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Finance and Public Administration Legislation Committee—Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 [Provisions]—Report, dated October 2021


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October 2021

The Senate

Finance and Public Administration Legislation Committee

Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 [Provisions]

© Commonwealth of Australia 2021

ISBN 978-1-76093-300-5

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License.

The details of this licence are available on the Creative Commons website: https://creativecommons.org/licenses/by-nc-nd/4.0/.

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Members

Chair Senator Claire Chandler LP, TAS

Deputy Chair Senator Tim Ayres ALP, NSW

Members Senator Kimberley Kitching ALP, VIC

Senator Matt O'Sullivan LP, WA

Senator James Paterson LP, VIC

Senator Malcolm Roberts PHON, QLD

Substitute Members Senator Patrick Dodson ALP, WA

(for Senator Kitching)

Participating Members Senator Lidia Thorpe AG, VIC

Secretariat Sarah Redden, Committee Secretary Kate Campbell, Principal Research Officer Trish Carling, Senior Research Officer Brooke Gay, Research Officer Michaela Keating, Administrative Officer

Website: www.aph.gov.au/senate fpa

PO Box 6100 E-mail: fpa.sen@aph.gov.au

Parliament House Ph: 02 6277 3846

Canberra ACT 2600 Fax: 02 6277 5809

v

Contents

Members ............................................................................................................................................. iii

Abbreviations ................................................................................................................................... vii

Chapter 1—Introduction and background ..................................................................................... 1

Referral .................................................................................................................................................. 1

Conduct of the inquiry ........................................................................................................................ 1

Acknowledgement ............................................................................................................................... 1

Structure of the report ......................................................................................................................... 2

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 ............................................. 2

Special measures ....................................................................................................................... 3

CATSI Act - reviews ............................................................................................................................ 4

KPMG Review - Regulating Indigenous Corporations ...................................................... 4

DLA Piper Technical Review .................................................................................................. 4

Department of the Prime Minister and Cabinet - Internal Review ................................... 5

The Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018 ................................................................... 6

Comprehensive Review of the CATSI Act 2019-20 ......................................................................... 7

Purpose of the bill ................................................................................................................................ 9

Objectives of the bill ................................................................................................................. 9

Outline of the bill .................................................................................................................... 10

Legislative scrutiny ............................................................................................................................ 11

Statement of compatibility with human rights .............................................................................. 11

Chapter 2—Provisions of the bill ................................................................................................... 13

Schedule 1 - Amendments ............................................................................................................... 13

Part 1 - Review of operation of the Act ............................................................................... 13

Part 2 - Powers and functions of Registrar ......................................................................... 14

Part 3 - Membership applications, member contact details and electronic communication ............................................................................................................ 17

Part 4 - Subsidiaries and joint ventures .............................................................................. 17

Part 5 - Classification of Corporations ................................................................................ 18

Part 6 - Meetings and reports ............................................................................................... 18

Part 7 - Constitutions ............................................................................................................. 19

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Part 8 - Officers of corporations ........................................................................................... 19

Part 9 - Related party transactions ....................................................................................... 20

Part 10 - Power to exempt corporation from employee-director requirement .............. 20

Part 11 - Independent directors ............................................................................................ 21

Part 12 - Modernising publication requirements ............................................................... 21

Part 13 - Storage of information ........................................................................................... 21

Part 14 - Improving consistency with Corporations Act .................................................. 21

Part 15 - Finalising processes ................................................................................................ 22

Part 16 - Dealing with unclaimed property ........................................................................ 22

Part 17 - External administration and deregistration ........................................................ 22

Part 18 - Minor technical amendments ............................................................................... 23

Part 19 - Review of financial reports ................................................................................... 23

Part 20 - Native Title Register ............................................................................................... 23

Chapter 3—Key issues and committee views ............................................................................. 25

Support for the CATSI Act................................................................................................................ 25

Consultation ........................................................................................................................................ 26

Special measures requirements ........................................................................................................ 29

Response to the bill ............................................................................................................................ 30

Statement on capacity building (Recommendation 1) ....................................................... 31

Registered Native Title Bodies Corporate (Recommendation 62) ................................... 32

Reporting of remuneration of key management personnel .............................................. 35

Annual General Meetings ...................................................................................................... 36

Size classification of corporations ......................................................................................... 37

Committee views .............................................................................................................................. 37

Additional Comments - Australian Labor Party ......................................................................... 41

Additional Comments - Australian Greens ................................................................................. 49

Appendix 1—Legislative Scrutiny Comments ............................................................................ 55

Appendix 2—Submissions and additional information ........................................................... 61

Appendix 3—Public hearings and witnesses .............................................................................. 63

vii

Abbreviations

ACA Act Aboriginal Councils and Associations Act 1976

ACNC Act Australian Charities and Not-for-profits Commission Act 2012 AGM Annual General Meeting

ASIC Australian Securities and Investment Commission

ASIC Act Australian Securities and Investments Commission Act 2001 Bill Corporations (Aboriginal and Torres Strait Islander)

Amendment Bill 2021

CATSI Act Corporations (Aboriginal and Torres Strait Islander) Act 2006 Committee Senate Finance and Public Administration Legislation Committee

Corporations Act Corporations Act 2001 EM Explanatory Memorandum

First Nations Group First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal Corporation and the Institute of First Nations Governance Professionals Ltd

NACCHO National Aboriginal Community Controlled Health Organisation Native Title Act Native Title Act 1993

NIAA National Indigenous Australians Agency

NNTC National Native Title Council

NNTT National Native Title Tribunal

NTA Native Title Act 1993

ORIC Office of the Registrar of Indigenous Corporations

PBC Prescribed Bodies Corporate

PGPA Act Public Governance, Performance and Accountability Act 2013 PMC Department of the Prime Minister and Cabinet

Registrar Registrar of Aboriginal and Torres Strait Islander Corporations RNTBC Registered native title body corporate

Scrutiny Committee Senate Standing Committee for the Scrutiny of Bills Technical Review Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 VAHC Victorian Aboriginal Heritage Council

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Chapter 1

Introduction and background

Referral 1.1 The Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 (the bill) was introduced in the House of Representatives on 25 August 2021 by the Minister for Indigenous Australians, the Hon. Ken Wyatt, MP.

1.2 On 26 August 2021, and pursuant to the 10th report of the Senate Standing Committee for the Selection of Bills, the Senate referred the provisions of the bill to the Senate Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 14 October 2021.1

1.3 The Senate Selection of Bills Committee noted that the bill was being referred to the committee to investigate ‘the impact of the bill on the standards for ATSI Corporations’.2

Conduct of the inquiry 1.4 The committee advertised the inquiry on its webpage, and set 17 September 2021 as the closing date for submissions. The committee also wrote to a range of key stakeholder groups and organisations, drawing their attention to the

inquiry and inviting them to make written submissions.

1.5 The committee received 13 submissions, which are listed at Appendix 2. The submissions were also published on the committee’s inquiry webpage.

1.6 The committee held a public hearing - via videoconference - in Canberra on 23 September 2021, and took evidence from a number of key stakeholders, including the National Aboriginal Community Controlled Health Organisation (NACCHO), the Central Land Council, the Office of the Registrar of Indigenous Corporations (ORIC) and the National Indigenous Australians Agency (NIAA). A full list of witnesses is provided at Appendix 3.

1.7 The committee also had access to the information obtained during several past reviews of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). These reviews included the release of discussion papers, submissions and public consultations with stakeholders.

Acknowledgement 1.8 The committee would like to thank those organisations and individuals who provided written submissions to the inquiry, and those who provided

1 Journals of the Senate, No. 11, 26 August 2021, pp. 4000-4001.

2 Senate Selection of Bills Committee, Report 10 of 2021, 26 August 2021, Appendix 2.

2

evidence at the public hearing. Your efforts have greatly assisted the committee in its deliberations.

Structure of the report 1.9 This report consists of three chapters. Chapter 1 provides an overview of the inquiry and background to the bill and its regulatory context. It also provides a summary of the development of the CATSI Act and the reviews that have been

undertaken since the Act came into effect.

1.10 Chapter 2 outlines the key provisions of the bill, and Chapter 3 considers the issues raised by stakeholders in relation to the bill, and sets out the committee’s conclusions and recommendation.

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 1.11 In 2007, the CATSI Act replaced the Aboriginal Councils and Associations Act 1976 (the ACA Act). The ACA Act had been in place for over 30 years, and was the primary vehicle for the incorporation of approximately 3000 Aboriginal

and Torres Strait Islander associations. These associations are central to the delivery of government services - at both a Commonwealth and state and territory level.3

1.12 The CATSI Act came into effect on 1 July 2007. It was introduced with the purpose of providing Indigenous corporations with a fit-for-purpose regulatory framework, and to make it simpler for Aboriginal and Torres Strait Islander persons to form and manage corporations. While the CATSI Act reflects many of the requirements of the Corporations Act 2001 (Corporations Act),4 it also provides the level of flexibility and support required to meet the unique cultural circumstances of Aboriginal and Torres Strait Islander people.5

1.13 As noted above, corporations registered under the CATSI Act play a central role in delivering services and supporting economic development in Indigenous communities, particularly in remote Australia. In introducing the bill, the Minister for Indigenous Australians, the Hon. Ken Wyatt, MP noted that since its commencement, the CATSI Act has had a central role within the Indigenous economic and corporate sector, and argued that the sector currently provides ‘vitally important services such as health, education, housing and employment to Aboriginal and Torres Strait Islander peoples.’6

3 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 14.

4 The Corporations Act 2001 is the primary legislation regulating companies in Australia. It defines

the laws dealing with business entities at both the federal and state level, and is administered by the Australian Securities and Investment Commission (ASIC).

5 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 13.

6 The Hon. Ken Wyatt, MP, Minister for Indigenous Australians, Second Reading Speech, House of

Representatives Hansard, 25 August 2021, p. 5.

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1.14 The CATSI Act supports Indigenous corporations by encouraging high standards of corporate governance and financial management, and it also provides regulatory tools for assisting corporations in difficulty, such as special administrative provisions.

1.15 The objectives of the CATSI Act are:

(a) to provide for the Registrar of Aboriginal and Torres Strait Islander Corporations (the Registrar7); (b) to provide for the Registrar’s functions and powers; (c) to provide for the incorporation, operation and regulation of those bodies

that it is appropriate for the Act to cover; (d) to provide for the incorporation, operation and regulation of bodies that are incorporated for the purpose of becoming a registered native title body corporate (RNTBC) (without limiting paragraph (c)); and (e) to provide for the duties of officers of Aboriginal and Torres Strait Islander

corporations and regulate those officers in the performance of those duties.8

Special measures 1.16 While containing may of the same provisions as the Corporations Act, the CATSI Act also contains unique provisions which make it a ‘special measure’.

1.17 The purpose of a special measure is to provide for the advancement of particular racial or ethnic groups, so that those groups can enjoy the same human rights and fundamental freedoms as others. As a special measure, the purpose of the CATSI Act is to ensure that Aboriginal and Torres Strait Islander people can form corporations that serve their needs.9

1.18 In material issued by the NIAA, it is explained that for CATSI corporations:

A majority of a corporation’s members and directors must be Aboriginal and Torres Strait Islander people. This ensures that Indigenous people control their corporations.

The CATSI Act also allows corporations to operate in a culturally appropriate way. For example, corporations can:

 hold meetings and keep their books in languages other than English, as long as there are English versions available; and  have rules that take account of Aboriginal and Torres Strait Islander tradition and circumstances.

7 The Registrar operates under the Office of the Registrar of Indigenous Corporations (ORIC), and is

an independent statutory office holder under the CASTI Act.

8 Corporations (Aboriginal and Torres Strait Islander) Act 2006, February 2020, Section 1-25 [accessed 1

September 2021].

9 National Indigenous Australians Agency, Objects of the CATSI Act, p. 2.

4

The CATSI Act also specifically states that the Registrar must take into account the tradition and circumstances of Aboriginal and Torres Strait Islander people in undertaking his or her role.10

CATSI Act - reviews 1.19 By 2016, the CATSI Act had been in operation for ten years and there had been considerable growth in the Indigenous corporate sector. The decision was therefore made to undertake a review, which would examine the ongoing

relevance of the Act. Specifically the review was tasked with investigating whether the Act was still relevant and useful for the people and entities it had been designed to benefit.

KPMG Review - Regulating Indigenous Corporations 1.20 In late 2016, the Department of the Prime Minister and Cabinet (PMC) commissioned KPMG to conduct the review. The purpose of the review was to inform consideration of how the Registrar could most effectively support the

capacity of Aboriginal and Torres Strait Islander corporations to maintain good governance and strong financial management, as well as identify whether amendments to the CATSI Act were required to meet this objective.11

1.21 The resulting report, titled Regulating Indigenous Corporations, concluded that overall, ORIC was doing a good job in what was a challenging regulatory environment. The report also pointed to opportunities to enhance ORIC’s contribution to improved governance of Indigenous corporations, particularly as it ‘becomes a more modern, intelligence led, risk-based regulator’.12 The report also recommended that a technical review of the CATSI Act be undertaken, to identify strategies which would streamline, strengthen and better align the Act with mainstream corporate regulation.13

DLA Piper Technical Review 1.22 In July 2017, the then Minister for Indigenous Affairs, Senator the Hon. Nigel Scullion, announced an independent review; to determine whether technical amendments to the CATSI Act were required. The review also examined ways

to align the CATSI Act with changes in corporate law and regulation - particularly changes to the Corporations Act. The Registrar of Aboriginal and Torres Strait Islander Corporations commissioned law firm DLA Piper

10 National Indigenous Australians Agency, Objects of the CATSI Act, p. 2.

11 Office of the Registrar of Indigenous Corporations, Regulating Indigenous Corporations,

https://www.oric.gov.au/publications/corporate/regulating-indigenous-corporations, [accessed 1 September 2021].

