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Finance and Public Administration Legislation Committee
25/05/2018
Estimates
PRIME MINISTER AND CABINET PORTFOLIO
Aboriginal Hostels Limited

Aboriginal Hostels Limited

[10:19]

CHAIR: I welcome Mr Tony Usher, chief executive officer of Aboriginal Hostels Limited, and officers. Mr Usher, do you wish to make an opening statement?

Mr Usher : Thank you, Chair. Yes, I do, a very brief one. Good morning, senators. I also wish to acknowledge the Ngunnawal people and pay our respects to their elders past and present. I'm accompanied today by Ms Michelle Deavin, who is our company secretary and chief financial officer and will be acting CEO for the next six weeks during an absence that I'll be taking from the business.

I thank the committee for inviting us today. I look forward to assisting you in the inquiries that you're taking. My opening statement will be brief in order to facilitate sufficient time for questions. For the sake of clarity, I would just like to briefly revisit two items of information I provided at the last hearing in March. The first one is my response to a question on notice from Senator Siewert regarding police checks for AHL staff. I can confirm from that meeting that every employee must pass a national police clearance prior to commencement with AHL. Every employee that currently works for us has it. We have strengthened since then to renew that every two years. So anyone who is working with us will have a recheck every two years.

The second point is on the question of hostel closures. I responded, again, to a question from Senator Siewert that there had been no hostel closures during my tenure at AHL. I want to clarify the record. I confirm that this is the case. However, I wish to advise—we have the Hansard from last meeting—that we have taken three properties offline temporarily either for significant repairs and refurbishment or for repurposing so that we can maximise their efficiency and utilisation. There's no intention to permanently close any of the hostels. In that context, there are no permanent closures, but there were three offline for that purpose. On the contrary, we're actually significantly along the track of identifying opportunities to expand our footprint where there's a need and proven viability within our existing appropriations. So our future, being underpinned now by our financial strength, may well lead to the extension of our footprint rather than a reduction. In the case of the hostels identified for repurposes, we're currently working with potential third parties to better use those facilities to meet local needs.

During the March hearings, I also provided some detail on the significant improvement in our financial position compared to previous years. I'm very pleased to report a continuation of that situation. I can advise that we will close this year with a fourth consecutive surplus quarter. We will end the year in surplus with no divestment of any hostels. Two significant areas of saving achieved this result. One is the restructure of our workforce, where we eliminated a considerable number of executive positions across our business, enabling more people on the ground. We also discontinued the use of external contractors to perform tasks that should be managed with our own levels of expertise. Thanks again for the opportunity to provide you with this update. I welcome your questions.

CHAIR: Thank you, Mr Usher.

Senator DODSON: Could you just remind me about your reporting obligations. I know we went through a process last year where reports to the parliament were being changed. I just can't recall. Do your reports still come through the minister and are tabled in the parliament, or do they go through some other arrangement? These are your financial end of year reports.

Mr Usher : Well, our annual report goes to cabinet.

Senator DODSON: To the cabinet?

Mr Usher : Our annual report, yes.

Senator DODSON: Maybe I will ask the minister. Minister, are these financial reports tabled in the Senate any longer as a standalone report, or are they included somewhere else?

Senator Scullion: Well, they are available on the website. But I will have to take on notice whether—

Senator DODSON: My question wasn't about the website.

Senator Scullion: I'm just giving you the information I have to hand, which is in my scone. I will get an answer to the question of whether they are still formally tabled. I understand the question, but I don't have the answer at hand.

Senator DODSON: Thank you, Senator. We always look forward to reading the reports, of course.

Senator Scullion: Sure.

Senator DODSON: They might not answer a lot of questions, but the detail is often in those reports. Can you identify where these opportunities may be for the further expansion of the hostels?

Mr Usher : Yes. Thanks, Senator. AHL runs three business streams—education, multipurpose and medical, particularly renal. We're currently undertaking a heat mapping exercise. We've completed the medical, which clearly shows where the need and the future need is for each of those streams. We're now focusing on education and then we'll do multipurpose. Right now, we have a clear picture. As an example, the Barkly region in the Northern Territory is very strongly in need of more renal hostels. So, as we undertake that program, we can identify more clearly where it is we should be looking to expand, if we do.

Senator DODSON: This may be a crossover with the housing programs. Do you have a role in the area of housing needs for families to cope with out-of-home care children or children at risk?

