Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

I will lead off in speaking to 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 by noting their importance. In some ways, legislation that deals with corporate regulations, whether they are for Indigenous organisations, associations or other things, can be seen as fairly dry and unexciting, but it is crucial. It is crucial for the purposes of accountability but it is even more crucial for the effectiveness of the many and varied organisations and associations around the country.

This legislation seeks to dramatically update the existing legislation regarding Aboriginal councils and associations which goes back to 1976. It has had a fairly long gestation. The original piece of legislation—the foundation piece—was introduced in June 2005. Even though it is a little while ago now, I am fairly sure that it was a Democrat initiative to get that legislation referred to a Senate committee. This process again highlights the importance of having an effective committee system. As I said, that legislation was introduced in June 2005, which, whilst it seems a long time ago, was actually before this government had control of the Senate. It gained control of the Senate on 1 July.

The committee’s examination of the legislation highlighted the very simple fact that the legislative framework was not ready. When you are making major amendments to laws and procedures that have been in place for nearly 30 years, you want to make sure that it is quite clear what the new framework you are moving to is. The problem was that we had a proposed core bill which relied on a lot on the details being filled in later via regulations and transitional provisions. It was not the first time that this had occurred—where you had legislation where the real impact was impossible to determine because you could not see what the regulations were that were going to be put in place once the law was passed. But I was pleased that on this occasion, I think as a direct consequence of the work of the Senate committee, it really became clear that it would be a huge leap in the dark to be passing that initial piece of legislation without having a much clearer idea of what the regulatory framework and the transitional provisions would be.

Putting in place legislation in this area is actually quite difficult. Everybody supports, and Indigenous people more than anybody else support, ensuring that the associations and organisations are accountable, that they operate effectively and that people get value for money out of them. But, as is the case with the wider community, it is actually quite a difficult balancing act to ensure that you have sufficient regulation to ensure proper and due practice and just competence without generating so much red tape and so many obligations and reporting requirements that it becomes impossible for small organisations to function.

This is a problem in the wider community. I know from my own experience—and I imagine many people here have been members of community organisations and associations—that, over time, the obligations on people who in many cases are volunteers on steering committees or boards that run associations with relatively small budgets can be quite enormous. It simply becomes a big disincentive to get involved in community based organisations when people who are basically volunteers end up having very significant legal obligations and, potentially, quite significant penalties imposed if they are found not to be complying with all the requirements. Of course, the difficulty is that you have such a wide range of organisations. This was noted in evidence to the committee—there are the largest corporations or service providers with quite huge multimillion-dollar budgets, significant staff numbers and a wide range of responsibilities right down to the tiniest community corporations. Trying to cover both those situations within legislation is quite difficult; and, with the consequential provisions and other proposed amendments to this bill that were provided to the committee, a view was taken that a reasonable attempt has been made to do that here.

But no matter how much you try to nail down in advance the operation of a new set of procedures, which everybody acknowledged needed updating, you will need to have a bit of a ‘suck it and see’ approach. I was pleased with the committee’s recommendations around the importance of monitoring the practical interaction of the bills with other legislation, particularly the Native Title Act, and reporting to the parliament at the end of the two-year transition period about the operation of the act. I hope we get a commitment on the record from the relevant minister during this debate that that recommendation will be followed because, once we put in place these changes, it is very important to look at how they operate in practice.

Everybody wants to see the necessary level of accountability. I think there is a bit of a myth going around about how inadequate existing accountability is in Aboriginal organisations. There are certainly problems from time to time, but an impression is sometimes created that there is just a mass of unaccountability or incompetence out there when the vast majority of organisations perform amazingly well, particularly given some of the challenges that some of them have to operate with. Everybody wants to have adequate accountability and to ensure value for money, and putting in place a new legislative regime to make that more likely to occur is important, but we want to make sure that it is not counterproductive. That is always the balancing act with any form of corporate regulation. Whether you are dealing with big corporations, voluntary associations or anything in between, getting that balance right is important because if you get it wrong it becomes counterproductive. In such situations the associations cannot even do their job adequately because so many of their resources are tied up with accountability and compliance measures.

