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ESTIMATES COMMITTEE F - 10/09/1992 - ABORIGINAL AND TORRES STRAIT ISLANDER COMMISSION

Senator SHERRY --The Committee will now commence the examination of the estimates for the Aboriginal and Torres Strait Islander Commission, consisting of proposed expenditure of $778,297,000 in Document A and $10m in Document B. We will also examine a separate appropriation in Document A of $5,335,000 for the Australian Institute of Aboriginal and Torres Strait Islander Studies. The operations of the Commission and the Institute are contained within program 7 of the Employment, Education and Training portfolio. I welcome Senator Peter Cook, representing the Minister for Aboriginal and Torres Strait Islander Affairs, and the officers of the Commission. Do you wish to make an opening statement, Minister?

Senator Cook --I do not have an opening statement but I will shortly invite Dr Peter Shergold, the Chief Executive Officer of ATSIC, to make an opening statement. At this stage I wish to inquire of you as to the intention of the Committee. I am here in an acting capacity representing a representational Minister. I was intending to try to be out of here by 6.30 p.m. I do not know what the intended sitting times of the Committee might be. If it were intending to go beyond that point, I would like leave to be absent.

Senator SHERRY --I think your stomach timetable is about the same as mine; 6.30 p.m. was the anticipated break for dinner.

Senator Cook --In that case, I would like to suggest that Dr Peter Shergold make an opening statement. I am certain he will introduce the officers of ATSIC at the appropriate juncture if any other of the officers need to make a statement.

Dr Shergold --I should like to take this opportunity to make a brief opening statement which I hope will help to set our 1992-93 program performance statements in context. The 1992-93 Budget appropriations for the Aboriginal and Torres Strait Islander Affairs portfolio total $814.8m. This represents an advance of 22 per cent on 1991-92 appropriations. Taking into account funds carried forward from last financial year and estimated receipts, likely expenditure in 1992-93 is estimated at $888.8m--a 30 per cent increase on last year.

The increase in funding for this portfolio reflects four main factors: first, a transfer of the community elements of the training for Aboriginals program; the enterprise employment allowance; the Aboriginal enterprise incentive scheme; and the Aboriginal languages initiatives program from DEET to ATSIC. That took place on 1 July and is responsible for some $60m of our increase. The second factor is funding provided by the Commonwealth Government to ATSIC by way of response to the recommendations of the Royal Commission into Aboriginal Deaths in Custody. That totals $49m this year and, of course, that represents the first year component of an additional $327m, which ATSIC will administer in the next five years.

The third factor is increased funding for the national Aboriginal health strategy, particularly for infrastructure projects to improve environmental health. That totals some $16m for this financial year. Finally, there is increased funding for CDEP, representing an additional 1,900 participants to commence in new CDEPs this financial year. That is responsible for something like $30m of our additional appropriations compared with last financial year.

By any standards, these represent very substantial increases in funding and very substantial increases in administrative responsibility, particularly for ATSIC. The challenges facing our officers in ensuring the maintenance of high levels of accountability for the efficiency, effectiveness and ethical processes by which Commonwealth moneys are expended are intensified by two factors. First, the additional funding will not just be used for more of the same. Our program performance statements, which you have before you, reveal that we are committed to introducing five major new programs to Aboriginal and Torres Strait Islander clients this financial year: the community training program; the community economic initiative scheme; the young person's employment program; employment industry strategies for the pastoral, tourism and arts industries; and the young person's sport and recreation program.

Secondly, there is an ongoing devolution of decision making by ATSIC's representative arm, which requires a concomitant decentralisation of staff and administrative support. The 1991-92 financial year saw regional council involvement in the funds allocation process for the first time in relation to ongoing recurrent projects.

The Commission has expanded the scope of regional council budgets for this financial year and is involved with regional council chairpersons in decision making on the Commission's national budget items, such as the community housing and infrastructure program and the expansion of CDEP.

The Commission's strategy is gradually to expand the scope of regional council program budgets over time as the councils become accustomed to their increasing role and responsibilities. Of course, this process will be expedited as councils develop their interim regional plans this financial year.

