Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Hansard source

I apologise for speaking later in this debate. I was unavoidably delayed at meetings. I thank Senator Crossin for her contribution. She no doubt has covered most of the ground, used my stuff and probably done a better job than I will do. That is always the disadvantage of letting her get a head start! I am not making a serious point, Senator Crossin. I appreciate your contribution and knowledge of the area.

I want to speak on this legislative package and will move a second reading amendment which has been circulated in my name and tries to encapsulate the concerns Labor has with these bills. The Corporations (Aboriginal and Torres Strait Islander) Bill 2006, the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006 and the Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006 have additional parliamentary amendments. The Corporations (Aboriginal and Torres Strait Islander) Bill 2006 replaces the Aboriginal Councils and Associations Act 1976. It seeks to provide a modern framework with the flexibility to accommodate the specific needs and cultural requirements of the Indigenous corporate sector. The Office of the Registrar of Aboriginal Corporations states that the changes are intended to promote contemporary governance and accountability standards and to provide greater security for funding bodies and creditors, while allowing communities and groups the flexibility to design the constitutions of their corporations.

The Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006 is intended to help corporations adapt to the new regime while the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006 is intended to provide for an appropriate interaction between the major bill and other Corporations Law regimes. Listeners will be beginning to get a sense of the complexity of this whole package.

Labor recognises the need for reform in this area. In fact the change has been required for some time—it has been a long time in gestation. We support the modernising of the corporate governance regime and recognise the complexity of reforming this area. Aligning Indigenous corporate governance with modern mainstream standards at the same time as providing flexibility is no easy task. One might question whether these three bills end the complexity. It is starting to look like the tax act. I think it got to about 600 pages of legislation. That is one of our major concerns.

The Indigenous corporate sector delivers the bulk of essential services to remote communities. In many ways it resembles the community sector more than the mainstream corporate sector. Currently there are approximately 2,800 corporations registered under the act. Services delivered to remote Indigenous communities by such corporations include basics such as medical care and infrastructure. Other corporations hold land for Indigenous groups, and most native title corporations and Indigenous art centres are also registered under the ACA Act.

The characteristics and requirements of the Indigenous sector have led to recognition by both sides of politics since the 1960s that it requires a special incorporations statute. The most recent commissioned by the Registrar of Aboriginal Corporations chaired by Pat Dodson, which reported in December 2002, recommended the establishment of a new act. Many of the Dodson review recommendations have already been implemented by the Office of the Registrar of Aboriginal Corporations. This legislation seeks to implement a number of the other recommendations.

The government is not seeking to implement the recommendation which required the ORAC to seek a court order prior to the appointment of an administrator. This requirement would increase fairness and transparency and ensure that such appointments would not be subject to the suspicions of political interference. We have had recent issues and concerns in this regard. The introduction in this legislation of the right to appeal to the AAT against the appointment of an administrator certainly adds protections to the system but does not provide the added protection recommended by the Dodson review. As I said, the appointment of an administrator of the community at Mutitjulu was problematic. It is an area of the legislation which Labor believes needs further careful consideration.

I note that a restructure within FaCSIA has taken place, with ORAC now reporting to the corporate section of the department rather than to the Office of Indigenous Policy Coordination. That is probably a positive move and reduces the potential for a conflict of interest between the registrar and a major creditor of Indigenous corporations. Labor remains concerned about the potential for political interference and pressure on the decision making of the registrar. I make it clear that I have no criticism of the current registrar. Labor is concerned about the lines of authority and ensuring the independence of the office.

Other recommendations of the review which have not been implemented include a requirement that membership of corporations be restricted to Indigenous people and their dependents, that corporate membership not be allowed and that the registrar not have the power to approve constitutions.

Labor believes that, overall, the bill improves on the existing outdated regime of the ACA Act. Labor welcomes the introduction of the legislation and the option to seek review of decisions by the registrar in the AAT—ensuring that the principles of natural justice and procedural fairness will now apply to the decision making of the registrar. We also support the introduction of a conference power, enabling the registrar to request that parties undergo mediation where a dispute arises. This power would have been very useful in the dispute between Mutitjulu Aboriginal Corporation and the Office of Indigenous Policy Coordination. The registrar cannot compel the parties to attend but can note in the annual report if any parties have refused to participate.

The bill seeks to enable Indigenous corporations to amalgamate and to more easily transfer between this regime and other Corporations Law regimes. I think the proliferation of corporations is a current weakness that hopefully will be addressed. The reforms seek to tailor the level of regulation for small, medium and large corporations—a move which may well prove to be problematic in practice. The changes aim to empower the registrar to exempt corporations or a class of corporation from certain requirements, or even chapters, of the bill. They enshrine a human rights standard in the preamble which states that the law is intended to be a special measure for the advancement and protection of Aboriginal peoples and Torres Strait Islanders.