12 KPMG Regulating Indigenous Corporations Report, 2016 cited in National Indigenous Australians

Agency, CATSI Act Review: Final Report, 30 October 2020, p. 15.

13 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 15.

5

Australia to undertake the review. In conducting the review, DLA Piper undertook a series of consultations and discussions with stakeholders and sought written submissions on a discussion paper.14

1.23 In October 2017 the report, titled the Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Technical Review) was provided to the Registrar. The Technical Review made 69 recommendations across a wide range of issues and identified a number of themes (which were raised during stakeholder consultation). These included:

 Indigenous corporations play a unique role in Indigenous communities and in the provision of services to Indigenous peoples;  there is no ‘single’ form of CATSI corporation and ‘one size does not fit all’;  smaller CATSI corporations require additional support and it is appropriate

to reduce the regulatory burden that is imposed upon small CATSI corporations;  while CATSI corporations look to the Registrar and ORIC for assistance and support, the autonomy of CATSI corporations requires that regulation is

often based upon additional disclosure; and  the Registrar can play a greater role with respect to certain matters relating to native title regulation.15

1.24 The NIAA noted that the themes identified during the Technical Review were important, and these issues should underpin any changes to the CATSI Act. The NIAA also acknowledged the tension between getting the regulatory balance correct (to safeguard the interests of those members and communities that rely on CATSI corporations) and making sure that regulation does not impinge on the autonomy of CATSI corporations.16

Department of the Prime Minister and Cabinet - Internal Review 1.25 In 2018, PMC conducted an internal assessment of the recommendations that came out of the Technical Review (the Internal Review). The decision was made - based on 30 of the Technical Review’s recommendations - to take

forward amendments to the CATSI Act. Recommendations that were not progressed included:

 recommendations relating to external administration and insolvency, which it was deemed would create unnecessary inconsistency between the

14 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 16.

15 DLA Piper, Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006, cited

in National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 16.

16 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 16.

6

insolvency laws applying to CATSI corporations and companies registered under the Corporations Act;17 and  twenty recommendations related specifically to the governance of native titled Prescribed Bodies Corporate (PBCs).18

1.26 Following the Internal Review, PMC - in conjunction with ORIC - developed a Discussion Paper which outlined proposed amendments to the CATSI Act. The proposed amendments were based on the recommendations that came from the Technical Review process. In August and September 2018, ORIC conducted consultation on the proposed amendments.

1.27 As part of the consultation, the Registrar wrote to all CATSI corporations (approximately 3000). CATSI corporations were invited to attend public consultations, provide written submissions or were offered one-on-one meetings.

1.28 In addition, the Registrar and PMC had regular meetings with the Prime Minister’s Indigenous Advisory Council, and met with individual councillors outside of meetings, to provide updates and seek advice.

1.29 The consultation also included:

 public consultations in 14 locations across Australia, attended by over 200 people;  one-on-one consultation sessions with 12 corporations;  four live radio broadcasts;  two presentations - made to approximately 100 people; and  13 individual consultations with peak bodies - which included native title

bodies.19

The Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018 1.30 A bill, based on the recommendations of the Technical Review (and feedback received during the ORIC and PMC consultation process) was developed by

PMC and ORIC and introduced into the Senate on 5 December 2018.

Inquiry - Senate Finance and Public Administration Legislation Committee 1.31 The bill, titled the Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018 (the Strengthening Governance and Transparency bill) was subsequently referred

17 It was suggested that this inconsistency would have led to additional regulatory complexity and

would have been directly contrary to the intent to streamline the legislation.

18 It was noted that these recommendations had informed the broader reforms of the Native Title Act

1993 (and the Native Title Legislative Amendment Bill).

19 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 17.

7

to the Finance and Public Administration Legislation Committee (the committee), for inquiry and report.20

1.32 In addition to a joint submission provided by PMC and ORIC, the committee received seven submissions to its 2018 inquiry. The majority of submissions called for greater consultation and a broader review of the CATSI Act - including a review of the CATSI Act as a special measure under the Racial Discrimination Act 1975.

1.33 The committee tabled its report on 11 February 2019, and recommended that the bill be passed. Opposition and Greens Senators on the committee lodged dissenting reports, which raised issues similar to those raised in the submissions and argued that the scope of the review had not been sufficiently broad, and more consultation was required in relation to the proposed amendments.

1.34 Before the bill was able to be considered by the Senate, the Parliament was prorogued because the 2019 general election was called. The bill subsequently lapsed in July 2019.

Comprehensive Review of the CATSI Act 2019-20 1.35 Prior to the development of the legislation that is the subject of the committee’s current inquiry, Minister Wyatt announced a further, more comprehensive review of the CATSI Act.

1.36 On 11 December 2019, the Minister requested that a Comprehensive Review address the criticisms received about the development process for the Strengthening Governance and Transparency bill and during the Technical Review consultations. The Comprehensive Review also considered:

 whether the CATSI Act is meeting its objectives and whether it is still an appropriate special measure for the advancement and protection of Indigenous people (as set out in the Act’s preamble);

 whether the functions and powers of the Registrar are appropriate, effective and adequate;  possible amendments to the CATSI Act which would better support the regulation of CATSI corporations; and  the consistency and interaction of the CATSI Act with other relevant

legislation, including the Corporations Act, the Australian Charities and Not-for-Profit Act and the Native Title Act.21

20 The following section is based on information contained in Senate Finance and Public

Administration Legislation Committee, Report into the Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018, February 2019.

21 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 18.

8

1.37 The Comprehensive Review was led by the NIAA and was overseen by a Steering Committee comprised of senior representatives from NIAA, ORIC and other Commonwealth regulatory bodies. A Reference Group of key stakeholders also provided advice and input into the conduct of the review.

1.38 The first phase of consultation started in December 2019 and finished at the end of February 2020. Consultation included:

 the release of a CATSI Act review website;  an online survey which invited feedback on the aspects of the CATSI Act that should be considered as part of the review; and  the development of a Draft Report (the report built on the findings of

previous reviews and covered the expanded scope of the Comprehensive Review).

1.39 The Draft Report - which was published in July 2020 - took into consideration:

 all previous reviews;  documents and feedback from the 2018 consultations (including the Discussion Paper, written submissions in relation to the Discussion Paper and written submissions to the Senate inquiry into the Strengthening

Governance and Transparency bill);  the Strengthening Governance and Transparency bill;  a review of relevant legislation; and  responses provided to the initial survey and written submission received.22

1.40 The NIAA then followed up, by seeking feedback on the Draft Report. This was done through: the provision of information via the CATSI Act Review mailing list and social media, stakeholder engagement through virtual consultation sessions, individual consultation sessions for industry stakeholders and traditional owners, the examination of survey responses, and the receipt of written submissions.23

1.41 The Final Report of the CATSI Act Review was completed in October 2020 and released by the Government in February 2021. The Final Report made 72 recommendations for amendments to the CATSI Act, for consideration by the Australian Government, which reflected the feedback received during the second phase of consultation.24

1.42 The Review found that:

… the special incorporation needs of Aboriginal and Torres Strait Islander people, as identified in the 2002 review of the Aboriginal Councils and

22 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 19.

23 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 20.

24 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020. A full

list of recommendations can be found at pp. 7-12 of the Final Report.

9

Associations Act 1975, continue to exist in some form. The review further noted the CATSI Act is vital to self-determination but, in its current form, is not fully meeting the needs and expectations of Aboriginal and Torres Strait Islander people.25

1.43 The bill therefore proposes improvements to the CATSI Act, and as a package aims to ‘reduce the regulatory burden on CATSI corporations, especially smaller corporations’.26

Purpose of the bill 1.44 The stated purpose of the bill is to meet the needs and expectations of Aboriginal and Torres Strait Islander people, support the realisation of economic and community development opportunities, and provide a tailored

and effective regulatory framework for Aboriginal and Torres Strait Islander corporations formed under the CATSI Act.27

1.45 The bill implements - either in whole or in part - a large majority of the 72 recommendations made by the Final Report of the CATSI Act Review.

Objectives of the bill 1.46 The Explanatory Memorandum (EM) to the bill outlines that the stated objectives of the bill are to:

 reduce the administrative burden on CATSI corporations by making it easier to satisfy reporting and meeting obligations;  provide greater flexibility for CATSI corporations to enable the realisation of economic and community development priorities;  ensure governance requirements are fit-for-purpose by expanding the

capacity of CATSI corporations to determine their own operational rules;  increase transparency of CATSI corporation operations through improved reporting for members, common law holders and other

stakeholders;  enhance support for CATSI corporations that are experiencing difficulties to enable these entities [to] return to health and, ultimately,

the control of their members;  streamline the process of winding up defunct CATSI corporations;  enhance the efficacy of operations by increasing access by CATSI

corporations to modern technology, including for managing their membership bases; and

25 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 3.

26 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 3.

27 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 1.

10

 provide the Registrar with expanded powers to enable a graduated, proportionate response to non-compliance.28

Outline of the bill 1.47 The EM also provides a general outline of the bill. In summary, the bill amends the CATSI Act in order to:29

(a) require a review of the legislation every 7 years (Part 1); (b) broaden the Registrar’s investigation and compliance powers, including by empowering the Registrar to accept enforceable undertakings (Part 2); (c) introduce provisions to make it easier for CATSI corporations to

manage their membership bases and provide members with greater privacy of their personal information (Part 3); (d) allow greater flexibility in the design of corporate structures for CATSI corporations (Part 4); (e) streamline the size classification criteria for CATSI corporations (Part

5);

(f) amend meeting and reporting requirements to take account of unexpected circumstances and provide greater flexibility to corporations, as well as increase transparency to members through access to reports (Part 6);

(g) provide for constitutions for CATSI corporations that are fit-for-purpose (Part 7); (h) increase the transparency of senior management arrangements, including by reporting senior management remuneration to members

and to the Registrar (Part 8); (i) simplify related party transactions to remove red tape (Part 9); (j) simplify directors’ requirements, including making it easier for CATSI

corporations to appoint independent directors (Parts 10 and 11); (k) enable the Registrar to use a wider range of platforms to publish notices (Part 12); (l) update the requirements in relation to storing information (Part 13); (m) align the Act with relevant sections of the Corporations Act, including

to expand whistle-blower provisions (Part 14); (n) provide certainty to corporations following an examination or compliance notice (Part 15); (o) provide for a special account to hold unclaimed funds from

deregistered corporations to be used for the protection of Indigenous assets vested in the Registrar (Part 16);

28 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 1. It is noted that the CATSI Act Review incorporates the findings of earlier reviews of the CATSI Act, undertaken in 2016 (by KPMG Australia) and in 2017 (by DLA Piper Australia).

29 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 2.

11

(p) improve special administration and deregistration processes, including streamlining processes where the majority of directors of a corporation have requested the appointment of a special administrator (Part 17); and

(q) implement minor technical amendments, including simplifying the process in the Native Title Act when a registered native title body corporate changes its name and allowing medium corporations to have their financial statements reviewed rather than audited (Parts 18, 19 and 20).

Legislative scrutiny 1.48 Following the introduction of the bill, the legislation was examined by the Senate Standing Committee for the Scrutiny of Bills (the Scrutiny Committee).

1.49 In accordance with Senate Standing Order 24, the Scrutiny Committee examined the bill to determine the effect of the proposed legislation on individual rights, liberties and obligations, and on parliamentary scrutiny.30

1.50 The Scrutiny Committee provided its comments on the bill, noting that it had specific concerns in relation to the issues of ‘reversal evidential burden’, ‘strict liability’ and ‘privilege against self-incrimination’, and requested further advice from the Minister on some of these issues.31

1.51 Appendix 1 to this report provides the comments of the Scrutiny Committee in further detail.

Statement of compatibility with human rights 1.52 The EM to the bill notes that the bill is compatible with human rights because the measures contained in the bill may be characterised as components of a broader ‘special measure’ - being the CATSI Act in its entirety. It is also noted

that the bill includes a mechanism for a review of the CATSI Act every seven years to ‘ensure the effectiveness of the Act as a special measure for the advancement and protection of Aboriginal peoples and Torres Strait Islanders’.32

30 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

pp. 1-7.

31 The following section is based on information contained in Senate Standing Committee for the

Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021, pp. 1-7.

32 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 85.

13

Chapter 2

Provisions of the bill

2.1 The Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 (the bill) comprises one schedule which contains 20 parts. As noted previously, the bill amends the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (the CATSI Act). The bill also makes one amendment (Part 20) to the Native Title Act 1993.

2.2 As a package, it is proposed that amendments to the Act will reduce the regulatory burden on CATSI corporations - particularly smaller corporations. It is envisioned that both costs and savings will result from the proposed legislative changes. However, it is anticipated that the savings will ‘offset any costs by a large margin’.1

2.3 It is argued that smaller CATSI corporations will likely seek assistance from the Office of the Registrar of Indigenous Corporations (ORIC) in developing new rule books, and will, therefore, incur minimal costs.2

Schedule 1 - Amendments

Part 1 - Review of operation of the Act 2.4 Part 1 (Items 1 and 2) of the bill introduces a statutory requirement for the CATSI Act to be reviewed every seven years. As a special measure under the Racial Discrimination Act 1975, the Act should be periodically reviewed to

establish whether it has achieved its objectives. It is proposed that when a special measure is found to have achieved its objective, it should be discontinued. This measure is designed to ensure that the legislation is regularly reviewed with respect to its ongoing need and scope to improve the regulatory environment.3

2.5 Item 1 would add the new review provisions introduced in Part 1 to the simplified outline (in section 599-1) which describes the contents of the part.