I conclude by emphasising that ATSIC--I am talking about both the representative and administrative arms--is committed to public scrutiny of its activities. We have already provided Committee members with drafts of our annual report. In addition, I would like to table Budget Related Paper No. 7, which provides details on 178 Commonwealth programs which have particular relevance to Aboriginal and Torres Strait Islander clients, together with our new corporate plan, our operational plan and procedures for the engagement of consultants.

Those documents give an indication of the high store which ATSIC sets on accountability and performance in the delivery of its programs and services. The program performance statements tell a very complex story. But, as a crude guide to performance, I might note that in the last financial year ATSIC oversighted the acquittal of approximately 3,000 grants worth approximately $400m to community organisations, administered payments and oncosts to more than 20,000 participants in 185 CDEP communities, oversaw the construction of more than $170m worth of badly needed housing and infrastructure, made 436 housing and business loans to Aboriginal or Torres Strait Islander clients, implemented 305 board decisions and supported some 800 regional councillors in 60 regional councils. The cost of that administration was about 15 per cent of ATSIC's expenditure. I expect that figure to fall below 14 per cent for this financial year.

I think it would be remiss of me if I as CEO failed to indicate my belief that these achievements bear testimony to the commitment of many ATSIC staff, more than 40 per cent of whom are now Aboriginal or Torres Strait Islander officers. That does not imply that there is not significant room for improvement in our administration, as the extraordinarily intense scrutiny of ATSIC activity reveals. The Australian National Audit Office carried out seven audits of aspects of ATSIC's activities over the last year, while the Office of Evaluation and Audit undertook nine major evaluations and 13 internal audits of State and regional offices. I can assure the Committee that in each instance senior management has sought to ensure that recommendations for improved processes are implemented.

Senior officers from the Aboriginal and Torres Strait Islander Commission, the Office of Evaluation and Audit, Aboriginal hostels, the Australian Institute of Aboriginal and Torres Strait Islander Studies and the Aboriginal and Torres Strait Islander Commercial Development Corporation are present here this evening. I hope that between us we can provide the additional information that your Committee will require.

Senator CRANE --In many of the resource summaries presented in the program performance statements there are no entries for salaries and running costs. One example is on page 145 and another one is on page 92. Why is that?

Mr Eldridge --For the PPSs, we have allocated running costs on a subprogram basis. I looked at the first reference that you gave on page 92, and that is an explanation for a component, which is at a level below the subprogram level. If you move back a few pages to page 88, you will see the running costs information given for that subprogram--the development, education and training subprogram.

Senator CRANE --So they are actually included in other parts of the program?

Mr Eldridge --At a higher level in the structure, yes. We have allocated down to the subprogram level, but not below. In the foreword to the performance statements we make mention of the fact that the Commission moved to a new program structure during 1991-92 which involved a reshuffling of administrative units within the Commission. That has made it difficult to identify to any degree of accuracy the shifts in running costs from the old structure to the new structure. Because of those difficulties, we have limited our allocation on this occasion down to the subprogram level. We would hope after 1992-93, when we will have a full year under the new program structure, to be able to allocate those running costs down to the lower levels in the structure. But for the moment we have restricted it to the subprogram level.

Senator CRANE --So next year we should see them in there.

Mr Eldridge --Yes.

Senator CRANE --That is the intent. ATSIC has acquired quite a number of assets in terms of land purchases, et cetera. What control do you have over those? Do you keep an assets register? What is the discipline and the valuation of those assets that have been purchased?

Mr Beadman --Land purchases are normally made by way of grant to a recipient Aboriginal organisation. Under the rules of grant, there are impositions on that recipient ever being able to dispose of that asset without prior approval. In terms of ATSIC's assets, there is an assets register. There are instructions as to how regularly stocktakes will be made. Reconciliations are done against those stocktakes back against the assets register. We have pretty tight controls in place.

Senator CRANE --But there is no separate assets register as far as land purchases are concerned.

