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.

 

 

Whose north, whose future?: the NAIF and the ILSC

 

Your dishonour

Mangles true judgment, and bereaves the state

Of that integrity which should become it

Coriolanus Act 3, scene 1.

 

In May 2018, the North Australia Infrastructure Facility (NAIF) approved loan finance of $27.5m to Voyages, a wholly owned subsidiary of the Indigenous Land and Sea Corporation (ILSC), for the upgrade of the Connellan airport at Yulara servicing the Ayers Rock Resort operated by Voyages.

 

The NAIF website outlines the details of NAIF financing on its website (link here) and provides a case study fact sheet (link here).

 

According to documents recently released under FOI by the ILSC (link here), [FOI cache #19], Minister Scullion wrote to the ILSC on 26 September 2018 proposing a series of preconditions to Commonwealth approval of the NAIF loan. In essence, these required a dollar for dollar repayment of a pre-existing Commonwealth loan to the ILSC made in 2016 totalling $65m. This loan allowed the ILSC to repay outstanding vendor finance associated with the purchase of the Ayers Rock Resort in 2010/11. The Minister’s 26 September letter apparently did not fall within the scope of the FOI request and thus has not been published. The ILSC Chair’s response dated 23 October 2018 has been released, along with Minister Scullion’s acknowledgment dated 13 November 2018. In that latter correspondence, he begins by stating: ‘Thankyou for your letter of 23 October accepting the Commonwealth’s conditions of consent associated with Voyages application for a Northern Australia Infrastructure Facility loan’ (FOI documents 1 and 2).

 

Ministers Canavan and Scullion’s joint media release announcing the NAIF loan dated 13 December  (link here) failed to mention the conditionality imposed by Minister Scullion.

 

Neither document on the NAIF website mentions the conditions imposed on behalf of the Commonwealth by Minister Scullion. These conditions effectively offset the NAIF loan finance in its entirety and thus negate all the benefits listed as flowing from the NAIF loan.

 

 

In a previous blog post on Indigenous participation in the NAIF (link here) , I noted that the NAIF loan to Voyages breached the Ministerially approved Investment Mandate governing the operations of the NAIF facility in a number of ways. The post is worth reading in full, not least for the reminder of the ANAO criticism levelled at the NAIF Board regarding its general standards of administration. In relation to the most significant breach, I noted:

In other words, notwithstanding the change that allowed NAIF to finance 100 percent of a project, the financial arrangements still required NAIF to assure itself that the Commonwealth was not the majority risk bearer. Sub-paragraph (d) prevents NAIF lending to a project where ‘the Commonwealth overall’ carries the majority of financial risk in a project….

[Snip]

…In the case of the Voyagers proposal, it appears that both NAIF and the Minister have ignored the requirements of subsection 12(1)(d). The reason this is the case is that Voyages Indigenous Tourism Australia is a wholly owned subsidiary of the Indigenous Land and Sea Corporation, which itself is a Commonwealth statutory corporation established by legislation.

 

What is now apparent following the release of the correspondence referred to above is that the entire NAIF loan to Voyages was a sham insofar as it was granted on the condition that the ILSC pay down at least $27.5m of the pre-existing Commonwealth loan. In fact, a prepayment of $23.5m was made in January 2019, and repayments of $1.95m were made quarterly thereafter (refer to p.66 of the ILSC Annual Report 2019-2020).  On 20 December 2019, the ILSC Chair wrote to Minister Wyatt (FOI document 41) advising him that the ILSC was in a position to repay the outstanding balance of the Commonwealth loan in January ‘due to the improved performance of the Ayers Rock Resort’.

 

While my September 2018 post concluded that the NAIF loan effectively amounted to the Commonwealth funding itself, the revelation of the Ministerial precondition makes it crystal clear that the NAIF loan was not required to upgrade the airport, but was used to replace specific pre-existing loan finance to  Voyages from the Commonwealth.

