Australian Indigenous Law Reporter
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The Aboriginal Councils and Associations Act 1976 (Cth) (The "ACA Act") was introduced 20 years ago to provide a simple, culturally appropriate method for the legal recognition of Indigenous groups and communities and their decisions. Since enactment some 2,600 Aboriginal Corporations have been set up under the Act. In 1992 comprehensive amendments to the Act were passed by Federal Parliament, tightening the regime of Indigenous incorporation with the aim of increased accountability. In 1994, the then Minister for Aboriginal Affairs, Robert Tickner tabled further amendments in the Senate. He subsequently commenced consultation with Indigenous bodies which revealed serious concerns over the proposed amendments and discontent with the operation of the Act generally. The Aboriginal and Torres Strait Islander Commission (ATSIC) Board advised the Minister to defer the amending Bill and in 1995 commissioned the Australian Institute of Aboriginal and Torres Strait Islander Studies to conduct a review of the Act. The report consists of two volumes; the main report and its recommendations appear in Volume 1, while the supporting research and case studies comprise Volume 2. Extracts are reproduced here.
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General dissatisfaction with the Act
2.4 The first key finding from the review is that there is widespread dissatisfaction with the ACA Act in its present form, and the way it is being administered. This dissatisfaction is clearly being felt by all those with an interest in the Act's operation -
* by Aboriginal and Torres Strait Islander Corporations themselves and their members;
* by peak indigenous bodies (eg, land councils, legal services, resource agencies) who act for and on behalf of corporations;
* by State and Territory Governments, who channel funds to indigenous communities through these corporations for health, housing, employment and other essential services; and
* by ATSIC's elected representatives and officials.
The complaints, described and analysed in the two volumes of this report, covered many matters, but their underlying theme is that the Act's regime for the incorporation of indigenous groups and communities has become unsuitable, either for meeting the circumstances, needs and wishes of the community members or as a vehicle for delivery of government-funded community services.
The Act's alleged popularity
2.5 Over the years an increasing number of bodies have applied for incorporation under the ACA Act, and this is sometimes taken to be evidence of the Act's popularity. The review team found, however, that the main reason why people used this Act was because they were seeking funds from ATSIC for some purpose -- to acquire land, or to carry out some government-type service. Under ATSIC's procedures bodies have to be incorporated in order to apply for funds and the ACA Act was the legal apparatus usually made available for that purpose. Two important facts, however, are that about half of all the indigenous organisations in Australia have used other laws to meet their incorporation needs; and more than half of the indigenous organisations funded by ATSIC are not incorporated under the ACA Act.
Furthermore, as far as ATSIC can tell, these bodies incorporated under the general laws perform no better and no worse in their expenditure of public funds to provide community services than do the bodies incorporated under the ACA Act. Such a finding raises serious questions about the reasons for the Act's existence.
Reasons for the Act
2.6 The ACA Act was introduced 20 years ago, to provide a simple, cheap and
flexible method for the legal recognition of indigenous
groups and communities,
and their effective decision-making. The then Minister for Aboriginal Affairs,
Mr Ian Viner, emphasised that the proposed Act would differ from the
mainstream laws for incorporation, in that it would allow for
the legal
recognition of bodies based on their own cultural values and practices, rather
than forcing them to fit in with European
legal concepts. The Minister
justified this special treatment -
(a) for reasons of principle -- to satisfy indigenous rights of citizenship and self determination, and
(b) for pragmatic reasons -- to facilitate meaningful decision-making by the groups concerned.
Achievement of the Act's purposes
2.7 The Act provided two models for indigenous corporations:
(i) councils, under Part III of the Act, to undertake municipality-type functions for local indigenous communities, and
(ii) associations, under Part IV, for bodies incorporating for any general purposes.
An office of the Registrar of Aboriginal Corporations was established by the Act, to carry out the incorporation of councils and associations and supervise their operations. Even in its original form, however, the Act made minimal concession to indigenous cultures, and serious doubts were raised at the time about whether the Act met the Minister's promises that it would be simple, flexible and easily understood.
2.8 After almost 20 years of the Act's operation, a total to some 2,600 Aboriginal Corporations have been set up under Part IV of the Act, but no Aboriginal Councils under Part III. As will be seen, there was strong opposition to a Federal incorporation model for indigenous councils from State and Territory governments, who saw it as intruding on State responsibilities for local government. With this avenue blocked, more and more reliance was put on Part IV of the Act, to incorporate bodies for the purpose of providing government-type services to indigenous communities.
A turning-point in 1992
2.9 During the 1970s and 1980s, Aboriginal Corporations were a low-key activity in indigenous affairs. The ACA Act had remained relatively unchanged since its introduction, about 100 new incorporations were carried out each year, and a small staff and part-time Registrar kept the regime running at a fairly low level of administrative intensity. Around 1990 major changes were made to the Act and its administration, in conjunction with the setting-up of ATSIC. To meet concerns about non-compliance with the Acts requirements, in 1992 a broad set of amendments were made to the Act with the central aim of increasing the accountability of indigenous corporations. These amendments imposed a whole range of new requirements on corporations and in particular they extended their reporting obligations. Each year a corporation was required to file two reports:
(i) Committee's Report, consisting of a statement of compliance with the Act, the rules and the regulations, a balance sheet, an income and expenditure statement, and an up-to-date membership list; and
(i) Examiner's Report, being an auditor's account of the accuracy of the Committee's Report.
The amendments also greatly increased the powers of the Registrar to intervene in the affairs of indigenous corporations.
2.10 It is a key conclusion of this review that, in trying to meet the need for greater accountability, the direction of reforms brought in by the 1992 amendments was misguided. By imposing strict requirements on the structure of corporations and their decision-making processes, very little flexibility remained in the Act. Bodies wishing to incorporate were now faced with a set of Model Rules, drafted to ensure compliance with the Act's requirements, which ran to 24 clauses (some of which had over a dozen sub-clauses) and set out rules for all aspects of the body's operations in precise detail. In the first three years after the amendments, the Registrar sought and received a total of 73 legal opinions on aspects of the Act's operation -- not good for a law intended to be simple and easily understood. But the worst consequence was the loss of flexibility in the Act's regime. From a law intended to suit the enormously diverse needs of indigenous groups and communities across Australia, the approach was now "one size fits all'. Only one model "suit" was made available, and that was a legal straightjacket, which gave no room for local cultural variation in corporate structures and decision-making processes. The consequences of that loss of flexibility will now be examined.
