote communities – see this post) involving conflicts of interest, fraud, and just poor financial and legal advice all need to be managed effectively. The regulator for the NT Land Councils is effectively the Federal Minister for Indigenous Affairs and his Department, and there would be merit in the Minister initiating a forward looking internal review of the quality and capacity of his Department to provide regulatory oversight of the land councils given the increasing shift to commercial land use decision-making.

It is too early to form a considered judgment on the merits of the new approach proposed by the NTG and the TLC. Implicit in the policy however is a recognition that commercial development of Aboriginal land in the NT is not impossible, but does require tailored approaches which acknowledge the rights of traditional owners and which opens up options for Indigenous participation in economic activity. This in itself is a good outcome.

The Redfern Statement and the Challenges Ahead

Last week, the National Congress of Australia’s First Peoples auspiced the release of a pre-election policy agenda, the Redfern Statement, outlining a comprehensive policy agenda which Indigenous interests are asking political parties and the next Government to implement.

The Statement was compiled and released on behalf of 17 peak indigenous organisations, and had the support of some 29 mainstream NGO’s and advocacy groups. The Statement was released at a meeting of Indigenous leaders in Redfern and gained useful media coverage. (See here).

Interestingly, the Statement made no reference to land issues, and the main news story arising from the day related to a call for the next Government to establish a new Indigenous affairs agency separate from the Department of Prime Minister and Cabinet (see here). I wrote a previous post on this issue.

My own reaction to the Statement and its attendant media releases and coverage was mixed. I was extremely pleased to see Indigenous interests and in particular Congress articulating a range of important policy positions during the election campaign, and was heartened that effort was being made to jointly develop an overarching policy agenda which is the first step in forcing political parties and governments to take the issues raised seriously.

The Statement will be a useful benchmark in assessing the state of play on Indigenous affairs going forwards, and simultaneously offers a useful summary of the extent to which the Indigenous policy agenda has been ignored by the political system over the past five years. It also provides a tangible demonstration of the importance of building policy coalitions as a first step towards policy influence within a political system which is extremely crowded with multiple interests jostling for attention let alone influence, ruthlessly pragmatic and responds only to pressure and publicity.

My reservations are largely pragmatic in nature: I fear that the Statement and its embedded policy agenda will not be taken seriously and ultimately will sink into oblivion. The reasons for my pessimism include the singular focus of the electorate and political elites on the economy and major service delivery sectors such as health and education, the short attention span of the political news cycle, and marginal status of Indigenous issues in electoral terms.

In these circumstances, Indigenous interests need to present their case in a way which is crisp, focussed, and which cuts through. And they need to supplement their initial release with some follow up media which reinforces the key messages, and pressures the government and opposition to respond. While the virtual silence of both the Governmental and to a lesser extent the Opposition in response to the Redfern Statement is disappointing, the onus falls on Indigenous interests to do whatever it takes to challenge this implicit marginalisation.

It is worth noting how business goes about the same task. At virtually the same time as Indigenous groups released the Redfern Statement, the four most influential business peak bodies, the Business Council, the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Minerals Council released a joint statement setting out their key policy ask heading into the election. IN contrast to the Indigenous statement, business focussed on one key issue, corporate taxation, and laid out a narrative which argued that more competitive corporate taxation leads to greater investment, economic growth, boosts to wages and increased national income. The Statement was published in the Australian Financial Review (AFR 9 June 2016 behind paywall), which also ran a complementary front page story under the headline “Business rebuts tax cut attacks”.

In contrast to the Indigenous approach, business have synthesised their message down to one key issue, corporate taxation. Their focus is on the arguments which support their position rather than a detailed description of the technical issues involved, and their stance is future oriented, not backward looking. The BCA website is clean, uncluttered, and takes the reader straight to the joint statement as one of three of four points of interest.

This comparison suggests that Indigenous interests, and in particular the National Congress, have more work to do to synthesise, simplify and sharpen their political messaging, while ensuring that they retain the confidence and active support of what is an extremely diverse constituency.

Admittedly, Congress is financially challenged following the current Government’s decision to cut their funding in the 2014 Budget. However this may be an opportunity. In my view, it is time that the Indigenous leadership acknowledged that not only must they speak with one voice if they are to maximise their policy influence within our political system, but that this voice must be established independent of government funding and influence. Opportunities exist to raise funds from the increasing number of significant Indigenous organisations nationally, from philanthropic sources, and even from business which over the last decade has increasingly seen and accepted the need for it to engage meaningfully with Indigenous Australians (see this page on the Business Council website).

