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Finance and Public Administration Legislation Committee
25/05/2018
Estimates
PRIME MINISTER AND CABINET PORTFOLIO
Indigenous Land Corporation

Indigenous Land Corporation

[09:04]

CHAIR: I welcome Senator the Hon. Nigel Scullion, Minister for Indigenous Affairs; Mr Andrew Tongue, associate secretary, Department of the Prime Minister and Cabinet; Mr John Maher, chief executive officer of the Indigenous Land Corporation; and officers from the Indigenous Land Corporation. Minister, do you wish to make an opening statement?

Senator Scullion: No. I don't have an opening statement.

CHAIR: Mr Tongue, do you wish to make an opening statement?

Mr Tongue : No, thank you, Chair.

CHAIR: Mr Maher, do you wish to make an opening statement?

Mr Maher : Yes, I would, thank you, Senator.

CHAIR: Please.

Mr Maher : Thank you, Senator. Good morning, everyone. Firstly, I would like to acknowledge the traditional owners on whose land we are meeting and pay tribute to their elders, past, present and emerging. Let me once again introduce Mrs Tricia Button, ILC's deputy CEO. Mrs Button oversees program delivery, policy and communication functions of the ILC.

Since last estimates, we have seen the tabling of three bills to give effect to the Australian government's intention to make changes to the Aboriginal and Torres Strait Islander land account, the ILC's primary source of income, to secure its future and to extend the ILC's sphere of operations beyond land to salt and fresh water. We are pleased to note that the legislation reflects the key components of ILC's eight recommendations to government. Also since last estimates, the ILC has been actioning the ILC board's decision to transition management of our agribusiness subsidiary, Australian Indigenous Agribusiness Company Pty Limited, or AIA, into the ILC itself. The board has made this decision to strengthen the alignment of strategy and direction, increase efficiency and reduce the call on ILC funding to subsidise losses generated by subsidiaries. The new ILC agribusiness division will now work to execute the ILC agribusiness strategy, with a view to ensuring financing sustainability, diversifying the agri portfolio to mitigate market risk exposure and ensuring stronger alignment to ILC's mandate. In doing this, the division will target new commercial agribusiness investments in partnership with Indigenous people and organisations and deliver capacity building for the broader Indigenous agribusiness sector.

I'm pleased to report that the ILC remains on track to meet most of its key performance indicators of this financial year. As mentioned previously in other Senate estimates, we have rebalanced priorities from the previous strong focus on land management taken by the company to a far more even approach between land acquisition and land management. Two properties have been acquired this financial year against a target of three while due diligence is well in train for a further seven acquisitions. Year to date we have achieved four divestments against a target of eight. The ILC is working hard with each relevant state and territory authority to achieve legal transfer of title on a further six properties where the board has approved the granting of land. In recent times, the average period from acquisition to divestment has decreased markedly to two years. Our goal is to have a 12-month turnaround.

We have 96 active land acquisition and land management projects versus a target of 100, with three months yet to go in the financial year. Our targets for direct and enabled Indigenous employment—that is, employment both within the ILC group and through ILC funded third-party projects—have already been exceeded. The ILC group is investing proactively in Indigenous management and executive development across the ILC group. Over the last 20 months or so, the number of Indigenous executives throughout the group has increased from two to six. Our Indigenous executive development program has now been running for over a year. Our Indigenous procurement target of five per cent continues to be exceeded. It stood at 7½ per cent at the end of June 2017 and is currently at 12.6 per cent. Ayers Rock Resort, owned and managed by ILC subsidiary Voyages, has been well supported by domestic and international visitors this year. Year to date, its various hotels have achieved an average of 89 per cent occupancy. Voyages also continues to implement recommendations from an operational review undertaken by ILC last year. Both factors have seen an improvement in the profitability of this asset.

By June this year, more than 300 Indigenous trainees from all over Australia will have graduated from our National Indigenous Training Academy with qualifications in hospital and tourism. Our Sydney based social enterprise subsidiary, the National Centre of Indigenous Excellence in Redfern, remains a valued community and national facility, providing accommodation, training, fitness programs, community events and after school and holiday care.

Under the guidance of the current ILC board, we believe the ILC group has become a far more integrated and successful entity, dedicated to achieving the Indigenous benefits originally envisaged by the ILC's legislation in a far more focused, efficient and proactive way. Next month, we will be cosponsoring with IBA the national native title conference in Broome, where our chairman will once again be emphasising the ILC's aspiration and progress towards being a key player in developing the Indigenous estate as a longer term source of prosperity and cultural renewal. Thank you, Senator, for the opportunity to address this committee. Tricia and I look forward to answering any questions you may have.