2.11 In the following illustration, each symbol represents a legal "instrument", as follows:
A. The ACA Act itself
B. Rules make by corporations under the Act
C. Service agreements entered into by corporations with funding agencies to provide community services
D. Other legislation on particular subjects (eg, Native Title Act)
A B C D
ACA Rules Service Other
Act agreement legislation
The way the ACA Act works at present, the Act itself (A) sets out in very detailed terms how a body can be incorporated, and how it can then operate. The rules adopted by that body at its incorporation (B) are also very specific -- in fact, they repeat much of what is in the Act itself. The result is that B is basically an extension of A. Meanwhile, bodies incorporated under the Act who wish to be funded to provide a community service are required to enter into a service agreement of some kind (C). Under ATSIC's present system for program funding, no attempt is made to articulate the funding regime (C) with the incorporation regime (A and B).
2.12 From a legal point of view, these two factors:
(i) the basic sameness of A and B, and
(ii) their separateness from C,
have the effect of limiting the scope for adaptation of the legal instruments to different situations. A is almost the same as B, and they have no relationship to C. How the instruments can be interrelated, and the benefits that become available, will be looked at shortly. The fourth legal instrument above is "other legislation" (D), and the example given is the Native Title Act 1993 (Cth). A legal device commonly adopted is for one piece of legislation to pick up a "regime" created by another law, and use it for its own purposes. Just such a situation arose under the Native Title Act, when it was necessary to provide for "prescribed bodies corporate". These bodies are responsible for holding and managing native title under the Act and, rather than introduce a whole new regime for them, the existing regime of the ACA Act has been "picked up". In doing so, the Native Title (Prescribed Bodies Corporate) Regulations 1994 spell out certain matters which must be addressed in the rules of such bodies, in particular with respect to consultation. The result is that, to qualify as a prescribed body corporate for native title-holding purposes, a body must incorporate under the ACA Act, and cover those particular matters in its rules. There are obvious advantages in being able to combine Acts in this way.
2.13 Or, at least there should be advantages. The problem in this case is that, when it came to "picking up" the ACA Act for the purposes of native title-holding, many aspects of it were found to be unsuitable. A paper in Volume 2 of this report contains a long list of the difficulties in using the Act for this purpose, basically because so many of its provisions would conflict with custom. Native title, while recognised by the common law, is a customary title. The ACA Act was designed to enable indigenous groups to operate in accordance with custom. If the Act is so unsuitable for the purposes of groups holding title in their own traditional lands under custom -- the ultimate indigenous group activity -- then the ACA Act has strayed very far indeed from its original purpose.
The costs of over-regulation
2.14 The ACA Act has become a classic piece of over-regulation. Practically every aspect of a corporation's structure and decision-making processes is spelt out in the Act and the Model Rules. Having laid down this detailed blue-print, the exercise becomes a matter of enforcing compliance with its requirements. In ATSIC's Operational Plan, the main "performance indicator" for the Office of the Registrar of Aboriginal Corporations is "full compliance by Aboriginal Corporations with the reporting requirements of the Act". The Office consistently falls short of this target. In its latest annual report, only 35% of Aboriginal Corporations are shown as having submitted financial statements for the previous financial year. Previous audits found two thirds of the corporations in breach, but the Katherine Regional Aboriginal Legal Aid Service Inc. (KRALAS), based on its considerable experience, thought that corporations were "almost invariably" in breach of their obligations under the Act and their rules. Given the degree of regulation, this seems a reasonable appraisal and the case studies support it.
2.15 And all this regulation comes at a high cost. Expenditure on the Registrar's Office increased by 300% over the last four years, totalling $2.67 million in 1995-96. Some corporations have had up to $150,000 spent on them, in appointing an administrator. A major firm of accountants estimated in their submission under the review that the annual costs involved for corporations in meeting the audit requirements of the Act would be $20 million. Despite all this expense and administrative effort, the accountability of corporations set up under the ACA Act, in ATSIC's view, is no better than that of the indigenous bodies it funds which have incorporated under the general law. The present Registrar's view is that more accountability requirements should be added to the Act, and more resources be made available to enforce those requirements. All the evidence suggests this would only be putting good money after bad.
The alternative
2.16 There is a clear alternative, but it means acknowledging that the direction taken in 1992 in trying to improve accountability was misguided. It is in everyone's interests to see accountability improved, but accountability must be seen as something more than whether the ACA Act's requirements have been met. The real question is whether the particular outcome -- usually, delivery of a community service -- has been performed. There is a range of inputs which contribute to a corporation's effective performance of a community service, some of which relate to its structure and decision-making processes, but other important ones of which do not. For example, employment of suitable staff on suitable terms may be crucial to the delivery of the service, but staff contracts are not the concern of the incorporation regime. Where matters like these may be picked up is in the funding regime, but the main development necessary to enable the range of necessary inputs to be covered is to bring flexibility back into the picture. And to do that, the ACA Act has to be wound back from its present very tight requirements.
2.17 The review recommends two main courses of action --
(i) that the ACA Act be rewritten, returning it to its original purposes of a simple law, flexible enough to allow indigenous bodies around Australia to incorporate in ways which are appropriate to them; and
(ii) that ATSIC's funding system be reviewed, so that the weight of accountability is picked up where performance of outcomes is the main concern.
If the Act is reduced to a simple form, then it is available to be built on as required. Where a body only requires basic recognition, then it need not be saddled with additional requirements. But where, as in many cases, a body is being incorporated in order to be funded for the provision of community services, then a more elaborate legal regime can be constructed, using the various legal instruments available. But this time, it is possible to combine the "cultural appropriateness" of the incorporation with the "accountability" for performance in delivery of the funded service.
