That was less than 10% of its annual expenditure.
“It presents ambiguous and confused findings,” the Minister said. of the review released on Saturday. (Sat 3rd May 2014 Nigel Scullion. Media Release.) On the Review of the Indigenous Land Corporation and Indigenous Business Australia Dated 17 February 2014 and not released until Saturday 3rd May 2014
Too right it does. But why? So much of the report can be read as supporting integration of the ILC and the IBA but they did not recommend integration.
The Department of the Prime Minister and Cabinet (PM&C) engaged Ernst Young (EY) to review the structure of IBA and the ILC. The primary focus was on Indigenous economic development (IED). Specifically, EY’s task was to assess the effectiveness of IBA and the ILC in driving IED, and how enhanced outcomes in IED could be achieved by Government including through consideration of an integration of IBA and the ILC.
Even though the report recognised that:
Synergies may be realised through full integration of IBA and the ILC from consolidation and reformulation of board, offices, compliance costs, capital avoidance, procurement, processes and systems New centralised structure with integrated operating model provides an opportunity to benefit for a more coordinated approach across IED and other outcomes. For example, improved management decision making and capital allocation can generate dynamic efficiencies. PAGE 21
they recommended continued separation and an expansion . In an appeal to their own expertise which they claim to be “deep analysis” the writers present a plethora of spider web graphics which serve only to reiterate ambiguity and to conceal any reasoning towards their conclusion.
Perhaps the most significant comment in the 86 page report is tucked away on page 65. Where they belatedly suggest that there could usefully be
an analysis of the benefits of a relaxation of existing assumptions and constraints (including the operation of the “Land Account”) which may yield greater benefits in driving Indigenous economic outcomes over a medium to long term.
The writers of the report acknowledge their limited capacity to conduct any independent research and instead relied on submissions from interested entities such as the ILC and the IBA. This may well explain why they persistently refer to the Land Account as though it is sacrosanct and provide an incomplete history of its establishment.
6 The “land promise” reflects the establishment of the Aboriginal and Torres Strait Islander Land Account (the Land Account) to provide a secure income to the ILC10. In effect the ILC was the culmination of decades of action by Indigenous Australians to seek recognition to address their dispossession from traditional lands and seas. The most significant and high profile achievement was the Mabo decision 11 when the High Court of Australia recognised common law native title for the first time. 7 There were many consequences arising from this decision, and three commitments made by the Keating Government: “to enact native title legislation, to establish a land fund for Aboriginal and Torres Strait Islander people whose native title had been extinguished and a social justice package.12” The native title legislation was enacted, the ILC and the land account established but while the features of a social justice package were identified these were never enacted formally. PAGE 7
What is omitted from that narrative is that the Land fund was negotiated in a post Mabo, but pre-Wik legal landscape. The Howard government was elected,( post Mabo), on 2nd March 1996 but Wik was not delivered until 23rd December 1966.
Main players thought that Wik was going to mean that Native Title would not survive where pastoral and other leases had been granted. When the Federal Government was negotiating all major parties thought the Wik people would lose and native title would only be possible over just 35% of the mainland.
Noel Pearson said during that in-between period:
My anxiety proceeds from a belief that the way in which advocates and increasingly, judges, have been prosecuting the law on native title ..... I hold a great anxiety that the High Court's consideration of the Wik Case might lead to the common law developing in an illogical and unnecessarily unjust way.
When “masses” of extinguishment was agreed to by the indigenous negotiating parties the Land Fund was set up with “masses” of dollars to purchase land where native title could not be recognised.
But after the “masses” of Land Funding was agreed to as part of the acceptance of the 10 point plan only then was Wik handed down and:
Instantly the acreage open to claims rose from 35 per cent to 78 per cent. It is noted in Wik itself that about 42 per cent of Australia is under pastoral leases, and that in some States the figure is as high as 80 per cent.8
Dr John Forbes
So after Wik the area of Australia subject to native title claims was far more than double the area to that which those who negotiated the billion dollar Land Fund believed it would be.
Perhaps the success of Native Title Land Rights over such a large area is the reason why in 2013 the Indigenous Land Corporation had total expenses of $118 million but only expended 9.7 million of that on land grants!