While Labor supports the legislation, we do retain significant concerns that we believe need to be resolved by the government. The second reading amendment which I will move outlines those issues. Labor notes significant concern in relation to the level of regulation and the extent of the registrar’s powers sought in the bill. The extent of these powers might be acceptable when we have a registrar who genuinely attempts to work with Indigenous people rather than against them, but we cannot rely on the personality of the registrar in terms of the operation of the act. However, we also note the important protection provided by the right of appeal to the AAT.

The Senate committee inquiry into the legislation heard very strong criticisms of the bill on the grounds that it was heavily regulatory. As I said, 600 pages does not make for easy reading, nor does it make for easy examination by the Senate. The Central Land Council argued that it introduced a default setting of intense regulation. Labor recognises that some of the parliamentary amendments that were made publicly available on 5 October aim to reduce the burden of both regulation and paperwork. However, I also note that the Indigenous corporate sector was not given the opportunity to examine these further amendments, as they were published after the deadline for submissions. I do think that the haste with which that part of the process has occurred runs the risk of having unintended consequences.

While the parliamentary amendments serve to reduce the regulatory burden, they do call into question the approach of these reforms—imposing regulation and then offering a way to avoid that regulation via an exemption process. I think the office of the registrar has attempted to make this bill very flexible, with a number of requirements able to be exempted either on request or at the discretion of the registrar. However, it may have been preferable to have omitted some parts of the non-essential regulation and thus to have produced a less complex piece of legislation.

We are concerned that the workload required of the registrar in processing exemptions could lead to lengthy delays and bureaucratic difficulties, particularly given the office’s limited resources. The provision allowing the registrar to exempt an entire class of corporations from certain obligations may allow it to manage its workload and tailor the act to eliminate unnecessary regulation. I trust that the registrar will manage both of these factors in the implementation of the bill. However, the various concerns I have raised will not be allayed until the legislation comes into practice and has been tested.

Labor has some concerns about the implementation of the new framework sought by the bill. The Senate committee inquiry unanimously recommended adequate funding for training and assistance of the Indigenous corporate sector to facilitate a smooth transition to the new regime. I understand the difficulties involved in providing that support and training. The last budget included a significant injection of funding into the Office of the Registrar of Aboriginal Corporations, but Labor is a bit concerned that the actual amount dedicated to training and support will not be adequate.

The injection of $28.1 million for reforming the delivery capacity of Indigenous corporations is still more focused on punitive measures than on capacity development. Less than a third of the funds will be spent on actual training, and half will be spent on using administrators and registering disqualified directors. I am also concerned that many of the administrators seem to be from communities so far away from the actual community being impacted. When I visited Mutitjulu the other day, the administrators had not been seen much around the community. I think that is a weakness.

ORAC’s enhanced training for directors initiative received funding of $1.46 million for the last financial year. This initiative includes three-day introductory workshops in corporate governance and training towards the Certificate IV in Business (Governance). To date, there have been 24 introductory workshops, with a total of 632 participants and 101 graduates of the certificate IV course. This training is extremely worthwhile, but it will not be enough to support the directors and officers of the 2,800 Indigenous corporations who will be making the transition to the new regime.

The Senate committee inquiry also noted concern about the capacity within ORAC’s budget to train and support directors and members of corporations making the transition. Clearly, the government needs to take a more evidence based approach to implementation. Funding needs to respond to assessed need, particularly given that many of these corporations deliver essential services; thus a smooth transition should be a priority, backed up by the necessary resources. These are not just small companies delivering non-essential services; these corporations are often the difference between life and death for people living in those communities. So we have to manage this properly.

I also point out that this legislation will not address one of the most significant problems facing Indigenous corporations—that is, government bureaucracy and the instability of funding. One of my staff recently found on the FaCSIA website, unheralded and unremarked upon by the government, an independent report commissioned by the Office of Indigenous Policy Coordination, identifying bureaucratic red tape and short-term, ad hoc grant funding as a major destabilising and debilitating influence on Indigenous corporate governance. I could not agree more.