2.18 To return to the illustration, using the same four symbols as above, ie:
A: The ACA Act
B: A corporation's rules
C: The service agreement
D: Other legislation
A B C D
ACA Act Rules Other legislation Service agreement
Having scaled the Act back, the four legal instruments can be used and articulated with each other, as the occasion demands. In the case of a group seeking to incorporate simply to gain legal recognition of their indigenous corporate nature only a basic set of rules would be required, covering such matters as the group's name, its membership criteria, how the group acts, any custom applying to it, and so on. Only two instruments, the Act (A) and the rules (B), are involved.
2.19 Where, however, a group is incorporating in order to provide community services using public funds, then it has a wider responsibility. It has to be accountable not only to its membership, but to the wider community for whom the services are intended, and ultimately to the taxpayers for expenditure of public funds. Accountability in this context is multi-dimensional and conflict is possible between the different obligations and expectations. To deal with this complex situation, the incorporation regime and the funding regime need to be co-ordinated. The Act (A) having set out the basic requirements for incorporation, the group's rules (B) then need to be developed so that they meet two types of accountability -
(i) internal accountability: to the group's membership; and
(ii) external accountability: to the wider constituency intended to benefit from the service, and to the funding agency.
Internal accountability is best addressed by letting the group incorporate in a culturally appropriate way. That is, basing the group's rules on its own concepts of membership, leadership and decision-making. External accountability is mainly the concern of the service agreement (C), but it may specify that the group must include certain matters in its rules (B), if it wants to be funded to provide that particular service.
2.20 Matters which might be specified in this way could be aimed at ensuring representativeness of the constituency -- that is, that the group's governing body is not just drawn from its own membership, but includes representatives of the wider constituency for whom the service is intended. And the service agreement may require the rules to spell out the way the constituency will be consulted, in planning for and providing the service. In this way, the complementary requirements of internal and external accountability can be addressed in a way likely to enhance a group's performance. Rather than forcing all groups to accept the structures and decision-making processes laid down in fine detail in the present Act and Model Rules, groups can adopt structures and processes which are meaningful to them,- but their wider responsibilities in using public funds to provide government type services to their communities can also be met. Indigenous groups and communities across Australia are typically small and local, and a flexible incorporation law is the only way to cater for their enormous variety. This flexibility does not, however, have to come at the expense of effective accountability, if the approach advocated above is adopted.
2.21 Another benefit of scaling the incorporation law back to the basic requirements for legal recognition is that it becomes available for being "picked up" by other special-purpose legislation (D). Taking the native title example again, the problems of using the present Act as the vehicle for incorporation of "prescribed bodies corporate" for holding and managing native titles can be overcome by the approach advocated above. The native title legislation can specify the matters which bodies must address in their rules (B), in order to qualify for the powers and functions of prescribed bodies corporate. But each body is able to adopt its own structure and applicable customs, without the Act (A) dictating how these vital matters are handled.
2.22 These reforms to the ACA Act will mean that much more attention will have to be given to the incorporation of groups being set up to be funded for provision of community services, and the service agreement will also have to be carefully negotiated to work in tandem with the group's needs. To be fully effective, it would mean a major reform of ATSIC's funding regime, and correspondingly of the services it provides to indigenous groups and communities. A more proactive style of service would be involved, tapping into skills necessary for effectively advising indigenous groups on their incorporation options. The Office of the Registrar of Aboriginal Corporations would be reduced, in keeping with the reduction in the Act's prescriptive requirements and in the Registrar's current extensive powers to intervene in a group's affairs. Far more attention in future should be given to information, education and advice -- but the Act should be rewritten first.
2.23 These reforms cannot be achieved quickly, although a political commitment to reform would allow a suitable transitional phase to begin. Another recent review conducted by the Attorney-General's Department into ATSIC's decision-making process has also recommended consideration of reforms in ATSIC's present funding system. A particular matter to be looked at is the future of Part III of the ACA Act -- the provision for indigenous councils. It is opposed by State and Territory Governments, and without their co-operation such councils could not really be viable. With a view to encouraging debate, the report discusses the options for local and regional governance and relevant overseas experience, but the indigenous council option should not be withdrawn until an alternative financial and legal package has been negotiated.
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(a) Indigenous Corporations
3.10 A large number of corporations have been established to obtain funds to provide services. Estimates based on figures provided by the Registrar for Aboriginal Corporations indicate that approximately 67% of corporations formed under the ACA Act are for the purpose of service provision (see table in Chapter Four). There are two major reasons for the proliferation of indigenous corporations for the purpose of service delivery. First, mainstream service-providers have failed indigenous communities in two fundamental ways. In a large number of instances they have failed to provide indigenous communities with any service at all and where services have been provided they have often been so culturally inappropriate as to hinder rather than to give effect to service delivery to indigenous communities.
3.11 The problem of hindrance rather than help has been particularly evident in locations where there is a high degree of racial hostility. In December 1992, in recognition of the failure to service indigenous communities adequately, the Council of Australian Governments endorsed a National Commitment to Improved Outcomes in the Delivery of Programs and Services to Aboriginal Peoples and Torres Strait Islanders. The following are the guiding principles of the National Commitment:
* empowerment, self-determination and self-management by Aboriginal people and Torres Strait Islanders;
* economic independence and equity being achieved in a manner consistent with Aboriginal and Torres Strait Islander social and cultural values;
* the need to negotiate with and maximise participation by Aboriginal peoples and Torres Strait Islanders through their representative bodies, including the Aboriginal and Torres Strait Islander Commission, Regional Councils, State and Territory advisory bodies, in the formulation of policies and programs that affect them;
* effective coordination in the formulation of policies, and the planning, management and provision of services to Aboriginal peoples and Torres Strait Islanders by governments, to achieve more effective and efficient delivery of services, remove unnecessary duplication and allow better application of available funds;
* and increased clarity with respect to roles and responsibilities of the various spheres of government through greater demarcation of policy, operational and financial responsibilities.
3.12 The Aboriginal and Torres Strait Islander Social Justice Commissioner reported in his third Annual Report in 1995 that there was no evidence that State, Territory or local governments were at the time of the report or in future willing to `accept and deliver on their claimed commitment'. It is interesting to note that indigenous representatives were not party to the formulation of the 1992 National Commitment. Such exclusion is out of step with indigenous people's aspirations, and the negotiation/consultation processes in comparable countries such as Canada.
