Anne Ruston (SA, Liberal Party, Assistant Minister for International Development and the Pacific) Share this | Hansard source

I table revised explanatory memoranda relating to the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

ABORIGINAL AND TORRES STRAIT ISLANDER LAND AND SEA FUTURE FUND BILL 2018

This Bill is designed to grow what has come to be known as the Indigenous Estate.

It builds on a movement that began in the 1960s, when Australian governments began returning country to Aboriginal and Torres Strait Islander Australians who had been dispossessed of the lands they had owned and cared for since time immemorial. The Mabo (No 2) decision and the cases that followed, were significant in their recognition of the pre-existing rights of Aboriginal and Torres Strait Islander Australians to country. Rights that endured where claimants could demonstrate a continued connection to country.

For many Aboriginal and Torres Strait Islander Australians the requirement to demonstrate a continued connection to country placed the restitution that native title offered, out of reach. Historical policies of dispossession and dispersal has denied many of the ability to continue their connection to country. Others have not been able to makes claims where native title has been extinguished.

In recognition of these inequities, the Indigenous Land Corporation was created to assist those Aboriginal and Torres Strait Islander Australians who were unable to meet the threshold of native title. The Aboriginal and Torres Strait Islander Land Fund, as it was then known, was established as an endowment fund that would provide a sustainable source of funding for the Indigenous Land Corporation to acquire land for, and manage land on behalf of, these Aboriginal and Torres Strait Islander communities.

As noted in the preamble of the Aboriginal and Torres Strait Islander Act 2005, under which the Indigenous Land Corporation is established, the Government was guided by a commitment to address the dispossession of Aboriginal and Torres Strait Islander Australians of their lands, which occurred "largely without compensation".

It should be a matter of real pride that the collective efforts of successive, and different layers of, Australian governments have now resulted in an estimated 40 per cent of the Australian land mass being subject to a recognised Indigenous interest.

Grounded within this history, the reforms proposed by the Government and co-designed with Aboriginal and Torres Strait Islander communities across the country, reaffirm and build upon the pledge in the preamble to the Aboriginal and Torres Strait Islander Act 2005, to develop policies that will "overcome disadvantages of Aboriginal persons and Torres Strait Islanders to facilitate the enjoyment of their culture… in a manner that is consistent with the aims of self-management and self-sufficiency".

The fund, now known as the Aboriginal and Torres Strait Islander Land Account, is contained in the Aboriginal and Torres Strait Islander Act 2005. The purpose of the Land Account is to provide a sustainable source of funding for the Indigenous Land Corporation to enable it to acquire and manage land for the benefit of Aboriginal and Torres Strait people and thereby grow the Indigenous Estate.

However, restrictions on investments and rules around additional payments under current arrangements mean that the Land Account is not financially sustainable. The Land Account is shrinking in real terms because its mandate does not match its purpose – which is to fund the Indigenous Land Corporation's land acquisition program.

The Land Account cannot continue to be plagued by poor returns, the opportunity cost for the Indigenous Estate is estimated by the Indigenous Land Corporation's Chair, Mr Edward Fry, to be up to $1 billion to-date. This is why we are acting now. This legislation will enhance the ability of the Commonwealth to put the Indigenous Land Corporation on a sustainable footing so it can continue to acquire land and, through the Government's related Bills, fresh and sea water country for the Indigenous Estate.

Under the Aboriginal and Torres Strait Islander Act 2005, the Land Account is required to make annual payments of $45 million (CPI-indexed and equated to over $53 million in 2018) to the Indigenous Land Corporation. However, the Land Account is currently restricted to cash or cash-like investments which have failed to reach the necessary target rate of return in each of the last five financial years. Independent advice suggests that this trend is set to continue given the prevailing investment environment.

Exacerbating this, additional payments are currently made automatically if the actual capital value of the Land Account exceeds a CPI-indexed target, with any excess funds paid to the Indigenous Land Corporation. These payments are made regardless of investment performance and prevent the accumulation of funds in good years, and guarantee payments in bad years.

These arrangements make it all but impossible for the Land Account to generate the returns needed to sustain annual payments to the Indigenous Land Corporation over the long term. The Land Account's capital base has been decreasing in recent years, bringing into doubt the Indigenous Land Corporation's ability to perform its functions and continue supporting Aboriginal and Torres Strait Islander organisations and communities to grow the Indigenous Estate.

From July to September 2017, the Indigenous Land Corporation held 16 independently facilitated consultations in 11 locations across Australia, involving over 70 Indigenous organisations. These consultations sought input from Aboriginal and Torres Strait Islander Australians on how the Land Account should be managed in the future. An overwhelming majority of participants strongly supported changes to improve the sustainability of the Land Account, to transfer investment responsibility to the Future Fund Board of Guardians, and to allow the investment of the Land Account's funds in a broader range of investment products.

The Government has listened to these stakeholders, and has taken these views into account in designing the proposed changes. This Bill now seeks to give effect to the clearly stated views of Aboriginal and Torres Strait Islander communities across the country. The Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018 establishes the Aboriginal and Torres Strait Islander Land and Sea Future Fund. This new Fund will replace the Land Account, and will enhance the ability of the Commonwealth to provide for the long-term financial sustainability of the Indigenous Land Corporation by transferring the management of its funding source to the Future Fund.