2.6 Item 2 would insert a new Division 643 into the CATSI Act, and would introduce a requirement that the Act be periodically reviewed. As noted above, it is argued that this would allow the Parliament to determine whether the Act has achieved its objective as a special measure.

1 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 3.

2 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 3.

3 The details in this chapter are all drawn from the bill’s Explanatory Memorandum.

14

2.7 It is noted that if a review undertaken under Division 643 finds that there is a continued need for the CATSI Act as a special measure, it may also identify that the Act requires amendment to improve the legislative framework to better meet the needs and expectations of Aboriginal and Torres Strait Islander people. However, if a review finds that the CATSI Act has exhausted its objects as a special measure, the Parliament would have the opportunity to consider the future needs of CATSI corporations, for example, in a more mainstream environment.

2.8 In addition, Item 2 also:

 sets out the review requirements;  provides that the review must consider the effectiveness of the Act as a special measure for the advancement and protection of Aboriginal and Torres Strait Islander people; and

 provides that the reviewer must present the Minister with a written report of their review within 18 months (after the relevant anniversary date) and that the Minister must have the report tabled in both Houses of Parliament within 25 days of the relevant house after completion of the report.

Part 2 - Powers and functions of Registrar 2.9 Part 2 (Items 3-25) of the bill would provide the Registrar with a suite of regulatory powers that are similar to those of the Australian Securities and Investments Commission (ASIC). It would enable the Registrar to accept

enforceable undertakings and issue infringement notices in connection with contravention of the CATSI Act. It would also expand the Registrar’s powers to require the production of rule books and broaden the threshold for exercising the Registrar’s investigative powers generally.

2.10 Item 3 would add the Registrar’s new power to accept an enforceable undertaking introduced in this Part (to the simplified outline in section 439-1) which describes the content of the Part.

2.11 Item 4 would empower the Registrar to accept enforceable undertakings and increase the range of mid-tier regulatory tools available to ensure compliance with the law.

2.12 It would allow the Registrar to accept written undertakings from a person about any matter that relates to enforceable undertakings (where there has been repeated non-compliance with the Act) and the terms of the undertaking would be directed at the type of non-compliance involved. If, for example, a CATSI corporation has not held general meetings when requested to do so by the prescribed number of members - despite being required to do so under the Act - the Registrar may consider accepting an enforceable undertaking (whereby the corporation might undertake to hold a general meeting within a specified period, or have directors undergo governance training). This Item

15

also allows for a person who has given an undertaking to withdraw or vary the terms of that undertaking at any time - with the consent of the Registrar.

2.13 Under Item 4, it is proposed to empower the Registrar to apply to the Court if it is considered that a person who has given an undertaking has breached any of its terms. It is argued that this power provides the Registrar with an effective and more cost-efficient alternative to having to initiate criminal or civil action against a person for breaches of the Act.

2.14 Proposed subsection 439-25(4) provides that the Court may make any or all of the following orders in response to an application by the Registrar (subsection 439-25(3)):

 directing the person to comply with the term of the undertaking that has been breached;  directing the person to pay the Commonwealth an amount that is reasonably attributable to the breach, up to the amount of any financial

benefit that the person has gained by committing the breach;  directing the person to compensate any other person to compensate any other person who has suffered loss or damage as a result of the breach; or  any other order that the Court considers appropriate.

2.15 Item 5 proposes a consequential amendment by adding a new paragraph which would ensure that an authorised officer who examines the books of a CATSI corporation or a related body can, in a report to the Registrar, draw attention to suspected breaches of the terms of an enforceable undertaking (given under new section 439-25 in addition to matters currently listed in paragraphs 453-1(1)(a) to (e)).

2.16 Item 6 proposes to replace the Registrar’s existing power to require the production of books with broader powers similar to ASIC’s powers under section 30 of the Australian Securities and Investments Commission Act 2001 (ASIC Act). Amendments proposed under Item 6 would create an offence and a ‘reasonable excuse defence’ (similar to subsections 63(1) and (5) of the ASIC Act. Under this Item, it is also proposed that the Registrar would be:

 authorised to issue a notice to a CATSI corporation (or a person acting in certain capacities) to produce specified books relating to the affairs of a CATSI corporation;

 allowed to issue notices to produce books relating to the affairs of a CATSI corporation, a related body corporate or a connected entity;  empowered to require the production of books immediately where this is reasonable in all the circumstances. (This would allow the Registrar to act

quickly in situations where there is a reasonable basis to be concerned about the possible destruction, concealment or falsification of books); and  empowered to require a person to identify property of a corporation and to explain how the corporation has kept account of that property.

16

2.17 Item 7 proposes a consequential amendment. The proposed amendment relates to the Registrar’s power to require the production of books and to the retention of the Registrar’s powers to issue a notice to give information or answer questions.

2.18 Item 8 proposes to align the exercise of the Registrar’s powers (to require the production of books) with ASIC’s powers under section 19 of the ASIC Act. The amendment would broaden the grounds upon which the Registrar can issue notices to relevant persons.

2.19 Items 9, 10 and 11 propose consequential amendments (in relation to the Registrar’s power to require the production of books).

2.20 Item 12 proposes an amendment to the current 14-day timeframe for responding to notices to provide information, produce documents or appear to answer questions. Under this amendment, a notice may specify that information is to be provided immediately (if that is reasonable in all the circumstances).

2.21 Items 13 and 14 propose consequential amendments (in relation to the Registrar’s power to require the production of books). Items 15 to 21 propose amendments which would accommodate situations where books are produced to the Registrar rather than to an authorised officer. Item 22 proposes consequential amendments which also relate to the production of books.

2.22 Items 23 and 24 propose a series of amendments in relation to infringement notices and the creation of an infringement notice scheme. The key amendments would:

 establish an infringement notice scheme based on offences to be prescribed in the Corporations (Aboriginal and Torres Strait Islander) Regulations 2017 (CATSI Regulations);

 provide the Registrar with powers to extend the payment period, or enter into an arrangement to pay by instalments;  require that an infringement notice be issued within 12 months after the day on which the offence was alleged to have been committed;  allow a person to seek an extension from the Registrar (in relation to

payment of an infringement notice) during the payment period and allow the Registrar to vary an instalment arrangement; and  allow a person to request the Registrar withdraw an infringement notice within 28 days after the infringement notice is given (and impose a duty on

the Registrar to either withdraw, or refuse to withdraw, an infringement notice and advise the applicant accordingly within 14 days of the request).

2.23 Item 25 would insert definitions for ‘payment period’ and ‘prescribed offence’ and Item 26 proposes that the Registrar would only be able to issue an infringement notice for new offences alleged to have been committed after the commencement of Part 2.

17

Part 3 - Membership applications, member contact details and electronic communication 2.24 Part 3 (Items 27-98) of the bill would allow CATSI corporations to collect additional contact details for members such as email addresses and other

alternative contact details. It is noted that the CATSI Act does not currently require that membership applications be considered and determined within a specified timeframe, which, it is stated, can have financial and other consequences for new members. The amendments contained in Part 3 would make it easier for the Registrar and corporations to communicate with members, and would help to ensure that intended recipients of various communications would have access to relevant information in a timely manner.

2.25 The Part 3 amendments, which largely relate to the management of memberships, would also:

 provide the process for making receiving and processing membership applications;  require corporations to consider membership applications within a 6-month timeframe;  empower the Registrar to extend or exempt corporations from this

timeframe (for specific applications or for membership applications generally);  allow members and former members to request that their personal details be redacted from the register of members or register of former members;  include revised membership cancellation provisions (which are a

replaceable rule except for registered native title bodies corporate);  allow CATSI corporations to adopt (membership) cancellation provisions that are specifically tailored to their circumstances; and  introduce a proper purpose test for people wanting to inspect or receive a

copy of a register of members or register of former members.

Part 4 - Subsidiaries and joint ventures 2.26 Part 4 (Items 99-110) of the bill contains amendments that would provide greater flexibility in relation to the minimum membership requirements for CATSI corporations. Under Part 4, the minimum number of members would

be 5 unless the Registrar determines a lesser number of members. It would also remove impediments to body corporates establishing wholly-owned or joint venture subsidiary corporations, and allow registration of two-member CATSI corporations when only one member is Indigenous - provided the Indigenous member has a casting vote.

2.27 Part 4 amendments propose CATSI corporations are given more flexibility in how they structure their affairs and promote the use of CATSI corporations as vehicles for economic and social development, supported by a suitable

18

regulatory framework. The amendments would also allow a group of entities to be registered under one legislative framework, with the same regulator, which would allow for more streamlined compliance and reporting obligations.

Part 5 - Classification of Corporations 2.28 Part 5 (Items 111-114) of the bill proposes to amend the criteria in the CATSI Act for determining the size of a CATSI corporation. The EM notes that CATSI corporations are classified according to their size, which in turn determines

their annual reporting obligations.

2.29 Under the current legislation, a CATSI corporation’s size is determined by a threefold test which is based on income, assets and number of employees. The amendments in Part 5 would provide for corporations to be registered as small, medium or large, based only on a simple, consolidated revenue test.4

2.30 It is proposed that the introduction of the new size classification system would align with the CATSI Act - with the criterion for determining entity size under the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act). It is argued that this measure will assist approximately 30 per cent of CATSI corporations which are also registered under the ACNC Act.

Part 6 - Meetings and reports 2.31 Part 6 (Items 115-146) of the bill proposes a number of amendments to current requirements in relation to meetings and reports.

2.32 It is noted that some CATSI corporations may face circumstances which prevent them from holding their Annual General Meeting (AGM) as planned (or within the timeframe prescribed under the CATSI Act).

2.33 It is also noted that some corporations with geographically dispersed membership-bases can find it expensive to hold an AGM, and/or difficult to form a quorum when their members are unable to travel. In response to COVID-19 restrictions, the Registrar introduced special rules, which allowed CATSI corporations to hold meetings and pass resolutions virtually. It also allowed corporations to meet more frequently and have more people participate in the meetings.

2.34 Part 6 amendments would make these arrangements perpetually available to CATSI corporations. These amendments would also:

 enable small corporations (that are not registered entities under the ACNC Act and have less than $1,000 in consolidated revenue in the previous

4 It is proposed that threshold consolidated revenue amounts for each sized corporation will be

prescribed in the CATSI Regulations.

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financial year) to pass a special resolution not to hold the next one or two AGMs;  empower the Registrar to direct a corporation to call and hold an AGM if the Registrar is satisfied that there is a need to do so;  allow CATSI corporations to activate an automatic, one-off extension of 30

days to hold an AGM and lodge their reports;5  allow directors to defer a meeting for up to 30 days after a notice has been issued (which would help corporations to accommodate unexpected circumstances that make it difficult to hold scheduled meetings;  provide the Registrar with the power to cancel general meetings and AGMs

(called by the Registrar); and  require corporations to lay before an AGM any reports they are required to submit to the Registrar (which would provide greater transparency to

members in relation to the operations of their corporations, including with respect the financial reports).

Part 7 - Constitutions 2.35 Part 7 (Items 147-150) of the bill proposes to change the way replaceable rules operate in relation to constitutions (also known as rule books).6

2.36 These amendments would require that all relevant replaceable rules be referred to in a corporation’s constitution, whether or not the rules have been replaced or modified.7

2.37 Part 7 of the bill would also provide a process for the Registrar to reject a constitutional change that is lodged after a special administrator has changed the constitution. (Unless the Registrar’s opinion is that the proposed change is consistent with the change made by the special administrator, or the corporation’s circumstances have changed such that the special administrator’s change is no longer appropriate).

Part 8 - Officers of corporations 2.38 Part 8 (Items 151-195) of the bill introduces two separate definitions for the ‘Chief Executive Officer function’ and the ‘Chief Financial Officer function’.

2.39 The amendments proposed in Part 8 would also make it a requirement for corporations to advise the Registrar if there has been a change in the person

5 Extensions would be available where there has been a death in the community, a natural disaster,

cultural business or an unavoidable delay in the audit or review. The extension option could not be used more than three years in a row.

6 Currently, under the Act, replaceable rules operate by default unless replaced or modified in a

corporation’s rule book. This raises the possibility that members and directors of CATSI corporations may not be aware of relevant internal governance rules.

7 CATSI corporations registered prior to the commencement date will have two years within which

to comply with the new requirements.

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performing the Chief Executive Officer and Chief Financial Officer roles within 28 days of that change. This requirement is similar to the existing requirement for corporations to advise the Registrar of a change to their Secretary within 28 days. It is argued that this would ensure the Registrar has up-to-date information regarding the corporation’s key management personnel.

2.40 This part would also require remuneration information about key management personnel to be reported in a remuneration report to the Registrar. It is argued that this would increase transparency with respect to key management personnel employed by CATSI corporations.

Part 9 - Related party transactions 2.41 Part 9 (Items 196-203) of the bill proposes modifications to the requirements in relation to small corporations dealing with low-value related party transactions. It is argued that these amendments take account of the diversity

and special circumstances of classes of CATSI corporations and administrative burden associated with transactions of this nature. It is also indicated that these changes are necessary because the current rules for related party transactions can make it difficult for corporations to do business, especially in small communities with extensive kinship ties and limited options for purchasing goods or services.

2.42 Part 9 also introduces a requirement that the Registrar - when considering making a determination to exempt a CATSI corporation from section 184-1 - must not make such a determination unless the Registrar is satisfied that the giving of the particular financial benefit will not cause detriment to the CATSI corporation.