3.13 The second main reason for proliferation of indigenous corporations is that the recognition of a right to self-determination presumes recognition of cultural distinctness. Indigenous communities tend to be very localised and desire local solutions to the problems which they encounter. Time and time again, programs -- even well-intentioned programs -- which are imported into communities fail. Corporations have served an extremely important role as structures through which enormous achievements have been made by Aboriginal and Torres Strait Islander communities.
3.14 Corporations are therefore playing a very different role in indigenous communities from the role which they play in the mainstream community. They have a much greater bearing on indigenous people's lives than they do in the general community. This is particularly so in small communities where people's only access to basic amenities such as housing, sewerage and water might be through a service corporation. The central role which corporations play in many indigenous communities is directly related to the fact that they are indigenous communities. The relationship between corporations, community development and funding is integral to indigenous communities. This relationship is a direct product of Liberal and Labor Government policies at a Commonwealth level from the 1970's onwards and the colonial history of communities.
3.15 A highly complex maze of funding structures, in which ATSIC's representative and administrative structure plays a central role, fund indigenous corporations and community councils. Funding programs, including those administered by ATSIC, provide the central mechanism for accountability for the spending of public money. While corporate structures provide a legal framework within which organisations function, they have not served well as mechanisms for ensuring accountability.
3.16 Numerous reviews, including this current review, have found the ACA Act wanting in terms of fulfilment of accountability provisions under the Act. A task force established in 1992 to examine all of the Registrar's files disbanded after examining 706 of the approximately 1,550 files. Of the files examined the task force found a 67.5% noncompliance rate. The reasons for non-compliance are complex and relate to cultural, educational and administrative factors, but a number of preliminary points in terms of the context of this review can be made. While the prescriptive requirements of the ACA Act have been progressively increased, the underlying reasons for non-compliance with the legislation have not been addressed. This has meant that increased bureaucratic requirements have been placed on communities but little improvement in compliance has been achieved. At least three previous reviews have recommended an urgent need for education, but virtually nothing has been done to fulfil this need.
3.17 The administration of the ACA Act has been highly formalistic. This has led to strategies to enforce rule compliance which undermine cultural aspirations, as well as a more general tendency to ignore requirements under the Act. In addition there tends to have been a duplication in terms of investigations, audits and other measures taken in response to problems. The Office of Evaluation and Audit conducts investigations at the ATSIC level and the Registrar conducts investigations at the corporations level. There is no formal liaison between the OEA and the Registrar regarding such investigations. While concern about the performance of indigenous corporations has persisted, recourse to enhanced legislative provisions has proven unsuccessful in dealing with the underlying reasons for noncompliance.
(b) Indigenous councils
3.18 An immediate point about the Council part of the ACA Act (Part III) is that it has never been operative. No council has ever been formed under this legislation. As discussed in Chapter 7, this does not reflect a lack of need or interest in a federal council structure, but rather policy factors which have prevented exercise of this option. In its absence, while some councils have been set up for indigenous communities in those jurisdictions where some legislative provision has been made (mainly the Northern Territory and Queensland), indigenous corporations set up under Part IV of the Act have increasingly been used for provision of council-type services.
3.19 Despite the range of State and Territory structures established, and in some instances perhaps because of them, there has been, and continues to be, a widespread belief amongst indigenous peoples that the Commonwealth is the most appropriate level of government to take responsibility for Aboriginal affairs. While this is the case, many heads of power which affect the autonomy and well-being of communities are State powers or powers devolved from the States to local governments. This has inevitably meant negotiation with State and Territory governments. Of particular relevance to this review is the Commonwealth's role in providing a safety net and setting standards for council structures. The Commonwealth's responsibility to ensure indigenous people's human rights are respected invites such a role. In addition, with the centenary of federation approaching, international standards which further define indigenous people's rights will undoubtedly be a focus.
3.20 Compared to overseas countries such as Canada, the United States and New Zealand, there has been little public or structural recognition of Aboriginal and Torres Strait Islander people's rights in Australia. In Canada there is bipartisan recognition of indigenous people's right to self-government. The debate has shifted on to how this right is sourced, the scope of jurisdiction to be exercised by first nations, and financial arrangements which would ensue. As we approach the centenary of federation, creative forms of pluralism within the Australian nation state are likely to be debated
3.21 It is clear that Aboriginal and Torres Strait Islander people continue to have less control over their lives, including the receipt of basic services, than non-indigenous people. While the historical reasons for this have been reviewed and pointed out on numerous occasions, it is important that the current cultural, social and economic legacy of this history be recognised. Only in that context can there be understanding of the current and future role of indigenous corporations and councils.
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4.4 Indigenous groups incorporate for a broad range of purposes. In many instances incorporation is to fulfil legislative or funding requirements. Indigenous organisations have incorporated for the purpose of holding title to land, to establish multi-purpose land council structures, to establish business entities, as service provision organisations, and as cultural and sporting organisations. Two sources of information on the groups who have had recourse to the ACA Act to meet their incorporation needs are the statistics on services of the indigenous corporations set up under the Act, and the case studies conducted during the present review.
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4.13 Indigenous organisations can usually elect to incorporate from four incorporation options. They can form an association under State or Territory association legislation, a cooperative under State or Territory co-operatives legislation, a corporation under the Federal Aboriginal Councils and Associations Act or a company limited by guarantee under the Federal Corporations Law. These basic options are considered below. ...
An Associations Incorporation Act
4.15 Generally a group which consists of five or more members, who have a set of objects and rules and whose primary purpose for incorporating is not to make a profit, may incorporate under this legislation. An association can carry out trade for profit, but this should not be its primary purpose. Groups whose financial dealings could affect third parties in a major way may have their application for incorporation refused. This is because the other incorporation options which have greater audit and accountably requirements may be viewed as more reliable for the applicant Organisation.
4.16 The Associations Incorporation Act 1984 is administered by the NSW Department of Fair Trading. The association's rules must cover 16 mandatory matters which include membership, governing committees, meetings, etc. Associations are required to hold an annual general meeting at which the governing committee must present a financial statement providing a true and fair reflection of the association's financial position. The association must appoint a public officer who is the reference point for communication between the administering department and the association. The association must lodge an annual financial statement with the department.