Mr Beadman --We have accurate records as to land that has been acquired, but for the most part since ATSIC started acquisition has been by way of grant to the recipient organisation. In some other cases--generally inheritances from past organisations--those purchases were made in the name of predecessor organisations, and they are assets that belong to the Commission until it devolves ownership. Separate records are kept of those and we are actively moving towards a devolvement onto the relevant Aboriginal organisation.

Senator TIERNEY --My question relates to the listing of the bodies that you have on the front of the program performance statements. Is that an exhaustive list? The word `including' is used. Are those the only administrative bodies attached to ATSIC or are there others?

Mr Dillon --The list that we have on the front of the PPSs indicates the organisations that are represented here today, except for the Aboriginal benefit trust account, which is an account and not an organisation. There is a number of other statutory bodies within the portfolio: Office of the Aboriginal Land Commissioner in the Northern Territory, the four Northern Territory land councils, and there may be a number of other smaller bodies.

Senator TIERNEY --I will put this on notice. Could we have a complete list of all the administrative bodies, which are often known as quangos, that are attached to ATSIC? There are five other questions relating to each of those bodies, but to save the time of the Committee I will place those on notice. In addition, could we have a complete list of all legislation for which ATSIC is responsible under which these bodies are administered?

Senator SHERRY --We will table those questions now.

Mr Dillon --On a point of clarification, ATSIC is not responsible for legislation per se. Ministers are responsible for administering legislation.

Senator TIERNEY --What I mean is that those bodies are set up under legislation. Which pieces of legislation are each of those bodies set up under?

Senator TAMBLING --I start by referring to mineral exploration on Aboriginal land. I am sure that the officers are well aware that a special land rights conference was held at Yulara in March 1992 with an emphasis on mineral exploration. What action has been taken by Minister Tickner, Minister Griffiths or ATSIC to prepare amendments to the Aboriginal Land Rights (Northern Territory) Act to ensure that exploration and mining proceed without hindrance on Aboriginal land? What timetable has been established for the introduction and passage of any such amendments through the Parliament?

Mr Dillon --Those matters are under active consideration, but they are matters of policy. I do not think that it is appropriate for officers to attempt to answer them.

Senator TAMBLING --Have any submissions been made by ATSIC in this instance with regard to that legislative process and have there been any suggested timetables for implementation of those amendments?

Mr Dillon --ATSIC has briefed our Minister, as appropriate, both prior to and since the round table conference held at Yulara. I cannot recall specific timetables being referred to in our briefings. As I said earlier, we are not in a position to know what might be in the Government's mind.

Senator TAMBLING --Are you aware of any public announcements by the Ministers with regard to the implementation of changes to this legislation?

Mr Dillon --I am not aware of any public announcements.

Senator TAMBLING --Have there been any discussions with the Northern Territory Government with regard to the implementation of this matter?

Mr Dillon --I am not aware whether that is the case or not.

Senator TAMBLING --Have the Aboriginal land councils made submissions with regard to any such amendments?

Mr Dillon --I understand that there have been discussions, but they are of a broad nature.

Senator TAMBLING --Have any written submissions been made by land councils? As such, can they be made available to this Committee?

Mr Dillon --I am not absolutely sure of the situation. I think that that is a question which the Minister would have to determine.

Senator TAMBLING --Mr Chairman, can the matters addressed by Mr Dillon that require policy determination by Ministers--I know that Senator Cook is not here at the moment--be considered by the Ministers and, if it is appropriate, then that information be made available to the Committee?

CHAIRMAN --I will pass it on to the Ministers. It is up to them to respond.

Senator TAMBLING --Does ATSIC hold or have access to any updated statistics with regard to the status of mining and ELAs for proposals lodged with the land councils?

Mr Dillon --Yes.

Senator TAMBLING --Can that statistical information be provided to the Committee?

Mr Dillon --I think we can do that.

Senator TAMBLING --It has been given to the Committee in past years. I would like to see the updated information. My second question refers to the Aboriginals Benefit Trust Account. In 1989 at the Estimates Committee hearing your predecessor Department, the Department of Aboriginal Affairs, provided to the Committee a table of information with regard to the funding of the Aboriginals Benefit Trust Account dating back to the year 1978-79. That 1989 table brought the figures up to the financial year 1988-89 and gave total figures. Can the statistical information be updated and made available to the Committee?

