Patrick Dodson (WA, Australian Labor Party, Shadow Minister for Indigenous Affairs and Aboriginal and Torres Strait Islanders (Senate)) Share this | Link to this | Hansard source

I rise to speak to the Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018 and related bill. The bills establish a financial asset fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, to support additional payments to the ILC, the Indigenous Land Corporation. I think it'll be called the Indigenous Land and Sea Corporation now. The fund will replace the Indigenous land account. Funds currently allocated will be managed by the Future Fund's board. The fund will be credited with amounts equal to the balance of the land account's special account and the value of the investment of the land account. The fund's special account will then be debited to provide an annual payment to the Indigenous Land and Sea Corporation to be credited to and paid from the ILC funding special account.

The finance minister and Indigenous affairs minister may also determine, once in a financial year, that an additional payment is to be made to the ILC after considering the advice of the Future Fund's board about the impact of any additional payments on the sustainability of annual payments to the ILC. The Future Fund board will be responsible for deciding how to invest the Aboriginal and Torres Strait Islander Land and Sea Future Fund to enhance the Commonwealth's ability to make annual payments or any additional payments to the Indigenous Land and Sea Corporation. The Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018 requires the responsible ministers to issue an investment mandate to the Future Fund's board regarding the investment of the Future Fund.

The purpose of the investment mandate is to provide a mechanism for the government to provide strategic guidance to the Future Fund board on its expectations for the investment of the Aboriginal and Torres Strait Islander Land and Sea Future Fund. The Indigenous land account has achieved an average return over the past three years of approximately CPI plus 1.5 per cent per annum. Under the new arrangements, the government expects that the account will achieve a return of CPI plus 2.6 per cent after fees. Some would say that's quite a substantial increase. The expenses associated with the investment and administration of the fund incurred by the Future Fund will be met out of the fund itself.

Labor's position is to support the intent of this legislation, and we accept the need to improve the financial sustainability of the fund. However, after consultations with stakeholders, we took the view that there are a number of ways in which the legislation could be strengthened in order to protect the land fund for future generations, so we have requested a number of minor amendments to the bill which we believe will help achieve this.

First, we have requested of the government that they include provisions in the bill so that the minister must have regard to the sustainability of the fund prior to making any additional transfers. This will help ensure that these transfers are not used to deplete the fund over time. We also requested that the long-term sustainability be a necessary consideration when the minister sets the investment mandate. I am pleased that the government will be soon moving amendments to address both these issues.

Our second concern relates to the removal of an oversight role for the ILC in relation to the fund. At present, the ILC Board provides oversight of this account. This is not an active oversight role but, rather, a way for the ILC board to maintain a clear line of sight as to how the account is being invested. The bill before us in its original form removed this. We did not support this. At a time when there are growing calls for a greater Indigenous say over issues that impact their lives, we felt the removal of the oversight was inconsistent with the need to maintain as much Indigenous involvement as possible. However, we welcome the government's decision to require the Future Fund to brief the ILC Board on the fund's investment decisions, restoring that important oversight for the ILC. We note that this will be an active oversight role that is not designed to interfere with the functions of the Future Fund board but, rather, to ensure that the fund, which is designed to assist Indigenous Australians, is never removed entirely from Indigenous involvement.

We also welcome the amendment that requires the minister to consult with the ILC in relation to the investment mandate. This, once again, provides an opportunity for important input from Indigenous Australians into the management of the fund.

We believe these amendments strengthen the bill and we thank the minister for working with us to achieve a bipartisan position. Having reached agreements on these matters, we will support the bill.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on the Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018 and the Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018. As previously stated, the Indigenous Land Corporation was established in 1995 following the Mabo High Court decision and assists First Nations peoples to acquire and manage land for the benefit of First Nations peoples. Funding to achieve this comes from the Aboriginal and Torres Strait Islander Land Account, to be referred to as the land account, in the form of an annual CPI-indexed payment to the Indigenous Land Corporation. Currently, an additional automatic payment is also made from the land account to the Indigenous Land Corporation when the capital of the land account exceeds a CPI-indexed target.