4.17 While associations provide limited liability to members, if the association incurs debts in circumstances where it is reasonably unlikely to be able to meet them, committee members may be personally liable. The protection of limited liability may also be lost if members are using the association for personal profits through substantial trading, or in other circumstances where the association is being used as a front for activities which would attract liability. Members of an association may be liable for penalties for offences under the legislation, including simple noncompliance such as failure to lodge forms.
4.18 A minimum of five members who wish to incorporate in accordance with the co-operative principles may form a co-operative. Co-operatives may and usually do trade for profit. Organisations which incorporate as a co-operative must comply with the co-operative principles. These include:
* voluntary association and open membership
* democratic control
* limited interest on share capital
* equitable division of surplus
* co-operative education
* co-operation amongst co-operative societies.
4.19 Co-operatives are more regulated and the requirements more prescriptive than other forms of incorporation. In addition to compliance with the co-operative principles, before the Registrar of Co-operatives will register a co-operative under the Cooperatives Act 1992 (NSW), it must provide a disclosure statement. This includes information such as the liability and financial involvement of members, membership requirements and objects, how the co-operative will be managed and perform its duties, amongst other matters. Co-operatives must comply with a number of requirements including the preparation of annual audited accounts, lodgement of returns, preparation of minutes of all board meetings, maintenance of a register of members, and other matters.
4.20 The importance of the way a law is administered, as opposed to its content, in terms of client perspectives was evident at the National Indigenous Associations Conference which was held in Sydney in December 1995. This conference included approximately 150 delegates from around Australia. The largest contingent was from NSW. A very strong attitude, reflected both in panel presentations and discussion from the floor, was the preference for co-operatives over incorporation under the Aboriginal Councils and Associations Act. There seemed to be a very low level of awareness of the greater regulatory requirements under the co-operatives legislation.
The Corporations Law
4.21 The Corporations Law is usually chosen where interstate business, large sums of money, or some external requirement such as prescription by a professional body requires incorporation as a company, usually limited by guarantee. Organisations which deal in large amounts of money or have substantial assets at stake are likely to use this option. Companies adopt a memorandum of association and articles. This incorporation option presents the greatest onus in terms of duties and responsibilities in order to comply with the legislation. The regulation of companies, duties and responsibilities of directors, financial requirements, and other matters are intricately regulated by the Corporations Law, which is administered by the Australian Securities Commission (ASC).
The Aboriginal Councils and Associations Act 1976 (Cth)
4.22 While the Aboriginal Councils and Associations Act 1976 was initially intended to provide a simple and culturally appropriate method for indigenous organisations to incorporate, this has not proven to be the case. It pre-dates most State and Territory association and co-operatives legislation currently in force and arguably is saddled with more complex and onerous requirements than mainstream legislation. The provisions of the ACA Act and their impact are addressed throughout this Report.
Special corporations
4.23 Indigenous Australians have widespread experience of corporations, both association style corporations and corporations which serve quasi-governmental type purposes. In Chapter 7 of this report, various corporate models for local and regional governance are discussed, Statutory corporations have been formed under a range of land rights legislation, under legislation such as the Indigenous Land Fund and Indigenous Land Corporation (ATSIC Amendment) Act 1995, and in jurisdictions where no statutory structure is in place but the need for a land council structure exists. For example, the Cape York Land Council is incorporated as a corporation under the Aboriginal Councils and Associations Act. Most recently, the native title legislation has picked up the ACA Act as its vehicle for the legal recognition of bodies holding and managing native title land. It has done so reluctantly however, and in full knowledge of the ACA Act's current limitations for that purpose, as forcefully spelt out by Patrick Sullivan in Volume 2 of this report.
4.24 Currently a patch-work of State land rights legislation exists, in the Northern Territory, South Australia, New South Wales, Victoria, Queensland and most recently Tasmania. This legislation establishes a range of corporate structures to house titles to land and administer or govern matters under the legislation. Land councils established either pursuant to land rights legislation or independently play a significant role in the standard-setting processes for legislation and relations between indigenous groups, as well as in inter-governmental consultation and negotiation. In addition to these peak bodies, service delivery groups, as well as local government-type structures such as those established in Queensland and the NT, have a stake in the political arena and often serve quasi-governmental type functions. Experience of legal administrative and financial arrangements will vary depending on the communities dynamic as well as the varying experiences under the bodies (amongst others) referred to above.
4.25 The legislative structure under the various land rights and council models vary enormously. For example, under the Pitjantjatjara Land Rights Act 1981 in SA certain lands are held and administered by Anangu Pitjantjatjara (AP) which includes all traditional owners. In contrast, under the NSW Aboriginal Land Rights Act membership is defined to include Aboriginal people who live in an area or who have an association with an area. Those with an association with an area have to be accepted by a meeting of the local land council. The scope and purpose of the different land rights legislation vary, as do the sections of the Aboriginal and Torres Strait Islander communities who benefit from it. For example, the land claiming process is central to the Aboriginal Land Rights (Northern Territory) Act 1976 while it forms only a minor part of the NSW legislation. Each corporate and land claiming structure has raised particular cultural and legal issues. How do new structures fit in with traditional decision-making? Should there be a division between the secular and sacred for the purpose of corporate membership and decision-making, and can the corporate structure serve in a manner which reflects the group for whose benefit the structure has been formed?
4.26 The present review looks at these and other questions in relation to the ACA Act, a Commonwealth law intended to make special provision for the incorporation needs of indigenous groups, but it is important to remember that the process of adapting Australia's legal system to accommodate the needs and aspirations of indigenous groups is of recent origin, and still has some way to go. The challenge has been taken up at different times at various levels, but government responses remain piecemeal. Concerted leadership, from indigenous and non-indigenous Australians and across all levels of government, will be needed to negotiate outcomes which recognise the mix of rights, needs and responsibilities, and spread them sensibly across the organs of government -- both non-indigenous and indigenous.
...
