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Finance and Public Administration Legislation Committee
Indigenous Land Corporation

Indigenous Land Corporation


CHAIR: I welcome Senator the Hon. Nigel Scullion, Minister for Indigenous Affairs, and Mr John Maher, the executive officer and officers. Minister, do you wish to make an opening statement?

Senator Scullion: Negative.

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

Mr Maher : No, thank you.

CHAIR: Senator Dodson.

Senator DODSON: Thank you, Minister and your team, for being here on such a wonderful day in Canberra. Do we have the Audit Office first?

CHAIR: That will be in outcome 2. We are doing agencies first.

Senator DODSON: I am just wondering whether there have been any developments on the amalgamation of the ILC and the IBA boards?

Senator Scullion: Just for clarification, there is no intention to amalgamate the boards. I will go to the ILC and perhaps to the department, given that it is the amalgamation of both of them. Some of the back-of-house administration was going to be able to be rationalised to give us some more efficiencies, but there was no intention to amalgamate the boards. Perhaps my department can assist further.

Ms Hefren-Webb : That is correct. There is no amalgamation of the boards proceeding. There is work underway around efficiencies to be found between merging some of the back office and essentially operational matters.

Senator DODSON: In terms of the IBA, is there a list of new Indigenous businesses that could be put before us or made available to us?

Ms Hefren-Webb : Do you mean Indigenous businesses which the IBA has had involvement in financing?

Senator DODSON: Yes, that have been instrumental in bringing it into existence.

Ms Hefren-Webb : Ms Williams will come to the table and talk to that matter.

Ms Williams : Could you repeat the question for me, please.

Senator DODSON: I am wanting to know how many Indigenous businesses have been brought into existence through the facilitation or agency of the IBA.

Ms Williams : That may be something that we do need to take on notice or perhaps when IBA comes to the table it might be appropriate for them to answer it at that time.

Senator Scullion: The IBA will be coming to the table. The people that we have at the table right at the minute are the Indigenous Land Corporation, the ILC, but they are in the room and no doubt will be prepared for that question.

Senator DODSON: Questions, then, in relation to ILC: what number of properties have been purchased in the last 12 months?

Mr Maher : Year to date we have purchased one property. Our target for the full year will be three.

Senator DODSON: Whereabouts?

Mr Maher : The property that has just been purchased is Kings Run in Tasmania, for cultural and environmental reasons.

Senator DODSON: What is the management structure for that?

Mr Maher : I will hand over to Ms Button.

Ms Button : The property has been purchased as part of a co-contribution with others, including philanthropic sponsors. The property was purchased and divested immediately to Tasmanian Aboriginal Corporation.

Senator DODSON: How many Indigenous people are employed on the property?

Ms Button : I would have to take that on notice.

Senator DODSON: What is the profit of the property?

Mr Maher : It is not a property for production. It is a property that has been purchased for cultural and environmental reasons.

Senator DODSON: Is it on Bruny Island?

Mr Maher : No, that is Murrayfield. That is a sheep/wool station that is managed by the ILC. The property that we are talking about is up in the northwest area of Tasmania.

Senator DODSON: I will come back to the question of the productivity and the returns from those properties, which I have an interest in. Is there an account of the profitability of these properties?

Mr Maher : Yes. Each property as a P&L, a profit and loss statement, and a balance sheet. We know the productivity and the profitability of each property that is managed by our subsidiary.

Senator DODSON: Are they in your annual reports?

Mr Maher : Included in the annual report is a consolidated figure for the pastoral enterprise, giving a surplus that has been generated for that financial year.

Senator DODSON: What about the employment of the Indigenous people in relation to that?

Mr Maher : That is fully covered in the annual report.

Senator DODSON: Has the ILC gone into joint ventures with any other major property holder, in particular in the pastoral industry?

Mr Maher : As we speak, joint ventures on a pastoral basis do not exist, but the ILC is in a period of transition where we are actually looking to build deeper relationships and greater partnerships with Indigenous organisations. We are currently in discussions with three parties to form those deeper relationships on a joint venture basis.