 

The loan approval by the NAIF Board was a breach of the NAIF Act and in particular its Investment Mandate. However, the decision by Minister Scullion to impose a condition on the approval of the loan appears to have no statutory basis, and represents a much more egregious shortcoming. The former might be argued to be a technical breach by the NAIF Board, the latter (in the absence of any justification) is clearly a case of a minister acting beyond his powers.

 

While the Minister for Industry has a power under the NAIF Act (section 11) to withhold approval of a NAIF Board decision, the circumstances under which he may do so are limited. Section 11 (4) stipulates a ‘rejection period’ of 21 days from the date of a loan approval and section 11(5) states:

However, the Minister may give the rejection notice only if the Minister is satisfied that providing the financial assistance would: (a)  be inconsistent with the objectives and policies of the Commonwealth Government; or (b)  have adverse implications for Australia’s national or domestic security; or (c)  have an adverse impact on Australia’s international reputation or foreign relations.

 

Minister Scullion was not the relevant Minister, the rejection period had long passed, and the conditions in subsection 5 on their face do not appear to have been met. For the Minister to impose conditions was in effect to threaten to arrange for the NAIF Board approval to be with-held or rejected.

 

Apart from the apparent misuse of ministerial power involved, the preparedness of the Department of Prime Minister and Cabinet and later the NIAA to facilitate these arrangements is a serious concern, as is the failure of the ILSC to act independently of the Minister’s irregular request.

 

The effect of all this was to effect a blatant sleight of hand by former Minister Scullion and perhaps others within the Executive branch. The result was that the public at large, and in the process the Parliament, were misled. The NAIF loan was not required to upgrade the airport and create jobs, including Indigenous jobs, but instead was a means to bring to finality an outstanding Commonwealth loan. That loan was from the start highly unusual and designed to insulate the ILSC from the adverse financial consequences of the decision taken in 2010 to purchase the Ayers Rock Resort at an inflated price. The failure of the ILSC to reveal the explicit conditions imposed by Minister Scullion in its 2019 and 2020 Annual Reports appears to confirm its implicit complicity in the Government’s irregular and probably illegal political agenda, and reflects poorly on its substantive independence notwithstanding the formal independence granted by its constituting legislation.  

 

One of the policy implications of this revelation is to highlight a lack of effective due diligence by the NAIF. Another is to highlight the appalling shortfall in funding for Indigenous projects in the NAIF’s operations. NAIF was the core financial element in the Government’s White Paper on Northern Development, Our North, Our Future (link here). To date, NAIF has provided funding of a mere $12.5m for only one other project involving Indigenous proponents (link here) out of an allocation of $5bn. This equates to 0.24% of the available allocation, and certainly suggests a less inclusive meaning to the words ‘our north, our future’. I aim to give these issues closer consideration in the near future following the recent release of a statutory review into the NAIF by Minister Pitt (link here).

Vale 2020

 

At the end of 2020, I thank the small coterie of regular readers of this idiosyncratic blog and the wider group of more occasional readers.

 

To express my appreciation and acknowledge my readers, I have attached a link to a short article by Barry Lopez “Love in a Time of Terror: On Natural Landscapes, Metaphorical Living, and Warlpiri Identity” (link here).

 

Lopez, who died last week, was previously unknown to me. His best known book was Arctic Dreams, an account of five years living in the Arctic. A 2005 review (link here) by Robert Macfarlane, whose work I have read and enjoyed, described Lopez as ‘the most important living writer about wilderness’.

 

This sentence from Love in a Time of Terror struck a chord with me:

It is more important to live for the possibilities that lie ahead than to die in despair over what has been lost.

 

Apart from the challenge of seeing the world in non-rational and metaphorical ways, embedded in these words is a deep respect for human agency, and perhaps even an argument for the importance of individual agency over structure.

 

It is an essential thought and touchstone, even for policymakers, upon which to end 2020, and begin 2021.

The Joint Council on Closing the Gap review of the National Indigenous Reform Agreement

 

His promises were as he then was, mighty,

But his performance, as he is now, nothing.