So monitoring the operation of those changes is important. The Indigenous representatives who appeared before the Senate inquiry, and no doubt some people within Indigenous communities, feel apprehensive about these changes. That is understandable as we are shifting to a new regime. Whilst there is potential for more complexity here, which is potentially problematic, if the implementation, administration and transition is done appropriately and with sensitivity and common sense, there will be a positive shift and development.

The Labor senators on the committee also put in place an additional recommendation that, for the next three financial years, ORAC include in its annual report a review of the operation of the new legislation and results of a statistical survey of stakeholder satisfaction. That recommendation also goes to the need to monitor how these changes work. The core test has to be whether it means improvements on the ground for Indigenous people—that is what all of this should be about, not just a theoretical exercise so everyone can feel happy that things are nicer and neater at the end of the day. It should be about getting better results on the ground for Indigenous people. I am sure that is a desire that we all have across the political spectrum.

As you know, Madam Acting Deputy President Moore, I try to be balanced in these things whenever I can. I think we do share a common view across this parliament about the need to get better results on the ground. That is the intent here, and the key challenge is to make sure that the intent actually becomes a reality. We cannot guarantee that reality here and now with what we pass in this place; we can only guarantee it by properly monitoring how it is implemented and how it works on the ground and by having a preparedness to make changes if necessary rather than just a stubbornness to insist that we got it all perfectly right the first time around. There is a fair chance we will not get it perfectly right the first time around. We need to have the willingness to listen to people on the ground about problems in the transition phase and be prepared to make changes if necessary.

I am not convinced that there is always as much skill in listening to people on the ground in Indigenous communities as there should be. We might all share a commitment to get improvements on the ground, but my view is that you are less likely to achieve those improvements unless you do more listening to what is actually happening on the ground rather than just pontificating from on high. We need to avoid that trap.

The only other point I would make is to once again emphasise the importance of Senate committees. They have once again proven their worth. I have already said on the record, and will say again, that the Senate Standing Committee on Legal and Constitutional Affairs in particular has developed a reputation as being the most effective of the Senate committees for a whole bunch of reasons, not just because of its excellent chair but also because of all its other excellent members and its preparedness to look at the issues on their merits. It is one that I would urge a few other committees to seek to aspire to in order to reach those same heights. I also say that because I always try to take the opportunity not only to compliment Senate committees when they do their work well but also to use that to highlight the importance of keeping the committee system alive and functional in as effective a way as possible.

I obviously have views that that has not been occurring in the period since the first of these bills was introduced back in June 2005. But, as this example shows, it does still work well from time to time. Hopefully, it will work even better through the government listening to what the committee said. One of the key recommendations was to follow through with monitoring what happens. I hope the government commits to adopting the other recommendations that the committee has put forward in its report.

Marise Payne (NSW, Liberal Party) Share this | Link to this | Hansard source

I thank Senator Bartlett for his contribution and his observations in relation to the Senate Standing Committee on Legal and Constitutional Affairs and for his contribution to the report of the committee on the Corporations (Aboriginal and Torres Strait Islander) Bill 2006 and related bills. As I just observed to Senator Vanstone, these have been a long time in the making. They most certainly began as bills within her previous portfolio, which contained Indigenous affairs. We now find ourselves in October 2006 dealing with the substantive package, so its development has come some way. I also should acknowledge on the record the assistance of my colleagues at this time last year when the bills were first considered by the committee. As members of the Senate will know, due to some significant family challenges I was unable to deal with the bills in the first instance. Senator Scullion in particular took that role up for me and to him and to other committee members I am particularly grateful.

