Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Hansard source

Thank you, Madam Deputy Speaker, for your forbearance. This cognate debate emanates from a long process of review and consultation which, as the Bills Digest points out, began in the late 1960s considering how Indigenous corporate governance should be managed. It was decided then that there was a need for a simple, inexpensive and culturally appropriate method for legal recognition of Indigenous groups and communities and it was identified in the late 1960s by the Council for Aboriginal Affairs which had been established by the Holt government.

Subsequently, there was a review of the Gibb committee of the pastoral lease in the Northern Territory and recommended legislation. Then Prime Minister McMahon announced in January 1972 that the federal government proposed to investigate ways of finding a simple, flexible form of incorporation of Aboriginal communities. The issue was raised again in 1973 by Justice Woodward—and I will refer to his recommendations in a short while. A bill was introduced into the federal parliament in the latter half of 1975 but lapsed as a result of the double dissolution. It was then passed in the subsequent parliament with Ian Viner as the minister.

The Aboriginal Councils and Associations Act was assented to on 15 December 1976 and came into operation on 14 July 1978 following amendments assented to on 22 June 1978. Since then there have been a number of reviews and a number of amendments made to the legislation. Firstly, in 1989 Graham Neat made a number of recommendations in his report to the Registrar of Aboriginal Corporations on the review of Aboriginal Councils and Associations Act 1976. Then in 1992 in response to his report, the government made changes to the ACA Act in the Aboriginal Councils and Associations Amendment Act 1992. Then in 1994 the government, as a second stage in their response to the Neat report, tabled further amendments which would have established an Australian Indigenous corporations commission which could prosecute people for contravening the act and other laws relating to fraud and dishonesty. In October 1995 the then Minister for Aboriginal and Torres Strait Islander Affairs, the honourable Robert Tickner, announced that he was commissioning the Australian Institute of Aboriginal and Torres Strait Islander Studies to conduct a review of the act. That was carried out by a review team headed by Dr Jim Fingleton—and I will come to a discussion about those issues a little later.

In November 2000 the acting registrar commissioned an internal review of the act to determine, firstly, its capacity to meet the contemporary corporate governance needs of Aboriginal and Torres Strait Islander people and, secondly, to identify areas for possible legislative reform and possible changes to the regulations. In January 2002 the review issued a summary consultation paper with a full consultation paper outlining the major issues, suggesting changes to the act and offering examples of new structure models. The final report and recommendations were released in December 2002.

What we have before us is ultimately the consideration by this government of the proposals in those recommendations. The preamble states that the law is intended to be a ‘special law for the descendants of original inhabitants in Australia’. That means it is enacted under the race power section of section 51(xxvi) of the Constitution. The law is not settled on whether the race power has to be used beneficially.

There are a range of issues which emanate from this legislation. The legislative package we have before us comprises three bills: the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006; the Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006, the transitional bill; and the Corporations (Aboriginal and Torres Strait Islander) Bill 2005, the amendment bill.

Whilst we understand the intention of this legislation to introduce modern corporate governance standards and Corporations Law while maintaining a special statute of incorporation for Aboriginal and Torres Strait Islander peoples to take account of the special risks and requirement of the Indigenous corporate sector, the transition bill seeks to facilitate a transition for Indigenous incorporations from the old to the new regime. The amendment bill proposes several amendments that address cross-jurisdictional issues and the intention is for these amendments to be endorsed by a later ministerial council meeting.

I am encouraged that around 2,800 Aboriginal and Torres Strait Islander corporations, or ATSIC corporations, are currently registered under the Aboriginal Councils and Associations Act. These corporations represent the diversity of activity taking place in Indigenous communities, and I can appreciate that regulating the activities of these corporations whilst at the same time respecting Indigenous cultural objectives and the expertise of these corporations is a challenge.