Part 10 - Power to exempt corporation from employee-director requirement 2.43 Part 10 (Items 204 and 205) of the bill would empower the Registrar to exempt corporations from the provision preventing the majority of directors from working as employees, and would also enable the Registrar to issue a

determination in relation to the directors of a specific corporation (or class of corporations).

2.44 It is argued that Part 10 represents an important reform because CATSI corporations are formed to support the members to realise economic and community development opportunities - such as sell artwork or deliver tourism activities - or to offer health and municipal services. It is suggested that members might also want to act as directors of the corporation and work as employees in these corporations. For example, they may wish to sell their artwork or undertake cultural heritage work, act as a tour guide, or deliver health services.

21

Part 11 - Independent directors 2.45 Part 11 (Items 206-212) of the bill proposes amendments which would promote the appointment of independent directors, who bring relevant knowledge, skills and experience which can be of benefit to CATSI

corporations.

Part 12 - Modernising publication requirements 2.46 Part 12 (Items 213-254) of the bill proposes amendments which would enable the Registrar to publish notices on platforms that are more accessible. These amendments would also modernise the Registrar’s power to exempt

corporations and their directors from exemptible provisions in the CATSI Act.

2.47 It is argued the amendments contained in Part 12 would allow the Registrar to act promptly in individual matters without having to make a legislative instrument, and that these powers would assist where the corporation or its directors are unwilling or unable to make an application. For example, in the event of a natural disaster.8

Part 13 - Storage of information 2.48 Part 13 (Item 255) of the bill would allow corporations to store information on platforms such as cloud servers. It would also require corporations to provide a means by which the stored information is accessible at its place of inspection.

2.49 It is argued that this new provision would:

 ensure that CATSI corporations are not constrained by artificial requirements with respect to storing records - that are required to be kept and made available for inspection -in accordance with the CATSI Act; and

 help modernise the CATSI Act, and enable CATSI corporations to access different technology to assist in record-keeping and compliance.9

Part 14 - Improving consistency with Corporations Act 2.50 Part 14 (Items 256-267) of the bill proposes to strengthen the CATSI Act by:

 inserting a new definition of the word ‘dishonest’ to align with the Corporations Act;  applying and modifying whistle-blower provisions (in Part 9.4AAA of the Corporations Act) in a manner that reflects the operating context for CATSI

corporations;

8 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, pp. 53-58.

9 Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021, Explanatory

Memorandum, p. 59.

22

 aligning penalties in the CATSI Act for making or authorising the making of statements that are materially false or misleading with the Corporations Act; and  providing an explanation of what comprises ‘reasonable steps’ in the

context of offences for providing false or misleading information.

2.51 Part 14 of the bill also proposes the introduction of ‘qualified privilege’ for auditors of CATSI corporations.

Part 15 - Finalising processes 2.52 Part 15 (Items 268 and 269) of the bill proposes the introduction of two new notices that the Registrar can issue to provide certainty to CATSI corporations.

2.53 The first is issued by the Registrar when they are satisfied with action taken in response to a compliance notice. The second is issued by the Registrar when they are satisfied with the outcome of an examination. It is noted that under these amendments, corporations could present these notices to relevant stakeholders - such as members and funding bodies.

Part 16 - Dealing with unclaimed property 2.54 Part 16 (Items 270-279) of the bill proposes the creation of a new special account for the purposes of the Public Governance, Performance and Accountability Act 2013 (the PGPA Act). This account would be known as the

Aboriginal and Torres Strait Islander Corporations Assets Protection Account (Assets Protection Account).

2.55 It is proposed that this new special account would hold funds transferred from the Aboriginal and Torres Strait Islander Corporations Unclaimed Money Account (Unclaimed Money Account) after a period of six years, and these funds would be used to meet the costs associated with managing property vested with the Registrar.

Part 17 - External administration and deregistration 2.56 Part 17 (Items 280-297) of the bill proposes to apply sections 451E to 451H of the Corporations Act to CATSI corporations placed under special administration. It is argued that these amendments would provide some

financial certainty to corporations placed under special administration.

2.57 Part 17 also proposes to:

 replace one of the grounds on which a CATSI corporation can be placed under special administration with a new ground: which is a serious irregularity in the financial affairs of the corporation;10

10 This would replace the ground that the corporation may have operated at a loss for six of the

twelve months preceding the appointment of a special administrator.

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 remove the requirement for the Registrar to issue a show cause notice (when the majority of CATSI corporation’s directors have requested the appointment of a special administrator);  make deregistration - which is cheaper and less complex than voluntary

winding up - a more feasible option for CATSI corporations in appropriate cases; and  introduce rebuttable presumptions under which a court may presume that a CATSI corporation is insolvent.11

Part 18 - Minor technical amendments 2.58 Part 18 (Items 298-305) of the bill makes a number of technical amendments to the CATSI Act.

Part 19 - Review of financial reports 2.59 Part 19 (Items 306-380) of the bill proposes the introduction of financial reports as an alternative to audits under Chapter 7 of the CATSI Act.12

2.60 Part 19 also provides for the making of regulations which would allow for the conduct of reviews and proposes an expansion to the category of practitioners qualified to undertake reviews. This is in contrast to the more restricted class of auditors.

Part 20 - Native Title Register 2.61 Part 20 (Item 381) of the bill proposes amendments to the Native Title Act 1993 (Native Title Act) which would expressly enable the Native Title Registrar to reflect a change to the name of a prescribed body corporate on the Native Title

Register when it is revised on the Register of Aboriginal and Torres Strait Islander Corporations.

11 It is argued that as the presumptions are rebuttable, a corporation can avoid the presumption by

proving to the court that it is solvent.

12 It is argued that reviews offer a less expensive alternative to an audit, while maintaining an

adequate level of independent assurance of financial information in appropriate cases.

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Chapter 3

Key issues and committee views

3.1 As noted in the previous chapter, the committee received 13 submissions to its inquiry. The organisations which provided submissions, included NACCHO, the Kimberley Land Council, the National Native Title Tribunal (NNTT), ORIC and the NIAA.

3.2 The committee also received evidence from a number of stakeholders during a public hearing held in Canberra on 23 September 2021.

3.3 The following chapter considers stakeholders’ views regarding the CATSI Act and the proposed amendments put forward by the bill, and details the committee’s views and recommendation.

Support for the CATSI Act 3.4 In providing their views in relation to the provisions of the bill, a number of stakeholders acknowledged the importance of the CATSI Act, particularly as a means of supporting self-determination for Aboriginal and Torres Strait

Islander corporations.1

3.5 The Central Land Council, for example, indicated its support for the continuation of the CATSI Act as a special measure, and noted that it is ‘to the benefit of Central Australian Aboriginal people to have the ability to form and manage corporations in a way that takes account of their unique cultural and living circumstances’.2

3.6 NACCHO also expressed support for the CATSI Act, and submitted that it ‘provides a vehicle to ensure corporations delivering services to our people remain community-controlled’.3

3.7 Further, NACCHO indicated that:

… it is an understatement to say that the CATSI Act is important to the Aboriginal and Torres Strait Islander health sector. It is a primary vehicle that has been available, in its original form, since 1976, for Aboriginal and Torres Strait Islander people to control and take responsibility for their own health. It facilitates self-determination and sets out rules for how our members and directors are appointed from our communities. The CATSI Act also provides the rules to establish policies for the governance of our organisations, for their financial management, control and reporting. It has

1 See, for example, Australian Institute of Company Directors, Submission 13;

2 Ms Francine McCarthy, Central Land Council, Proof Committee Hansard, 23 September 2021, p. 10.

3 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 3.

26

had a significant impact on our costs and benefits to Aboriginal and Torres Strait Islander peoples for about 45 years.4

3.8 At the same time, however, a number of stakeholders argued that there are many ways in which the CATSI Act could be improved. It was also stressed that Indigenous organisations need to be closely involved in any proposals for change - including through this bill - to ensure that they do not undermine the original intention of the CATSI Act.5

Consultation 3.9 One of the central issues raised by submitters - prior to any comment on the provisions contained in the bill - related to stakeholder involvement in the development of the legislation. The Victorian Aboriginal Heritage Council

(VAHC) argued, for example, that to be regarded as a special measure, a proposal ‘must be assessed by reference to the wishes of the group for whom advancement of their enjoyment and exercise equally with others of human rights and fundamental freedoms is sought’.6

3.10 Further, the VHAC indicated that:

The council is concerned that the process leading to the current bill was flawed. The bill was not developed in genuine partnership with Aboriginal and Torres Strait Islander peoples. As committed to by the Commonwealth government under the July 2020 National Agreement on Closing the Gap. If it had been developed in a genuine partnership, Aboriginal and Torres Strait Islander organisations would have been involved in developing the proposals, not just responding to them. There would have been resources allocated to those organisations to participate as equals in this process and there has not been.7

3.11 In addressing the issue of consultation, NACCHO also pointed to the National Agreement on Closing the Gap, and argued that it was developed around four priority reform areas:

 Shared decision-making: Aboriginal and Torres Strait Islander people are empowered to share decision-making authority with governments to

4 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 3.

5 See, for example, National Aboriginal Community Controlled Health Organisation, Submission 1;

Victorian Aboriginal Heritage Council, Submission 3; First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal Corporation and The Institute of First Nations Governance Professionals Ltd, Submission 7; New South Wales Aboriginal Land Council, Submission 9; National Native Title Tribunal, Submission 10 and Tangentyere Council Aboriginal Corporation, Submission 11.

6 Dr Matthew Storey, Victorian Aboriginal Heritage Council. Proof Committee Hansard, 23 September

2021, p. 6.

7 Dr Matthew Storey, Victorian Aboriginal Heritage Council, Proof Committee Hansard, 23 September

2021, p. 6.

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accelerate policy and place-based progress on Closing the Gap through formal partnership arrangements.  Building the community-controlled sector: there is strong and sustainable Aboriginal and Torres Strait Islander community-controlled sector

delivering high quality services to meet the needs of Aboriginal and Torres Strait Islander people across the country.  Improving mainstream institutions: governments, their organisations and their institutions are accountable for Closing the Gap and are culturally safe

and responsive to the needs of Aboriginal and Torres Strait Islander people, including through the services they fund.  Aboriginal and Torres Strait Islander-led data: Aboriginal and Torres Strait Islander people have access to, and the capability to use, locally-relevant

data and information to set and monitor the implementation of efforts to close the gap, their priorities and drive their own development.8

3.12 NACCHO submitted that for progress to be made, these four priorities (and the principles that underpin them) need to be embraced by all parties.9

3.13 In evidence, NACCHO stated that consultation in relation to the bill had been ‘cursory at best’.10 It was also argued that by not involving organisations like NACCHO in the decision-making process - as part of the steering group or to provide advice - the government:

… has lost a critical opportunity to demonstrate its commitment to the first priority reform under the new National Agreement on Closing the Gap - that is, that Aboriginal and Torres Strait Islander people are empowered to share decision-making authority with governments to accelerate policy and place based progress on closing the gap through formal partnership arrangements.11

3.14 The NIAA acknowledged that some stakeholders had been critical of the consultation process. At the same time, however, it was submitted that the amendments outlined in the bill were the result of extensive consultation and the NIAA expressed confidence that the proposed amendments ‘reflect the interests and expectations of Indigenous Australians’.12

8 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 2.

9 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 2.

10 Ms Patricia Turner, National Aboriginal Community Controlled Health Organisation, Proof

Committee Hansard, 23 September 2021, p. 2.

11 Ms Patricia Turner, National Aboriginal Community Controlled Health Organisation, Proof

Committee Hansard, 23 September 2021, p. 2.

12 Mrs Letitia Hope, National Indigenous Australians Agency, Proof Committee Hansard, 23 September

2021, p. 26.

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3.15 In evidence, NIAA representatives told the committee that:

These consultations consisted of deep engagement across the sector represented by CATSI organisations and were conducted in three phases. We asked stakeholders what they wanted to have considered in the review, we developed changes based on public submissions and consultation sessions and then we sought feedback on the proposed legislative changes. It’s important to note that, while government facilitated the process, these amendments were driven by CATSI corporations, interested parties and the community. We note some of these changes have been subject to years of consultation and we are pleased now to bring these forward.13

3.16 In representing the Office of the Registrar of Indigenous Corporations (ORIC), the Registrar indicated support for the consultation process and said:

... I applaud the National Indigenous Australians Agency for the consultation program that was undertaken as part of the review particularly under the very trying circumstances of a global pandemic. Three separate phases of consultation were offered, over 22 weeks, through a variety of channels and formats, with a significant report written after each phase.14

3.17 When asked directly about the issue of co-design, the Registrar, Mr Selwyn Button, indicated that while the latest review process had been led by the NIAA, his office had been involved through the stakeholder group and the steering committee. Mr Button noted that:

…the process around co-design has been about ensuring that people are sitting at the table, having direct conversations about how the changes may affect them, and the things that are going to reduce the regulatory burden, and supporting corporations to get on with their business.15

3.18 Mr Button also indicated that following the introduction of the previous bill - the Strengthening Governance and Transparency bill - one of the things he had undertaken to do was to get NACCHO, the Native Title Council and others to the table and have a direct conversation about the issues. Further, Mr Button stated that:

We took notice of exactly what they were saying then, and we used that to insert into this process as well. So it has not been a short process. It has not been something we haven’t had many conversations and consultations around.16

13 Mrs Letitia Hope, National Indigenous Australians Agency, Proof Committee Hansard, 23 September

2021, p. 26.

14 Office of the Registrar of Indigenous Corporations, Submission 2, p. 5.

15 Mr Selwyn Button, Office of the Registrar of Indigenous Corporations, Proof Committee Hansard, 23

September 2021, p. 16.