The Future Fund was established in 2006 and is Australia's sovereign wealth fund. It has proven to be one of the most visionary Government initiatives, significantly strengthening Australia's long-term financial position. It is fitting that the manager of the nation's sovereign wealth fund – the Future Fund Board of Guardians – should manage and grow the over $2 billion endowment fund that is held and managed on behalf of future generations of Aboriginal and Torres Strait Islander Australians by providing a source of funding to the Indigenous Land Corporation over the long-term.

The Government's proposed legislation will allow the funds to be put into the same range of investment products as other funds managed by the Future Fund Board of Guardians. By transferring its management to the Future Fund the new Aboriginal and Torres Strait Islander Land and Sea Future Fund can, with assurance, seek higher returns through investment in higher risk products. Dealing with an increased range of investments products and the option to take on more risk requires a specialist investment manager. The Future Fund Board of Guardians, a trusted and proven investor of public money, will manage those investments.

The investment mandate for the Fund will be set by the Finance Minister and the Treasurer, as the responsible Ministers, in consultation with the Future Fund Board of Guardians and the Minister for Indigenous Affairs. The Indigenous Affairs Minister will in turn consult with the Indigenous Land Corporation Board prior to responding to the responsible Ministers. This consultation provides an important opportunity for the interests of the Indigenous Land Corporation to be considered within the responsible Ministers' decision-making process. The purpose of the investment mandate is to provide a mechanism for the Government to provide strategic guidance to the Future Fund Board of Guardians on its expectations for the investment of the Fund, whilst still preserving the independence of the Future Fund Board of Guardians.

The mandate will be set in a manner consistent with Commonwealth objectives for the Land Account and with reasonable but not excessive risk. This risk balanced approach will be consistent with the arrangements for other funds currently managed by the Future Fund Board of Guardians – such as the Future Fund, the DisabilityCare Australia Fund, the Medical Research Future Fund, the Building Australia Fund, and the Education Investment Fund.

The Government's proposed legislation will preserve the arrangements for annual payments and alter the arrangements for additional payments. The Government proposes that additional payments be made by the Finance Minister and the Minister for Indigenous Affairs, having considered advice from the Future Fund Board of Guardians and any other matters that those Ministers consider relevant.

This safeguard obliges the Ministers to consider the impact an additional payment would have on the financial sustainability of the new Fund, before making any decisions. One of the Bill's guiding principles is to enhance the ability of the new Fund to continue making its annual payments and growing the corpus of the Fund for the benefit of future generations. This safeguard provision has been designed with the intention that additional payments will be made only where they will not negatively impact on the viability of the annual payments. In its report published following an inquiry into this Bill, the Senate Finance and Public Administration Legislation Committee noted it was "confident that future additional payments will only occur in circumstances where the sustainability of the Fund is not compromised".

The Committee also expressed satisfaction with the reporting arrangements surrounding the new Fund. As required under the Future Fund Act 2006, the Future Fund Board of Guardians will table an Annual Report in the Parliament providing extensive information on the performance of the new Fund. This will include publication of audited financial statements.

The Future Fund Board of Guardians also publishes a report each quarter on the performance outcomes of the Funds under its management. All of these reporting arrangements are consistent with arrangements for other funds currently managed by the Future Fund Board of Guardians. Nonetheless, the Bill has provisions that ensure that the Indigenous Land Corporation Board has the opportunity to discuss the performance of the new Fund with Commonwealth officials, if it so desires and following the publishing of the quarterly updates.

The Bill also includes a provision allowing the Finance Minister to request that the Future Fund Board of Guardians prepare reports or give information. The Finance Minister may give these reports or information to a relevant Minister if appropriate. Nothing in the Bill prevents the Minister for Indigenous Affairs from sharing this information where it is appropriate to do so.

These reforms are crucial for the Indigenous Land Corporation to continue its historically significant purpose of assisting Aboriginal and Torres Strait Islander Australians 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, the Government is giving practical effect to its commitment to working with Aboriginal and Torres Strait Islander Australians, their communities and organisations to support their aspirations.

ABORIGINAL AND TORRES STRAIT ISLANDER LAND AND SEA FUTURE FUND (CONSEQUENTIAL AMENDMENTS) BILL 2018

The Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018 facilitates the establishment of the Aboriginal and Torres Strait Islander Land and Sea Future Fund through amendments to:

the DisabilityCare Australia Fund Act 2013;

the Future Fund Act 2006;

the Medical Research Future Fund Act 2015; and

the Nation-building Funds Act 2008.

The bill also includes minor technical amendments contingent on the enactment of the Aboriginal and Torres Strait Islander Amendment (Indigenous Land Corporation) Act 2018, which relate to the re-naming of the Indigenous Land Corporation as the Indigenous Land and Sea Corporation, reflecting the entity's wider remit effected by that Act.

Taken together, the consequential amendments in this bill would enable the effective operation of the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act at commencement.

Debate adjourned.