8.1 Main conclusions reached in previous chapters include that the Aboriginal Councils and Associations Act 1976 is too prescriptive to allow bodies to incorporate in a culturally appropriate way -- in particular with respect to the key matters of a group's structure and decision making processes. Much of the Act's present inflexibility can be attributed to requirements aimed at making groups more accountable, but indigenous groups are usually faced with a range of different accountability requirements, not all necessarily compatible with each other. The approach currently taken under the Act confuses financial and procedural accountability with the achievement of program objectives, and this has led to undue emphasis on the enforcement of compliance with statutory requirements. Outcomes in delivery of essential services have not been improved under this approach, often leading to the "proliferation" phenomenon, where communities respond to poor service delivery by setting up new corporations.
8.2 The proliferation of indigenous organisations under the present system adds a further level of difficulty, in attempting to fund the delivery of essential services to communities in an acceptable and effective way. The present applications-based system for ATSIC's allocation of funds has become clogged up, with many times more bodies applying than can possibly be funded. Decision-making by ATSIC Regional Councils becomes intensely difficult and contentious, where a multiplicity of highly-localised bodies seek funds to provide services to an overlapping constituency. In these circumstances, the role of regional bodies who already have some representative function needs to be enhanced. But nothing can be achieved without more appropriate incorporations in the first place, and to achieve that a great deal more flexibility needs to be available than the ACA Act presently allows. The weight of accountability needs to be shared between the available legal instruments -- the Act, a corporation's rules, and the service agreement under which such bodies are funded to perform government-type functions. In summary, the general direction of reform should be --
* away from the current very tight, specific and demanding single model of incorporation for all purposes, and
* towards a much wider range of legal options, enabling different mechanisms to be tailored and articulated so as to fit the particular accountability requirements of the corporation concerned.
8.3 The basic options are -
(a) leave things as they are;
(b) repeal the Act;
(c) make minor adjustments to the Act, to strengthen it and address particular problems; or
(d) carry out a major rewrite of the Act, to get to the root of the problems.
Re (a) -- leave things as they are:
8. 4 There is no support for this option -- not even from the current Registrar. It would leave the Act between two stools, being criticised by one side for intervening too much in the affairs of indigenous organisations, and by the other side for not allowing more intervention. The Review team recommends against this option.
Re (b) -- repeal the Act:
8.5 The point has been made that, under the Act as it stands and as it is currently administered indigenous groups would be better off incorporating under mainstream incorporations and associations laws. Basically, these would be the Corporations Law, and the various State and Territory Associations Incorporations Acts. While these laws have attractions (most of them are modern, they have necessary back-up services, and have other benefits of being mainstream), and while many indigenous organisations have used them for incorporation, their present comparative advantage of greater flexibility than the ACA Act would be removed by making the reforms necessary to give the Act that flexibility which was originally one of its principal policy goals.
8.6 Mainstream laws will continue to have a place in meeting the wide range of needs indigenous people have for corporate recognition. A "special" law like the ACA Act, however, can supplement the general laws in two main respects -
(i) it can enable groups to operate in accordance with customary laws; and
(ii) it can apply nationwide.
The current legal system would have important gaps in these two respects, if the ACA Act were simply repealed without any replacement. Furthermore, it would present the practical problem of working out what to do with the 2,600 corporations in existence under the present Act. They would have to be transferred to another statutory regime; presumably, they would have to be given some say in the matter; and the operation could be very time-consuming.
8.7 In addition, there is a widely-held perception that the Commonwealth is the most appropriate level of government to handle indigenous affairs. This perception is no doubt borne out by experience, and it reflects the Commonwealth's international and national obligations to indigenous peoples. At a local level, Indigenous groups often straddle State boundaries. This option of repeal is rejected by the review team, although it is preferable to options (a) above and (c) below.
Re (c) -- adjust and strengthen the Act:
8.8 Under this option the view is taken that the Act is basically sound as it stands, and all that is required is some routine adjustment of the Act to take account of particular problems which have emerged and new circumstances. This, essentially, is the approach of the present Registrar, who regards the Act in its present form as "in large measure culturally appropriate", although still lacking on the accountability front. His proposals for amendment are --
(i) to enact the 1994 Bill which is still before the Senate, under which --
* the Australian Indigenous Corporations Commission would replace the Registrar of Aboriginal Corporations,
* it would get new functions to promote understanding and acceptance of, and compliance with, the Act,
* there would be a further tightening of the accountability requirements of the Act, and an increase in the range of powers to supervise corporations and prosecute offences;
(iii) to insert a new part in the Act, to cater for native title-holding bodies;
(iv) to make minor changes to the membership provisions, in particular with respect to numbers (which should be reduced) and corporate members (which should be allowed);
(vii) to reform Part III, to "update" it and make it more workable and "significantly reduce" the Registrar's role in incorporating Councils. (Sub. No. 54.)
This approach to reform can be summed up as "more of the same". It does not acknowledge any fundamental problem with the Act or the way it is administered, but aims to reinforce its present direction. It seeks improvements in outcome by increasing the regulatory reach via stricter mandatory requirements, wider powers to promote the Act and ensure compliance with its provisions, and more administrative "clout" to supervise the operations of bodies and prosecute those in breach of its provisions.
8.9 Past attempts to extend the regulatory reach of the Act and the Registrar have produced no noticeable improvement in service delivery -- in fact, they have coincided with rising concerns over the decline in services. In any case, half the bodies funded to provide community services lie outside that reach. A main conclusion of this review is that the weight of accountability has to be shifted from the current heavy reliance on the Act to greater use of the funding regime as the area where the arrangements for effective service delivery are developed. This means a major reduction in the Act's regulatory regime -- in what requirements it imposes and the powers it provides to intervene in a group's affairs.
8.10 The inappropriateness of this option is demonstrated by how it would handle native title. In his submission the Registrar proposes a new part to the Act: "Not surprisingly", he says, "the Act is not at present a suitable vehicle for Native Title organisations." ... Although the High Court's Mabo judgement could not have been in contemplation in 1976, there is no doubt that the Act's use as a vehicle for the incorporation of traditional land-owning bodies was very much in prospect (see Chapter 5). The Act's singular inappropriateness for this purpose (see Vol 2, Sullivan) is possibly the strongest evidence of its fundamental inappropriateness for its intended purposes, and simply adding another part to the Act -- in the Registrar's own words, "but without compromising the need for appropriate accountability" -- would do nothing to overcome the Act's structural limitations. The review team recommends against this option.