16 Mr Selwyn Button, Office of the Registrar of Indigenous Corporations, Proof Committee Hansard, 23

September 2021, p. 16.

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Special measures requirements 3.19 In addition to the concerns raised by stakeholders in relation to consultation, the committee received a substantial submission from the First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal

Corporation and The Institute of First Nations Governance Professionals Ltd (the First Nations Group) regarding the legal analysis of the special measures requirements.17

3.20 The First Nations Group submitted that ‘any amendments to the Act in the Bill under consideration of the Senate that arise from the Review are the result of a fundamentally flawed process’. It was argued that the amendments perpetuate the notion of the CATSI Act as a legally justifiable special measure, when it has not been properly considered and tested against the law regarding special measures - despite this issue being a focus of the Comprehensive Review.

3.21 Specifically, the group submitted that the Comprehensive Review only considered whether the CATSI Act as a whole was justifiable as a special measure, whereas the law requires every provision of the CATSI Act to be subjected to the special measures test. In addition, it was argued by the organisations that:

 The approach taken by the Comprehensive Review favours giving powers of regulation and control to the government (a negative discriminatory approach) versus an approach that focuses on what benefits and assistance can be provided to Indigenous corporations to aid them to overcome their disadvantages (a positive discriminatory approach).

 The amendments proposed in the bill will add elements of further regulation in an already over-regulated sector. This will encourage more CATSI corporations to transfer from the CATSI Act to the Corporations Act because the benefits being offered by ORIC are out-weighed by regulatory over-reach.  The bill contains amendments that are inconsistent with rights of self-

determination of Indigenous people.  The Comprehensive Review took the position that no alternatives to a separate incorporation regime would be suitable, which is fundamentally flawed given that the Australian Charities and Not-for-profits Commission

(ACNC) regime was introduced in 2012 and governs a majority of Indigenous corporations.18

3.22 The First Nations Group submitted that the ACNC regime is a suitable alternative option that would allow Indigenous corporations to incorporate

17 First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal

Corporation and the Institute of First Nations Governance Professionals Ltd, Submission 7.

18 First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal

Corporation and The Institute of First Nations Governance Professionals Ltd, Submission 7, pp. 5-6.

30

under the Corporations Act (or the Incorporated Associations Act) in the same way that other entities incorporate. The special needs of Indigenous corporations could then be addressed in a way similar to how the special needs of charities and not-for-profits are taken into account under the ACNC Act.19

3.23 In its submission to the Comprehensive Review, the group proposed an alternative that was based on having Indigenous corporations incorporate under the Corporations Act or the Incorporated Associations Acts of the states and territories. This alternative would include a Special Regulatory Assistance Scheme to support all Indigenous corporations - not just CATSI corporations - to access the assistance they need to both understand and meet the relevant regulatory requirements that apply to them.20

3.24 The Comprehensive Review did not specifically respond to the suggestion that every provision of the CATSI Act should be subjected to the special measures test.

3.25 The issue was addressed by confirming that the preamble to the CATSI Act states that the Act is a special measure for the purposes of the Racial Discrimination Act 1975. It also notes that while the CATSI Act is designed to mirror many provisions of the Corporations Act, it also contains unique provisions that characterise it as a special measure. These provisions include:

 incorporation provisions for Aboriginal and Torres Strait Islander corporations;  protection for members;  support for corporations; and  capacity building.21

Response to the bill 3.26 Submitters acknowledged that there had been some positive gains made and included in the new legislation. Overall, there was support for:

 the modernisation of a number of governance arrangements;  measures that would allow greater flexibility;  measures that would allow the appointment of independent directors for 12-month periods; and

 measures that would allow for the redaction of sensitive personal information (to protect members).22

19 First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal

Corporation and The Institute of First Nations Governance Professionals Ltd, Submission 7, p. 6.

20 First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal

Corporation and The Institute of First Nations Governance Professionals Ltd, Submission 7, p. 6.

21 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 22.

31

3.27 Stakeholders identified a number of concerns in relation to the bill, including the rejection of Recommendation 1, the nature of the review process, discriminatory standards, the frequency of Annual General Meetings (AGMs), and the size classification of corporations being based on revenue. These concerns are discussed below.

Statement on capacity building (Recommendation 1) 3.28 Stakeholders raised concerns regarding Recommendation 1 of the CATSI Act Comprehensive Review not being incorporated into the bill. The recommendation proposed that the objectives of the CATSI Act ‘be amended

to better reflect its role by referring to capacity building, promoting modern governance and accommodating Aboriginal and Torres Strait Islander tradition and circumstance’.23

3.29 It was argued that the inclusion of this statement would emphasise the ongoing need for collaboration and coordination with peaks, and would ensure that struggling corporations could be assisted prior to punitive measures being required. Further, NACCHO argued that the Commonwealth needs to be seen to be committed to capacity building and working collaboratively with Indigenous communities and their organisations.24

3.30 NACCHO acknowledged that issues such as capacity building and promoting modern governance are addressed within ORIC’s functions and powers. It argued, however, that if this intention is not clearly articulated in the objectives of the CATSI Act, it could be easily overlooked (or misunderstood).25

3.31 NACCHO submitted that it has developed a very positive relationship with the Commonwealth Department of Health. This was a relationship developed over the 50 years of the sector’s history, and on the whole, they have worked collaboratively to address emerging governance issues. It was argued, however, that there are still too many instances where concerns in relation to the governance and/or finances of Indigenous organisations are raised too late for early remedial action to be taken, or before an intervention takes place and results in unintended damage within the community.26

22 See, for example, National Aboriginal Community Controlled Health Organisation, Submission 1;

Tangentyere Council Aboriginal Corporation, Submission 11 and Australian Institute of Company Directors, Submission 13.

23 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 7.

24 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 5.

25 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 5.

26 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 6.

32

3.32 NACCHO concluded that:

It must be remembered, therefore, that no matter how good the legislation may be - in this case the CATSI Act - it is always important to consult closely with the sector long before punitive action is put into effect. An overarching statement as suggested in recommendation 1 would go some way in underlining this collaborative approach and clarifying the intent in this respect and the importance of capacity building.27

3.33 The NIAA acknowledged that disappointment had been expressed about Recommendation 1 not being incorporated into the bill. In response, it noted that the CATSI Act specifies that, in addition to conducting research in relation to matters affecting CATSI corporations, the functions of ORIC include conducting public education programs on the operation of the CATSI Act and on the governance of CATSI corporations.

3.34 Specifically, the NIAA pointed to the fact that:

Section 658-5 of the CATSI Act requires that in performing his or her functions and exercising his or her powers, the Registrar must have as aims (among others): to facilitate and improve the effectiveness, efficiency, sustainability and accountability of CATSI corporations; and to have regard to Aboriginal and Torres Strait Islander tradition and circumstances.28

3.35 The NIAA argued, therefore, that the implementation of Recommendation 1 was not considered necessary, particularly as these considerations are already appropriately addressed by ORIC’s functions, powers and aims, and are specifically addressed in the CATSI Act.29

Registered Native Title Bodies Corporate (Recommendation 62) 3.36 Of primary concern to some stakeholders was that the bill would not implement Recommendation 62 of the CATSI Act Comprehensive Review.30

3.37 Recommendation 62 proposed that a ‘separate division of the CATSI Act be created that is dedicated to those provisions specific to Registered Native Title Bodies Corporate’ (RNTBCs).31

27 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 6.

28 National Indigenous Australians Agency, Submission 5, pp. 8-9.

29 National Indigenous Australians Agency, Submission 5, p. 8.

30 See, for example, Victorian Aboriginal Heritage Council, Submission 3; National Native Title

Council, Submission 6; Kimberley Land Council, Submission 8; National Native Title Tribunal, Submission 10 and Central Land Council, answers to written questions taken on notice, Senate Finance and Public Administration Legislation Committee, 23 September 2021 (answers received 29 September 2021).

31 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 11.

33

3.38 The National Native Title Council (NNTC) and its members indicated strong support for this recommendation, and submitted that RNTBCs are different to other corporations incorporated under the CATSI Act, or companies incorporated under the Corporations Act. It was argued that RNTBCs are not entities established voluntarily by a group of individuals (with the purpose of pursuing a common purpose), nor are they entities that can be conveniently reconfigured, replaced or wound up.32

3.39 RNTBCs are incorporated because the Native Title Act requires that native title holders establish a corporation to represent and manage or hold their native title rights and interests in trust. RNTBCs must be incorporated under the CATSI Act, and unlike other corporations, they must be designed and supported to exist in perpetuity, because the native title rights and interests they hold or manage will continue forever, and be exercised by succeeding generations of native title holders.

3.40 The NNTC advised that, in addition to its obligations under the CATSI Act and general law, RNTBCs have critical statutory functions to perform under the Native Title Act. These include obligations to hold or manage the native title rights and interests of its society in accordance with the Native Title Act and the detailed provisions of the Native Title (Prescribed Bodies Corporate) Regulations 1999 (PBC Regulations).33

3.41 The Kimberley Land Council indicated its support for the NNTC’s view that the CATSI Act should contain a separate division dedicated to provisions which are specific to RNTBCs. It was argued that the CATSI Act does not sufficiently recognise the unique characteristics and circumstances of RNTBCs, which include the following:

 Regulation of corporations by both the common laws and statute assumes that a corporation is brought into existence because of a decision by founding members that a corporate form is the appropriate way to achieve their common purpose. This choice is absent from the circumstances leading to the incorporation of RNTBCs. In the case of Prescribed Bodies Corporate (PBCs), common law holders are compelled to nominate a corporation to be the prescribed body corporate to hold native title rights and interests on trust or act as agent of the common law holders.

 Many RNTBCs are brought into existence without any capacity to comply with basic legal obligations arising under both the Native Title Act and the CATSI Act. This means that from day one, without support from third parties, they are effectively counting down to non-compliance and potential administration or deregistration.

32 National Native Title Council, Submission 6, p. 2.

33 National Native Title Council, Submission 6, p. 2.

34

 Mandatory meeting requirements are particularly onerous for RNTBCs and often serve no purpose whatsoever if the only business of the corporation is to hold on trust or act as agent in respect of native title rights and interests. In such cases, the RNTBC will have no business to report to members other than a generic general report and the election of directors until the next AGM.  RNTBCs have obligations to non-members and are also governed by more

than one system of laws. The legal pluralism which governs the conduct of RNTCBs is not sufficiently provided for in the CATSI Act.34

3.42 The Kimberley Land Council submitted that, for these reasons, separate regulation of RNTBCs is required. At the very least, it was argued, this separate regulation should be achieved through a stand-alone part of the CATSI Act which deals with RNTBCs.35

3.43 The NIAA noted that feedback in relation to recommendations that were not being taken forward in the current legislation included references to Recommendation 62. The NIAA detailed the references to RBTBCs currently contained in the CATSI Act as:

 five stand-alone sections;  six sections that need to be read in conjunction with other parts of the CATSI Act;  twelve paragraphs, two sentences, 21 subsections and one note.36

3.44 The NIAA submitted that the five stand-alone sections were not sufficient for a dedicated chapter in the CATSI Act. The committee was advised, however, that to assist NRTBCs to understand their obligations under the CATSI Act, the NIAA and ORIC will be drafting a guide that identifies the references to NRTBCs, and provides a comprehensive outline of both general and specific requirements for NRTBCs.37

3.45 The NIAA argued that the guide will provide greater flexibility to explain in plain English the sections that NRTBCs may be subject to and exempt from, and include a brief description as to why this may be the case. The NIAA advised the committee that:

The CATSI Act Review Final Report made a number of recommendations requiring further work; particularly in relation to RNTBCs and the CATSI Act. Development of a standalone chapter in the CATSI Act for RNTBCs will be considered further as the work around the outstanding

34 Kimberley Land Council, Submission 8, p. 2.

35 Kimberley Land Council, Submission 8, p. 2.

36 National Indigenous Australians Agency, Submission 5, pp. 9-10.

37 National Indigenous Australians Agency, Submission 5, p. 10.

35

recommendations progresses and will be deliberated as part of the second tranche of changes to the CATSI Act.38

Reporting of remuneration of key management personnel 3.46 Concerns were raised about the proposed new remuneration reporting requirement which would require CATSI corporations to table remuneration reports at AGMs which would disclose the remuneration (salary and benefits)

paid to key management personnel.

3.47 Stakeholders, including the Kimberley Land Council, submitted that the reporting requirements for executive officers of CATSI corporations should be no more onerous than reporting requirements under the Corporations Act.39 The Council observed that under the Corporations Act, the requirement for remuneration reports in relation to key management personnel to be included in directors’ reports applies only to listed companies. It argued, therefore, that:

CATSI corporations are not analogous to listed companies and the imposition of reporting requirements similar to those of listed companies is not justified and will be unreasonably onerous.40

3.48 The Kimberley Land Council submitted that the effect of these provisions may be to deter appropriately skilled and experienced candidates from accepting positions with RNTBCs and other corporations regulated by the CATSI Act. It also put forward the view that:

Recruitment of suitable candidates to CEO and other executive management positions in remote areas is already challenging and mandatory reporting of remuneration benefits may act as a deterrent to potential candidates as it requires reporting of their confidential and private information that would not occur if they were employed in the private sector (other than listed corporations).41

3.49 The ACNC, however, expressed support for the proposed changes, which, it argued, ‘should enhance transparency and accountability’.42 The Commission also noted that:

The Commonwealth Government has announced that from 1 July 2022, most large charities, being those with annual revenue exceeding $3 million, will be required to report on remuneration paid to responsible persons and senior executives and this change will lead to greater harmonisation between the ACNC and ORIC frameworks.43

38 National Indigenous Australians Agency, Submission 5, p. 10.

39 See, for example, NSW Aboriginal Land Council, Submission 9, p. 2 and Australian Institute of

Company Directors, Submission 13, [p. 5].