I want to make a few comments about the structure of the package of bills and the process of the committee inquiry. The achievement of these bills is to address the status of about 2,500 Aboriginal and Torres Strait Islander corporations which are registered under the Aboriginal Councils and Associations Act 1976. Many of those corporations play an essential role in delivering services to remote Indigenous communities. For the delivery of those services, a very significant amount of public funds is provided. The corporations may also hold land for remote Indigenous groups. Most native title corporations are registered under the current ACA Act, as are most remote Indigenous arts centres.

It is a statement of the obvious in many ways to say that since 1976 there have been substantial changes in the corporate regulatory environment in Australia. The old act is over 30 years old. It is not really in line with modern corporate governance and the accountability standards which are reflected in the substantive Corporations Act. This package provides a specific regulatory framework for Indigenous corporations in particular to deal with both the risks and the requirements of the Indigenous corporate sector.

As Senator Bartlett observed in his remarks, such corporations are many and varied. It is not simple; it is not a straight line. The corporations that fall within the provisions of these bills are often very different. They have different activities and different requirements and are of very different sizes. What the bills seek to do is to provide some flexibility and appropriate regulatory powers and compliance support, which are not available from other corporate regulators like ASIC, which are primarily concerned with relatively large trading corporations.

What is noted in bringing this package together is that special legislation like this needs to be consistent with the current practices of other corporate regulators. So the backbone of the reform process is the application of mainstream corporations law to these corporations, bearing in mind their special nature. The reforms largely replicate the modern standards of duties for officers, directors and employees that exist in the Corporations Act. They also address some regulation gaps—for example, managers of Indigenous corporations will now have duties which mirror those of directors and will be subject to appropriate scrutiny. Directors and managers can be disqualified. Their names can be put on an appropriate register to make them visible. A person who is disqualified from managing a corporation under this legislation will also be recognised and disqualified from managing a corporation under the Corporations Act and, appropriately, vice versa.

We also have strong measures in the bills to mirror the requirements of the Corporations Act for disclosures and approvals required for related party transactions and measures to avoid what is described as nepotistic behaviour. Under the legislation, the registrar will also be able to check subsidiaries and trusts related to Indigenous corporations. Some of those hold substantial funds and assets. To protect the members of corporations, funding bodies and ultimately the taxpayer in this country, there are a range of offences covered in the bills. They largely reflect those in the Corporations Act and have been developed on the principle that similar obligations should attract similar consequences.

In the development of the CATSI bills, the unique circumstances of many Indigenous corporations—to which I referred earlier—have been considered. One of the measures in the bills, which also exists under the current ACA Act, is the power for the registrar to appoint a special administrator. It is an important safeguard. It protects the interests of those communities that might otherwise suffer the consequences of a corporate failure, especially when it could indeed threaten a community’s essential services and basic infrastructure, such as municipal services.

Corporations will be able to tailor their corporate governance practices to better suit their members and their communities. Smaller corporations will have fewer reporting requirements in proportion to their size. Larger, more sophisticated organisations will have appropriately rigorous reporting arrangements in line with modern corporations law. The bills offer a practical response to the need for good governance in relation to Indigenous communities. They enable Indigenous Australians to structure their corporations to create the best outcomes for their particular needs. They are very valuable initiatives.

There are three bills in the package. The first bill, which was introduced into parliament in 2005, is the Corporations (Aboriginal and Torres Strait Islander) Bill 2006. That is essentially the one that replaces the Aboriginal Councils and Associations Act 1976.

The second is the Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006. That is being introduced to support the implementation of the C(ATSI) Bill. It includes a range of consequential amendments—some very basic ones and some transitional arrangements—which set up measures that enable corporations to move from the ACA Act framework into this modern and new CATSI regime. That bill also contains a minor amendment to the Native Title Act 1993 which corrects a technical problem that prevents replacement agent prescribed bodies corporate, which are a type of corporation that can be formed to hold or to manage native title, from being recognised as registered native title bodies corporate under the Native Title Act.