CHAIR: Thank you, Mr Maher.

Senator DODSON: I acknowledge the Ngambri and Ngunnawal peoples as well and their leadership and their contribution to the parliament on many occasions with their welcomes.

Senator McCARTHY: Hear, hear!

Senator DODSON: Thank you, Mr Maher, for your opening statement. There is an area which you may have alluded to in your report. Thank you for that report. It is the area around enterprise bargaining that I want to go to primarily. We understand that the ILC has been involved in the enterprise bargaining process for some years now. Can you please advise at what stage the negotiations are currently at?

Mr Maher : I might defer to Tricia on that, given that she's one of the key executives leading the negotiations.

Ms Button : Thank you, Senator. The ILC has been in negotiation with its staff on the enterprise agreement for some time now. We currently have our enterprise agreement before the APSC. We have as late as last week updated staff on the progress of that and reassured staff that when it comes back from the APSC, we will commence immediately into staff consultations and we'll take a roadshow around the various offices before we take the new enterprise agreement to the vote.

Senator DODSON: Can you tell me what advice you received from the APSC?

Ms Button : On the latest version of the EA?

Senator DODSON: Yes.

Ms Button : I'm sorry, Senator, but I would have to take that on notice.

Senator DODSON: So is the APSC requiring that any of the agreed conditions be removed from the draft?

Ms Button : Again, Senator, I apologise. I will have to take on notice specifics around the feedback and the points of contention with APSC, if that's all right.

Senator DODSON: It's all right for me. It may not be for those staff who are involved. Is paid domestic violence leave one of the agreed conditions?

Ms Button : It is proposed in the new enterprise agreement.

Senator DODSON: My question is whether it is agreed.

Ms Button : Between staff and management?

Senator DODSON: Yes.

Ms Button : Yes.

Senator DODSON: Thank you. So what is the proposed outcome regarding pay?

Mr Maher : My understanding is that what is being negotiated is a six per cent pay rise over three years. The first year is three per cent, the second year is two and the third year is one. So it is front-loading that pay rise.

Senator DODSON: Has that got general acceptability amongst the staff?

Mr Maher : It's part of the negotiation, as are some of the clauses you refer to with respect to what APSC has asked to be taken out as well. A lot of those clauses relate to consultation.

Senator DODSON: You have been involved in this, as you said, for about four to five years now. There's been no pay rise in that period. Will those proposed percentages cover that backlog?

Mr Maher : Of pay rise?

Senator DODSON: Yes.

Mr Maher : If you calculate compound interest on CPI over five years, you would have to say they wouldn't.

Senator McCARTHY: Did you say they wouldn't?

Mr Maher : They wouldn't. I wouldn't imagine they would, no. However, my understanding is that the biggest issue is some of the clauses that APSC are asking to be taken out of the agreement are essentially those where staff are keen to ensure that there's some, if you like, safety net.

Senator DODSON: What impact is that having personally on the employees you've got?

Mr Maher : No doubt it's not helping engagement at all.

Senator McCARTHY: What do you mean by that?

Mr Maher : Morale would be low.

Senator McCARTHY: Morale is low in your staff; is that what you're saying?

Mr Maher : I would say it is, yes, definitely.

Senator McCARTHY: And how is that reflected?

Mr Maher : I think staff are passionate about the job they do and the reason they are at the ILC. But there's no doubt that if you're talking about engagement and, if you like, people enjoying coming to work or having more enjoyment coming to work, this is affecting that.

Senator McCARTHY: Have you lost staff?

Mr Maher : Our turnover is very low. No. Our voluntary turnover in the ILC is much lower than most organisations, I would hazard a guess.

Senator McCARTHY: Though you do understand that your staff morale is low?

Mr Maher : I'm fully cognisant of that, yes.

Senator McCARTHY: How have you ascertained that? Have you done a survey or had meetings?

Mr Maher : We do engage. Yes, we run engagement surveys. Every quarter, I do what is called a roadshow, if you like, around to all our offices and engage staff in discussions.

Senator DODSON: What measures are you putting in place to deal with that morale issue?

Mr Maher : Firstly, the conditions that our staff work under are reasonably favourable with respect to things other than the pay rise; they are given extra leave et cetera. I think our next step is to try to implement what the APSC would like us to do and to go to the vote again and see where we end there. It's as much in our interests as the staff's interests to bring this to a close.

Senator DODSON: You say the conditions are favourable. Can you outline them for us to assist?

Ms Button : The CEO is just referring to the atypical Public Service leave entitlements and conditions that ILC staff benefit from.