Henry VIII, Act 4, scene 2.

 

The path-breaking December 2018 Closing the Gap Partnership Agreement (link here) between COAG and First Nation interests made a commitment to review the National Indigenous Reform Agreement (NIRA). The NIRA established and formalised the Closing the Gap process that operated from 2008 to 2018. The Partnership agreement also established a Joint Council co-chaired by the Minister for Indigenous Australians and the CEO of the Coalition of Peaks, Ms Pat Turner.

 

At its second meeting on 23 August 2019, the Joint Council met to consider the Closing the Gap process. The communique issued after the meeting (link here) noted:

The Joint Council considered a review of the National Indigenous Reform Agreement (NIRA), completed by the Partnership Working Group, and agreed to develop a new National Agreement on Closing the Gap, covering the next ten years, continuing the NIRA’s successful elements, strengthening others and addressing foundational areas that were previously excluded from consideration.

 

On 26 August 2019, I submitted a Freedom of Information request for the review. Following a long and convoluted 15 month process, that review was released in full on 23 November 2020, and is available on the FOI disclosure log of the NIAA (link here).

 

The review takes the form of a nine page agenda paper for the Joint Council prepared by a ‘Partnership Working group’, presumably comprised of representatives of NIAA, the states and territories, and the staff of the Coalition of Peaks. It is headed ‘Lessons learned from the National Indigenous Reform agreement’. The review paper is not so much an independent assessment of the NIRA as a consensus document that lays out its supposed strengths and weaknesses. It thus effectively provided each of the parties with the opportunity to introduce their perspective, and to begin to lay out their log of claims for the negotiation ahead. This is presumably the explanation for the countervailing and somewhat inconsistent views embedded throughout the document.

 

This post does not attempt to summarise the document. It is short and easily read. Instead, I have subjected it to a brief critical assessment and commentary, focussing particularly on the more contentious or self-serving claims made. Going forward, the review document will also provide a useful benchmark against which to assess the final outcomes of the negotiation as agreed in the July 2020 National Partnership on Closing the Gap (link here).

 

In a section titled Strengths and Weaknesses - Overview, the review states:

Target setting was highly aspirational. While this helped to highlight the issues and create a sense of urgency, the trajectories were not based on historical trends or evidence about what could be achieved in a given timeframe. This lack of distinction between final policy goals and an ambitious-yet-achievable rate of progress further contributed to a deficit narrative by creating the perceptions of continuous failure…

 

This text is both deeply problematic and fundamentally misconceived. Problematic, because it betrays an underlying agenda to abjure aspiration, and replace it with acceptance of limited progress or even implicit regress. The whole point of a strategy is to aspire, to lay out objectives that will move the nation and First Nations forward, and devise a feasible pathway to achieving those objectives. Misconceived, because it betrays an attempt by governments to appropriate and apply to themselves an argument or viewpoint that has been promulgated by Indigenous advocates to the effect that pointing to deficits implicitly define First Nations citizens as failures. The argument may have some validity when applied to analyses of the actions of Indigenous peoples, but in my view, it has absolutely no validity when used as an excuse for government failures or shortcomings.

 

Governments are effectively arguing that we should not focus on their failures and the structural implications of their policies, because to do so somehow reflects negatively on First Nations. Deconstructed, this text is signalling that governments are not committed to substantively closing the gap, but instead are focussed on the mere appearance of action.

 

In a further paragraph, the review notes that while NIRA did not provide funding:

…it was underpinned by a series of Indigenous specific and mainstream National Partnerships that committed Commonwealth funds often paired with state and Territory funds. These provided the critical foundation for Closing the Gap implementation, and as these began to expire from 2013 without renewal, bipartisanship and implementation fell away.

 

This text is misleading in two respects.

 

First, the pairing of state funding was invariably comparatively minor. The Commonwealth provided the vast bulk of funding under NIRA addressing Indigenous disadvantage. One might argue that the states should have provided more, but the reality is that Closing the Gap was effectively a Commonwealth Government initiative. The states do not have the fiscal capacity of the Commonwealth, and are subject to electoral and political dynamics that virtually ensure under-investment in addressing Indigenous disadvantage. Commonwealth policy leadership is essential if the nation is to successfully close the gap.