It appears increasingly likely that Australia faces a decade or more of significant financial constraint, if not austerity. In such an environment, governments will be forced to make difficult choices. Given these accelerating challenges, it will be imperative in my view that Indigenous interests develop two broad capacities.

First, Indigenous interests would benefit from having a clear and effective voice in the broader political debate, with a capacity to both work with government and to take the debate up to government and to the public at large. The likely election of three or four Indigenous MPs across a range of parties in the next Federal Parliament will help, but will not be a substitute for an external Indigenous voice independent of the party system.

Second, Indigenous interests need to develop and sustain an independent and effective policy analysis capacity with both legitimacy and authority to speak on behalf of Indigenous interests, which would allow them to engage substantively both with the broader Indigenous constituency and with governments, state and federal. Policy issues are increasingly complex, have short life spans in public debate, and thus present only limited widows of opportunity for interests affected to have their say. Moreover, in many respects it is the macro economic and social issues which have the most potentially to affect Indigenous interests, for good or ill. Not to have a considered and persuasive view on these mainstream macro issues is to abdicate influence to mainstream interests groups and the bureaucracy.

The development and release of the Redfern Statement is a positive step on this pathway, but much work will be required over the next five years by the Indigenous leadership if Indigenous interests are not to be further marginalised by the Australian political system.

Improving Financial Accountability for Government Investment in Indigenous Affairs

This week’s Four Corners program provided a telling reminder of vulnerability of remote Indigenous communities to the predations of unscrupulous individuals who have been engaged to assist them in managing their financial affairs either as employees, advisers, or office bearers.

Tellingly, at the end of the program, the presenter Sarah Ferguson noted that this was not the first time that Four Corners had covered issues of fraud and financial mismanagement in remote communities, and asked rhetorically, ‘Is it a vain hope that we will not be returning to tell this story again?’

Accountability challenges in relation to funding for Indigenous development have a long and dishonourable history, and for better or worse, have contributed to the widespread public perception that much of the funding allocated to Indigenous affairs is wasted or misdirected. Whether this perception is fair or correct is irrelevant; the reality is that fraud and financial mismanagement within Indigenous organisations exists and any level of poor financial management should be deemed unacceptable.

Nevertheless, closer examination of the issues surrounding Indigenous funding arrangements, and the extent of funding mismanagement, reveals a more complex reality which is worth setting out in greater detail.

Waste

The first point to make is that there is a clear distinction to be drawn between the effectiveness of Government programs and inappropriate financial management. Clearly, the latter undermines the former. However, effectiveness shortfalls (which in everyday parlance we can term ‘waste’) can occur for a range of reasons, beginning with poor program design, poor program management, and poor program implementation and delivery.

It is only at the implementation and delivery end of this spectrum that Indigenous organisations are closely involved, and increasingly in Indigenous affairs, even those stages are being outsourced via competitive tender to a range of providers, indigenous and non-indigenous. It follows that Government – not Indigenous organisations – must bear primary responsibility for any ‘waste’ in Indigenous programs.

A second related point to note is that in public policy terms ineffective program investment (‘waste’) is a much more important issue than fraud. It has larger consequences for taxpayers, and more importantly, larger and adverse consequences for Indigenous citizens insofar as the purported benefits of the program investment are not realised or only partially realised.

In other words, program effectiveness is a much more salient and significant issue for taxpayers than financial mismanagement, and the responsibility for ensuring programs are effective falls overwhelmingly to government and not Indigenous organisations and citizens.

Arguably, the effectiveness of government programs (particularly grant programs) gets too little attention by the media and informed commentators. Governments habitually make it difficult for the public to be informed of the investment and grant decisions which have been taken, and the processes by which those decisions are taken. Evaluations are rarely totally independent and methodologically sound, and their terms of reference are often deliberately constrained so as to minimise the likelihood of adverse findings. Once completed, they are often not published or not published immediately.

In relation to grant funding, while there are processes for accessing information on grant funding such as Freedom of Information requests or Annual Reports, the transaction costs for individual citizens in doing so in any meaningful way are generally insurmountable, and once obtained, the information is often presented in ways which occlude the nature of what is being funded.

To provide an example, the recent Senate Committee Report into PMC’s Indigenous Advancement Strategy (IAS) struggled to receive a coherent account of the extent and nature of the funding processes under that program. Notwithstanding the extensive information on the public record relating to the IAS through that committee process and recent Senate Estimates questions, an interested citizen still has no way of assessing the effectiveness of the grants to individual organisations, nor the effectiveness of grants overall in particular sectors (such as the Community Development Program). And this Inquiry is a one off, and the information provided on the public record will quickly be out of date.