Dr Shergold --It can be.

Senator TAMBLING --In regard to the purchase of pastoral leases generally, I note that on pages 112 to 113 of the Auditor-General's report, tabled in the Parliament in the last few days, there is comment, firstly, in regard to the viability of enterprise based proposals and, secondly, in regard to the directors of Aboriginal bodies having the skills to hold pastoral leases. On page 112 of the report, the Auditor-General stated:

As some of the proposals had an enterprise objective, there was a need for an independent assessment of viability of each proposal. There was no evidence to indicate this was undertaken for any of the proposals with enterprise objectives. ANAO recommended that proposals with an enterprise purpose should be subject to an independent assessment of viability.

Secondly, putting the two issues together, because I think that they relate, the Auditor-General commented in relation to the skill of directors:

The Commission advised that action has been taken by the ABTA Secretariat, and the Delegate, to improve the level of skill of directors appointed to boards of incorporated Aboriginal bodies holding pastoral leases purchased with ABTA funds.

The report continued:

ANAO recommended that consideration should be given to including, in the terms and conditions of ABTA grants, a requirement that Aboriginal directors be suitably skilled or be prepared to undertake training in their obligations, duties and responsibilities.

With those two very heavy criticisms of the Auditor-General, what has been done to overcome the problems raised by the Auditor-General?

Mr Dillon --A range of actions has been taken since the Audit Office undertook this investigation. I say at the outset that what is not apparent in the Audit report is that the criticism related to the lack of an independent assessment. In other words, there were assessments, but the criticism was that in the eyes of the Audit Office those assessments were not independent enough. As a result of the Audit report, the Minister has had a good hard look at the operations of the Aboriginals Benefit Trust Account.

A revised set of guidelines and administrative procedures has been approved by the Minister. These guidelines require that grants, including an enterprise objective, not receive final approval until an independent viability study has been completed. The Minister has amended the delegations applying to the ABTA grants so that all purchases of land require approval by the CO of ATSIC. Such approval may be given only if all the requirements of the guidelines and the procedures have been followed.

The matters raised in the Audit report have been brought to the attention of the Advisory Committee which has recognised the need for improved procedures and proper levels of accountability in the grants process. Assistance is being provided to Aboriginal directors of pastoral properties through a workshop on pastoral property management, a seminar on the responsibilities of company directors and the employment of pastoral accountant advisory staff by some of the land councils.

Senator TAMBLING --Can those revised guidelines and procedures and delegations be tabled?

Mr Dillon --Yes, they can be.

Senator TAMBLING --With regard to the $16m for land purchases for the year 1990-91 relating to four pastoral properties--Elsey Station, Muckaty Station, Mistake Creek Station and Fitzroy Station--what proportion or percentage of the ABTA funds were represented by that $16m?

Mr Dillon --I do not have the figure in my head. From memory, the total amount that went through the ABTA last financial year in terms of royalty revenues was in the order of $35m. It will be in the figures that we table shortly. On that basis, you are looking at something less than 50 per cent of total ABTA revenue.

Senator TAMBLING --And in the subsequent financial year, 1991-92--

Mr Dillon --Sorry, I was talking about 1991-92.

Senator TAMBLING --We were at cross-purposes. I was referring to the year mentioned in the Auditor-General's report, in which $16m was provided for those stations. Could you provide a table of the proportion of funding from ABTA that went into the purchase of pastoral leases and other land, as distinct from the proportion of funds that went into other commercial projects--and other projects--for the financial years ending in 1991 and 1992?

Dr Shergold --We would have to extract that information, but we could provide it.

Senator TAMBLING --Are you in a position to indicate what proportion of the ABTA funds will be dedicated to pastoral lease purchases in the current financial year, 1992-93?

Mr Dillon --We are not in a position to provide that percentage. First of all, we do not know what the actual revenue will be and, secondly, we do not know the amount that might be approved. I can say generally that it will be much lower than the percentage in previous years.

Senator TAMBLING --After research, would you be in a position to indicate what figures are already dedicated and pre-committed to the funds for 1992-93?