 

Second, the non-renewal of the National Partnerships as they expired was a conscious and explicit decision of the incoming Abbott Government elected in September 2013. Bipartisanship and implementation did not gradually and incrementally ‘fall away’. These were deliberate decisions made by the current Liberal/National Coalition Government to stop the pre-existing and arguably inadequate funding directed to addressing Indigenous disadvantage, and thus closing the gap. The most egregious example of this was the decision not to renew the National Partnership Agreement on Remote Indigenous Housing that I have analysed at length in previous posts. See the dot points on page 4 of the review document for more specific examples.

 

Finally, the review notes:

Two additional factors compounded the impacts of this withdrawal of resources: the absence of a formal structure for Aboriginal and Torres Strait Islander involvement in the governance of the framework, and the dissolution in 2013-14 of the two key oversight bodies for the Closing the Gap framework (the COAG Reform Council and the Working Group on Indigenous Reform). Both factors facilitated a period of policy drift. The Close the Gap campaign’s 10-year review concluded that:

By 2014-15, the Closing the Gap Strategy as a coherent, national response to Indigenous disadvantage was effectively over. […] In practice, [it] persists in name only…

 

This text was clearly inserted at the insistence of the Coalition of Peaks. In a stark assessment, it supports and reinforces the points I made above regarding the underlying commitment of governments.

 

Implications

 

So what are we to make of this rather sorry document. At one level, it might be argued that it has been overtaken by the National Agreement on Closing the Gap, and is arguably of minimal or merely historical significance. That is certainly its formal status.

 

However, to my mind, it points directly towards the risks inherent in the current Closing the Gap institutional framework. It reinforces the deeply embedded predispositions of the current Government (and potentially future governments) merely to go through the motions while kicking substantive reform down the road.

 

It points to the path-breaking importance of implementing the Priority Reforms set out and agreed to by all governments in the National Agreement on Closing the Gap.

 

It also points to the very real risk of under-investment by Governments in addressing the Closing the Gap targets identified in the new National Agreement. It is significant in my view that since the announcement of the Agreement and notwithstanding the largest ever stimulus budget in the nation’s history, the Commonwealth has not come forward with any major budget initiatives apart from funding of $46.5m for Community Controlled service agencies (link here). Similarly, the states have made no substantive funding announcements, apart from funding for community controlled services. Western Australia recently announced funding of $4.8m for the community controlled sector (link here).

 

While funding community controlled services is important, addressing substantive disadvantage requires much more substantial funding commitments. These are nowhere to be seen. There is a real risk that Governments have decided to invest in the community controlled sector to facilitate a strategy of non-investment in substantive reform. The lessons of the implementation of the NIRA, identified in the review report the Government sought to keep hidden, have clearly not yet been learnt.

 

Furthermore, there is at present no single data repository recording the investments of governments under the agreement. This is a priority if the agreement is to have a substantive impact.

 

Finally, the fact that the Government was not prepared to release this document immediately it was requested points to an underlying fear that its contents would reveal too much about the governments underlying agenda during the negotiation of the National Agreement. That in itself lends credibility to the analysis above. It should be cause for real concern in the engine room of the Coalition of Peaks.

 

Transparency is an important means of ensuring governments are kept to their word. In coming weeks, I hope to post a short outline of the arguments used to justify the review’s non-release for over a year.

 

I have previously expressed concern about the level of substantive commitment by governments generally, and the Commonwealth in particular, to the substantive reforms required to close the gap (link here and link here). Close analysis of the NIRA review does nothing to change my mind on this score.

The media and Indigenous political aspirations: a book review

 

Here is a link to a book review I recently wrote published on the Australian Policy and History website (link here).