Due to the restrictions on the investment mandate of the land account to cash and cash-like products, it is not generating sufficient investment returns to ensure the financial sustainability of the Indigenous Land Corporation into the future. In the previous four financial years, the land account has not met its target rate of return. The Murray panel, which, in 2016, was tasked with providing advice on options to ensure the sustainability of the land account, recommended the Future Fund Board of Guardians invest the funds of the land account. In the previous parliament the Greens had a bill to make amendments to the Indigenous Land Corporation act. As part of the inquiry into our proposed reforms, this very issue of the investments of the land account was brought up. One of the recommendations made during that inquiry—even though it was not part of my bill—was that the land account should be managed in an alternative way. Suggestions were made around incorporating the Future Fund. At the time, those suggestions were not taken up by government, so it is pleasing to see that action has now been taken. It was in fact pleasing to see that the Murray review was undertaken.

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, to be referred to as the Land and Sea Future Fund. It is an investment fund that will replace the land account, but will serve the same purpose—namely, to fund the activities of what is now the Indigenous Land and Sea Corporation. The Future Fund Board of Guardians will oversee the investment of the Land and Sea Future Fund, in line with a recommendation of the Murray panel.

The consultation I mentioned during debate on the previous bill regarding the expansion of the Indigenous Land Corporation's remit also measured support for improving the sustainability of the land account by transferring the investment function of the land account to the Future Fund Board of Guardians and by broadening the range of financial assets that the funds could be invested in. Again a majority of those consulted supported this reform. The intention is for the Land and Sea Future Fund to have a broader investment mandate that should see more sustainable returns produced and see annual payments to the Indigenous Land Corporation continue without the current concern of slowly depleting the land account. The Land and Sea Future Fund will receive the money and financial assets of the land account.

The bill requires that an annual indexed payment be made to the Indigenous Land Corporation as is currently the case. The bill also provides for one discretionary additional payment per financial year if determined by the Minister for Finance and the Minister for Indigenous Affairs after considering the advice of the Future Fund Board of Guardians regarding the impact this payment will have on the sustainability of annual payments to the Indigenous Land Corporation. The investment mandate will be set by the Minister for Finance and the Treasurer in consultation with the Minister for Indigenous Affairs.

The Australian Greens expressed our in-principle support for the bill during the inquiry. However, in our quite substantive additional comments to the Senate Finance and Public Administration Legislation Committee inquiry into the bill and the previous bills, we indicated that we had a number of concerns. One of the concerns we raised was in relation to reporting requirements. We said:

There needs to be certainty that reports will be available at regular intervals that illustrate the performance of the ATSILSFF, rather than reliance placed on the Minister for Finance to request such reports.

Our concerns regarding this have been alleviated by the knowledge that the Future Fund Board of Guardians is required to report each quarter to the Minister for Finance on the performance outcomes of the funds they are managing and that these reports are published on the Future Fund's website. We have also become aware that, following the 10-year review of the legislation, there is no requirement that the review be made public or tabled in parliament. I hope the government can address this and make some commitments around that.

We are pleased to see that a number of amendments were made in the House of Representatives to strengthen the bill further. We are pleased to see that sustainability of the annual payments from the Land and Sea Future Fund to the Indigenous Land Corporation has been further highlighted as a key concept through the requirement that this sustainability be taken into account when the investment mandate is being set and when a determination is being made regarding a discretionary additional payment to the Indigenous Land Corporation. It is also appropriate that the Indigenous Land Corporation Board be consulted on the setting of the investment mandate and that they are able to meet with Commonwealth officials regarding a quarterly performance report relating to the Land and Sea Future Fund.

The Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018 makes consequential amendments to other acts that are affected by the establishment of the Land and Sea Future Fund. This includes repealing the sections of the Aboriginal and Torres Strait Islander Act 2005 that create the land account and amending the legislation governing the Future Fund and other funds managed by the Future Fund Management Agency. It also includes minor technical amendments relating to the renaming of the Indigenous Land Corporation to the Indigenous Land and Sea Corporation, contingent on the passage of the previous legislation. The Greens thank the minister for the additional information that was provided by him and his office. We are pleased to see amendments and we will be supporting these bills.

Nigel Scullion (NT, Country Liberal Party, Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I thank senators for their contributions to the debate on the Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018 and the Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential Amendments) Bill 2018. These bills represent an historic moment in Australia's land rights journey. The legislation gives effect to the government's decision to establish a dedicated financial asset fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, to support the making of annual and discretionary additional payments to the Indigenous Land Corporation. The government wishes to invest in financial assets with the aim of achieving investment returns to support the Indigenous Land Corporation financially.