Senator DODSON: Is that moving away from your subsidiary company in relation to leasing?

Mr Maher : That joint venture could be with the ILC core group or with the subsidiary company, whichever is the best or most applicable at the time.

Senator LINES: I will just follow up from some of the questions that Senator Dodson asked you. In relation to joint ventures, could you name some of the Aboriginal and Torres Strait Island organisations that you might partner with?

Mr Maher : I will be led by my colleagues, but I think at the moment those discussions are in confidence. That will obviously come to light if those discussions bear fruit.

Senator LINES: Are any of those partnerships in Western Australia?

Mr Maher : I would say, yes, there is.

Senator LINES: Is that a definite, yes, there are discussions?

Mr Maher : It is definite, yes.

Senator LINES: Just in relation to Western Australia, what discussions recently has the ILC had with Noongar groups.

Mr Maher : Two weeks ago, our chairman was discussing with a Noongar group the potential for building a relationship. I will not say it is specifically a joint venture, but certainly a relationship to help realise the Noongar people's economic wealth there.

Senator LINES: Which group was that?

Mr Maher : I am not sure. I will hand over to Ms Button for that.

Ms Button : If I can take on notice the formal name, but it is a consortium of a range of Noongar title holding bodies in the south. A few months ago, we had an introductory meeting with SWALSC along similar lines in terms of what might be some potential opportunities for the ILC to help them manage their land that they will take over and also realise economic opportunities on those properties.

Senator LINES: With the Noongar settlement?

Ms Button : Yes.

Senator LINES: Who initiated the meeting in relation to the groups your chairperson met with?

Mr Maher : It was initiated by a director of our pastoral enterprise, who is a Western Australian and is working with the Noongar as well.

Senator LINES: Have you worked with that group or any Noongar groups in the past?

Ms Button : Some of the title holding bodies that are part of that Noongar land consortium, if you like, that our chairperson met with are managing or owning properties that the ILC has previously purchased and granted. We have been having conversations with some of them about starting up some land based enterprises. We already have an existing relationship with a number of them in that party or that consortium that met.

Senator LINES: As to these meetings, particularly with the Noongar groups, not SWALSC, you said you are doing some investigative work about future partnerships.

Mr Maher : Yes.

Senator LINES: I do not want to say a joint venture. So, when would you expect that work to be complete?

Mr Maher : The next step is that we will be meeting together and essentially doing introductions on what ILC does, what it can do and what the requirements or what the Noongar aspirations are. Then within that we will obviously work out how we can match our capability and resources to try and meet those requirements. That is the next step. It is really getting to know each other a lot better with formal presentations with respect to what each group is on about.

Senator LINES: Is it fair to say that the bulk of the activity of the ILC in Western Australia has been directed towards pastoral leases in the north?

Mr Maher : We certainly have a lot of our investment in pastoral in the north, but there is also a lot of urban investment throughout Perth as well with respect to Indigenous organisations.

Senator LINES: There are these discussions with the Noongar groups that are looking at something different for the ILC?

Mr Maher : Yes. My understanding is that they will be looking at an agribusiness focus. Yes, definitely.

Senator LINES: Thank you.

CHAIR: Senator Siewert.

Senator SIEWERT: I would like to go back to the question on notice that I asked last time, which is 106. It is in fact the breakdown of the purchases that have been made. Is it possible to get details on the grants that have been made for management?

Ms Button : Yes, we can do that.

Senator SIEWERT: I presume that is an extensive list.

Ms Button : Yes.

Senator SIEWERT: Can you give us the breakdown for the management projects that have been funded, how much and where?

Mr Maher : Can you just clarify over what period you would like that information?

Senator SIEWERT: Can we have that for the same period? You gave me from 2011 to date.

Mr Maher : So, 2011 to year to date?

Senator SIEWERT: Yes.

Mr Maher : Thank you.

Senator SIEWERT: Did you say there has been one purchase year to date?