Mr Usher : No. That's not the mandate we have. Where we do assist with children is where children have a place in the school and they need accommodation in a location at the school they are attending. We provide services for that.

Senator DODSON: Alternative entities could be created for detention centres. I'm thinking at the back of my mind Don Dale in the Northern Territory. Do you have any sort of discussions or innovative approaches with either the territory government or others on alternative accommodation for youth who are potentially to be detained?

Mr Usher : We have a passion, through the board and the executive, to provide the services that we can within the envelope that we get. We are in discussion about other options. We may enter a fourth stream, but, frankly, they're pretty early days.

Senator DODSON: You mentioned that your finances are in a healthier state than they were last time; I think you reported that to us.

Mr Usher : Yes.

Senator DODSON: What has happened to turn that around?

Mr Usher : Well, I could turn to my right and say my chief financial officer and her team have done an outstanding job in really taking control of fiscal management in our business. But the two key areas were a significant reduction in the numbers of employees at a higher executive level—national office level. Our view was that it's much better to have our numbers of employees out in the field, where they can actually provide services to our residents. So we've culled a number of positions. When non-ongoing contracts came to an end, we didn't renew. There were policy writing and a lot of external contractors being engaged to do work that we believe should have been done in-house. So we switched to that model.

Senator DODSON: You are in the process refurbishing, I think, three hostels, and you are looking at alternative uses. Can you tell me what the scope of that is? Is it joint venturing with first nations people somewhere or state governments and some other enterprise or some corporate?

Mr Usher : I will give you some exact examples. We provide services to the Northern Territory government, for instance, in Alice Springs. We manage three hostels there for them. I spoke about three hostels being temporarily closed. We are refurbishing one with our own funding. That's William T Onus in Melbourne. It's an aging facility, as many of ours are. It needs refurbishment. It should reopen in July. So that's our own internal funding. There's Ee-Kee-Na in Armidale. We're talking to Homes North. In that hostel, we had residents, but only three or four of them were students. So there were people using it as cheap accommodation. There are structural issues with that building. Homes North have advised us that they can fill that hostel with people from their own pool rather than the half a dozen that we had in there. So I think it will double the number of people that we assist in that area. In Musgrave Park in Brisbane, we've just opened discussions with a group in Queensland to take over the management of that.

Senator MOORE: This is purely selfish. I'm following up on the Musgrave Park situation because we've been following it fairly closely. Is there any timeframe for that?

Mr Usher : Musgrave Park is a 1930s build. It has concrete cancer and asbestos. The issue is what we really do with this building in the longer term. The discussion is open. The CEO of the business I'm talking about has been on leave until yesterday, I believe, the 24th. I go on delayed leave tonight for five weeks. We won't recommence that until July. I don't expect there will be an outcome until around September.

Senator MOORE: Thank you.

Senator SIEWERT: Thank you for the answers to the questions. You said that no hostels have closed. I want to close the loop and ask whether there is any intention to close any.

Mr Usher : Exactly. There is no intention to close any. The intention is to actually open more within our appropriation.

Senator SIEWERT: Thank you.

Senator DEAN SMITH: I have a similar point. In your opening statement, you mentioned that there are no closures or anticipated closures. Thanks for that. You also mention that three properties are temporarily offline for either significant repairs and refurbishment or for repurposing to maximise their utilisation. What do you mean by significant repairs?

Mr Usher : William T Onus, for instance, has—

Senator DEAN SMITH: Let's be specific. What are the three properties?

Mr Usher : William T Onus, which is based in Melbourne, in Northcote. There is Ee-Kee-Na, which is a property in Armidale. Musgrave Park is in Brisbane. William T Onus is a two-storey property. I think it's over 30 years old. There are stairways. A lot of our residents don't have an opportunity to get up and down stairs.

Senator DEAN SMITH: So Williamstown would be a hostel for—

Mr Usher : No. It's in Northcote—

Senator DEAN SMITH: Sorry.

Mr Usher : not Williamstown.

Senator DEAN SMITH: Yes. In Northcote in Victoria. You said it's two storeys, about 30 years of age. When you mentioned the three streams—education—

Mr Usher : It's a multipurpose.

Senator DEAN SMITH: Multipurpose?