The role of the media, broadly defined, in covering Indigenous policy is under-analysed in academic and wider public discourse. In particular, the footprint of the media is very uneven and increasingly highly segmented. The book under review is one very useful and stimulating perspective.

Of course, a focus on mainstream media is arguably overly narrow. Indigenous art, broadcasting, film making, and social media activity are alternative ways for First Nations’ to promulgate and circulate their own narratives and perspectives.

Further, as my review hints, the ways in which governments and corporate interests use the media (in all its formats) to advance self-serving narratives relating to aspects of Indigenous policy deserve critical analysis too.

This is to say that the role and impact of the media on Indigenous policy and political aspirations deserves greater focus, but perhaps within a wider theoretical framework or set of frameworks than usually brought to bear.

Minister Wyatt and the NT Land Councils: a policy rapprochement?

 

So may the outward shows be least themselves:

The world is still deceived with ornament.

The Merchant of Venice, Act 3, scene 2.

 

Recently there have been signs of improved relations between the Northern Territory Land Councils and the Commonwealth. This post sets out to document some of the public milestones in that process, examines the possible motivations of the respective parties, and asks what this means for remote policy generally.

 

But first, some context. The NT land councils are established under Commonwealth legislation and constitute hybrid statutory corporations. Their members selected by Aboriginal communities, their funding guaranteed (subject to ministerially approved budgets) outside the budget process, their expenditures audited by the ANAO.

 

The key financial mechanism within the NT Land Rights Act is the Aboriginals Benefit Account (ABA). It is funded by automatic appropriations by the Commonwealth equivalent to the royalty revenues accrued by the Commonwealth and the Northern Territory from mines on Aboriginal land; thus the term ‘royalty equivalents’. The ABA is used for three broad purposes (I am ignoring some minor technicalities here). First, section 64(3) requires 30 percent of all ABA revenues be paid to land councils for distribution to corporations whose members are affected by the resource project that generates the royalty equivalent appropriation.  Second, section 64(1) provides for an amount determined by the Minister to be paid from the ABA to fund the administrative costs of the Land Councils. Third, the Minister can determine further amounts to be paid ‘to or for the benefit of Aboriginals living in the Northern Territory’ (s.64(4)). An advisory committee is established to assist the Minister in this latter function.

 

The four land councils (NLC, CLC, Tiwi LC, and Anindilyakwa LC) operate as key institutions and gatekeepers in relation to Aboriginal land extending over more than fifty percent of the NT. Moreover, their significant budgets and employment, their influence over royalty distributions, and their networks into the broader Indigenous domain means that they exercise significant political power within the NT. As early as 1988, they were described as ‘para-governmental’ in nature (in an article I co-authored with Jon Altman). Consequently, the land councils have multiple points of interaction with all three levels of government in the Northern Territory and these extend from cooperative to conflictual modes of engagement.

 

Recent Developments

 

I want to point to six seemingly independent data points, and argue that they are elements in the separate, but overlapping, larger political and policy strategies on the part of both the Commonwealth and by implication the Land Councils.

 

Data point one: the 2019-2020 Annual Report of the NIAA (link here), which includes the financial statements for the ABA, includes the following salient information. As at 30 June 2020, the net assets (excluding future commitments) of the ABA were $1,266 million (let’s call it $1.26bn), a 19 per cent increase over the $1.06bn at 30 June 2019 (p.173 NIAA Annual Report). This increase was the result of higher mining royalty revenue collections by the NT Government, largely originating from manganese mining at Groote Eylandt.

 

Data point two: the Minister approved $10m in emergency support payments to the four land councils as part of the larger $123m COVID-19 support package approved in April 2020. This is mentioned in the ABA Annual Report at page 173. In addition, but not explicitly mentioned except in the financial statements, the Minister approved an increase in administrative support funding to the four land councils of $24.2m, up from $61.4m to $85.6m. The two larger land councils were the major beneficiaries. This represents an unannounced and unexplained increase in funding of 39.4 percent over the previous year’s funding (refer p.162 NIAA Annual Report).