40 Kimberley Land Council, Submission 8, p. 4.

41 Kimberley Land Council, Submission 8, p. 4.

42 Australian Charities and Not-for-profits Commission, Submission 4, [p. 2].

43 Australian Charities and Not-for-profits Commission, Submission 4, [p. 2].

36

3.50 The amendment was also supported by ORIC, which submitted that remuneration of directors and senior executives of CATSI corporations is an area of complaint and dispute, and one most associated with major prosecution. The Registrar told the committee that:

It saddens and appals me that a few unscrupulous people will take advantage of some of the most vulnerable people in the community for financial gain. I am pleased to see that the National Indigenous Australians Agency has persevered with the measure first proposed in the 2018 Bill to report on the remuneration of senior executives, noting that this proposal has been modified so that reporting would not be made public, but would be available to members through a new remuneration report. I consider that the compromise represents a genuine commitment to consultation and co-design on behalf of the Agency, and a real win for members who wish to know how their corporation is spending its funds.44

3.51 This amendment was described by the NIAA as a good example of ‘where feedback from stakeholders has been reflected in taking forward this change’.45 The NIAA continued that the change had been revised from the proposal in the second phase of consultation to make remuneration publicly available.

3.52 The NIAA told the committee that:

Due to the consistent feedback during the second phase of consultation that this information should not be publicly available, this amendment now requires the remuneration reporting be made available to members, but it will be exempt from being made public through proposed changes to the Corporations (Aboriginal and Torres Strait Island Regulations) 2017.46

Annual General Meetings 3.53 NACCHO raised concerns about the amendment which proposes to permit small corporations to hold AGMs less frequently. It was submitted that while it may seem like a minor concern, AGMs are a critical element for some of the

more remote, small and vulnerable communities. This amendment, it was argued, would have the effect of depriving members of a key mechanism to ensure accountability of its board and officials.47

3.54 The NIAA acknowledged the concern that this amendment could impede transparency and accountability to members. In response to these concerns, it advised that:

A decision to not hold an AGM for up to 2 years must be passed by special resolution which requires at least 75 per cent of the votes cast by members

44 Office of the Registrar of Indigenous Corporations, Submission 2, p. 3.

45 National Indigenous Australians Agency, Submission 5, p. 7.

46 National Indigenous Australians Agency, Submission 5, p. 7. The NIAA also notes that it intends to

undertake consultation on the proposed changes to the Corporations (Aboriginal and Torres Strait Islander) Regulations later in 2021.

47 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 6.

37

entitled to vote on the resolution. Therefore, it is in the hands of members as to whether they agree not to hold an AGM. Further, corporations that pass such a special resolution will be required to advise the Registrar of any significant changes in their circumstances during the time they are not holding an AGM, and the Registrar will have the power to require the corporation to hold an AGM if she or he considers it necessary. Alternatively, the Registrar can also call a meeting. Lastly, corporations are still required to prepare reporting during the time they are not holding meetings, which is accessible to members by request or on ORIC’s website.48

Size classification of corporations 3.55 There was also some concern raised in relation to the proposed amendment which would alter the basis of size classifications for corporations, so that they are based purely on revenue.

3.56 While the broad principle was generally supported, it was also argued that while the amendment has the potential to reduce the reporting requirements for some small corporations, it also has the potential to increase reporting requirements for a number of mid-size corporations.49

3.57 The NIAA acknowledged these concerns - particularly in relation to the possibility of some CATSI corporations being subject to an increased regulatory burden. The NIAA subsequently indicated that there had been little support shown during consultations regarding a two-tiered classification system. The NIAA advised the committee that:

During the second phase of consultation for the CATSI Act Review, the proposal to have a 2 size classification framework was canvassed and received almost no support. It should also be noted that if the revised ACNC size classification thresholds are adopted, around 50 CATSI corporations will have increased reporting requirements, while around 200 will have reduced reporting requirements.50

Committee views 3.58 The CATSI Act is the primary vehicle for the incorporation of approximately 3000 Aboriginal and Torres Strait Islander associations, which play a central and unique role in delivering services and supporting economic development

in Indigenous communities. The committee notes that evidence to the inquiry indicated broad support for the CATSI Act, particularly as a means of supporting self-determination for Aboriginal and Torres Strait Islander corporations.

48 National Indigenous Australians Agency, Submission 5, p. 9.

49 Victorian Aboriginal Heritage Council, Submission 3, p. 4.

50 National Indigenous Australians Agency, Submission 5, p. 9.

38

3.59 In recognising the considerable growth in the sector, the government has undertaken several important reviews into the intent and outcomes of the CATSI Act, to ensure the Act remains fit for purpose. These reviews have incorporated thorough consultation with associations and other stakeholders, while applying a co-design approach.

3.60 To the extent possible, the bill before the committee incorporates the feedback of those who engaged with the consultation process. The bill will progress a number of important objectives, including a reduced administrative burden on CATSI corporations, providing greater flexibility to their operations and increasing efficiency through improved access to and use of technology.

3.61 During the inquiry, arguments were put forward in evidence in favour of every provision of the CATSI Act being tested against the special measures test of the Racial Discrimination Act. The committee notes, however, that there remains broad support for the continuation of the CATSI Act to continue as a special measure in its entirety.

3.62 The committee agrees that it is to be benefit of Aboriginal and Torres Strait Islander people to have the ability to form and manage corporations in a way that takes account of their unique cultural circumstances, as provided for by the special measures in the CATSI Act.

3.63 The committee acknowledges the concerns raised by stakeholders about specific provisions within the bill, and likewise the questions that arose from the Scrutiny of Bills Committee’s examination of the legislation.

3.64 However, the committee notes the NIAA’s advice that the consultation on the bill was thorough, and further, that the NIAA has read the concerns raised by the Scrutiny of Bills Committee and has, as far as is possible, incorporated this feedback into the amendments put forward in the bill. The committee commends the NIAA for taking this approach, and for its considerable efforts in consultation throughout the process of developing the bill.

3.65 The committee also notes the acknowledgement by the NIAA that there are several areas of the bill which require further consideration and that these issues are slated for further consideration and review in the near future. The committee trusts that this ongoing process will help to address any remaining concerns stakeholders might have regarding the bill.

3.66 Overall, the committee is of the view that the measures proposed in the bill represent a positive step for Indigenous Australians, and will support the ability to form and manage Indigenous corporations in a way that benefits First Australians and takes account of their unique cultural circumstances.

39

Recommendation 1

3.67 The committee recommends that the Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 be passed.

Senator Claire Chandler Chair

41

Additional Comments - Australian Labor Party

1.1 Labor Senators support the stated objective of the bill to ensure a tailored and effective regulatory framework for First Nations corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

1.2 Labor Senators note that the majority of those who made submissions and gave evidence to this inquiry support at least some of the proposed amendments.

1.3 However, Labor Senators also note that several parts of the bill were the subject of strong opposition by First Nations corporations and their representative bodies.

1.4 In addition, Labor Senators note with concern the frustration of First Nations stakeholders with the quality of consultation on the bill, which they have argued fell short of the commitments made by the Government in the new National Agreement on Closing the Gap.

Shared decision-making with First Nations 1.5 As noted in the Committee Report, NACCHO described the Government’s consultation on the bill as ‘cursory at best’ and as a lost opportunity to demonstrate its commitment to shared decision-making with First Nations

peoples under the first priority reform of the National Agreement.

1.6 Ms Francine McCarthy of the Central Land Council echoed these sentiments:

There are many ways that the C(ATSI) Act could be improved, and we see this bill as a missed opportunity. The CLC presented a number of constructive ideas to government during the comprehensive review of the C(ATSI) Act, none of which has been substantially taken up in the bill.1

1.7 While the NIAA and the Registrar submitted that consultation was extensive and included several amendments that had been recommended in previous reviews over the years, NACCHO clarified:

We were not arguing for a longer process; we were arguing for a genuine process, and we were arguing for co-design and a seat at the decision-making table. Consultation is not just a box that you tick.2

1.8 NACCHO also pointed out that consultation on the exposure draft bill took place for a month between 8 July and 9 August, at the height of recent COVID-19 outbreaks:

1 Ms Francine McCarthy, Central Land Council, Proof Committee Hansard, 23 September 2021, p. 10.

2 Ms Patricia Turner, National Aboriginal Community Controlled Health Organisation, Proof

Committee Hansard, 23 September 2021, p. 2.

42

We were, and we still are, in the middle of a pandemic. We are on the front line of this fight. Our ACCHOs and their staff are exhausted and stretched to their limits, yet we managed to deploy resources to draft a submission and then we found that it, along with the 26 others, was reviewed in less than 14 days. That is what we mean by 'cursory'.3

1.9 Labor Senators note that as a special measure under the Racial Discrimination Act 1975, the CATSI Act is intended to promote First Nations rights, particularly the right to self-determination. For this reason, the need for genuine engagement with First Nations stakeholders and their representative bodies is particularly important.

Recommendations not taken up 1.10 In this context, it is significant that several recommendations of the NIAA Review, which were supported by First Nations stakeholders, have not been taken up in this bill.

1.11 This includes the recommendation that a separate division of the CATSI Act be created which is dedicated to provisions specific to Registered Native Title Bodies Corporate (RNTBCs).4

1.12 In its submission to the inquiry, the National Native Title Council (NNTC) explained the importance of this recommendation to assist RNTBCs manage their specific and additional obligations under the Act:

With the amendments currently proposed by the Bill there will be more than 40 sections or subsections in the CATSI Act that are specific to RNTBCs. Very few RNTBCs have the capacity to identify these provisions scattered throughout the 600 pages of the CATSI Act and fully comprehend how they interact with the NTA, the PBC Regulations and the general law, and the RNTBC responsibilities and obligations that flow from these laws.5

1.13 The Kimberley Land Council supported the NNTC’s position, submitting:

[T]he CATSI Act does not presently sufficiently recognise the unique characteristics and circumstances of RNTBCs and, as such, cannot adequately regulate those entities…the KLC submits that separate regulation of RNTBCs is required. At a bare minimum, this separate regulation should be done through a stand-alone Part of the CATSI Act dealing with RNTBCs.6

3 Ms Patricia Turner, National Aboriginal Community Controlled Health Organisation, Proof

Committee Hansard, 23 September 2021, p. 2.

4 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020,

Recommendation 62.

5 National Native Title Council, Submission 6, p. 3.

6 Kimberley Land Council, Submission 8, p. 3.

43

1.14 Labor Senators acknowledge the critical role of RNTBCs and consider that they should be properly supported to manage the specific regulatory burdens imposed on them under the CATSI Act.

1.15 Labor Senators welcome the commitment made by NIAA to consider the development of a standalone chapter for RNTBCs as part of a planned second tranche of changes to the CATSI Act.

1.16 A second proposal supported by First Nations stakeholders but not included in the bill is to amend the objectives of the CATSI Act to better reflect its beneficial role in building the capacity of corporations and accommodating First Nations tradition and circumstance.7

1.17 NACCHO submitted that this recommendation ‘would help emphasise the ongoing need for close collaboration and coordination with peaks, so that struggling corporations can be assisted well before punitive measures are used.’8

1.18 In their view, ‘[t]he Commonwealth needs to be seen to be committed to capacity building and in working collaboratively with our communities and their organisations.’9

1.19 In response, the NIAA submitted that including capacity building in the objects of the Act was not necessary as the principle is already reflected in the parts of the Act that stipulate the functions, powers and aims of ORIC.10

1.20 However, in the view of Labor Senators there is value in ensuring these principles are reflected in the Act as a whole, and not just in relation to the functions of the Registrar. Such a step would be consistent with the Act’s status as a special measure intended to operate for the benefit of First Nations peoples.

Concerns about specific amendments 1.21 As noted in the Committee Report, there was overall support for parts of the bill that submitters felt would enable greater flexibility for CATSI corporations.

1.22 However, stakeholders raised concerns that several amendments would increase the administrative burden on CATSI corporations or weaken the protective aspects of the Act.

7 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020,

Recommendation 1.

8 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 5.

9 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 6.

10 National Indigenous Australians Agency, Submission 5, p. 8.

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1.23 This includes concerns about the suite of new regulatory powers granted to the Registrar under Part 2 of the bill, including the power to issue infringement notices in connection with minor contraventions of the Act.

1.24 The Central Land Council described the potential impact of the new framework on landholding corporations such as RNTBCs:

Many landholding corporations, including RNTBCs, hold substantial inalienable land assets but have no income, liquid assets or cash reserves. Most do not even have bank accounts. An infringement notice, even for a small sum, would be impossible for the corporation to pay. An unpaid notice then exposes the corporation to risks of administration or winding up, as well as requiring directors to consider issues of insolvent trading. The inalienable land assets held by these corporations would be put at risk.

Most directors of these corporations in central Australia receive no remuneration for their work, and live in deeply impoverished circumstances, often with little access to basic services. Infringement notices would punish them for participating in the work in managing land for the benefit of their traditional groups, in accordance with their traditions.