Finally, the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006 also supports the implementation of the primary bill. It serves to amend the Corporations Act 2001 to ensure that there is appropriate interaction between both those regulatory regimes and to close off any regulatory gaps where they may appear. It does that quite simply by confirming that section 57A of the Corporations Act, which provides that the term ‘corporation’ applies to any body corporate in Australia, applies to CATSI corporations for the purposes of the Corporations Act. It also makes sure that certain parts of the Corporations Act do not apply when there are corresponding provisions in the C(ATSI) Bill, which is essentially the point of this process.

That bill also aligns the disqualification provisions of the C(ATSI) Bill with those in the Corporations Act, creating a scheme where persons disqualified from managing corporations in Australia are recognised under both regimes. That will be a process which assists in the implementation of a national standard of disqualification that currently applies only to directors and officers of companies which are registered under the Corporations Act. I understand that those amendments to the Corporations Act have been agreed to by the Ministerial Council for Corporations.

It was clear in the committee process, which commenced last year, that, as Senator Bartlett alluded to, some significant concerns were raised by witnesses in submissions that were provided to the committee—about how the implementation process would work, how the transition would work and how existing corporations would manage this process. In response to that, the committee’s suggestion was that there was really a need to see the transitional bill and the provisions of the transitional bills before final sign-off could be given on the substantive legislation. After some period, I think in the mire of the drafting process, that bill appeared. As a result of that, the committee was finally able to report.

As a result of the ongoing consultation process by the government in response to the committee and in response to stakeholders in this area, we also have before the chamber a set of parliamentary amendments to the Corporations (Aboriginal and Torres Strait Islander) Bill 2005 put forward by the minister. They are going to assist in addressing some technical oversights in the C(ATSI) Bill—for example, ensuring that all CATSI corporations fall into the categories of small, medium and large, to create a more tailored reporting scheme.

Those amendments also respond to concerns which, as I said, were raised by stakeholders who made submissions and appeared before the then Senate Legal and Constitutional Committee inquiry last year. I think that is an important part of the process. I think that responsiveness is valuable and should be noted here in the chamber. It has been a constructive engagement between the Senate committee and the parliament to bring this forward.

In conclusion, I should also acknowledge the preparation of this report by Alistair Sands, from outside the normal legal and constitutional committee secretariat. We are very grateful for Alistair’s assistance in the process. I look forward to the rest of the debate on the bills.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

I rise this morning to provide a contribution to the debate on the changes being proposed through 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.

Senator Payne made some comments about the cooperation of the Senate Standing Committee on Legal and Constitutional Affairs in inquiring into these bills in the last 12 months. The initial amendment bill, which was pretty thick in terms of the number of pages and complexity compared to what Indigenous organisations and corporations now have to deal with, was somewhat overwhelming. But the legal and constitutional committee did agree cooperatively to put on hold the outcomes of their inquiry into this bill and the report until we had seen the transitional legislation. That has occurred.

The bills include many measures to replace the Aboriginal Councils and Associations Act 1976. According to the explanatory memorandum, the aim is to improve the governance and capacity of Indigenous organisations. I do not intend to go into great detail about these measures, although it will not come as any surprise to people listening that I might have some comments to make about what is currently occurring at the Mutitjulu community in the Northern Territory.

The original act was an incorporation statute to provide a fairly simple means for Indigenous people to establish legal corporations. It was last amended in 1992 to improve external accountability and is now considered to be out of step with modern corporations law in Australia. It was seen—and I hope it still is—that Indigenous incorporation needs are different from those of mainstream Australian corporations. Their associations tend to be quite small, are usually non profit making, are often remote and involve people for whom English is at best a second language and for whom education standards are below those of mainstream non-Indigenous people.

When people have a concept about Corporations Law, they need to very clearly separate out in their minds the application of this law to Indigenous corporations and associations and its application to big business and multi-business corporations. Indigenous people have had their own culture and traditions—including clan leaders, traditional owners of land and so on—for thousands of years. In many areas of my electorate, Indigenous people had, and still have, their own traditional laws of governance. Even under the original Aboriginal corporations act, much of the legislation was based on non-Indigenous law and was often pretty foreign to the people to whom it applied. In instances today, that is still predominantly the case. It has taken people a long time to get a basic understanding of it. I believe that there are still people working within local government, in particular, in the Northern Territory, who say that many Indigenous people in remote areas still do not fully understand, appreciate or realise the intent of such legislation.