 

Data point three: In both a speech to the NLC (‘Connecting and activating the Northern Territory’) and in a media release, Minister Wyatt announced on 25 November 2020 what he termed a ‘$100m stimulus package for Indigenous businesses and jobs in the NT’ (link here and here). In the speech, he asserted that he was signing off on a Land Council proposal.  In the media release, he states:

“Working with the NT Land Councils, we are releasing $100 million from the Aboriginals Benefit Account (ABA) for Aboriginal people to create and sustain jobs through capital injections in ‘shovel-ready’ economic, social and infrastructure projects.” (emphasis added).

 

Data point four: In the speech to the NLC, the Minister attacked the NT Government for their failure to make adequate progress on housing upgrades funded by the Commonwealth.

It is unacceptable that so many Indigenous Australians in the Northern Territory live in over-crowded and inadequate housing. This is despite the Commonwealth committing to providing the Northern Territory with $550 million over five years to deliver 1,950 new bedrooms, equivalent to 650 houses, in remote NT communities.

The Northern Territory Government’s roll out of these houses is slow – and it is unacceptable.

The NT Government is responsible for housing and essential services. People in remote communities should expect their housing services to be provided – just as they would in any other location in Australia.

The fact that this is not happening is a disgrace – and in the year 2020 – and looking ahead to 2021 - something that neither I nor the Northern Territory Government should allow to happen.

 

Data point five: In the same speech, the Minister stated:

I am serious when I say – where we have failings – we must explore new ways of working. To this end, I note that the Land Councils are continuing to develop a proposal which would see a direct partnership established with the Commonwealth for the provision of housing services in the NT – led by the Central Land Council. We don’t need to accept the current situation as the only option.

 

Data point six: Notwithstanding the Minister’s visit focussing on a major funding announcement directed to job creation, there was no mention of advice from the Northern Australia Indigenous Reference Group established by Ministers Canavan and Scullion to assist in the implementation of the Government’s 2015 White Paper on Northern Development: ‘Our North, Our Future’. The Department of Industry , Science Energy and Resources website lists the most recent meeting of the IRG as December 2019 (link here). There appears to be a major hiatus of the IRG’s work since the changeover in ministers from Canavan to Pitt and from Scullion to Wyatt. This parallels the Government’s decision to discard (without announcement) the Prime Minister’s Advisory Group on Indigenous Affairs (link here).

 

Implications

 

So what are we to make of these events, individually and together?

 

Over the years I have worked in proximity to Ministers, I have observed a tendency for Ministers to adopt a transactional mindset when making decisions that bestow favours or benefits on particular interests. For this reason, in relation to the Minister’s unannounced decision to increase Land Councils’ funding, it is a reasonable to assume that he made the decision with an expectation of a quid pro quo of some kind. He may or may not have had a discussion with key Land Council players regarding his expectations, and I am certainly not suggesting that any such expectation is necessarily inappropriate let alone illegal.

 

The most plausible reason for the Minister to seek to woo the NT Land Councils are to obtain a political advantage or benefit of some kind. An outcome that created a disincentive on the Land Councils to support the Labor Party either in the NT or federally, or to not criticise the Liberal/National Party aligns with the political agenda of the Liberal/National Party Government federally and of the CLP in the Territory.

 

There was a Territory election in August 2020 just two months after the end of the year where the increased funding occurred. There may well be a Federal election in the second half off next year. Indigenous voters in the NT are no longer rusted on Labor voters and have shown in recent elections that they are prepared to vote for either party and/or Independents. There are also indications that many Indigenous voters have tuned out and do not vote despite the existence of compulsory voting (link here).  While Labor has won both House of Representatives seats in the NT in the last election and won a return to Government in the Territory in August, the margins are not so wide, particularly in some electorates, that it would not be worth investing in raising political support for non-Labor parties and candidates.