Mr Maher : Yes.

Senator SIEWERT: Since the change in the board with the new chair does that cover that period?

Mr Maher : That is year to date. That is from July last year.

Senator SIEWERT: How many have been purchased since the new chair took over?

Mr Maher : We have the data. Just bear with us. There have only been two.

Senator SIEWERT: How many have you considered?

Mr Maher : Considered?

Senator SIEWERT: So, you purchased two?

Mr Maher : Yes.

Senator SIEWERT: How many have been considered in that time?

Ms Button : There is an iterative process, if you like, that we work through with groups that have some proposals around purchasing land. I would have to take on notice and get back to you on the total number of inquiries, conversations and initial investigations that we had. In terms of properties that have reached a full due diligence and investigation process, been recommended and gone to the board and not been approved, there have been none.

Senator SIEWERT: How many?

Ms Button : None.

Senator SIEWERT: Are you saying that the two were already in train?

Ms Button : They are two that have gone through the full process, then a recommendation gone to the board, the board has supported it and the property has been purchased, but ones that have been initial investigations or informal conversations with groups or inquiries made—there would be a number of those. I would have to get back to you on the total number. But in terms of formal requests, formal processes and then a formal request to the board, only the two that have been approved.

Senator SIEWERT: If you could take that on notice, that would be really appreciated. I have a number of questions that are quite detailed so I will put them on notice. It is unrealistic to expect them to be answered straightaway. I did want to go back to the issue of the loan for the ARR and ask a couple of questions there. There is the $95 million loan?

Ms Lindsay : It is $65 million.

Senator SIEWERT: Have you worked out what the net cost of that is going to be in terms of looking at the opportunity lost on what that money could have been used for?

Ms Hefren-Webb : The purpose of the $65 million loan from the government to the ILC was to reduce the interest costs that the ILC was paying. In that sense, it saved some funds. In terms of opportunity costs do you mean—

Senator SIEWERT: In terms of the fact that you are now having to spend that, then having to loan that money to pay the interest costs and that money—

Ms Hefren-Webb : The Australian government.

Senator SIEWERT: Yes, the Australian government. ILC are still caught up paying for that loan that could have been used on other things.

Senator Scullion: The opportunity cost is the difference between what they were paying on the loan, which was a very high level of interest rate. We were able to borrow at a much lower level of interest rate. The Australian government had the capacity at that time to borrow at a very low level. We just simply passed on the very low interest rates that were available to the government but not available to the ILC. The opportunity is in fact a clear, number which we can probably get you on notice, which is a benefit to the ILC. With the opportunity lost, I understand what you are saying. If we, for example, were using this from the IAS to loan it, there would be an opportunity lost because we did not actually use these funds on some other matter. This was just simply a borrowing from the government that was not available to the ILC to ease the burden on their very high interest payments, which have now gone.

Ms Hefren-Webb : To clarify, it was not drawn from the IAS.

Senator SIEWERT: I know that. Can you clarify for me what the ILC has paid all up and what the asset is worth now?

Mr Maher : I will hand over to Ms Lindsay, who is our CFO.

Senator Scullion: While we are getting that information, I was delighted to hear that it has been in fact revalued recently. I know that they can probably specifically go to that revaluing.

Mr Maher : The revaluation has the asset valued at $300 million now.

Senator SIEWERT: Three hundred million?

Mr Maher : Yes. Just while Ms Lindsay is looking that up, the minister is correct in that the interest rate that the ILC was paying was a vendor finance rate, and the loan that has replaced it through the government has reduced the interest spread around six per cent. It has been a huge alleviation.

Senator SIEWERT: How long did it take to work through the agreement with the government to essentially refinance?

Ms Lindsay : I have the answer to the other question, but I will address that one first. There was a working group established to look at all kinds of options around the Ayers Rock Resort debt. That process, from the time that as I understand it PM&C made a recommendation in regard to what options to put forward to government, the to negotiate the terms of the loan was a very short period, a matter of about six weeks.