Despite any such problems of understanding existing regulations—and I use figures from my colleague in the other place—some 2,800 Aboriginal and Torres Strait Islander corporations are currently registered. That is a pretty large number, but I suspect that most of them are very small corporations. These new acts have come about as a result of a review by the Registrar of Corporations, who reported in 2002 that there was a need to change, a need to update the old act, while still keeping in mind the specific incorporation needs of Indigenous people. The review reported that a new act should provide for modern needs and, at the same time, provide some form of regulatory assistance to support modern standards of corporate governance.

The old act, dating back as it did from 1976, was undoubtedly outdated, and there is a need for some form of change. Labor supported this need for change, but I have some concerns about several matters that are connected with these bills. They are reflected in the second reading amendment that has been moved by the Labor Party both in the House of Representatives and here in the Senate. These bills supposedly provide a more up-to-date framework for governance, while at the same time providing flexibility for special Indigenous factors such as cultural practices and any particular local needs and circumstances. The explanatory memorandum states that one reason for the need to change is that the substantial amount of public moneys provided to Aboriginal corporations has highlighted deficiencies in the old act. Returning to the principle of accountability—with which, I am sure, we all agree in principle—I sincerely hope that these changes are not part of what seems to be a witch hunt against Indigenous organisations by this government.

One of the first things done by this government on coming into power over a decade ago was to have the then Minister for Aboriginal Affairs engage a major accounting firm to do a total audit on all Indigenous organisations funded by ATSIC. The belief seemed to be that dishonesty and corruption were rife. However, the audit found that this was certainly not so. Indeed, the Federal Court later found the appointment of this auditor to be invalid. So now we appear to be back to those old days, where Indigenous organisations were strictly scrutinised and monitored for rigid compliance to rules and regulations.

In my own electorate over the past few months the Mutitjulu community have had funding suspended; for instance, Southern Barkly Aboriginal Corporation was closed down completely. I have had several other Indigenous organisations also complain that they have been threatened with closure or had fund releases subjected to lengthy delays because they were held to be in breach of one regulation or another, all over a few thousand dollars—organisations like Merrepen Arts or Majimap, in Malak, to give some examples. At the same time government departments such as Defence are purchasing billions of dollars worth of equipment, which then turns out to be less than ideal or takes forever to be modified and delivered at huge additional cost. Or Defence is purchasing small equipment for troops through poor procurement procedures and then finding it too is not suitable for the use it was to be put to. I even remember not so long ago Defence being unable to account for the whereabouts of tens of thousands of dollars worth of computers. What happened there? It made the papers for a few days and then got papered over and forgotten.

This would not happen with Indigenous organisations though—they get slammed. They get administrators appointed, as in Mutitjulu, for no valid reason whatsoever. They get a zealous minister going to the press, jumping on them from a great height or, even worse, making totally unfounded claims about what terrible things are going on. But I do not see the same sort of reaction occurring with the Department of Defence and their gross mismanagement of their funds and their lack of audited accounts year after year after year. I hope these bills truly represent changes which will benefit Indigenous corporations and will not be used as a means to further beat them down.

When initially introducing the bill in June 2005, the then minister for Indigenous affairs, Senator Vanstone, announced a rolling program of governance audits and explained that the bill would strengthen accountability provisions. Indigenous people are sick and tired of being victims of unscrupulous or incompetent administrators. The Northern Land Council, while accepting that corruption anywhere is unacceptable, pointed out the lack of any real evidence for such claims. Despite the possible inappropriateness of the old act, most Indigenous corporations do seem to comply, or do their best to do so. There seems to be little real dishonesty. I am far from being the only one with concerns about this legislation, which I fear may prove to be overly complex and lacking in genuine support for those corporations affected. The Woodward report of 1974 stated:

The legislation must be simple ... it must be flexible ... it should make provision for Aboriginal methods of decision making by achieving consensus rather than majority vote ... it must contain simple provisions for control over a situation if things go wrong within an organisation ...