 

An essential element in pursuing a successful political strategy such as appears to be in place here would be to promulgate a pro LNP / CLP narrative amongst key Indigenous thought leaders and interests and/or to negate pro-Labor or Green support from key organisations and leaders. Some version of this strategy is likely behind the motivations of Minister Wyatt in going out of his way to improve relations with the Land Councils while promulgating an anti-NT government narrative on housing. Whether such a strategy will work is unclear.

 

Of course, the Indigenous leadership of organisations such as the Land Councils understand these motivations, and the risks of governments effectively buying their silence. These issues go with the territory.

 

While the description above might accurately be characterised as a statement of the obvious:  ‘politicians indulge in political behaviour’, my concern is to focus on the associated implications for policy when institutional domains become politicised.

 

One of the risks with the overt politicisation of an institution such as the ABA is that it can inhibit the emergence of good long-term policy outcomes.

 

A key challenge for engaged citizens, including Indigenous citizens, seeking to understand what is occurring in relating to policy development in particular sectors are the extraordinarily poor levels of transparency and the absence of well presented and basic information to underpin announcements and ongoing government decisions.

 

In the present case, for example, there is no information on the public record about the nature of the Land Councils’ proposals to which the Minister is responding in announcing his $100m ‘stimulus package’. The policy effectiveness of this initiative in creating and sustaining jobs (the Minister’s objective) will depend in large measure on the quality of the grants made from the ABA. Given that last year the ABA only spent around $20m in general grants, it is not clear that there exists a pool of high quality ‘shovel ready’ projects to fund. In the absence of a comprehensive evaluation, it is unlikely we will ever find out how that goes however, as neither the Minister nor his predecessor publish in an accessible place information on grants made under section 64(4), nor any information on the outcomes of the grants made. I was critical of this in a 2017 post (link here), and note that previous Governments up to and including the Rudd/Gillard/ Rudd Government did make such information accessible and available. The last major evaluation of the operations and effectiveness of the ABA, undertaken by Jon Altman, was published in December 1984.

 

Similarly, in relation to remote housing, the lack of transparency is overwhelming. Minister Wyatt’s critique of the NTG is data free although he clearly has access to detailed performance data as it is standard in funding agreements. The NIAA website does not provide basic data on the progress of expenditure in relation to the Commonwealth’s $550m investment in the NT. The NT Housing and Local Government Department website does provide some quite basic information but has a range of shortcomings including a lack of clarity on timeframes being reported upon (link here). That data shows that while the NTG has spent or contracted some 40% of its own allocation, it has only spent or contracted 28 % of the Commonwealth’s allocation. What is unclear from the table is whether the Commonwealth allocation began after the NT allocation. Also unclear is what action has been taken by Commonwealth officials to ensure that the Commonwealth contribution was being prioritised, a matter that ultimately is Minister Wyatt’s responsibility.

 

While the NT Government’s performance in recent years in constructing remote housing and maintaining the existing housing asset base has been underwhelming at best, and in many respects unacceptable, the hypocrisy that suffuses Minister Wyatt’s narrative is breathtaking. His Government walked away from funding responsibility for remote Indigenous housing nationally notwithstanding the Commonwealth’s prior involvement over more than fifty years. His Government refused to renew the ten-year $5.5bn National Partnership put in place in 2008, and walked away from a ten-year allocation of $1.6bn or $160m per annum in the NT. In the NT alone, it was replaced by a five-year offer of $550m (or $110m per annum) only when the Commonwealth realised it was exposed. Some ten years ago, the Land Councils decided to insist that in relation to many (but not all) communities in the NT, they would only agree to Commonwealth held leases to secure the NPARIH investments in those communities. The Commonwealth assented. This meant that a total Commonwealth retreat from funding would leave it with landlord responsibilities in relation to many hundreds of houses in remote communities that it would have to deliver itself.

 

The suggestion by the Minister that he is considering a CLC sponsored proposal for a partnership with the Commonwealth to deliver remote housing in the NT is tantalising. It may be a positive sign. Or it may be merely a ploy to justify inaction. Again, there is limited information available on the public record; a media release from the Land Councils in July 2020 appears to be the only public record available (link here). More importantly, the issue of the establishment of a Territory wide community housing provider is not something that should be seen only through the single prism of the existing public housing asset base, and nor should it be seen as a way of bypassing the NTG (which was the implicit narrative deployed in the Minister’s speech).