However, I am not encouraged by what I believed to be a failure of the Aboriginal Councils and Associations Act to deliver for Indigenous Australians in a way that the original drafters of the legislation intended. I fear that the reforms of the Corporations (Aboriginal and Torres Strait Islander) Bill may also not deliver for Indigenous Australians. There have been, as I have pointed out, regular reviews and changes to the act both under Labor and coalition governments, and it is very important of course that there is accountability. I believe that accountability should go hand in hand with Indigenous self-determination and confidence to deliver better services and more opportunities. Ten years ago the Fingleton report on the review of Aboriginal Councils and Associations Act recommended many administrative and legislative changes that were not acted upon by the coalition government after it came to power. In my view it is a shame that 10 years ago the government failed to act. It is worth quoting Dr Fingleton’s concluding comments in his report in the light of the current debate and the failure of service delivery in Indigenous communities. He said:

... the Aboriginal Councils and Associations Act 1976 is too prescriptive to allow bodies to incorporate in a culturally appropriate way—in particular with respect to the key matters of a group’s structure and decision making processes. Much of the Act’s present inflexibility can be attributed to requirements aimed at making groups more accountable, but indigenous groups are usually faced with a range of different accountability requirements, not all necessarily compatible with each other. The approach currently taken under the Act confuses financial and procedural accountability with the achievement of program objectives, and this has led to undue emphasis on the enforcement on compliance with statutory requirements. Outcomes in delivery of essential services have not been improved under this approach, often leading to the ‘proliferation’ phenomenon where communities respond to poor service delivery by setting up new corporations.

As an observer of these corporations over a number of decades, I can only say ‘Hear, hear!’ to that.

In the case of the Northern Territory, a large number of corporations were set up to avoid the possibility of prescriptive treatment being taken upon those organisations or communities by a previous Country Liberal Party administration in the Northern Territory. That led to a relatively large number of Indigenous communities incorporating under this act as a way of avoiding being incorporated under Northern Territory law and having to comply with elements of the Northern Territory local government legislation. They were fearful of the takeover that was being represented by that legislation by the CLP. I note that the CLP sought to get the Commonwealth to remove the possibility of the Aboriginal Councils and Associations Act having an effect in the Northern Territory.

I would like to draw members’ attention to an article published in the Indigenous Law Bulletin in May of this year entitled, ‘The Corporations Aboriginal and Torres Strait Islander Bill 2005 coming soon to a community organisation near you.’ The article was authored by Nicole Watson, a research fellow employed by the Jumbunna Indigenous House of Learning in Queensland. It is Ms Watson’s conclusion that the new legislation is more likely to frustrate Indigenous organisations and it introduces a complex regime that has the potential to usurp Indigenous self-determination.

I will come back to Ms Watson’s article in a moment, but now it is timely to remind the House of the findings of the Woodward report of the Aboriginal Land Commission in 1974. Justice Woodward in his second report set out the following important principles to be observed in formulating legislation for Aboriginal corporations:

(a)

the legislation must be simple, so that those who are working under it can readily understand it;

(b)

it must be flexible, so as to cover as wide a range of situations and requirements as possible;

(c)

it should, as far as possible, make provision for Aboriginal methods of decision-making by achieving consensus rather than by majority vote;

(d)

it must contain simple provisions for control of the situation if things go wrong within an organisation through corruption, inefficiency, outside influences or for other reasons; and

(e)

it should be so framed as to avoid taxation of any income that has to be devoted to community purposes.

Unfortunately, the Aboriginal Councils and Associations Act has failed to achieve these objectives. The Fingleton review 10 years ago came to the conclusion that under the act there was:

... an ever-increasing gap between people’s attempts to incorporate in a culturally appropriate way and the Registrars pre-occupation with matters of statutory compliance.

Secondly, it said:

An emphasis on procedural compliance overlooked important factors such as representative membership and equitable service delivery.

Arguably, such factors would be more effectively measured by shifting emphasis away from compliance with the ACAA to service agreements with funding bodies.

Nicole Watson, in her article that I mentioned earlier, has also analysed the key provisions of the new legislation. The only advantage she can see is that small corporations may be relieved of inappropriate and onerous reporting requirements. I stress the word ‘may’ because the decision of exemption rests with the registrar. As Nicole Watson rightly points out:

Indigenous Corporations are still beholden to the Registrar’s discretion, and despite review rights reviewable by the Administrative Appeals Tribunal it remains to be seen if this will be effective and appropriate for Indigenous organisations or whether it creates another web of entanglement.