As an aside it is clear, as this recent post to the ANU’s Development Policy Blog demonstrates, that these issues extend beyond Indigenous affairs.

There is a strong case for improving the information on grant investment by government which is made publicly available, and in particular, for establishing a publicly accessible data base of both previous and current grant funding for all Government programs incorporating a capability for interrogation and sorting of the data by citizens and the media. The technical capacity exists.

In our much more complex digital age, the notion of ‘open government’ needs to be expanded if citizens are to be in a position to exercise their democratic rights to understand and effectively express their views in relation to government activities. This is particularly relevant in areas such as Indigenous policy where the challenges are huge and government’s role is crucial. Greater transparency of government investment decision-making will assist in improving program effectiveness and thus reduce ‘waste’.

In summary, the capacity of citizens external to government to assess program and grant effectiveness in a timely fashion is at the moment extremely limited. This is not an argument for greater transparency as ‘citizen voyeurism’, but for establishing mechanisms which incentivise government to invest more internal resources in ensuring programs are effective.

Under current arrangements, and notwithstanding the rhetoric on ‘open government’, it is only much later (if ever) – when problems emerge – that ineffective program results become apparent. By then it is too late for any accountability mechanism to have an impact.

Fraud

Turning to issues of financial mismanagement and fraud in Indigenous organisations, we need to disentangle a number of threads. While arguably an extremely small proportion of overall funding and thus of lesser significance (at least in objective terms), fraud has the potential to gain substantial political and public attention.

Moreover, for Indigenous interests, being subjected to fraud can be catastrophic for the legitimate operations of community organisations, and can undermine community and organisational cohesion.

Community members can be severely disadvantaged and office bearers shamed and humiliated. The Four Corners program made this point very effectively, demonstrating the trauma and shame which community members felt at being ripped off by individuals they had trusted.

While fraudulent activities and financial mismanagement can occur anywhere, and is not by any means limited to the Indigenous sector, there appear to be strong intuitive grounds for concluding that Indigenous organisations are particularly vulnerable. Their office bearers are often appointed for their community based links, and not for their financial or organisational skills; organisational membership is often drawn from groups with low levels of educational attainment and low levels of financial literacy; and importantly, Indigenous cultural mores which emphasise and prioritise kin based relationships over externally imposed rules can lead to poor governance and oversight in the absence of governance training and development.

The structural tension public policy-makers face is to maximise Indigenous ownership and involvement in managing their own affairs including in the delivery of programs to the Indigenous community while minimising the adverse consequences of poor governance, defective program implementation or poor financial oversight and management.

A key point in considering the policy significance of these issues is to note that Indigenous organisations increasingly have access to their own sources of revenue, through business activities or from various land and native title related financial agreements. It is not just taxpayers’ funds which are at risk from poor financial management. The capacity for Indigenous commercial and economic development is also placed at risk from deficient financial management practise within Indigenous organisations.

Governments have been aware of these issues for decades, and from time to time have focussed on one or another of the elements underpinning the effective financial management of Indigenous organisations.

For example, in recent decades there have been from time to time efforts to improve governance in Indigenous organisations, to strengthen the original purpose of the CATSI legislation, to roll out financial literacy programs, to strengthen remote community access to banking services, and to strengthen government’s capacity to audit and evaluate Indigenous programs through the now defunct Office of Evaluation and Audit. Each of these initiatives has faded in profile and priority, and there appears to be no overall strategy focussed on managing the risk of fraud or misappropriation within Indigenous organisations.

Under the new IAS, the present Government has strengthened the requirement for funded organisations to be incorporated under CATSI or the Corporations Act (rather than under state based Associations Acts designed for tennis clubs and the like). The Government has also encouraged greater use of independent directors on the boards of organisations with complex or substantial financial responsibilities. I support both of these initiatives.

Following the Four Corners program, the ABC reported that the Registrar of Aboriginal Corporations issued a statement to the ABC:

The Registrar of Indigenous Corporations, Anthony Beven, declined to be interviewed but provided the ABC with a statement.

"The registrar takes allegations of wrongdoing seriously and has a strong track record of taking action where there is evidence of wrongdoing," the statement said.

"In the last six years the registrar has taken action in the courts against more than 140 corporations and individuals.

"If you or any person has any evidence of any wrongdoing by any person or corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 please refer it to the registrar's office (ORIC)."

ORIC has launched more than 140 criminal prosecutions since 2011 and supported hundreds of Indigenous organisations to improve their governance.

Full details of the prosecution outcomes from the registrar's action are available on the website.

