• ILC property Crocodile/Welcome Station near Laura, Cape York QLD (Facebook / Indigenous Land Corporation)Source: Facebook / Indigenous Land Corporation
The Government's new Aboriginal and Torres Strait Islander Land and Sea Future Fund could impact the Indigenous Land Corporation's annual funding - and more, writes researcher Michael Dillon.
By
Michael Dillon

4 Apr 2018 - 12:00 PM  UPDATED 4 Apr 2018 - 12:14 PM

In February this year, as part of the Close the Gap statement to Parliament, Prime Minister Malcolm Turnbull announced a series of changes to legislation relating to the Indigenous Land Corporation (ILC), and the related Aboriginal and Torres Strait Islander Land Account which provides the Corporation’s annual funding. Prime Minister Turnbull stated:

A new Aboriginal and Torres Strait Islander Land and Sea Future Fund represents a significant reform in the land rights journey of our country, as the $2 billion land acquisition fund set up following the Mabo (No 2) decision has been plagued with poor returns, meaning lost opportunities for the Indigenous Estate. Our reform will see the fund transferred to the Future Fund, delivering a $1.5 billion benefit over 20 years.

These additional funds will also mean that the Indigenous Land Corporation, the Commonwealth agency that acquires land on behalf of Aboriginal and Torres Strait Islander Australians can now have its remit expanded to include sea country.

The Government has now introduced legislation to implement those changes. Last week, Minister Nigel Scullion announced further details of the proposed changes. They were; a name change for the Indigenous Land Corporation to the 'Indigenous Land and Sea Corporation’, accompanied by an extension of its statutory remit to allow it to acquire and provide management assistance to Indigenous owners of sea and freshwater country. In addition, a new Land and Sea Future Fund will be established by separate legislation which will be managed by the Future Fund Board of Guardians (a national board who manages financial assets, investments and corporate governance) to replace the current Land Account.  

The revised name and expanded remit of the Indigenous Land Corporation is largely uncontroversial. It makes sense for the ILC to be able to assist Indigenous groups who have rights over offshore seas. It also desirably broadens the potential pool of investment for the Land Fund and positively uses the Future Fund to manage those investments.

That said, the approach adopted by the Government in relation to this governance framework which surrounds the Land and Sea Fund is open to serious criticism and raises questions regarding the desirability of enacting the Bill in its current form.

First, the 'Future Fund' Bill fails to formally acknowledge the underlying purpose of the Land and Sea Fund. The Preamble to the Native Title Act includes the following text:

It is also important to recognise that many Aboriginal peoples and Torres Strait Islanders, because they have been dispossessed of their traditional lands, will be unable to assert native title rights and interests and that a special fund needs to be established to assist them to acquire land.

The Indigenous Land Corporation was originally established to meet this requirement as a separate part of the Aboriginal and Torres Strait Islander Commission (ATSIC) legislation. ATSIC also had a Preamble to contextualise the aims and objectives of establishing the Commission and its ancillary institutions.

With the reconstitution of the legislation following ATSIC’s demise, and now the proposed establishment of the Land and Sea Fund in separate legislation, those contextual provisions seem to have disappeared entirely. This is not merely a symbolic matter, but means that any future judicial consideration of the operation of the Fund will be done without the benefit of any contextual framing which can be taken into account by the courts.

The Bill provides a range of mechanisms for consultation and provision of advice and information between Ministers, the Future Fund and the Minister for Finance - but there is no requirement for information to be provided to the ILC Board.

The second concern is that the Bill is replete with provisions which make absolutely clear that the Fund is to be treated as merely another special account within the Government’s standard financial architecture. Thus, for example, the Bill provides a range of mechanisms for consultation and provision of advice and information between Ministers, the Future Fund and the Minister for Finance - but there is no requirement for information to be provided to the ILC Board. Moreover, the current Consultative Forum on the Investment Policy of the Land Account in s193G of the Aboriginal and Torres Strait Islander Act 2005 which provided Indigenous interests with a guaranteed mechanism for monitoring the operations of the Fund disappears.

This may seem like quibbling, and I suspect it is the product of historical ignorance rather than malevolent intention, but it creates a context in which the Fund was established with a clear intent of going some small way to addressing the dispossession of Indigenous peoples from their lands, is itself being progressively removed from their influence and control. It reinforces the original physical dispossession with institutional dispossession.

The third concern relates to the design of the proposed arrangements, and the potential risks which emanate from the design features chosen.

The current legislation allows for the Land Account to provide the ILC with a guaranteed amount of $45m (indexed to the CPI from 2010).

The proposed design structure in the Future Fund Bill continues the $45m indexed provision, but adds a provision for an annual discretionary payment to be made by Ministers. The Bill requires the Finance Minister and Treasurer (the ‘responsible ministers’) to issue an investment mandate to the Future Fund Board who then provide a mechanism for articulating the Government’s expectations and for providing strategic guidance. This approach is consistent with the approach adopted with other funds invested by the Future Fund Board, but again provides no input for Indigenous interests.