The Indigenous Land Corporation was established as part of the government's response to the High Court's decision in Mabo No. 2. The Indigenous Land Corporation was established to assist Aboriginal and Torres Strait Islander organisations to acquire and manage Indigenous-held land, to provide economic, environmental, social and cultural benefits for Aboriginal and Torres Strait Islander people. This is in recognition that many people would be unable to benefit under the Native Title Act 1993.

The Aboriginal and Torres Strait Islander Land and Sea Future Fund will replace the Aboriginal and Torres Strait Islander Land Account. The legislation provides for the transfer of moneys and financial assets currently allocated to the land account to the new fund, managed by the Future Fund Board of Guardians. The Future Fund board is an experienced, specialised and trusted sovereign investor, responsible for investing over $180 billion—as at 30 September this year—across five sovereign wealth funds with different purposes and different investment mandates. As at 31 October 2018 the land account held a capital balance of $2 billion. However, a combination of the current investment environment, payment arrangements and investment restrictions means that the land account is not financially sustainable. Those arrangements make it all but impossible for the land account to sustain annual indexed payments to the Indigenous Land Corporation. These bills propose landmark changes to address this. Annual payments will be channelled to the Indigenous Land Corporation from the Aboriginal and Torres Strait Islander Land and Sea Future Fund. The finance minister and the Indigenous affairs minister may determine, once in a financial year, that an additional payment be made to the Indigenous Land Corporation, after considering the advice of the Future Fund board about the impact of such payments on the sustainability of annual payments.

The legislation requires the responsible ministers to issue an investment mandate to the Future Fund board regarding the investment of the Aboriginal and Torres Strait Islander Land and Sea Future Fund. The purpose of the investment mandate is to provide a mechanism for the government to provide strategic guidance to the Future Fund board on its expectations for the investment of these funds. The legislation mandates consultation with the Indigenous Land Corporation, through the Indigenous affairs minister, on the actual setting of the investment mandate. This requirement acknowledges the interest of the Indigenous Land Corporation in the performance of the fund.

The Future Fund Board of Guardians is required to prepare an annual report about the performance of the Aboriginal and Torres Strait Islander Land and Sea Future Fund. The finance minister may also request additional information from the Future Fund board about the management of the fund. These reporting arrangements are consistent with arrangements for other funds currently managed by the Future Fund board. In addition, the Future Fund Board of Guardians publishes a quarterly report on each of the funds under management. The legislation gives the Indigenous Land Corporation board the opportunity to discuss the performance of the Aboriginal and Torres Strait Islander Land and Sea Future Fund with Commonwealth officials if it so desires and following the publishing of a quarterly update for the fund. This recognises that the fund is the primary source of funding for the Indigenous Land Corporation.

Sustainability of annual payments to the Indigenous Land Corporation is a key concept underpinning the establishment of the Aboriginal and Torres Strait Islander Land and Sea Future Fund. This is reflected in provisions dealing with the channelling of discretionary additional payments to the Indigenous Land Corporation and setting of the investment mandate for the fund. The concept of sustainability of annual payments captures the intention of government that the fund is established to provide a source of funding to the Indigenous Land Corporation over the longer term.

In response to Senator Siewert's concern about the tabling of any reviews: the legislation requires, as the senator indicated, a review of the operation of these arrangements to be undertaken after 10 years. It is the government's intention that the report of the review will be tabled in parliament.

Stakeholders have expressed overwhelming support for these reforms. From July to September 2017 the ILC conducted public consultations on the financial sustainability of the land account. Multiple meetings were held, in 11 locations across Australia, involving 75 Indigenous organisations. The Indigenous Land Corporation also invited written submissions from stakeholder groups and individuals. A clear majority of stakeholders supported changes to improve the sustainability of the land account by allowing land account funds to be invested in a wider range of investment products and to be managed by the Future Fund Board of Guardians.

The government has listened and acted by introducing these groundbreaking reforms. Securing sustainable funding arrangements for the Indigenous Land Corporation will allow the Indigenous Land Corporation to continue to assist Aboriginal and Torres Strait Islander Australians to achieve their economic, environmental, social and cultural goals into the future. This government is giving practical effect to its commitment to improving the lives of Aboriginal and Torres Strait Islander Australians. I thank the Senate and parliament for their input and the amendments that have been discussed already in a multipartisan way around the parliament, and I commend the bills.

Question agreed to.

Bills read a second time.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

As no amendments have been circulated, I don't intend to go into committee, unless any senator wishes me to do so. There being no such request, I will now call the minister to move the third reading.