Senator SIEWERT: Renegotiating the loan is different from going through government processes from the initial stages of ILC in trying to refinance. How long did that take?

Ms Lindsay : I am sorry?

Senator SIEWERT: How long from when ILC first started working out that they needed to refinance to when the agreement was reached? You can take it on notice.

Ms Lindsay : Yes.

Senator Scullion: I understand what the senator is asking is in two parts. Firstly, is the government seeking money to pay, but the other is renegotiating the loan with the original vendors. So, there were two parts to that question.

Senator SIEWERT: Yes. So, we have the six weeks. Could you take the other on notice then?

Ms Lindsay : Yes.

Senator SIEWERT: Let us go back to my question.

Ms Lindsay : I will take the question on notice. The refinance was due in May 2016. We knew that we had that deadline in terms of refinance, so we started the refinancing process very early in the piece. We made sure that we had that deadline cut off. I will come back to you as to where we started negotiating with the government in that timeline.

Senator SIEWERT: That would be appreciated.

Mr Maher : I can add also that in our corporate plan it states that the transfer of the loan from vendor finance to where we are now has saved $26 million in interest payments.

Senator SIEWERT: Thank you. Can we go back to the other one?

Ms Lindsay : The value of Ayers Rock Resort, as I said before, at 30 June was $300 million. If you take into account the acquisition costs, all interests on debt, capital upgrades and improvement on Ayers Rock Resort, then the total investment to date has been $180 million. Plus, there is $184 million worth of debts still outstanding.

Senator SIEWERT: Did you say $184 million worth of debts?

Ms Lindsay : Yes, still outstanding.

Senator SIEWERT: So, you paid $180 million. It was valued at $180 million when you bought it.

Ms Lindsay : No, it was valued at $300 million. Our acquisition cost was $300 million, of which we financed $215 million. Of that $215 million there is still $184 million outstanding. If you take into account what we have paid in principal payments, what we have done in capital improvements and interest payments, then the investment is about $180 million.

Senator SIEWERT: If I understand what you have just said, it is now back at the cost?

Mr Maher : That is right.

Senator SIEWERT: So, it went down and now it has gone back up again?

Mr Maher : Yes.

Senator SIEWERT: I have some other questions that I will put on notice. I am conscious of time so I will ask a few questions here and put them on notice. Is this the appropriate place to ask about National Indigenous Pastoral Enterprises?

Mr Maher : Yes, it is.

Senator SIEWERT: What is the current staff FTEs for the enterprises?

Mr Maher : NIPE?

Senator SIEWERT: I was not sure if that was what you called it.

Mr Maher : Yes. Just call it NIPE. It is 102, of which 45 per cent are Indigenous.

Senator SIEWERT: Have there been any staff losses or growth in the last 12 months?

Mr Maher : The staff numbers will fluctuate in seasons. In the dry season the staff numbers go up and in the wet season there is less staff.

Senator SIEWERT: You were very sure about the 102.

Mr Maher : Yes, as of 31 January.

Senator SIEWERT: Maybe you could take on notice the staff over the last five years?

Mr Maher : Yes, we can do that.

Senator SIEWERT: Could you take that on notice?

Mr Maher : Yes.

Senator SIEWERT: Also, could you take on notice the split between Aboriginal and non-Aboriginal staff over that period?

Mr Maher : Yes, that is how we would calculate it.

Senator SIEWERT: Yes. You automatically gave it to me then, so I was just double checking.

Mr Maher : Yes. We have that data.

Senator SIEWERT: Could you also tell us what the budget has been over the last three years?

Mr Maher : The budget?

Senator SIEWERT: For NIPE.

Mr Maher : Do you mean the profit and loss budget?

Senator SIEWERT: Yes.

Mr Maher : I would have to ask Ms Lindsay or we might have the program.

Senator SIEWERT: Is it easier to give it to me now?

Mr Maher : We have this year. We might have to take on notice last year.

Senator SIEWERT: That would be great.