Other people support her view. The Central Land Council in their submission to the Senate Standing Committee on Legal and Constitutional Affairs inquiry into the provisions of the Corporations (Aboriginal and Torres Strait Islander) Bill had this to say:

The “special incorporation needs of Indigenous people” are not being met by the main provisions of the Bill. The Bill is drafted from a reverse perspective.

Instead of being a simple incorporation statute tailored to the special needs of the Indigenous population it is a complex statute designed to regulate large corporations.

…            …            …

... the needs of the majority of Aboriginal corporations, at least in Central Australia, are not met by the main provisions of the Bill but rather by the provisions providing for exemption from obligations created by the Bill.

But to make an application for exemption will require a complete understanding of the provisions of the Bill and an understanding of the implications of non-compliance and the capacity to make an exemption application.

As the Central Land Council further added:

Clearly in Central Australia ... the Aboriginal members of corporations are not, without assistance, going to be able to deal with the complexity of the Bill if it becomes law.

This bill does not address the very basic flaw that any administrative arrangements require skills in and access to a range of governance services. If these are the advantages of new legislation, what are the disadvantages?

Nicole Watson is a member of the Birri Gubba people of Central Queensland and has a Master of Laws from the Queensland University of Technology. Her conclusions are that there are many disadvantages to the act. Having worked with and in Indigenous organisations for many years and representing the electorate with the greatest number of Indigenous Australians, I agree with what she has to say. First and not surprising, given this government’s record on other pieces of legislation dealing with Indigenous Australians, is the lack of consultation. Secondly, for a piece of legislation which is to be used to govern Indigenous Australians, it spans over 500 pages. There is the question of whether the new legislation will make it easier for Indigenous organisations to comply or ever more difficult. Thirdly, as Nicole Watson points out:

In an attempt to achieve alignment with modern corporations law, the CATSIB contains over 100 strict liability offences. Although most are based on equivalent provisions in the Corporations Act, some are unique to Indigenous corporations.

She adds:

A punitive approach overlooks the circumstances of the vast majority of Indigenous corporations. As distinct from those formed for profit, many are incorporated in order to deliver essential services to indigenous communities. Directors of such corporations are often elected on the basis of skills in community development as opposed to business acumen. Increased liability for non-compliance in the absence of a mass education campaign may result in Indigenous people carrying most of the burden of the Commonwealth’s reforms.

It is now nearly four years since the final report of the independent review of the Aboriginal Councils and Associations Act was presented. Ms Watson also expressed concern about the departure from the Corrs review, which looked at the original legislation. The new legislation allows non-Indigenous people to become directors of Indigenous corporations and corporate membership. Despite provisions requiring an Indigenous majority on boards, these proposals may be a wedge that has the potential to take control out of Indigenous hands.

Ms Watson is quite right when she highlights the comments of Michael Prowse—then of the Central Land Council; now, I think, of the justice department in Queensland—when giving evidence at the Senate hearings. In part, Mr Prowse said:

Quite often people are not comfortable using the kind of processes that other people with corporations in other parts of Australia might use. Voting is quite often not used but a process of consensus decision making is used. We would suggest that to permit non-Indigenous membership of Indigenous corporations would quite often lead to a chaotic situation with Aboriginal people being overwhelmed by non-Aboriginal people, who may have better capacities to read and write and to use techniques and instruments of non-Aboriginal law. We suggest that that provision is one that should be struck out of the bill.

I wish to further stress the concerns of Indigenous corporations to the proposed bill—in particular, the issue of powers of the registrar. It should be noted, as the Bills Digest pointed out, that:

The Registrar’s greater enforcement powers means that the Registrar now appears to more closely resemble a regulator rather than a body whose primary purpose is to assist the capacity of ASTI corporations.

The Corrs review recommended that particular regulatory powers under the current act should not be retained. The review suggested that, instead of the registrar being able to appoint an administrator, the registrar should apply to a court for appointment of a receiver under the court’s equitable jurisdiction. The recommendation has not been implemented. I will come a little later to some comments about a particular case which I have spoken to the registrar about. I think it reflects some of those issues.