Re (d) -- rewrite the Act:
8.11 In contrast to option (c) -- adjusting the Act to reinforce its present direction -- this option involves changing the basic thrust of the Act, back to the directions proposed for it in 1976. This approach is based on the view that there is a continuing role for a Commonwealth Act providing legal recognition to indigenous groups in a culturally appropriate way. Such bodies will be accountable to their membership in accordance with the rules they adopt, including any custom which they nominate as applying to them. To the extent that accountability beyond their membership is required, those additional requirements can be spelt out in different ways -
* in service agreements, in the case of bodies funded to provide community services;
* in the rules adopted by the body concerned (either at incorporation, or under a change of rules at the time of entering into the service agreements); or
* possibly in a special part of the Act itself
8.12 In addition, where a body has functions vested in it under other legislation, those special functions, the powers that go with them and how they are exercised will be spelt out in the other legislation. A case in point is a group incorporated for the purposes of being a "prescribed body corporate" under the Native Title Act 1993. Under the ACA Act in its present form the powers and functions of such native title-holding bodies are largely incompatible with the prescriptions, limitations and administrative discretions contained in the ACA Act (see Vol. 2, Sullivan). Under option (d), the Act would be reformed so that the native title-holding body could readily gain recognition as a "natural" group with an "automatic" membership, holding native title under and in accordance with custom and the Native Title Act.
8.13 This is the option the review team clearly favours, and within it there are further choices, which relate mainly to how "radical" the Act's reform should be. They are -
(i) to reduce the Act to its bare minimum requirements;
(ii) to make the Act a Federal version of the State and Territory Associations Incorporation Acts; or
(iii) to provide in the Act for different categories of incorporation, enabling accountability requirements to be matched to a body's actual activities.
Re (i) -- the minimal model:
8.14 This would involve legislating for the bare minimum requirements needed for a group to be legally recognised, to manage its internal affairs, and to deal with third parties. Thus a group would adopt rules which stated -
* the group's name,
* qualifications for group membership,
* how the group acts, and how its acts are evidenced,
* the name of any applicable custom in accordance with which the group is to act, and
* an address for service.
The group would be free to adopt other rules, at incorporation or later, but these would be the minimum matters to be addressed in the group's rules. If a group was incorporating in order to provide a community service, the funding agency could require, as a pre-condition of funding, that certain matters be covered by the group's rules -- representativeness of its constituency, consultation, reporting, etc. Similarly, special purpose legislation might specify that the group's rules contain certain matters in order for the group to be vested with certain functions and powers after incorporation, just as the Native Title (Prescribed Bodies Corporate) Regulations 1994 do at present. The key feature of the minimal model is that it keeps the mandatory requirements for basic incorporation to a minimum and then allows these to be built upon by a group's rules, by terms and conditions of service agreements and by special purpose legislation as the case requires. Sets of rules could be developed for common purposes.
8.15 It is tempting to think that this is the kind of legislation Justice Woodward had in mind in his 1970s reports, and which the Minister, Mr Viner, promised -- but which the DAA officer, Mr Jansz, found to be so lacking when the Bill emerged (see Chapter 5).
Re (ii) -- the incorporated associations model:
8.16 When the ACAA first appeared it was clear that Part IV on Associations was modelled on the Associations Incorporation Acts then in use in the States -- with the main modification being the ability to base rules on custom. If a rewriting of the ACA Act so that it prescribes only the minimum requirements is regarded as too radical, an alternative would be to provide indigenous groups with an incorporation option which is basically a Federal version of current incorporated associations legislation. The ACA Act, in its present form, is far more demanding in its requirements for a group's incorporation and ongoing operation than mainstream legislation. A number of contributors to the review pointed out that the Act now discriminates unfairly in this regard against indigenous people. Instead of being "special" by providing a simple incorporation method for indigenous groups, the Act is now specially onerous. It is surely unacceptable for the law for indigenous incorporations to be more demanding than the general incorporation laws. The ACA Act needs to be rewritten so as to give indigenous groups a fair choice in selecting an incorporation law, not one which prejudices their rights.
8.17 Most States and Territories have replaced their incorporated associations legislation in recent years, so any of these could be used as a model for rewriting the ACA Act. They are based on a careful balancing of the rights of members among themselves, and of third parties. The main change from the Act in its present form is that its flexibility would be reinstated. This was largely sacrificed in the reforms of 1992, and would almost have disappeared altogether if the later proposed reforms had been passed. Without this flexibility the Act cannot be built on by rules, service agreements, special purpose legislation, etc, to meet the wide range of needs faced by indigenous corporations.
Re (iii) -- the different categories model:
8.18 This would involve legislating for three basic categories of incorporation --
* a very basic incorporation mechanism, enabling simple recognition of indigenous groups with some cultural basis who require little more than a legal manifestation of their indigenous corporate nature;
* incorporation of groups for the purposes of holding and managing their traditional land;
* incorporation of groups for the purposes of providing community services with public funds.
Each category would be dealt with separately in the Act, under parts which would set out broad rule-making requirements which must be met to qualify for the status concerned. A body intending to seek funding for a particular service delivery, for example, would have to prepare itself for incorporation under that part of the Act -- or, if it is already in existence, amend its rules so it qualifies for the status of a service provider.
8.19 The main difference between this model and the other two is that in this case the Act itself specifies the particular accountability requirements for different categories of groups, whereas the others leave this to be specified outside the Act. In either case the group concerned has to design its rules according to certain accountability requirements, but in one case these are spelt out in the Act, whereas in the other two cases they are spelt out in funding guidelines, etc.
8.20 Opinions varied between team members as to which option was to be preferred, but the weight of opinion came down in favour of recommending option (ii) -- a Federal version of an Associations Incorporation Act.