Ms Lindsay : The 2016-17 budget for NIPE is $8.4 million. That includes, if you like, the gross operating profit from our agribusinesses plus some other programs that NIPE do directly as part of our land management functions.

Senator SIEWERT: What about last year, 2015-16?

Mr Maher : We will have to take that on notice.

Senator SIEWERT: Was it above or below that?

Mr Maher : The operating surplus is, from memory, $5.7 million, which was invested.

Senator SIEWERT: Is that different from what you have just told me for the budget?

Mr Maher : That is this year's budget. You asked for last year's actual—

Senator SIEWERT: Yes. It was five point?

Mr Maher : Seven.

Senator SIEWERT: So, that is a significant increase.

Mr Maher : As you know, we are in a period of very high cattle prices. So, if we are not doing okay now we—

Senator Scullion: Can I just say that when I make inquiries about this it is useful to know that profit does not necessarily mean a lot. They have made a decision to increase the herd. You do not sell as many and obviously you do not get a profit. We might try to find a couple of other settings to assist with that.

Senator SIEWERT: Thank you. I have a number of other questions that I will put on notice.

CHAIR: Thank you. Senator McKenzie.

Senator McKENZIE: I wanted to pursue the unfair dismissal of Mr McCaffrey by Mike Dillon and the lack of response by the ILC to apologise or to offer to date to cover any of his legal costs. That is the issue that I will be traversing with you. It is one that we have spoken about before, not with you but with others. In the interests of time I might put them on notice.

CHAIR: Any other questions to the ILC?

Senator SIEWERT: There is one bit that I would like to start here and then put some on notice if possible.


Senator SIEWERT: When we were talking about some of the changes that I was proposing a while ago to ILC one of the strong issues that came up—and I have asked about it before but I would like to continue to pursue it—is the issue around Sea Country. Can you quickly update me on where you have made progress on that. I will put some more detailed questions on notice. It has been raised with me a number of times.

Mr Maher : Late last year we commissioned a QC to give us some formal advice on what role ILC could play with respect to Sea Country. That advice gave arguments both for and against ILC being involved.

Senator SIEWERT: Why am I not surprised?

Mr Maher : Yes, do not be surprised. It concluded that a definitive answer can be given only on a case-by-case basis and, if you like, the only way that ILC could actually bravely go forward into Sea Country without any concern would be legislative change.

Senator SIEWERT: You have pre-empted my next question. So, that would make it clear that you could and there would be no ambiguity then?

Mr Maher : That is right, but that does not rule us out from working on a case-by-case basis and we are very keen to do that.

Senator SIEWERT: I understand that, but it makes it much harder, does it not, with that ambiguity still there?

Mr Maher : It would mean case by case we would have to get advice. Yes, that is right.

Senator SIEWERT: I will put the rest of my questions on notice.

Senator Scullion: It is probably useful to have my view and the government's view. I have to say most Aboriginal and Torres Strait Islander people would be shaking their heads about a QC having to provide advice about whether native title country and your country has any difference because there is water over it. I have been pursuing for some time, as you may well be aware, the notion that if a cattle property on land is able to be purchased by the land fund, if a set of cattle yards is able to be purchased from the land fund, if a truck to move those cattle around can be, then Aboriginal and Torres Strait Islander people absolutely believe that an entitlement to the fish in the ocean, whether it is a jetty or a vessel, is in exactly the same context as land; it has universally been put to me that they should have access to those very same things. I am working very closely with the ILC and we will look at this carefully.

As you indicated, we can get a number of opinions from people, but since the Akiba case in the Torres Strait I think there is a great deal more clarity around that. I am not sure whether or not the QC pontificated on both the Croker Island and now the Akiba case in regard to a level of confidence that the ILC may have, but I will be having a conversation with the board specifically about these and associated matters and hopefully we can have some progress at the next estimates hearing.

Senator SIEWERT: Thank you.

CHAIR: Are there any further questions for ILC? If not, I thank them for their appearance today.