Senator DODSON: So one of the seminal issues—the domestic violence leave—is not one of those favourable conditions at this stage?

Ms Button : No.

Senator DODSON: So you potentially still have an ongoing battle?

Mr Maher : We have an ongoing battle in meeting APSC requirements and then meeting what the staff believe should be in the agreement.

Senator McCARTHY: I want to go back to the domestic violence issue. Do you know what position the APSC has taken on the inclusion of this condition?

Ms Button : Not as yet, sorry, Senator. I'm not up to speed with the latest response from APSC. I'll add that into my response to the question on notice, if that's okay.

Senator KENEALLY: Could I also add in, if you don't have the details now, the number of days proposed for the agreement?

Senator Scullion: Perhaps I can assist. You would perhaps be aware when I inquired into this that domestic violence leave isn't available across the Public Service. They indicate that you should be taking personal leave out of that. I guess that's the tension that they're trying to negotiate. It's something that isn't available right across the Public Service. It's that anomalous approach—

Senator DODSON: You're not saying it's not a reality?

Senator Scullion: No. Not at all. I have to sit here and actually shake my head that people have to take leave for these sort of things. It's horrific, mate.

Senator KENEALLY: But we did hear earlier that it was proposed to be included.

Senator Scullion: Just for the purposes of those people who may be listening, it is very useful to note that the issue of the anomaly is that it's something the ILC would like to be able to pursue, but it's inconsistent with what the remainder of the Public Service does. Generally speaking, the ILC has marched with what the Public Service requires.

Senator MOORE: With some of the Public Service. There's a tension across many departments.

Senator Scullion: Indeed.

Senator MOORE: Some departments and agencies have got it.

Senator Scullion: I was advised that at the moment it is a policy across the Public Service that personal leave should be taken. I'm not making anything else but a factual statement about that to try to indicate the differential that they have. This is the tension. It's policy across the Public Service. The ILC tries to keep step with the Public Service. That's generally what they've asked for. That's the background of these negotiations and this tension.

Senator KENEALLY: Thank you, Minister. That actually wasn't my question. Earlier I thought I had understood the ILC to say that domestic violence leave was one of the agreed conditions. So my question is: what was the number of days?

Mr Maher : Ten days, Senator.

Senator KENEALLY: Thank you.

CHAIR: Thank you, Senator Dodson. I have a few questions for the ILC and we'll then move to the next witness. Mr Maher, thank you for mentioning in your opening statement the Future Fund transition changes to managing those funds. I'm interested in exploring that a bit further. I understand that you ran a consultation process in the lead-up to these proposed changes. What were the findings of the consultation process?

Mr Maher : We went to 11 locations and had 16 consultations that included 75 organisations. The outcome was 100 per cent support throughout the consultation. There was also the written submission with respect to changes to the land account to do with the better investing of the land account. Roughly, there was around 85 per cent support for extending our remit to salt water and fresh water.

CHAIR: Thank you. I am quoting from that consultation paper. You said:

First, the financial sustainability of the ILC's major funding source—the…Land Account. In the current economic context, the Land Account is not financially sustainable.

Senator McCARTHY: Why is that the case? Why is it not financially sustainable?

Mr Maher : Because at the moment, under the act, the land account can only be invested in cash or cash like products. In today's low inflation and low interest environment, we are also legislated to receive a fixed amount of income, being $45 million at 2010 dollars. So the amount of income we are receiving, as per legislation, is actually greater than the amount of return on the investment. Consequently, it's reducing the capital base of the land account.

CHAIR: Which is obviously very unsustainable for the operating model that you're using?

Mr Maher : For future generations of Indigenous Australians as well.

CHAIR: Has this only recently become a problem?

Mr Maher : I think it's something that that has been looked at for quite a while, I think.

Senator Scullion: It's certainly been something that seems to have been around as long as I have been here. I was just thinking to myself when it was. I spoke to Senator Dodson before he became a senator seeking his advice on the matter. I think it was over a flathead in Perth or something. These are matters that people who are interested in this space have been contemplating for a long time. First of all, the notion is that land in a non-Indigenous sense in the Westminster system ends at some arbitrary point at high tide. In an Aboriginal and Torres Strait Islander sense, country extends to sea country. There's no delineation. So the capacity to invest in other areas of estate was prohibited simply because of a fairly culturally incompetent approach when the land account was put together.

The second matter was this concern around effectively investing this level of funds in what was, in effect, a Westpac savings account. That is effectively what it is. It's taken a while, because these are really important issues. Everybody knows we don't want to rush into any change. We, being the whole community of interest around this, have been discussing a sensible way forward for some time. I would like to thank pretty much everybody who's on the committee for having a very fair dinkum input into this area. We've looked at it in the most precautionary manner. I think we've looked at it very carefully and very thoroughly. Again, I thank those members of the committee for their input.