With over 500 pages included in this legislation, it is hard to believe that it achieves these criteria to any great degree. How can over 500 pages be simple? It seems impossible for those who draw up legislation—non-Indigenous lawyers and bureaucrats—to understand and empathise with real Indigenous values and needs. They lack the relevant experience to do so.

The Senate Standing Committee on Legal and Constitutional Affairs inquired into the provisions of this legislation, as outlined by Senator Payne, and presented their report earlier this month, on 9 October. While a need for some change was acknowledged by several organisations in their submissions or at hearings, land councils tended to criticise the initial legislation for being too large and far too complex. At the time of submissions and hearings, information on amendments since made was not available to organisations. As Senator Payne outlined, we were waiting for transitional legislation to see exactly how this would transpire. The Central Land Council, from my own electorate, stated in their submission:

... it is a complex statute designed to regulate large corporations.

They summarised their views as being unable to support the bill in its current form. They do not believe that it meets the special needs of Indigenous people; that potentially regulation could be very intense; that the bill is too prescriptive and may deter Aboriginal groups from using the statute; that many organisations struggle to meet the requirements of the existing legislation; and that what is needed is more assistance, not increased regulation and complexity.

The Northern Land Council said in their submission that they ‘recognise that the bill includes important accountability measures but considers it is seriously deficient in important respects’. They also could not support the bill in its current form. They continued:

... the Bill ... is overly prescriptive such that many unfunded, under resourced or remote ... corporations will be incapable of compliance ...

While general comments have later indicated a better degree of satisfaction with the transitional and amendment bills, doubts still remain about the legislation as a whole.

In the report of the Senate Standing Committee on Legal and Constitutional Affairs, Labor senators comment that they ‘remain concerned, however, about the level of regulation and the extent of the registrar’s powers’. At the hearings, staff of the Office of the Registrar of Aboriginal Corporations assured the committee that power to access books would not result in the examination of documents covered by legal privilege or any privacy rules. We can only take their word at this point in time. The potential still exists for the registrar to hold enormous power in issuing compliance notices and then, for example, to allow the registrar to appoint an authorised person to ‘assist’ in that compliance. While such legislation may be well meaning and intended to help with the provision of expertise, it does leave the way open for abuse and the overriding of Indigenous control and processes.

It is little use sending in some sort of non-Indigenous administrator unless he or she actually works with the Indigenous people; otherwise, they will learn little or nothing from any such exercise to improve future governance. Here I refer to the Central Land Council’s submission in which they said more assistance, not more complexity and regulation, was needed. Again, it seems to me that the government does not realise or appreciate how much assistance, training and mentoring is needed in these remote organisations. Appearing before the committee, Professor Mick Dodson said:

Let us stay with what we have because the new bill is far too complex.

While noting that the transitional bill does extend some degree of flexibility in acknowledging special Indigenous needs, Labor senators also reflected:

... there can be no certainty that these bills reflect an appropriate level of regulation which is workable for the specific conditions of the Indigenous corporate sector until they come into operation and have been tested in practice.

For this reason, we have recommended that the Office of the Registrar of Aboriginal Corporations closely monitor any effects of these changes for three years. I understand that there is an amendment on behalf of the Labor Party to be moved to that effect. However, even here I have concerns about the true independence of the registrar and about how independently of government interference they will be able operate if they are to be appointed by the minister. We have seen instances of that in the Northern Territory in only the last six months.

Furthermore, as previously mentioned, some of the amendments made since the introduction of the initial bill were not available to the public or specifically to Indigenous organisations wishing to submit or appear at committee hearings. As a result, the Indigenous corporate sector has not been able to examine and consider the amendments in what I would consider to be a reasonable period of time. This is again another example of where the government is simply not allowing for proper discussion or debate of this issue with the people most affected by it. We have groups such as the Central Land Council saying of the initial legislation that they could not support it. Groups like this definitely should be listened to and taken seriously.