On these figures the ILC uses only a quarter of its annual government donation or less than 10% of its annual expenditure on land grant purchases.
9 What can be said of the ILC is that its effectiveness in driving IED is naturally limited based on its remit PAGE 11
and
12 Finally, underpinning many of the inhibitors is the question of financial capital. Where there are opportunities to exploit there is often a requirement for investment. Both the ILC and IBA provide opportunities for Indigenous organisations, and in the case of IBA individuals, to access grants or loans. However, there were a series of examples provided during the consultation that demonstrated either the need for access to capital in a timeframe or of a scale that the ILC or IBA could not support. PAGE 12
With ILC 2013 having net assets of $1.968 billion and a further 45 million government input each year, plus IBA’s $1.093 billion net assets and $140 million (page 50 of the report). It appears that cash is not the problem. So what is?
The report repeatedly refers to the legislative capacity for ILC funds to be made available:
18 The ATSI Act in s.191EA already allows the ILC to “make payments to Indigenous Business Australia to assist Indigenous Business Australia to carry out its functions”.
Surprisingly it reports no one knew if this had ever been tried!
19 Whilst stakeholders within IBA or PM&C were not aware if this provision had been exercised, it presents a valuable opportunity for IBA and the ILC to resource projects and initiatives within an effectively controlled
governance environment. PAGE 20
The report writers appeal to their own expertise which they call their “deep analysis” but consider just three options: “Merger” of the two current entities (without enhancement), “Stand alone” of the entities as is, or the creation of a “new entity”.
What they don’t seem to consider is either merger or subsuming of one into the other with enhancement to fill the perceived missing elements even though they do set out to identify them:
4 In order to create maximum impact, the new entity would take on new functions that address the ‘missing elements’ of IED. [Indigenous Economic Development] 5 One of the central challenges to this proposal is a multi-purpose entity being overseen by a single Board. 6 This is made more complex by the role of the Land Account.
7 The Land Account was established to provide a secure income in-perpetuity to the ILC to provide economic, social, cultural and environmental benefits to Indigenous people by assisting in the acquisition and management of an Indigenous land base. 8 We do not understand that there is any interest in changing to purpose of the Land Account or the ILC’s functions towards commercial activity. Instead we are clear that by virtue of the Land Account effectively being annexed from the review we have presumed that its original intent remains intact and thus the Board of a new entity emerging from the ILC and IBA would be required to quarantine its commercially focused decisions from activities funded by the Land Account. PAGE 59
Even though the report recognised that:
Synergies may be realised through full integration of IBA and the ILC from consolidation and reformulation of board, offices, compliance costs, capital avoidance, procurement, processes and systems New centralised structure with integrated operating model provides an opportunity to benefit for a more coordinated approach across IED and other outcomes. For example, improved management decision making and capital allocation can generate dynamic efficiencies. PAGE 21
For reasons which can only be explained by their received view that the “Land Account” is something sacrosanct and to remain isolated the report does not recommend the integration of IBA and ILC which will bring about these synergies. Instead they say:
Our preferred option honours the integrity of the “land promise” PAGE 23
Their desire to protect the Land Fund at all costs maybe the real explanation why they avoid recommending an amalgamation that would more logically lead to the synergies mentioned. A path they did not go down because:
Within the time available EY did not have the opportunity to provide a detailed analysis of the optimal ‘architectural’ structure of Commonwealth government effort, given that this would require a broader analysis and critique of both Commonwealth and State and Territory government policies. PAGE 25
EY’s findings and conclusions therefore can only be based on the documentary evidence examined by the review team. There may be other documentary evidence which, if considered by the review team may lead to alternative findings, observations and recommendations. PAGE 27
After having read those qualifiers it seems obvious that the report cannot be relied on for anything much at all.
Had the writers been informed that the Land Fund exceeded the “land promise” by more than double that necessary after Wik, perhaps they would have not so readily accepted that the “land fund” should not be part of the review in the pursuit of indigenous economic development.
Perhaps then they would have more flexibly considered alternative findings, observations and recommendations and sought to find a way in which:
Synergies may be realised through full integration of IBA and the ILC from consolidation and reformulation of board, offices, compliance costs, capital avoidance, procurement, processes and systems.