Mr Dillon --We could include that in the table we have agreed to provide.

Senator TAMBLING --On page 106 of his report, the Auditor-General comments on enterprise funding with regard to loan arrears, saying that they had not been regularly monitored, nor had remedial action been taken. What has been done about this?

Mr Morony --The Commission has, over this and the previous financial year, been going through a process of consolidation of its enterprise program and looking at a reform strategy. Within that strategy, we have been working quite hard to look at the arrears situation. We are able to report to the Senate that there has been a reduction and we are certainly going to give that an even greater focus this year with a much more reduced program.

Senator TAMBLING --Of what percentage order is this reduction?

Mr Morony --Could I come back to you on that one?

Senator TAMBLING --Yes. In relation to areas of accountability and scrutiny--with regard to grant acquittals and audit reports that are required to be submitted to you by various organisations in receipt of benefits--what proportion of ATSIC grant and loan acquittals are currently outstanding?

Dr Shergold --I would be able to provide that information. It would be a relatively low proportion.

Senator TAMBLING --Would you be able to give details of all unresolved projects, say, in excess of $10,000 per project?

Dr Shergold --I could not commit myself to that before I have looked at the number of unacquitted grants and how far they go back. I can certainly provide you with statistics which would give an overview of the number and value of unacquitted grants and when they were written.

Senator TAMBLING --Are you able to indicate how many Aboriginal organisations are currently under review due to either a qualified or an unsatisfactory audit report?

Dr Shergold --Under review by whom?

Senator TAMBLING --By yourselves--probably by your Office of Evaluation and Audit.

Dr Shergold --I do not think we would know that because there are all sorts of reviews, both formal and informal, and a lot of that responsibility would be residing with our regional and State offices. I could not give you a neat figure on that question.

Senator TAMBLING --You said earlier that you would be able to provide information with regard to the number of grants and loan acquittals that are not yet finalised. Would you be able to indicate in a table the number of those that are subject to unsatisfactory audit reports?

Dr Shergold --Are you asking for the number of organisations whose grants are not yet acquitted?

Senator TAMBLING --Yes.

Dr Shergold --I will certainly seek to see whether we could provide that. I do not know how difficult a task it will be, because some of those grants will obviously go back a number of years. Some of them may predate ATSIC.

Senator TAMBLING --On page 105 of his report, the Auditor-General has commented on the $2m loss of Baruwei Enterprises in Katherine in the Northern Territory. It is noted, both in this comment and in previous evidence before this Estimates Committee, that ATSIC has undertaken a two-year supervision of this project, which subsequently failed and ceased operations in January 1992. Given the ATSIC involvement during that two-year review period, how many ATSIC officers were seconded or involved with the management of Baruwei prior to its failure? What internal reporting took place on it?

Dr Shergold --I cannot instantly give you the number of officers who were involved. Again, I am not sure how difficult it will be to come by that information. I certainly can bring you up to date on the situation with respect to Baruwei, which may not be apparent from the report to which you refer; namely, that ATSIC is now in the process of appointing the Australian National Audit Office as auditor and is appointing new directors to the company. Indeed, ATSIC has instructed the Australian Property Group to commence the sale of the remaining assets of the company. We believe that we should be able to accomplish that by December this year. A voluntary winding up of the company will then take place.

Senator TAMBLING --Would you still acknowledge the comment of the Auditor-General that, even after that orderly sale of assets takes place, `the Commission expects to realise a loss on its loans and preference shareholdings in the order of $2m'. Is that still the anticipated loss figure?

Dr Shergold --I think that is a fair estimate.

Senator TAMBLING --Dr Shergold, you will recall my questions at previous Estimate committee hearings with regard to the administration of ATSIC's Barkly regional office in Tennant Creek and, in particular, the failures of the Jurnkurakurr organisation, which I think again was an organisation that went out the back door with a multi-million dollar loss. You will also remember my questions regarding the administration of the Anyinginyi Congress--an Aboriginal corporation in Tennant Creek--which is a health delivery organisation. Have any additional reports or reviews highlighted further problems with regard to the Barkly office and the various organisations that were under review from that Barkly administration?