Amendments and consequential legislation may have alleviated some of these concerns, but many still remain. While Labor supports these bills, the implementation of this legislation must be closely monitored with a preparedness to genuinely listen to Indigenous organisations, who should be given all and every assistance in the transition period. These changes could be used to genuinely help Indigenous organisations to improve their governance, not as further heavy-handed government intervention.

I want to mention the second reading amendment that Labor has moved in the House of Representatives and that will be moved in the Senate. For the record, I reiterate that, whilst we welcome many of the positive measures contained in the bills, there are still some concerns that remain on behalf of the Labor Party. These concerns go to ensuring that the government responds immediately and comprehensively to a recent report commissioned by the Office of Indigenous Policy Coordination, which found red tape and short-term, ad hoc funding arrangements were severely debilitating the Indigenous corporate sector—interestingly, the government’s own department found that to be the case. This legislative reform will not address these external causes of instability to corporate governance.

The government must also 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 Senate committee that inquired into the bill. All of us have recognised the need to ensure that the governance training of the office of the registrar does in fact increase—that is, that it is adequate and comprehensive.

There are significant outstanding concerns in relation to the level of regulation and the extent of the registrar’s powers in the bill, particularly given the lack of full independence of the registrar from ministerial and political interference. For the next three financial years the Office of Indigenous Policy Coordination 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. We want to see some department within this government monitoring the impact and the flow-on of this new legislation and the effects that it will have on Indigenous people and their organisations.

The government should also ensure a review of the operations of the Corporations (Aboriginal and Torres Strait Islander) Act by a parliamentary committee within three years. We suggest that in three years time parliament should conduct a review to see what is happening with particular regard to the effective and proper use of the registrar’s powers under the act and the effectiveness and appropriateness of the act as a regime of corporate law for Aboriginal and Torres Strait Islander people. So while we will support this legislation, albeit with some changes and with a second reading amendment, and some of the improvements are worth supporting, we do have concerns that Indigenous people are fully trained and aware of the impact of this legislation, that they are not barrelled into a situation where they are bullied by this government into complying with regulations and requirements that they do not fully understand, and that the office of the registrar is used wisely and independently of this government, not simply as a puppet to impose unwieldy limitations on Indigenous people that are not necessary. (Time expired)

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to 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”.

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

My remarks bring the second reading debate to an end. It will not surprise Senator Evans that the government will not be accepting the second reading amendment. We welcome the support of the Labor Party for the Corporations (Aboriginal and Torres Strait Islander) Bill 2006 and related bills, albeit a trifle grudging at times. Nonetheless, we welcome that support and I acknowledge the contributions, mostly thoughtful, that have come from senators who have made speeches in this debate. I particularly want to commend my colleague Senator Payne for her remarks and her hard work on this bill. I am very glad that Senator Evans also acknowledged the interest and work of Senator Scullion.

The Aboriginal Councils and Associations Act 1976 was passed 30 years ago to cater for the small number of landholding corporations linked to the first land rights legislation. There is broad agreement that the legislation no longer meets the needs of Indigenous corporations or their communities. One of the points that Senator Evans raised in his remarks concerned red tape. I think this issue has been of concern to a wide range of people, particularly to the corporations involved. The advice I have is that there will be less red tape for the majority of corporations. One of the express aims of the registrar is to administer the bill with a minimum of procedural requirements. The key compliance obligation is in the reporting area. The advice I have is that the reporting requirements for small and medium corporations will decrease. The reporting requirements for large corporations will increase and align with mainstream standards. This implements a key recommendation of the independent review, which found that large corporations can generally recruit competent personnel to carry out these requirements.