 

Given the substantial and potentially growing demand for remote housing, there is a cogent argument for a large-scale community housing provider across the NT, supported by governments and established with the capacity to source private sector borrowings. The existence of a new and alternative source of housing in remote communities would create significant incentives for Government public housing providers to lift their game and offer more choice to remote residents. The absence of a private housing market in these locations, and the significant levels of poverty and formal unemployment suggest that innovative policy solutions such as this idea should be explored.

 

Finally, the absence of the IRG from the Minister’s public narrative is intriguing, and throws light on broader approaches by governments to the use of appointed advisory bodies. I previously posted on the lack of ambition of the Government’s policy agenda in the White Paper on Northern Australia and the role of the IREG in that process (link here). In particular, it aligns with a hypothesis that such bodies are used as a means of internalising policy debate; as a means of managing down community expectations; and slowing down policy development. Once the political and policy agenda moves on, and/or the Advisory body membership refuses to adhere to the implicit expectations of Ministers, the advisory body can be quietly sidelined and eventually disbanded. This was the fate of the Prime Minister’s Indigenous Advisory Council and appears to be the likely fate of the IRG.

 

To sum up, I would make three general points. They share a simple assumption: that good policy is good politics; however good politics is not always good policy.

 

First, it is past time that governments had a close look at making better use of the ABA and the associated royalty flows into many communities. An obvious way forward would be to initiate a forward looking evaluation/review process in conjunction with Indigenous interests designed to identify opportunities for better use of the existing royalty and royalty equivalent flows in remote Australia. The risk Indigenous interests face is that as the overarching governance of the current system becomes tired and degraded, and in the absence of a culture of transparency, there will emerge higher levels of politicisation, poor accountability, and perhaps even corruption in the ways governments deal with these institutions. This would undermine trust in the system, and could lead to significant reductions in financial resources to Indigenous communities into the future.

 

Second, governments at all levels must lift their game in terms of transparency and the presentation of clear and accessible information to citizens. While this is relevant across the whole span of government activity, it is particularly important in the Indigenous policy domain as it operates to inhibit building the case for the necessary policy reforms to allow Indigenous interests to achieve their political and policy aspirations. In the absence of such transparency, citizens are within their rights to assume the worst. Trust in governments is declining. If governments and politicians value our democratic systems, they should demonstrate that by being much more transparent about their decisions, the processes they use and the outcomes they achieve. Statutory corporations in the Indigenous policy domain are not exempt from these same dynamics, and indeed it is incumbent on the Minister to ensure that they too meet normal accountability requirements.

 

Third, while the NT is a special case insofar as the Commonwealth has specific responsibilities derived from the NT’s status as a territory and the existence of Commonwealth land rights legislation, the policy issues at play in the NT pertaining to remote communities are also present in other jurisdictions. The Commonwealth should use its more direct policy involvement in the NT to inform a new national policy approach responding to the very specific needs of remote communities. In particular, while it espouses the rhetoric of economic development, the current Commonwealth Government has failed to pursue any substantive policy reforms that would deliver sustained improvements in economic status. One obvious starting point would be remote housing policy; a second would be to ensure that the financial provisions related to land rights legislation in the NT and native title across the board are fit for purpose. A third not discussed in this post would be to reverse course on the punitive welfare policies applicable to remote Australia (link here).

 

The challenge for the Government and its Minister for Indigenous Australians is to ensure that the ‘outward shows’ of working with Indigenous interests is more than politics, more than mere ornament, and delivers substantive and sustained policy reform. The challenge for Indigenous leaders and interests and mainstream citizens alike is not to be ‘deceived with ornament’. Unfortunately, the fact that Shakespeare’s words still ring true 400 years after they were written is cause for pessimism rather than optimism.