Ken Wyatt (Hasluck, Liberal Party, Minister for Indigenous Health) Share this | Hansard source

I would like to thank the honourable members for their contribution to the debate on the Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018. This bill represents a significant step forward in Australia's land rights journey.

The Indigenous Land Corporation was established as part of the government's response to the High Court's decision in Mabo No. 2, in recognition that many Indigenous peoples would be unable to benefit under the Native Title Act 1993. The Indigenous Land Corporation was established to assist Aboriginal and Torres Strait Islander organisations to acquire land and manage Indigenous held land so as to provide the economic, environmental, social and cultural benefits for Aboriginal and Torres Strait Islander people. The Indigenous Land Corporation is funded by indexed annual payments and sometimes by additional payments from the Aboriginal and Torres Strait Islander Land Account. The land account was established to provide an ongoing, sustainable source of funding for the Indigenous Land Corporation. As at 1 July 2018, the land account had a capital balance of $2 billion. However, a combination of the current investment environment, payment arrangements and the investment restrictions means that the land account is not financially sustainable. These arrangements make it all but impossible for the land account to sustain annual index payments to the Indigenous Land Corporation.

The Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018, along with the Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018, proposes a landmark change to the land account. These changes will mean the land account payment arrangements support the land account's sustainability. Land account funds will be invested in a wider range of investment products and managed by the Future Fund Board of Guardians.

These bills follow extensive consultation with Indigenous stakeholders. A clear majority of stakeholders support changes to improve the sustainability of the land account by allowing land account funds to be invested in broader range of investment products and managed by the Future Fund Board of Guardians. The government listened and took these views into account. Through securing sustainable funding arrangements for the Indigenous Land Corporation, these reforms will provide significant long-term benefits to Aboriginal and Torres Strait Islander people. Under this legislation, the land account, which is currently managed by the Department of the Prime Minister and Cabinet, will be closed, and the Aboriginal and Torres Strait Islander Land and Sea Future Fund will be established, to be managed by the Future Fund Board of Guardians. The government's reforms will allow the land account funds to be put into the same range of investment products as other funds managed by the Future Fund Board of Guardians, and thus have the opportunity to generate higher investment returns. A move from the current narrow range of investments to a broader range requires an experienced investment manager. The Future Fund Board of Guardians is an experienced, specialised and trusted investor of public money, and the government wants the Indigenous Land Corporation to benefit from the Future Fund Board of Guardians' experience over the last decade in managing other Commonwealth investment funds. The Future Fund Board of Guardians currently invests over $164 billion across five public asset funds with different purposes and different mandates. While this transfer will add some complexity to their role, it is consistent with their current operations.

As noted in the report of the Senate Finance and Public Administration Legislation Committee on this bill, these reforms preserve the independence of the Indigenous Land Corporation in making its own decisions on how and where to spend its funds. The investment mandate for the new fund will be set by the Treasurer and the finance minister as the responsible ministers, in consultation with the Future Fund Board of Guardians and the Minister for Indigenous Affairs. The Minister for Indigenous Affairs will, in turn, consult with the Indigenous Land Corporation Board prior to responding to the responsible ministers. Setting up of the investment mandate enables the responsible ministers to articulate the broad, strategic guidance to the Future Fund Board of Guardians regarding investment of the fund. As with the arrangement for other funds currently managed by the Future Fund Board of Guardians, the mandate will be set in a manner consistent with Commonwealth objectives for the new fund and with reasonable but not excessive risk. The Future Fund Board of Guardians will be responsible for deciding how to invest the assets of the new fund under the investments mandate. This is consistent with other funds invested by the Future Fund Board of Guardians and preserves the independence of the Future Fund Board of Guardians as a sovereign investor of public money.

Under the new arrangements, annual payments will be unchanged, but additional payments will be altered to support the long-term sustainability of the new fund. Amendments made to this bill strengthen this intent. Annual payments to the Indigenous Land Corporation will be made by the minister for indigenous affairs. The annual payment to the Indigenous Land Corporation will remain indexed by CPI based on an initial payment of $45 million in 2010-11, over $53 million in today's terms.

Additional payments will be reformed so that they support the sustainability of the new fund. Currently, additional payments are made automatically if the land account capital exceeds a CPI-indexed target, with any excess funds paid to the Indigenous Land Corporation. The government proposes that additional payments be made by the finance minister and the minister for indigenous affairs, having considered the advice from the Future Fund Board of Guardians and any other matters that those ministers consider relevant. This will allow the ministers to decide whether to make an additional payment, based on the impact it will have on the financial sustainability of the new fund.

The Senate Finance and Public Administration Legislation Committee expressed confidence that future additional payments will only occur in circumstances where the new fund's sustainability is not compromised. These new additional payment arrangements will not compromise the financial independence of the Indigenous Land Corporation.

As required under the Future Fund Act 2006, the Future Fund Board of Guardians will table an annual report in the parliament which will include information on the performance of the new fund, as is the case with all of the funds managed by the Future Fund Board of Guardians. The Future Fund Board of Guardians will also publish quarterly investment performance updates, including investment commentary, on the Future Fund website, consistent with arrangements for other funds.

The government considers that the arrangements for standard reporting requirements relating to the Aboriginal and Torres Strait Islander Land and Sea Future Fund should, as closely as possible, mirror those in place for existing funds for the purpose of consistency. Nonetheless, the government will move amendments to ensure that the Indigenous Land Corporation board has the opportunity to discuss the performance of the fund with Commonwealth officials if it so desires and following the publication of the quarterly updates.

The bill also allows the finance minister to request that the Future Fund Board of Guardians prepare reports or give information. The finance minister may provide these reports or information to a relevant minister if appropriate.

These reforms are crucial to support the Indigenous Land Corporation to continue to assist Aboriginal and Torres Strait Islander people to achieve their economic, environmental, social and cultural goals into the future. By taking these steps to put the Indigenous Land Corporation's funding arrangements on a sustainable footing, this government is realising its commitment to improving the lives of Aboriginal and Torres Strait Islander peoples. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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