Mr Usher : Yes. It's multipurpose. The bathrooms are aging. Unfortunately, a lot of these buildings we have had for a long time. They were built by other people, not AHL. We're finding that the standard of the build is very suspect now. We've got leaking bathrooms that have never been sealed. We have a complete bathroom rebuild in a lot of the hostels, asbestos removal and intensified security. William T Onus in particular has a long history of violence. It's right across the road from a railway station. We get a lot of itinerants coming across trying to come in, so we've beefed up the security. That should be finished, we think, in the second or third week of June ready for rehabitation in July.

Senator DEAN SMITH: And the Armidale hostel?

Mr Usher : Ee-Kee-Na is a unique property. There's no management there. It's a building that housed between six and eight tertiary students, who pretty much self-managed. We found that, of those six or eight, only 50 per cent were actually students. There was a very low nightly rental. There were people using the facility that shouldn't. It has cracks in the wall and it has some refurbishment to be done. Alternative accommodation for those types of students in that town is abundant. They've all found alternative accommodation. Therefore, Homes North has said that they think they can fill it with a different type of resident than what we target. We just think it's a better purpose for that building.

Senator DEAN SMITH: And you have made some comments already with regard to Musgrave Park. The assessment that you do on your properties happens regularly or has happened regularly, or has it not happened regularly? You'll know better than me, but it sounds like there's been a lack of attention to refurbishment and repurposing and maintenance?

Mr Usher : That's correct. You are right. In the past, that has been the case. This management regime has been in place for under two years. We now have a maintenance program, which in the forward estimates shows that works will need to be done. It goes across a full year. We allocate several million dollars a year for this program maintenance.

Senator DEAN SMITH: So we can expect that, whatever you are expending on the refurbishment and getting it back to a better condition, those costs will decrease over the longer term because you'll just be maintaining a higher level of standard rather than getting it up to a higher level of standard?

Mr Usher : Yes. Certainly beyond the medium term. There are 45 properties, not all of which are in that state. As we go one by one, in the out years, that will come down.

Senator DEAN SMITH: How have you actually been doing the assessment of the properties? Do teams go in, or are you contracting that out?

Mr Usher : Well, it's a mix. We have our own property team now. We've got professional builders who now work for us. We have two areas, really. We have the instantaneous identification of a problem, which we can fix immediately, and then we have the longer term assessment of what that program will need to be. We've currently got an employee doing a hostel by hostel works program for the next three to five years.

Senator DEAN SMITH: So this is a feature of the new management approach—having a dedicated person employed by AHL to do the property assessments?

Mr Usher : We have a third party doing full property assessments. We buy that expertise in from outside, but then we manage it internally.

Senator DEAN SMITH: I'm just conscious of issues around fire safety.

Mr Usher : Yes.

Senator DEAN SMITH: How is it—

Mr Usher : External contracting. We have had some serious fire safety issues inherited, most significantly, in Biala. We now meet all regulatory requirements right throughout our 45 hostels.

Senator DEAN SMITH: And that's a relatively new initiative under the new management—to make sure that the fire safety conditions are meeting the required state?

Mr Usher : Yes. The board have put in place an asset management committee and—

Senator DEAN SMITH: So there was not an asset—

Mr Usher : There was not one.

Senator DEAN SMITH: Despite the fact that your assets are physical infrastructure.

Mr Usher : Exactly.

Senator DEAN SMITH: There was not an asset management committee previously?

Mr Usher : That's right. So we've put in an assessment management committee. We've got an audit risk and finance committee. Both sit on the same day.

Senator DEAN SMITH: So there wasn't an audit risk committee previously?

Mr Usher : There was a finance committee and an audit and risk committee. We've amalgamated that into one key committee.

Senator DEAN SMITH: Sounds sensible.

Mr Usher : Our deputy chair chairs that. We have a former CEO from New South Wales housing who chairs our asset committee. We've just introduced a strategic investment committee for the footprint growth that I talked about earlier, which will sit for the first time in August.

Senator DEAN SMITH: Mr Usher, how would you describe the governance arrangements of AHL before you arrived? Strong? Poor?

Mr Usher : When I took the role, I wasn't satisfied or comfortable with them.

Senator DEAN SMITH: I want to turn briefly to the issue of workforce. You mentioned in your opening statement that you had done some work refocusing the workforce, and I quote, 'eliminating a considerable number of executive positions'. How many people are employed by AHL? What is the proportion of Indigenous people? Where does that Indigenous proportion sit? Does it sit in the management structure? Does it sit supporting on-the-ground services?