The appointment of a special administrator and the grounds for such an appointment give considerable power to the registrar. The proactive regulatory assistance is quite different to the Corporations Act. The grounds for placing a corporation under special administration are much broader than the grounds for appointing a receiver. The registrar also has considerable power to issue compliance notices that allow the registrar the power to appoint an authorised person to a corporation to assist in the compliance. As I understand it, and it could well be the case, the intention of these provisions is to nip problems in the bud or to provide expertise of an accounting or management nature, but they are options that are open to abuse that could see Indigenous control and processes ignored. Rather than Indigenous people having their say and moving forward over time to improved corporate practices, the improved corporate practices may come from Indigenous people being pushed back while some other expert takes control and plays the role of the ‘big boss’. Unfortunately, for Indigenous people this happens all too often.

Once decisions are made by the registrar, what is the process for review? The bill proposes that when a person makes a reviewable decision then notice of the decision, together with advice of the person’s right to have a decision reviewed, must be given to each person affected by the decision. This makes sense and is, of course, quite reasonable. However, the bill makes an exception that is very worrying: the decision maker is released from the requirement to ‘give notice where the decision maker determines that giving notice to the person or persons is not warranted’, having regard to the cost of giving notice and ‘the way in which the person or persons are affected by the decision’. This is very concerning as, in my view, it essentially gives the decision maker an unfettered right to decide not to give an affected person or persons notice of the decision and the right to have it reviewed. It is also very disturbing when one considers Peter McCarran’s comments in the Indigenous Law Bulletin in November last year: ‘The bill assumes a high degree of literacy and legal and financial sophistication.’

Key questions in all this need to be asked. Does the bill offer simplicity, which has been the repeated recommendation of reports over the last 30 years? I have to say that I do not think it does. Are the procedural and documentary requirements of the bill more onerous than under the current act? If they are then where is there recognition of the needs of Indigenous organisations’ access to training, education and other services for good governance, especially given that the minimum membership age has been set at 15, and yet, as we all know, there is limited access for Indigenous students to secondary education, particularly in remote parts of Australia?

I have grave concerns over the question of the independence of the registrar. Given that this bill grants greater powers of enforcement to the Registrar for Aboriginal and Torres Strait Islander Corporations than are currently provided, we should be concerned about the possible lack of independence. This bill provides that the Office of the Registrar of Aboriginal and Torres Strait Islander Corporations will be part of the government bureaucracy, not an independent body at arm’s length from the minister. Section 1-30 of the bill proposes that:

There is to be, within the Department, the Office of the Registrar of Aboriginal and Torres Strait Islander Corporations.

The bill also proposes in section 653-1(2) that:

The Registrar is to be appointed by the Minister and has such duties, functions and powers as are provided for by this Act or another law of the Commonwealth.

Contrast this position with that of the Australian Securities and Investment Commission, which is the organisation that administers the Corporations Act 2001. Members of ASIC are appointed by the Governor-General on the nomination of the Treasurer. However, ASIC is established by section 8 of the ASIC Act as a body corporate with perpetual succession. It has a common seal. It may acquire, hold and dispose of real and personal property and may sue and be sued in its corporate name. In short, ASIC is its own legal entity, established under statute, and is independent from the government.

It is a real concern to me that the Aboriginal and Torres Strait Islander people wishing to establish new corporations or incorporate existing associations will not be expected to seek the same level of independence from the Registrar as other Australians can expect from ASIC.

I said I wanted to refer quickly to a particular case. I know the Registrar is in the parliament. I spoke to the Registrar recently about Mutitjulu. What we have seen in this particular case is the danger that the Registrar’s powers may be used by the government creditors to control corporations, and that is precisely what has happened in the case of Mutitjulu. What we also know in the case of Mutitjulu are the spurious reasons put on behalf of the government for requesting that the Registrar be involved. There are documents which are available, but I understand they are currently the subject of a court hearing, so I am not able to use them. But let me point this out very clearly: I think that the way in which the Commonwealth has rorted the use of the Registrar at Mutitjulu is unwarranted. I know that there have been proposals to settle the dispute between—

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