Mr Dillon --As a result of the problems that arose with Jurnkurakurr, the Commission did put in train a number of--two from memory--internal audits of the office in Tennant Creek. A number of recommendations that arose out of those internal audits have been implemented. There have been a number of personnel changes in the office. We brought in a team from one of our offices in New South Wales to complete the overhaul of systems and procedures in the office, and I think we are now satisfied that the office is operating in a much improved fashion.

Senator TAMBLING --Are you in a position to indicate what the final loss to the Commission is with regard to Jurnkurakurr?

Mr Dillon --No, I am not.

Senator TAMBLING --Would you be able to ascertain that figure and provide it to the Committee?

Mr Dillon --I will seek advice, but I am not sure that the matter has been finalised as yet.

Senator TAMBLING --Is there any estimate of the likely loss, given that, I gather, this matter has been before the courts in the Northern Territory?

Mr Dillon --The problem is that the issue is the responsibility of the appointed receiver. We do not have an estimate. It depends very much on the policy decisions he or she may take.

Senator TAMBLING --My principal question was probably worded badly. Let me reword it. What was the financial injection by ATSIC into Jurnkurakurr as a total commitment prior to its collapse?

Mr Dillon --We would have to take that question on notice.

Senator TAMBLING --The second part to that question relates to the administration of the Anyinginyi health congress in Tennant Creek. I understand that there have been additional reports and audit considerations of it subsequent to the ones you reported on to the Estimates committees last year. What additional reports have you received? What additional reviews have been undertaken or are currently under way? And what further problems have they highlighted with this office and organisation?

Mr Dillon --You are correct. An accountancy firm was engaged to look once again at Anyinginyi. My understanding is that it has essentially found that the allegations that were referred to earlier were unfounded and that the congress is operating in a proper manner.

Senator TAMBLING --I understand that was the first report. Has there not been a subsequent report and investigation into the original one which found further problems in the administrative areas?

Mr Dillon --I am not aware of that, no.

Senator TAMBLING --I ask you to take that question on notice and ascertain whether there have been any further inquiries in that area. Has ATSIC reviewed or evaluated or conducted audits of the Jawoyn Association in Katherine or any of the organisations linked with the Gumatj clan of Nhulunbuy?

Mr Dillon --I am not aware of any audits or investigations being undertaken, but I should add the caveat that our regional mangers have a fair amount of discretion and it may well be that reviews of those organisations have taken place. They would be just normal operational reviews if they have occurred.

Senator TAMBLING --I am not interested in prying into operational reviews but I would be interested in knowing the details of any more complex reports or evaluations. What ATSIC grants and loans have been made to these two discrete groups--the Jawoyn group in Katherine and any of the bodies associated with it, or any of the bodies associated with the Gumatj clan of Nhulunbuy for the years 1991-92 and, as proposed, for 1992-93?

Mr Dillon --We will endeavour to get that information. I again add the caveat that it is not clear what organisations may be related to the Gumatj clan. There may well be some obvious ones but there may well be others we are not aware of.

Senator TAMBLING --Would not that information be readily available to the registrar of Aboriginal organisations?

Mr Dillon --Only if those bodies are incorporated under the Aboriginal Councils and Associations Act.

Senator TAMBLING --In what way does ATSIC identify associated groups that might apply for grants or loan funds if they are not incorporated under the Act?

Mr Dillon --There is a procedure whereby organisations must be declared as an Aboriginal organisation under the ATSIC legislation.

Senator TAMBLING --Therefore, if you were looking at the Gumatj linked organisations or companies or structures or anything and if you were giving grants in that region, you would know that the particular bodies do have a link?

Mr Dillon --I expect our regional office will know.

Sitting suspended from 6.28 to 7.30 p.m.

CHAIRMAN --There being a quorum present, we will reconvene.

Dr Shergold --I can now answer a question asked by Senator Tambling before the break relating to the Jurnkurakurr Aboriginal Resource Centre. The official liquidator has estimated a deficiency of some $600,000, subject to the cost of liquidation.