Mr Usher : There are several parts to the question, so I will try and attack them. Currently our ASL is, I think, 332. We had an approved ASL of 411 in 2015-16. I think it was a little over 470. So we've brought that to a figure of 332. But we're expecting that will grow over the next year to fill the positions out in the field. We're about 63 per cent Indigenous. That moves slightly.

Senator DEAN SMITH: Of course, yes. It's essentially more than 50.

Mr Usher : It's certainly more than three per cent, which the government mandates. Yes, we're at 63 per cent now. We've been as high as 66, but a lot of that depends on who we get as casual employees as well. Our objective when we go out to market is preference for Indigenous employees. We actively seek that. We have Indigenous employees at senior level—at executive level ones and twos. We don't think there are enough. That's a program that we continue to implement over time.

Senator DEAN SMITH: Is there a career path for Indigenous people in the organisation?

Mr Usher : There is. In fact, people come to us as a cook or at a domestic level. Many of them transition into assistant hostel managers, then hostel managers. Because we've expanded the lower base, we're actually creating more positions for that development.

Senator DEAN SMITH: So more entry points available?

Mr Usher : More entry points but also more mid points. Instead of just one or two execs and only one or two people getting them, we spread it across the field. We also introduced a scholarship traineeship in the national office exclusive to Indigenous employees.

Senator DEAN SMITH: What does the retention rate of Indigenous employees look like?

Mr Usher : I will have to take that on notice, I think. I can say that the consistency of the percentage is strong. So I guess the answer would be it's consistent, but I wouldn't be able to give you the exact number.

Senator DEAN SMITH: Fantastic. So 63 per cent of the 332, roughly, are Indigenous people. And that has moved around and has got to as high as 66 per cent?

Mr Usher : It has. As we move to our end of year figure, which we think is around the 370 or 380 mark, it's a requirement of our recruitment that that be the minimum. Sixty-six is our target; that's what we want to achieve.

Senator DEAN SMITH: Finally, are there any initiatives that the board may not yet have approved but that you're thinking about that might further enhance the participation of Indigenous employees?

Mr Usher : New initiatives, innovative initiatives? It's a bit hard to say. I think the drive is that we evidence our sustainability so we grow our footprint. But the board is aware of this. The board has approved the footprint increase within our means. That would obviously increase the number of Indigenous opportunities. It may not increase the percentage, but it will certainly increase the numbers.

Senator DEAN SMITH: Great. Excellent.

Senator SIEWERT: I understand that there are some ongoing issues around the hostel at Biala. Is that correct?

Mr Usher : Over the last 23 months, there have been significant issues around Biala. I have not had any this school year. Generally they seem to have settled. Our business is very dynamic; it changes every day. That's business as usual for us, though. So at this point in time, I don't have any outstanding issues at Biala other than I don't have enough students staying there.

Senator SIEWERT: And why is that?

Mr Usher : AHL doesn't find students. We house students that the school finds a place for. So if a school has 15 students, we have accommodation for that. If the school only had five or six or eight, we have accommodation for them. At the moment, the school that we're dealing with mostly has only accepted that number of students. In reference to Senator Smith's question, which is similar, one of the innovations we have is to work more closely with the school to increase the numbers of students that come to their school so that we can increase the number of kids in our hostels.

Senator SIEWERT: Thank you.

CHAIR: Are there any further questions for AHL?

Mr Fox : I want to add to an answer. Within my division, I look after the Indigenous portfolio bodies from a governance perspective in the department. Senator Dodson asked about the tabling of annual reports from Aboriginal Hostels Limited. I can confirm that the last AHL annual report in 2016-17 was tabled in the parliament on 31 October consistent with the normal practice for government bodies.

CHAIR: Thank you. Are there any further questions to AHL? If not, I thank you very much for your time and your evidence this morning. The committee will now move to the Australian Institute of Aboriginal and Torres Strait Islander Studies.

Senator DODSON: I want to indicate that we have no questions of the institute or the Office of Town Leasing. We will put them on notice in the interests of time, if that helps staff and people organise themselves. Maybe other senators have questions. We will not be asking questions for this session.

CHAIR: It would be good to know, particularly in the case of the Office of Township Leasing, if anyone does have questions. I understand that they have come from Darwin today and that they were requested by the opposition to attend.

Senator DODSON: We are just conscious of the time. But we're happy to ask some questions. We have questions to ask. I'm not sure who made that request.

CHAIR: Let's call the witnesses and see if any senators have questions for them.