…If these corporations are exposed to infringement penalties for minor administrative errors, the cascade of consequences represent a real threat to the Aboriginal estate, and a real risk of hardship for voluntary directors.11

1.25 Mr Jamie Lowe of the National Native Title Council, also reflected these concerns, although recognising that PBCs make up a relatively small proportion of all CATSI corporations:

I think any further kind of burden on prescribed body corporates as it sits at the moment, with the lack of funding and lack of capacity, is an issue.12

1.26 While the Labor Senators support increased transparency and accountability of CATSI corporations in the interests of their members, they share the concern of these submitters about the potential impact of the Registrar’s proposed broad discretion to issue and withdraw infringement notices. As the Central Land Council submitted:

There is a risk that the issuing of infringement notices will, over time, become a routine practice that is carried out without any real regard being given to each corporation’s circumstances. Certain administrative steps such as the lodging of annual reports with ORIC could be the subject of automated infringement notices, which may appear appropriate to a future

11 Central Land Council, answers to written questions taken on notice, 23 September 2021 (answers

received 29 September 2021), p. 1.

12 Mr Jamie Lowe, National Native Title Tribunal, Proof Committee Hansard, 23 September 2021, p. 22.

45

Registrar who does not pay sufficient regard to the circumstances of corporations on the ground.13

1.27 Labor Senators support the Central Land Council’s recommendation to legislate a non-exhaustive list of considerations to guide the Registrar in exercising the discretion to issue or withdraw infringement notices.

1.28 As the CLC submitted, considerations could include the gravity of the contravention, the likely impact of issuing a notice on a corporation’s ability to continue to carry out its functions and whether the other interventions are more likely to promote compliance with the CASTSI Act.14

1.29 Labor Senators note that when this suggestion was put to the Registrar at the inquiry’s public hearing, he expressed it would be acceptable to him.15

1.30 Labor Senators also acknowledge the concerns that the new remuneration reporting requirement would impose a more onerous standard on CATSI corporations than for general corporations.

1.31 Labor Senators note that this change will bring the standards for CATSI corporations in line with remuneration reporting requirements for larger charities and welcome the changes made by the Government in response to stakeholder feedback that the remuneration reporting should not be made publicly available.

1.32 Labor Senators consider that this amendment should be carefully monitored and included as a priority for the next review of the Act.

1.33 A further concern raised in the inquiry related to amendments which would enable the registration of two-member CATSI corporations. Submitters and witnesses raised concerns that these changes could increase the risk of exploitation of First Nations corporations and people. The NSW Aboriginal Land Council submitted:

NSWALC also does not support Items 108 to 110 in the CATSI Amendment Bill, which support the establishment of a two-member corporation where only one member is an Aboriginal or Torres Strait Islander person as long as that person has the deciding vote. This change is not in accordance with the general principle of Aboriginal community control and could lead to the exploitation of Aboriginal people. For

13 Central Land Council, answers to written questions taken on notice, 23 September 2021 (answers

received 29 September 2021), p. 2.

14 Central Land Council, answers to written questions taken on notice, 23 September 2021 (answers

received 29 September 2021), p. 3.

15 Mr Selwyn Button, Registrar, Office of the Registrar of Indigenous Corporations, Proof Committee

Hansard, 23 September 2021, p. 18.

46

example, the formation of partnerships seeking to profit from organisations with an Aboriginal status.16

1.34 NACCHO expressed similar concerns:

NACCHO does not support [two-member corporations]…as there is a real danger that this provision may be ‘rorted’. For example, there may be a serious unintended consequence in which partnerships are formed in which Aboriginal and Torres Strait Islander people are manipulated by other interested parties seeking to profit from organisations with an Aboriginal status (e.g. advantages in Government procurement exercises).17

1.35 Labor Senators also note, however, that other stakeholders expressed support for the increased flexibility of corporate structures enabled by the bill, including the removal of impediments to establishing wholly-owned or joint venture subsidiary corporations.

1.36 In his evidence to the inquiry, the Registrar acknowledged that exploitation of First Nations corporations is an issue of concern and stated:

We have been looking at small corporations and, as part of our regulatory role as it exists, going to smaller corporations where there are member numbers at 10 or fewer. We have been having direct interaction with them case by case to determine Indigeneity and to make sure there is evidence of Indigeneity for individuals within those corporations so we then have some confidence that there are more Indigenous people who are members and directors of each one of those corporations. That would be the case in the future. Once the amendments come to fruition, we would undertake the same practice so we have a level of vetting to make sure that people are still compliant with what's happening.18

1.37 Labor Senators urge the Government and the Registrar to maintain these vetting processes and consider other safeguards which could be put in place to protect against exploitation.

Concluding comments 1.38 Labor Senators support the broad objectives of the bill to improve the effectiveness of the CATSI Act and strengthen transparency of First Nations corporations for the benefit of their members.

1.39 Evidence received by this committee, however, raises legitimate concerns regarding the Government’s consultation process, non-implementation of

16 New South Wales Aboriginal Land Council, Submission 9, p. 2.

17 National Aboriginal Community Controlled Health Organisation, Submission to the Exposure

Draft Bill, p. 9, cited in National Aboriginal Community Controlled Health Organisation, Submission 1, p. 5.

18 Mr Selwyn Button, Registrar, Office of the Registrar of Indigenous Corporations, Proof Committee

Hansard, 23 September 2021, p. 19.

47

certain reforms and the potential for some amendments to impose additional administrative burdens on First Nations corporations.

1.40 Labor Senators call on the Government to ensure the CATSI Act continues to promote First Nations’ economic advancement and self-determination, taking into account the unique circumstances and contribution of CATSI corporations.

Recommendation 1

1.41 The Government should improve the bill by adding an amendment to the objects of the CATSI Act to better reflect the intention to build capacity, promote modern governance and accommodate Aboriginal and Torres Strait Islander tradition and circumstance, consistent with Recommendation 1 of the Final Report of the CATSI Act Review.

Recommendation 2

1.42 The Government should amend the bill to include a non-exhaustive list of considerations guiding the Registrar’s discretion to issue or withdraw infringement notices. At a minimum, these considerations should include the gravity of the contravention, the likely impact of issuing a notice on an individual or corporation’s financial security, a corporation’s ability to continue to carry out its functions and whether the other interventions are more likely to promote compliance with the CATSI Act.

Senator Tim Ayres Deputy Chair

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Additional Comments - Australian Greens

1.1 The CATSI Act and Regulations, their NIAA Review Report, and the proposed Amendment Bill are extensive and at times legalistic, and the Australian Greens deeply appreciate the effort of those who have participated in the inquiry, and made themselves and their expertise available, especially considering the short timeframe in which the inquiry was conducted. We particularly thank First Nations people and companies involved in the inquiry.

1.2 The Australian Greens aim for First Nations corporations to operate in self-determined ways and appreciate the role the CATSI Act plays in assisting them to deliver critical services to First Nations communities, while providing for accountability and transparency of their operations to their members. There are thousands of CATSI regulated corporations across Australia with diverse purposes and representing a range of diverse First Nations Clans and their peoples. The Australian Greens acknowledge the proposed changes to the CATSI Act as a step in the right direction to ensure cost efficiency, greater transparency and accountability of First Nations corporations.

1.3 Whilst in support of the recommendation outlined in the committee report, The Australian Greens wish to add the following.

1.4 The Australian Greens acknowledge the concerns expressed by stakeholders on the short timeframe of this parliamentary inquiry and the possibility to make considered submissions, as well as the possibility to comment on the exposure draft of the Bill. This concern is also reflected in the small number of submissions received in the inquiry. The Australian Greens stress the importance of giving stakeholders the necessary time to properly consider the proposed Bill.

1.5 The National Aboriginal Community Controlled Health Organisation (NACCHO), states in its submission to the inquiry:

Of most recent concern is the rushed process for the consideration of the 27 written submissions on the exposure draft of the CATSI Act Amendment Bill. They were due by 9 August 2021 and yet the Bill was tabled in Parliament just 14 days later. This was not enough time to consider carefully the 27 submissions and it appears that this element of the consultation and feedback process was disingenuous.

Our feedback was provided in the midst of the pandemic when so many of our members and staff were exhausted. To have such a rushed consideration of a submission in which we diverted valuable resources to invest in its preparation was very disappointing.1

1 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 3.

50

1.6 The Australian Greens are concerned with some of the new provisions in the Bill potentially being racially discriminatory through not complying with some common and criminal law principles such as through the reversal of evidential burden, the inclusion of strict liability and the abrogation of the principle against self-incrimination, as pointed out by the Senate Standing Committee for the Scrutiny of Bills in Scrutiny Digest 14 of 2021.

1.7 The Australian Greens are further concerned about the application of different standards and higher penalties proposed for corporations under the CATSI Act as compared to the Corporations Act 2001.

1.8 NACCHO submits that:

Some of the changes are discriminatory in that different standards are expected for Aboriginal organisations. The changes set higher standards (e.g. remuneration reports) and penalties for directors and officers than what other Australians are expected to meet under the Corporations Act 2001 and the regulatory frameworks of ASIC and the ACNC.2

1.9 The Australian Greens wish to flag that, while the introduction of a two-member corporation has some advantages, concerns remain as to the possibility of undue influence of non-First Nations people in two-member corporations where only one member is a First Nations person. While that person receives a casting vote, we are aware that this provision will not fully eliminate the possibility of undue influence, pressure or coercion being exercised by the non-First Nations member. There also remains the possibility of unconscionable conduct by non-First Nations parties. The issue of so-called ‘black-cladding’ needs to be investigated and appropriate measures taken as to its prevention.

1.10 While the proposed Bill does not cover this subject, the Australian Greens are further concerned about the possibility of fraud and deception under the CATSI Act regarding non-First Nations people falsely claiming Aboriginality to benefit from the provisions made for First Nations people under the Act. Similar concerns extend to the false claim of Traditional Ownership under the CATSI Act and other Commonwealth, state and territory legislation.

1.11 However, the Australian Greens reserve caution as to the Commonwealth’s ability to determine Aboriginality and therefore believe that, where there is reasonable belief of fraud or deception as outlined above, the Office of the Registrar of Indigenous Corporations (ORIC) should work with Traditional Owners and communities of the Country concerned to confirm an individual’s Aboriginal identity or a community’s Traditional Ownership.

1.12 The Australian Greens do not support the proposed changes in the Bill providing for small corporations being permitted to avoid holding Annual

2 National Aboriginal Community Controlled Health Organisation, Submission 1, p. 5.

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General Meetings (AGMs) as we regard AGMs as an important opportunity for members to scrutinise the activities of a corporation and engage more deeply with it. For some members, this might be the only opportunity each year they are given to do this, and corporations should be supported to conduct AGMs rather than avoid them.

1.13 This view is also reflected in NACCHO’s submission to the inquiry:

This may seem like a minor concern, but it is a critical element for some of the more remote, smaller and vulnerable communities. It will have the effect of depriving members of a key mechanism to ensure the accountability of its boards and officials.

NACCHO does not support changes that reduce an organisation’s accountability to members. They are counter to the fundamental principle of community control. We do not, therefore support recommendations that allow small corporations to avoid holding AGMs. Transparency and accountability to members is very important and we encourage any revisions to be targeted towards greater transparency around operations and membership. Furthermore, AGMs serve as a touch-point for the communities the corporations serve and provide a familiar means for members to ask questions about their management and results achieved (or lacking).3

1.14 For the purposes of transparency and accountability, the Australian Greens believe that the provision of documents for AGMs and Special General Meetings, mailed out in sufficient time (three weeks) before the meetings, would provide for improved accessibility of information to members. We recognise that it might be challenging for small corporations to meet these requirements and believe they should be exempted from this provision. Relevant documents to provide to members include the

 Incorporation Certificate, Rule Book, Notices, Agenda, Annual Audits and other statutory documents  Native Title Act 1993 (Cth) Native Title Documents such as a Native Title Determination or an Indigenous Land Use Agreement

1.15 The Australian Greens would like to point out the importance of the Rule Book for accessibility of information of the corporation to its members and beyond. The draft Bill does not set out any changes to the Rule Book, but the Australian Greens would like to point out the importance of culturally appropriate Rule Books. While a standard ORIC template for a Rule Book is about 30 pages, many First Nations corporation have taken greater control on what we see as a culturally appropriate Rule Book, including covering issues such as Sovereignty, cultural heritage, Native Title, land justice, Treaty, and socio-economic objectives. Some Rule Books are also, subject to ongoing research, recognising Clans, Ancestors, Descendants and Country. While Rule Books are

3 National Aboriginal Community Controlled Health Organisation, Submission 1, pp. 6-7.

52

living documents and can be amended at AGMs, a review of the template could ensure it is culturally appropriate and inclusive, and provides corporations with guidelines around how they can make references in the Rule Book to Native Title determinations, Indigenous Land Use Agreements (ILUAs) and other relevant considerations for its membership.

1.16 Given the unique nature of Registered Native Title Body Corporates (RNTBCs), the Australian Greens support the CATSI Act review recommendation 62 for a separate division of the Act to be dedicated for provisions specific to RNTBCs.

1.17 As the National Native Title Council submitted:

RNTBCs are very different to other corporations incorporated under the CATSI Act, or companies incorporated under the Corporations Act 2001. RNTBCs are not entities established voluntarily by a group of individuals to pursue a common purpose, nor are they entities that can be conveniently reconfigured, replaced or wound up.4

1.18 This was also supported by the Victorian Aboriginal Heritage Council:

Council fully accepts that CATSI corporations established to hold or manage native title rights and interests (Prescribed Bodies Corporate - PBCs) are in a unique position arising from the fact that due to the subject matter of the rights and interests in question they can only be held by Aboriginal and Torres Strait Islander Peoples and that these rights and interests are held collectively. This fact warrants particular rules being put in place for PBCs. In Council’s view this fact also supports the recommendation contained in the Final Review Report that provisions relating to PBCs should be in a distinct chapter.5

1.19 Furthermore, the Australian Greens believe in the importance of equitable distribution of Native Title or land justice benefits such as through ILUAs. Transparency around such wealth distribution is important to ensure accountability towards affected communities. Therefore, the Australian Greens believe there is a need for strengthened governance and reporting requirements around such wealth distribution, as per Recommendation 57 of the CATSI ACT Review Final Report:

It is recommended to amend the Prescribed Body Corporate Regulations to require reporting to common law holders on the management and use of native title monies and non-monetary benefits negotiated on behalf of common law holders held on trust under external trust arrangements.