CHAIR: Mr Maher, I'm right in remembering you have a commercial background yourself. The chair of the board, Mr Fry, has quite a commercial background as well. Is that a reason why this has been more of a focus or concern to you?

Mr Maher : Certainly it's a huge concern to me. I can't speak for people who went before me. I've only been in this role just coming up to two years. But what has happened, I guess, in that last two years is that we put together an expert panel headed by David Murray. We put together a report and used that report to then talk to Minister Scullion and go out and consult with Indigenous Australians with respect to these changes.

CHAIR: Thank you for your leadership on that. I think that's a very important change.

Mr Maher : Thanks, Senator.

CHAIR: I don't have any further questions for the ILC.

Senator SIEWERT: I want to pursue a few questions about the bill. I noted in the inquiry that ILC had made a submission and raised a number of amendments. I understand the issue around water is going to be addressed. Maybe I should address this to the minister. Section 191E(1)(b) extends the bill because it excludes all water related rights held by the ILC. I understand that it is the intention to amend the bill.

Senator Scullion: It's been amended.

Senator SIEWERT: It is amended. So it went through the House of Representatives?

Mr Maher : Yes.

Senator Scullion: It was a clear oversight. Thanks to you and others who picked that up as part of the process. It was amended before it went into the House.

Senator SIEWERT: Right. Thank you. So when we deal with it—

Senator Scullion: Probably just for completeness, I might try to get you a copy of the actual amended stuff that went into the House, if you like.

Senator SIEWERT: That would be useful.

Senator Scullion: Okay.

Senator SIEWERT: I also raised a number of other issues. I should, by the way, thank the minister for the briefing that we did get on the bill. I noted there some of the issues that we've raised. I wanted to get on the record whether the ILC is now happy with the bill, given a couple of matters that you raised, including the matter of the preamble.

Mr Maher : Yes. We raised three issues, as you rightly point out. None of those three were picked up. However, the board—

Senator SIEWERT: Other than the water one.

Mr Maher : Okay. Four issues. The water one was picked up. The board and management of ILC see that the upside of this legislation passing far outweighs any downside of those three not being picked up.

Senator SIEWERT: Thank you. Minister, there is the issue of the nature of the quarterly reporting. In fact, the ILC raised it in their submission, I do understand that the Future Fund does, in fact, even though it's not required to, make those quarterly reports available. Have you considered a way to ensure that that does happen in case there is any change to their practice?

Senator Scullion: This is one of the balances. Because it happens now, we tried to contemplate what change may happen to the guardian process. That has been fixed. That is their process; it's not ours. We have looked at how you do this. They've said, 'Well, we always do this.' I didn't explore further whether the guardians of the land fund are locked into that process or what may affect that process. But I think, reasonably, if that process is affected so that it isn't provided, then there's an expectation now that that is the case. You would have an exchange of letters. All sorts of things can change. We considered that if this is the process and the convention of the fund, that would be fine.

The other issue we considered is that at any time we can write to them. The ILC or the government can write, on behalf of the ILC, to the guardians and ask them where we're up to, be it every week or month. So whilst we get the reporting process, if we need it and it isn't being reported, we can write and find out. If we wanted that process changed at any time, they would be able to tell us whatever circumstances the fund was in. I didn't think it needed any more.

Senator SIEWERT: So the ILC can write at any time to ask the guardians for a report?

Senator Scullion: Yes. There's nothing preventing the normal approach of, 'What's happening? How are you going? Where's the account up to?' Quarterly is what they've always done. I'm trying to look at the mischief and what would be the mischief. You can have mischief in government. Governments change and you're not sure about all of those sort of things. We have had a lot of confidence in the guardians of the land account because that's where massive investments of people's superannuation and all those sort of things are put. Part of the thinking of the ILC, government and parliament was that we should attach ourselves to that because we have such a large level of confidence. If something is happening to the Future Fund, we have vested interests who are equally concerned about the investments across government. That's one of the reasons it was so attractive. I have a great deal of confidence in that process. We can't foresee a mischief under which the Future Fund guardians would somehow move in a direction that wasn't transparent because of the vast sum of moneys that they're looking after on behalf of the Australian people.

Senator SIEWERT: I do have some other questions about the additional payments, but I'll pursue them in the debate on the bills. I will pursue that during the debate on the bills.