The report, A red tape evaluation in selected Indigenous communities, contains evaluations of 22 Indigenous community organisations and the Indigenous coordination centres that serviced them from mid-2005 to January 2006. The report found that there were 336 grants going to these 22 organisations. Basically the organisations will spend the whole time managing the grants. Half of all the grants were very small, yet they had the same reporting and application requirements as the larger grants. Two-thirds of these grants required annual applications even though they were rolling programs. So, despite the fact that it was an ongoing program, they had to apply for the money annually and to justify the need even though there was little change in the risk profile or circumstances of the funded organisation. Three-quarters of funding agreements contained a majority of performance indicators that were not useful or relevant to government agencies. Only 11 per cent of the performance indicators set by the government for their grants were categorised as effective.

Aboriginal people and Aboriginal corporations have been saying this for years. To its credit, the government now has a report that brings home the truth of their frustrations. The report makes strong recommendations, including that a paradigm shift is needed to change departmental culture and priorities from rigid compliance to achieving outcomes for Indigenous communities. Wouldn’t that be a useful change! The report also says that funding mechanisms and processes need to be improved to reflect this paradigm shift, including using triennial block grant funding where possible rather than annual appropriations. We cannot expect to achieve outcomes until we have a system that supports Indigenous capacity and problem-solving rather than primarily serving the needs of the bureaucracy.

I note that the cost of the report was more than $168,000. I hope that the money was not wasted and that the government delivers an immediate and meaningful response. The fact that the government did not publicise the report or draw any attention to it leaves me concerned that it may be filed away like so many others. Labor believes that to make a real difference to Indigenous corporate governance the government must act to reduce red tape and consolidate and simplify its funding arrangements.

In conclusion, Labor is supportive of the bill. It has been a long time coming but it is important work. As I indicated, we retain a number of outstanding concerns. Given the numbers in the Senate, the government clearly will carry the day in terms of any amendments. We have not sought to try to greatly amend the act, in part because of its complexity and the inability of those who are affected by it to come to terms with that. Very few of the Aboriginal organisations I have spoken to understand the full complexity of the changes and how they will impact on them, so to have an intelligent conversation about this bill has not been easy. Those organisations just have not had the resources to deal with it as adequately as I think would have been useful. It is always good to hear the views of the consumers of the product, but quite frankly very few, if any, have come to terms with it.

We hope it is an overall improvement to the old regime and that the benefits will flow to the Indigenous corporate sector. We recognise and support the attempt to provide flexibility but note the complexity of the task it seems to undertake. We are trying to take a constructive approach, we are trying to move forward and we hope that this will help.

Labor’s second reading amendment is designed to express our reservations. I still think there could have been some improvement in the process, but no-one can say that the government did not take time in delivering the product. Senator Scullion and I had similar concerns when it was originally introduced without the transitional arrangements, and I appreciate his help in making sure we dealt with it as one package even though it is frighteningly thick and frightening complex. I hope what we do today is a good thing. I cannot say that I am absolutely certain that that is the case, given that I do not pretend to be on top of the 600 pages of the detail.

In any event, we will be supporting the package more in faith than in certainty, and we will be moving a couple of amendments that we think might improve the bill. I commend the bill to the Senate. I move the second reading amendment standing in my name:

At the end of the motion, add:

“whilst welcoming many positive measures contained in this bill and the related bills, the Senate is of the opinion that:

             (a)    the Government should respond immediately and comprehensively to a recent report commissioned by the Office of Indigenous Policy Co-ordination, which found red tape and short-term, ad hoc funding arrangements were severely debilitating the Indigenous corporate sector. This legislative reform will not address these external causes of instability to corporate governance;

             (b)    the Government must ensure adequate funding for training and assistance for the Indigenous corporate sector to build their governance capacity and facilitate a smooth transition to the new regime, particularly as many Indigenous corporations deliver essential services—this was a unanimous recommendation of the Legal and Constitutional Affairs Committee’s inquiry into the bill;

             (c)    there are significant outstanding concerns in relation to the level of regulation and extent of the Registrar’s powers in the bill, particularly given the lack of full independence of the Registrar from Ministerial and political interference;

             (d)    for the next 3 financial years the Office of Indigenous Policy Co-ordination should include in its annual report a review of the operation of the new legislation and results of a statistical survey of stakeholder satisfaction to ensure that the impact of the legislation is closely monitored and with appropriate transparency; and

             (e)    the Government should ensure a review of the operation of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 by a parliamentary committee within 3 years having particular regard to:

                   (i)    the effective and proper use of the Registrar’s powers under the Act; and

                  (ii)    the effectiveness and appropriateness of the Act as a regime of corporate law for Aboriginal and Torres Strait Islander people”.

                   (i)    the effective and proper use of the Registrar’s powers under the Act; and

                  (ii)    the effectiveness and appropriateness of the Act as a regime of corporate law for Aboriginal and Torres Strait Islander people”.