It is recommended the Registrar give consideration to introducing reporting requirements under section 336-5 of the CATSI-Act, consistent with the reporting requirements to be implemented through changes to the Prescribed Body Corporate Regulations.

4 National Native Title Council, Submission 6, p. 2.

5 Victorian Aboriginal Heritage Council, Submission 3, p. 4.

53

It is recommended that should the registrar decide against additional reporting under the CATSI Act, changes to the Prescribed Body Corporate Regulations outlined above be extended to include reporting on all native title benefits held by Registered Native Title Body Corporate.6

1.20 Lastly, the Australian Greens believe that a standardised framework for First Nations organisations should be considered, given the discrepancies in regulations of CATSI corporations vs corporations incorporated under other Commonwealth or state and territory legislation, to ensure increased transparency and accountability towards members.

Recommendations 1.21 Given the above considerations, the Australian Greens recommend:

Recommendation 1

1.22 That the CATSI Act be amended to have a separate but succinct section to simplify matters relating to Prescribed Body Corporates (PBCs), Registered Native Title Body Corporates (RNTBCs), and Indigenous Land Use Agreements (ILUAs).

Recommendation 2

1.23 Small corporations under the CATSI Act continue to be required to hold AGMs.

Recommendation 3

1.24 For increased transparency and accountability, medium and large corporations under the Act, be required, with sufficient notice before an upcoming Annual General Meeting or Special General Meeting, to provide members with hard copies of:

 the Incorporation Certificate,  the Rule Book,  Notices and Agenda for the meeting,  Annual Audits  Other statutory documents  Native Title Act 1993 (Cth) Native Title Documents such as a Native Title

Determination or an Indigenous Land Use Agreement

Recommendation 4

1.25 That recommendation 57 of the CATSI ACT Review Final Report be fully implemented, as well as annual audits of use of native title monies and non-monetary benefits be required.

6 National Indigenous Australians Agency, CATSI Act Review: Final Report, 30 October 2020, p. 122.

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Recommendation 5

1.26 The Office of the Registrar of Indigenous Corporations (ORIC) establish processes to confirm CATSI corporations’ compliance with the majority First Nations board members and members requirements, including working with Traditional Owners and communities of the Country concerned to confirm an individual’s Aboriginal identity or a community’s Traditional Ownership where needed.

Recommendation 6

1.27 Penalties in the CATSI Act, where higher than for similar offences under the Corporations Act, be aligned with the penalties under the Corporations Act.

Recommendation 7

1.28 The abolishment of exemptions granted to the requirement organisations receiving grant funding of $500,000 or more in any single financial year under the Indigenous Advancement Strategy to be incorporated under the CATSI Act, as per the Australian government’s Strengthening Organisational Governance policy.

Recommendation 8

1.29 The Australian government increase funding for the Office of the Registrar of Indigenous Corporations to ensure continued and increased capacity to support First Nations corporations.

Recommendation 9

1.30 The Australian government to undertake a Truth and Reconciliation Royal Commission to investigate allegations of corruption and mismanagement across Commonwealth and State First Nations incorporated bodies, as well as historical dispossession, dispersal and deculturalisation.

Senator Lidia Thorpe Greens Senator for Victoria

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Appendix 1

Legislative Scrutiny Comments

Legislative scrutiny Following the introduction of the bill, the legislation was examined by the Senate Standing Committee for the Scrutiny of Bills (the Scrutiny Committee). In accordance with Senate Standing Order 24, the Scrutiny Committee examined the bill to determine the effect of the proposed legislation on individual rights, liberties and obligations, and on parliamentary scrutiny.1 The Scrutiny Committee provided its comments on the bill, noting that it had specific concerns in relation to the issues of ‘reversal evidential burden’, ‘strict liability’ and ‘privilege against self-incrimination’, which are all detailed further below.2

Reversal evidential burden The Scrutiny Committee pointed to Item 6, Schedule 6 of the bill, which seeks to insert a number of new offences into the CATSI Act, and noted that: Proposed subsection 453-2(5) provides that it will be an offence if the

Registrar gives a person a notice to produce specific books and the person does an act, or omits to do an act, with the result that the notice is not complied with. Proposed subsection 453-2(6) provides an exception to the office (offence-specific defence), stating that the offence does not apply if the person has a reasonable excuse.3

The Scrutiny Committee also noted that proposed subsections 453-3(2) and 453-4(2) provide that a person commits an offence if they are given an order under proposed subsection 453-3(1) and the person does an act, or omits to do an act, with the result that the notice is not complied with. Item 126 of Schedule 1 - which seeks to insert proposed subsection 201-150(5) into the Act - was also referenced by the Scrutiny Committee. This amendment would provide four new exceptions to the existing offence of not holding an AGM within five months after the end of the year. In commenting on these proposed amendments, the Scrutiny Committee noted that, at common law, ‘it is ordinarily the duty of the prosecution to prove all elements of

1 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

pp. 1-7.

2 The following section is based on information contained in Senate Standing Committee for the

Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021, pp. 1-7.

3 The following section is based on information contained in Senate Standing Committee for the

Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021, p. 2.

56

an offence’.4 It was argued that this is an important aspect of the right to be presumed innocent until proven guilty, and that provisions that reverse the burden of proof and require a defendant to disprove, or raise evidence to disprove, one or

more elements of an offence, interferes with this common law right. The Scrutiny Committee also argued that:  while in this instance the defendant bears an evidential burden rather than a legal burden, it expects that any such reversal of the evidential burden of

proof should be justified;  the Guide to Framing Commonwealth Offences5 provides that a matter should only be included in an offence-specific defence (as opposed to being

specified as an element of the offence) where it is peculiarly within the knowledge of the defendant and it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter;  in this case, it is not apparent that any of the matters in the proposed new

subsections are matters peculiarly within the defendant’s knowledge, and that it would be difficult or costly for the prosecution to establish the matters (these matters appear to be matters more appropriate to be included as an element of the offence);  no clear explanation has been provided in the EM regarding why an offence

of ‘reasonable excuse’ has been used in relation to the offence-specific defences in Item 6 of Schedule 1, or why it would not be possible to design more specific defences.6

The Scrutiny Committee summarised its comments about ‘reversal evidential burden’, (including the questions it had of the Minister in relation to this issue) as follows: The committee requests the minister’s detailed justification as to why it is

proposed to use offence-specific defences (which reverse the evidential burden of proof) in proposed subsections 453-2(6), 453-3(3) and 201-150(5).

The committee also requests the minister’s advice as to whether the bill can be amended to provide for more specific defences in proposed subsections 453-2(6), 453-3(3) and 453-4(3).

The committee further suggests that it may be appropriate for the bill to be amended to provide that the defences set out at proposed subsection 201-

4 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 2.

5 Attorney-General’s Department, A Guide to Framing Commonwealth Offences, Infringement Notices

and Enforcement Powers, September 2011.

6 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 3.

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150(5) are instead specified as elements of the offence. The committee requests the minister’s advice in relation to this matter.7

Strict liability The Scrutiny Committee noted that Item 81 of Schedule 1 seeks to insert proposed section 180-37 into the CATSI Act to provide that at the end of each financial year, a CATSI corporation must give the Registrar a copy of the register of members. Proposed subsection 180-37(3) provides that a corporation commits an offence of strict liability if it fails to do so. The penalty for the offence is 25 penalty units or imprisonment for six months, or both. The Scrutiny Committee argued that under general principles of the criminal law, fault is required to be provided before a person can be found guilty of a criminal offence (ensuring that criminal liability is imposed only on persons who are sufficiently aware of what they are doing and the consequences it may have). It was also noted that when a bill states that an offence is one of strict liability, this removes the requirement for the prosecution to prove the defendant’s fault. In such cases, an offence will be made out if it can be proven that the defendant engaged in certain conduct, without the prosecution having to prove that the defendant intended this, or was reckless or negligent. Further, the Scrutiny Committee indicated that:

 the Guide to Framing Commonwealth Offences states that the application of strict liability is only considered appropriate where the offence is not punishable by imprisonment and only punishable by a fine of up to 60 penalty units for an individual;  the bill proposes applying strict liability to offences that are subject to a

penalty of up to 6 months imprisonment, and it is the committee’s view that it is inappropriate to apply strict liability in circumstances where a period of imprisonment may be imposed;  the bill’s EM should provide a clear justification of any imposition of strict liability, including outlining whether the approach is consistent with the Guide to Framing Commonwealth Offences;  while the EM notes that the penalty aligns with the penalties for failing to lodge annual reports, the committee does not consider that consistency with existing provisions is a sufficient justification for including strict liability offences with a penalty of imprisonment.8

7 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 4.

8 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

pp. 4-5.

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The Scrutiny Committee summarised its view in relation to ‘strict liability’ as follows: From a scrutiny perspective, the committee considers that the bill should be amended to remove the penalty of imprisonment from the strict liability

offence in subsection 180-37(3), consistent with the principles set out in the Guide to Framing Commonwealth Offences. The committee requests the minister’s advice in relation to this matter.9

Privilege against self-incrimination The Scrutiny Committee noted that the bill seeks to insert a number of broader powers for the Registrar to compel the production of books. The Scrutiny Committee specifically referenced Section 461-15 of the CATSI Act, which currently provides that it is not a reasonable excuse for a person to refuse to, or fail to, give information or produce a book because the information or production of the book might tend to incriminate the person or make the person liable to a penalty. It was noted that this section overrides the common law privilege against self-incrimination, which provides that a person cannot be required to answer questions or produce material which may tend to incriminate himself or herself.10 The Scrutiny Committee also indicated that a limited use immunity is currently included in subsection 461-15(2) for oral statements only, and no use or derivative use immunity is provided in relation to the production of books. It was noted there may be certain circumstances in which the privilege against self-incrimination can be overridden. However, abrogating the privilege represents a serious loss of personal liberty, and in considering whether it is appropriate to abrogate the privilege against self-incrimination, it is important to consider whether the public benefit in doing so significantly outweighs the loss to personal liberty. The Scrutiny Committee acknowledged that the bill’s statement of compatibility provides some explanation, and noted that it:

…considers that any justification for abrogating the privilege against self-incrimination will be more likely to be considered appropriate if accompanied by a use and derivative use immunity (providing that the information or documents produced or answers given, or anything obtained as a direct or indirect consequence of the production of the information or documents is not admissible in evidence in most proceedings).11

The Scrutiny Committee also specifically noted that section 461-15 of the bill includes a limited use immunity; but not a derivative use immunity. This means that

9 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 5.

10 Sorby v Commonwealth (1983) 152 CLR 281 and Pyneboard Pty Ltd v Trade Practices Commission (1983)

152 CLR 328, cited in Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021, p. 5.

11 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 6.

59

anything obtained as a consequence of the requirement to produce a document or answer a question can be used against a person in criminal proceedings. The Scrutiny Committee drew the matter of ‘privilege against self-incrimination’ to the attention of Senators and noted that it:

…leaves to the Senate as a whole the appropriateness of expanding powers in relation to the production of books in circumstances where the privilege against self-incrimination has been abrogated and no use or derivative use immunity is provided.12

12 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 14 of 2021, 1 September 2021,

p. 7.

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Appendix 2

Submissions and additional information

Submissions 1 National Aboriginal Community Controlled Health Organisation (NACCHO) 2 Office of the Registrar of Indigenous Corporations 3 Victorian Aboriginal Heritage Council

 3.1 Supplementary to submission 3

4 Australian Charities and Not-for-profits Commission 5 National Indigenous Australians Agency 6 National Native Title Council 7 First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People

Aboriginal Corporation RNTBC 8 Kimberley Land Council 9 NSW Aboriginal Land Council Policy Unit 10 National Native Title Tribunal 11 Tangentyere Council Aboriginal Corporation (TCAC) 12 Minerals Council of Australia 13 Australian Institute of Company Directors

Answers to Questions on Notice 1 Answers to written questions taken on notice by the Central Land Council on 23 September 2021. Answers received 29 September 2021. 2 Answer to a question taken on notice by the National Indigenous Australians

Agency on 23 September 2021. Answer received 29 September 2021.

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Appendix 3

Public hearings and witnesses

Thursday, 23 September 20211 Committee Room 2S3 Parliament House Canberra

National Aboriginal Community Controlled Health Organisation (NACCHO)  Ms Pat Turner, Chief Executive Officer  Mr James McDonald, Director, Board Relations and Constitutional Reform

Victorian Aboriginal Heritage Council  Mr Michael Harding, Chairperson  Ms Liz Allen, Deputy Chairperson  Dr Matthew Storey, Director

Central Land Council  Mr Dante Mavec, Senior Native Title Lawyer  Ms Francine McCarthy, Manager, Native Title

Office of the Registrar of Indigenous Corporations  Mr Selwyn Botton, Registrar

National Native Title Council  Mr Jamie Lowe, Chief Executive Officer  Mr Austin Sweeney, Director of Legal Policy

National Indigenous Australians Agency  Ms Letitia Hope, Deputy Chief Executive Officer, Operations and Delivery  Mr Andrew Huey, Branch Manager, Grant Design, Program Performance Delivery

1 All witnesses appeared via videoconference.