Senator Scullion: The other element, in case you weren't going to ask about it, is the preamble. It's my intention—it is not normal, but people have a concern about it—to circulate the second reading speech in the context of saying, 'What else do you think we need in here?' The intention of the preamble is to make sure that people understand the motive of this, exactly what we're doing, and to set that out in easy to understand terminology. Because the second reading speech is going to lay that out—if people want to know what it's about, as usual, they go to the second reading speech—we are going to make sure that everyone's concerns around it are met. It's my intention to share that with you particularly because you've shown some concerns around people actually understanding that.

Senator SIEWERT: Thank you.

Senator DODSON: The minister's indicated that he's going to deliver two things, I think. One is the second reading speech. The other is an updated draft of the bill.

Senator Scullion: Yes.

Senator DODSON: Can I request the minister make sure that they are circulated to all parties.

Senator SIEWERT: That's what I presumed he was—

Senator DODSON: No. He was saying that you were especially interested in this and that we weren't.

Senator McCARTHY: You are very special.

Senator DODSON: I don't want to prolong the debate.

Senator Scullion: Indeed. The senator had a particular issue around making sure. We had a conversation around the motive. We've sort of agreed that the second reading speech—

Senator DODSON: And we put some things to you as well. I'm not going to pursue them now.

Senator Scullion: No.

Senator DODSON: If I see them in the bill, I'll be very happy.

Senator Scullion: When I indicated to one member, I meant that it will be circulated to the committee for your assistance.

Senator DODSON: Thank you for your clarification, Minister.

CHAIR: Thank you, Minister, and thank you, Mr Maher and Ms Button.

Senator SIEWERT: I do have another question.

CHAIR: I thought we were at the end. I'm sorry.

Senator SIEWERT: I was just at the end of the bill.

CHAIR: Continue, Senator Siewert.

Senator SIEWERT: It's fairly short. I want to follow up one of the questions that I asked last time about Voyages and the answer that you gave. It was question 71. It gave the operating loss and capital expenditure on Voyages from 2013-14 to 2016-17. The operating loss has reduced substantially, as presumably the changes that have been made to the operations have kicked in.

Mr Maher : And occupancy has increased dramatically.

Senator SIEWERT: I'm presuming they are interlinked—

Mr Maher : Yes, they are interlinked, yes.

Senator SIEWERT: through the work you've been doing. When do you expect to get to the point where you don't have any operating losses to ILC?

Mr Maher : Well, I'm really pleased to report—and I mentioned in my opening statement—that with the increasing occupancy and the execution of some of the recommendations from the ILC report last year, as we speak, nine months to March, we have a very modest positive contribution at the bottom line.

Senator SIEWERT: So this financial year?

Mr Maher : I'm certainly hoping that will continue for the next three months.

Senator SIEWERT: So this financial year you're expecting to have no losses?

Mr Maher : It could be the first year ever that we don't have an operating loss.

Senator SIEWERT: And the capital expenditure will remain?

Mr Maher : The capital expenditure will still remain given that there's no doubt that Voyages is quite a capital hungry asset. We are going to continue to improve profitability. We can't not spend some capital on continuing to maintain and improve the asset.

Senator SIEWERT: It has gone up considerably since 2013-14, where it's $6.2 million. It's now $13.8 million. Do you expect to see that decrease, or do you expect to see that remaining at that level?

Mr Maher : I would say that would remain at that level.

Senator SIEWERT: At about $13.8 million or $14 million?

Mr Maher : Yes. Depending on how things work out with the runway, it could even increase. We have to upgrade the runway this year.

Senator SIEWERT: Yes. You did mention that on another occasion. Can you take on notice to provide figures? By the time you take it on notice and report in October—

Mr Maher : Yes, sure.

Senator SIEWERT: we'll have the end of year.

Mr Maher : Yes, this financial year.

Senator SIEWERT: Can you take on notice, then, updating that table for this financial year?

Mr Maher : Yes, sure. I'm happy to do so.

Senator SIEWERT: Thank you.

Senator MOORE: In terms of the profile, with the information you provide to the committee, do you have any analysis of the ages and where the people are coming from who are visiting? This is on notice as well.

Mr Maher : Yes, definitely.

Senator MOORE: I thought you did. I thought I've seen it in the past.

Mr Maher : Yes. We have really strong data on that.

Senator MOORE: If we could get some data on that, that would be lovely.

Mr Maher : I don't have it with me now. That is one we can get definitely.

Senator MOORE: On notice, that would be really useful. That would also show where the increases have been in those particular areas.

Mr Maher : It's an interesting flux between international and domestic as well.

Senator MOORE: Lovely.

CHAIR: Thank you very much to the ILC.