Instead of simple payments from the Department of Prime Minister and Cabinet managed Land Account to the ILC, the Bill establishes a complicated series of special accounts through which the funds flow.

The new Bill establishes a much more complex design architecture of the Fund than at present, which has the unfortunate result of making the operations of the Fund even more opaque to Indigenous interests. Instead of simple payments from the Department of Prime Minister and Cabinet managed Land Account to the ILC, the Bill establishes a complicated series of special accounts through which the funds flow.

What this complexity disguises is that the proposed legislation not only broadens the investment parameters available in managing the Fund, but it also significantly increases the role of Ministers in controlling the flow of resources to the ILC. Two implications are worth drawing out.

First, over time, the gap between the guaranteed amount available for the ILC and the potential discretionary funding available which would not threaten the sustainability of the Land and Sea Fund, will grow larger. This will likely have the effect of making the annual discretionary payment a routine event, to the point that the financial independence (as opposed to its statutory independence) of the ILC which was a deliberate feature of its original design will disappear.

The second implication relates to the structural tensions which will inevitably exist between the short term interests of Ministers and the government-appointed ILC Board. This is to maximise ILC investments versus the longer term interests of the wider and more diffuse Indigenous interests would wish to see a Land Fund exist in perpetuity. The architects of the current Land Fund/ILC arrangements may be aiming at a perpetual Fund, however, the current proposal structure could allow Ministers to progressively reduce the capital base of the Fund through the use of additional payments to the ILC which progressively deplete the capital base of the Fund.

While the proposed legislation does include checks and balances to constrain such behaviour, there is no absolute statutory impediment to a Minister (perhaps in conjunction with an ILC Board which after all he or she appoints) allocating significant sums to the ILC from the Fund for projects within its statutory remit.

 

Potential Improvements to the Bill 

To address the shortcomings of the Bill, a number of changes will be required.

The Bill ought to be revised to incorporate an appropriate Preamble and potentially other substantive provisions to reinstitute, in a way which the courts can take into account, the primacy of the objective of addressing dispossession which has been progressively stripped out of the legislation.

Indigenous engagement at all levels should be substantially strengthened. This should extend to considering placing the Future Fund Bill back within the current legislation dealing with the ILC and Land Account

Indigenous engagement at all levels should be substantially strengthened. This should extend to considering placing the Future Fund Bill back within the current legislation dealing with the ILC and Land Account; giving the Minister for Indigenous Affairs a stronger oversight role; and establishing an independent policy oversight advisory committee which monitors the operations of both the Land Fund and the ILC with a mandate to focus on issues which may place the long term sustainability of both institutions at risk.

The Bill ought to be expanded to include a provision which makes clear that whatever the internal administrative requirements, the Fund is established and operated by the Commonwealth on the basis of a fiduciary obligation to sustain the Land and Sea Fund in perpetuity and thus maximise the impact of the Fund (and ILC) operations in addressing the impact of dispossession on the Nation’s First Peoples.

If we are to take the Prime Minister’s claims seriously that these amendments represent a ‘significant reform in the land rights journey of our country’, shouldn’t we expect to see increased funds allocated by government to accelerate the accretion of the Fund’s capital base? 

Finally, if we are to take the Prime Minister’s claims seriously that these amendments represent a ‘significant reform in the land rights journey of our country’, shouldn’t we expect to see increased funds allocated by government to accelerate the accretion of the Fund’s capital base? The original Keating Government Land Fund legislation was based on the statutory appropriation over ten years of $140m per annum, which built the fund to $1.4bn. Investment returns over twenty years have taken it to $2bn today.

A persuasive case can be made that the funds allocated were paltry compared to the value of the land that was taken without compensation from Indigenous peoples (let alone the economic, social and cultural losses that also were involved). A further contribution of say $200m per annum over ten years would go some way to acknowledging that fact. Such a provision would serve to give a modicum of credibility to the Prime Minister’s claims of ‘significant reform’; its absence merely serves to confirm the government is more concerned with rhetoric than substance.

Legislation is invariably complex. Because it is a primary mechanism for effecting institutional change, its impacts are long lasting. The process of legislative degradation – for that is what it has been – over the past twenty five years in relation to the Land Fund has gone on under the radar. The issues seem technical; they are not necessarily controversial; and the consequences of legislative change can take decades to emerge and have a tangible impact. The Land Fund was provided for in the Native Title Act and yet has been progressively transformed from a social justice initiative into one of a myriad ‘special accounts’ within the byzantine Commonwealth financial architecture.

That this occurred, and could well continue to occur, is clear evidence of the need to establish an Indigenous Voice to Parliament as proposed in the Uluru Statement from the Heart.

 

Michael Dillon is a former public servant and currently a Visiting Fellow at the ANU Centre for Aboriginal Economic Policy Research. He worked on the original Land Fund legislation in 1995, and is a former Chief Executive Officer of the ILC.