This led the Chair of the National Congress of Australia’s First Peoples, Dr Jackie Huggins, to comment there was still an endemic problem with misuse of Indigenous funds:

"It's still not getting any better, in fact it's getting worse," Dr Huggins said.

"We are sick and tired of all the money that gets ripped out of Aboriginal and Torres Strait Islander organisations."

The Minister responded:

Federal Indigenous Affairs Minister Nigel Scullion on Tuesday backed the regulator and said he was aware that it was operating under budgetary constraints.

Senator Scullion said a review of the ORIC and the CATSI Act was currently underway.

"Some elements of the CATSI Act may have to be amended to ensure we can ... get further transparency for organisations," Senator Scullion said.

"Of course everyone will be able to make a submission and that review will be public."

But Senator Scullion said the investigations that were taking place into compliance at 44 Indigenous organisations would not be made public.

In the light of the recent revelations on Four Corners, and the considerable quantum of the grant funding currently being allocated to Indigenous affairs, there appear to be grounds for concluding that Government should do more. A first step would be to acknowledge that Governments, not regulators, are responsible for the policy and program frameworks which determine how fraud with Indigenous organisations is dealt with.

The response of the Minister, apparently on the run, ‘announcing’ a pre-existing review of the CATSI Act will not get the root of the issues. His focus on the regulator neatly sidestepped his own broader responsibility for the current policy frameworks which are clearly facing considerable challenge.

As a corporate regulator, the Registrar can investigate the compliance of Corporations with the legislation, and under the current Registrar ORIC has an admirable record of pursuing financial mismanagement within CATSI Act corporations. But his remit is only partial, and he has limited capacity to pursue individuals outside CATSI corporations who engage in illegal behaviour. This appears to be the case at the Warmun community covered in the Four Corners program.

A Broader Review

To respond to the plea of the National Congress Chair, the Government should in my view commit to establishing a comprehensive policy framework addressing the risk of financial mismanagement in Indigenous organisations. Such a policy framework should not involve more punitive and intrusive grant oversight and management, but should focus on a stronger and more streamlined approach to investigation and prosecution of offences.

In this context, it is worth noting that the current Commonwealth grant management processes in Indigenous affairs are arguably over-engineered, and reducing their complexity would be consistent with the Government’s red tape reduction strategy. The notion of ‘earned autonomy’ under the current IAS Grant Guidelines (refer section 12) meaning that funded organisations which can demonstrate lower risk profiles can ‘earn’ more streamlined grant management processes sounds plausible, but would be better framed in terms of a minimalist default, which is ramped up as risks increase.

A first step in developing the policy framework suggested here would be to initiate a broader review of financial management issues affecting Indigenous organisations, with a positive remit focussed on identifying structural opportunities and developing an ongoing policy response.

Such a Review needs to extend to the capabilities and operations of all Indigenous organisations, not just those incorporated under the CATSI Act, and should encompass the need for new policy measures and responses, and the effectiveness of current policies and programs related to Indigenous corporate governance, financial literacy, management training, and the like.

While there are legitimate constraints in making the outcomes of the 44 reviews currently underway public, the broader review I am proposing here should also assess the effectiveness of Government responses to defective grant management and in particular, the extent to which past internal reviews have led to prosecutions and remedial action. There is a strong case for greater transparency in relation to the results of internal reviews undertaken (while protecting the legitimate privacy concerns of organisations and individuals). Without it, the risk is that reviews take the easy course, avoid prosecutions, and send a signal that accountability is optional.

Finally, the proposed Review should examine the record of state and federal police in pursuing cases of fraud within or in relation to Indigenous organisations. My experience over three decades has been that in most cases of fraud, the quantum of funds misappropriated does not exceed the risk based thresholds used by police in allocating serious investigatory resources. There is a strong argument in my view for a smarter approach to risk based assessments by police and law enforcement bodies, where they allocate a small proportion of their resources to investigation frauds and thefts which fall below their normal thresholds. This would send a clear signal to potential perpetrators that they are not immune from investigation and potential prosecution.

I am not holding my breath on the establishment of such a broader Review, nor of a new policy framework on financial management for Indigenous organisations. However, in the absence of a coherent and comprehensive effort by Government to bring greater rigour to financial management within Indigenous organisations, theft, fraud and misappropriation will continue to be problems in Indigenous Affairs. Unfortunately, if this is the case, Indigenous interests will continue to wear an undeserved level of public opprobrium, and the deep-seated public perception that Indigenous affairs is characterised by wholesale waste and inefficiency will – unfairly in my view - continue to permeate the Indigenous domain.