The bill has maximum flexibility built into it. This ensures that support and regulation can be tailored to the needs of particular corporations. I am advised that the registrar will use this flexibility to reduce red tape, which will be music to Senator Evans’s ears. The registrar’s office will offer assistance to make the required changes. There will be a number of tools and guides for corporations, members and directors, and the registrar’s office has a free telephone hotline for inquiries about this bill. This deals with one of the concerns that Senator Evans raised.

The new legislative package responds to the need for improved corporate governance in Indigenous communities in a number of ways. It aligns the government’s requirements for Indigenous corporations with modern standards of corporate accountability while at the same time allowing flexibility for Indigenous communities to design corporations that suit the diverse circumstances of the 2,500 communities located all over Australia. These corporations serve many different purposes, from holding land and delivering essential services through to operating health and legal services and running businesses such as Indigenous arts centres. Indigenous corporations are essential to the lives of many Indigenous Australians, and it is not appropriate for them to have lower standards of corporate governance.

The legislation ensures special support and a regulatory environment that is tailored to the risks and requirements of the Indigenous corporate sector. However, special support and regulation needs to be consistent with the practices and standards of other corporate regulators. The backbone of the bills is the application of mainstream governance standards to Indigenous corporations. For example, directors and senior officers who are running and managing corporations will now have the same obligations as mainstream directors and officers. However, I should say that the bill offers a flexible framework, allowing the special circumstances of individual corporations to be taken into account. For example, communities can structure their corporations in ways that suit their needs and aspirations.

The bill also provides a strong internal governance framework that offers transparency of operations for members and key stakeholders. Regulatory powers such as the appointment of a special administrator allow the important services the corporations provide to continue in the event that these services are put at risk through corporate failure. Unlike the existing act, the appointment of a special administrator under the new legislation will carry with it the new rights of review that are currently unavailable. The new legislation, as I said, allows for red tape to be reduced.

Amendments made in the House of Representatives have led to improvements in the main bill. Some of these amendments were responses to feedback from a range of stakeholders, including, I might say, submissions made to the Senate Standing Committee on Legal and Constitutional Affairs. In its report, the committee considered that the bills will make a significant contribution to improved governance and accountability. The government has already responded to recommendations of the committee, but I note that the recent $28 million budget initiative to strengthen the capacity of Indigenous corporations will include funding associated with the implementation of the new act. This is in addition to the Registrar of Aboriginal Corporations existing funding.

With its core and additional funding, the Registrar of Aboriginal Corporations will provide support to Indigenous corporations through an information and complaints hotline, do-it-yourself tools, a new model constitution, fact sheets, troubleshooting sessions, governance training and capacity-building and compliance training. It will help corporations through the transitional process where it is needed. The registrar’s office has already embarked on some of these measures. The registrar will monitor the implementation of the new act for three years, which covers the two-year transitional period given to existing corporations to align with the new act. The registrar will do so by monitoring and responding to transitional issues that arise, through its suite of services provided to Indigenous corporations. The registrar will monitor the take-up rate by corporations under the new legislation, including special options for extra support and tailoring rules. The registrar will also monitor the rate of compliance and reasons for noncompliance. Details of the monitoring of the implementation of the legislation will be published in departmental annual reports and the registrar’s yearbooks for the three years.

The government also accepts the recommendation of the committee to report on this matter to parliament at the end of the two-year transitional period. We believe that the transitional provisions, which set out how corporations will move from the old regime to the new, will minimise the administrative burden on existing corporations. They will have up to two years to meet the requirements of the new act. The Corporations Act will also be amended to remove existing regulatory gaps.

These are essential and widely accepted reforms that complement other changes being implemented by the Australian government, designed to deliver a better future for Indigenous people in Australia. As I mentioned, we will not be accepting the second reading amendment. That will come as no surprise to Senator Evans and his colleagues.

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

It does.

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

It does, apparently, but I am surprised that it does—let me put it that way. I believe that this is legislation that enjoys widespread support and that should enjoy speedy passage through this parliament.

Question negatived.

Original question agreed to.

Bills read a second time.