8.21 The main ones are as follows:
(i) controls on incorporation --
* It was suggested under the review (eg by the NSW Aboriginal Land Council) that there should be some restriction on bodies incorporating to provide services where a body already exists for that purpose in that area. Along similar lines was a suggestion that ATSIC should only fund bodies incorporated under the ACA Act. While understanding the reasons behind such controls, they might be regarded as an unwarranted interference with freedom of choice. Rationalising of funding is really a matter for the funding agencies, and improvements in that area are preferable to legislative restrictions.
* On the other hand, there are clear benefits from confining the Act's coverage to bodies of a non-commercial nature. As the Central Land Council recommends, indigenous corporations operating large business enterprises, which need to provide detailed financial reports, should be incorporated under separate legislation. Under State and Territory Associations Incorporation Acts there are usually controls limiting the eligibility of bodies whose primary purpose for incorporating is to make profits for their members, and similar controls could apply here. Where an indigenous group does wish to distribute profits among its members, it is open for it to incorporate a separate business arm. It assists to keep the Act's regulatory requirements to a minimum for such bodies to be brought under the mainstream regulatory regimes applying to trading companies, etc.
* It may be useful to provide some formal status for bodies in the process of incorporating. Thus a group could call itself "X Aboriginal Corporation (to be incorporated)", and thereby gain some formal recognition prior to completion of the incorporation formalities. Such a device could be useful where bodies are incorporating to apply for funds. If the funds are not approved, incorporation could be discontinued. Similarly, a group could negotiate under a native title claim, before a final determination of its membership under the Native Title Act 1993.
(ii) re-incorporations --
* Bodies incorporated under this Act should be able, themselves, to be members of new corporations under the Act -- thus enabling "umbrella" bodies to be set up. The review showed that there is a strong demand for such "vertical integration" of associated indigenous groups, and that it offers many advantages in terms of corporate structure.
(iii) membership lists --
* This should not be a general requirement, although the Registrar could have the power to direct a list of current membership to be prepared in exceptional circumstances.
* For many groups membership will be a consequence of kinship, residence, etc. In cases where a group's rules specify such criteria as qualifications for membership, then membership will be "automatic" for those who qualify. Any membership list will be an aid, but not definitive, as to who is a member.
(iv) dispute settlement --
* Groups should be encouraged to include rules on the settlement of internal disputes -- including use of traditional dispute settlement authorities. It might be desirable for the Act to make some provision for settlement of disputes within the group, or between the group and a member or person claiming to be a member. Ideally, these matters should be the subject of attempted mediation by an acceptable person or body before they are brought into mainstream courts. There may even be scope for special dispute settlement machinery in the Act, with mediation, arbitration and appeal steps provided.
(v) Councils --
* While Part III of the ACA Act has a number of limitations as a vehicle for indigenous self-government, repeal of Part III is not recommended at this stage. In some jurisdictions there are legislative alternatives which are to a greater or lesser extent suitable, but in a number of the States there are not. The Commonwealth has a responsibility for standard-setting in the area of indigenous self-determination, and an existing Commonwealth statutory provision for indigenous councils -- despite its limitations -- should not be abolished until something better is available. The review recommends that steps be taken towards negotiating an alternative financial and legal package.
(vi) drafting --
* The present Act shows no appreciation of what is involved in the statutory recognition of bodies with their own cultural dynamics, and it is essential that such expertise, including the indigenous viewpoint, be brought to bear in rewriting the legislation.
* A Corporations Law Simplification Program has been under way for some years. In rewriting the ACA Act, obviously simplification should be a main objective.
(vii) tax exemption --
* Current developments in this area need to be considered, to ensure that there is no loss of entitlement to tax exemptions for the relevant indigenous corporations.
8.22 The main recommendation here is that the present ATSIC system based on annual applications for grants should be reviewed. The terms of reference for the present review do not extend to making detailed recommendations on what reforms should be made to the funding regime, but a major conclusion under the review is that improvements in accountability for provision of services to indigenous communities will only be possible if --
* the incorporation regime is substantially deregulated, to give the flexibility necessary for internal accountability to be possible, and
* the funding regime is correspondingly enhanced, to build up the inputs and controls necessary for funding objectives to be met.
8.23 Main weaknesses with the present funding system are -
(i) being application based, the initiative for project design rests largely outside the authority of the funding agency;
(ii) furthermore, the funding agency cannot influence in advance the nature and composition of the applicant groups;
(iii) it follows that matters of critical importance to the equitable, effective and efficient delivery of publicly-funded services (eg, representativeness, consultation and staff engagement) cannot be built into the planning for service provision at an early stage;
(iv) accordingly, the planning and implementation of service provision is compromised by the need to accept the groups intended to provide the services in the form in which they have already incorporated themselves;
(v) accountability controls are then applied via the conditions of grant and enforcement of compliance with the incorporation law concerned;
(vi) but this is largely ex post facto accountability (by grant acquittance and audited financial statements), and cannot cure basic defects which might exist in the group's suitability and capability as the service provider, stemming from its manner of incorporation;
(vii) thus handicapped in its capacity to plan for service provision the funding agency's efforts to ensure performance of funding objectives are frustrated; service provision by existing corporations is less than satisfactory so new corporations are established -- and the whole process begins again.
8.24 According to the findings of the present review, the main avenue for improvement lies in a better articulation of the two regimes -- incorporation and funding -- and, to achieve that, each regime has to be refined. Recommendations in the previous part of this chapter call for refinement of the incorporation regime by giving it far more flexibility, and the counterpart to that is a refinement of the funding regime which will allow bodies to take advantage of that new flexibility, and incorporate in ways which predispose them to carry out intended service delivery functions equitably, effectively and efficiently. This means a greater role for the funding agency at the time of the group's incorporation, or in adjusting the structure of an existing corporation, and the inputs required will be examined in the next part of this chapter.
8.25 So, the main recommendation is that there be a follow-up review of funding systems for service delivery -- ATSIC's at least, but possibly others as well Such a review would take account of the reforms to the incorporation regime proposed in this report, and base its own considerations on the new flexibility they would entail. After a recent review of ATSIC decision-making processes, the Attorney-General's Department also recommended a review of ATSIC's funding system. Other matters such a review could take up, based on the present review's findings, include -
* relaxing the requirement for incorporation of groups prior to funding, especially in cases of one-off grants (this is no longer a statutory requirement, though it is followed as a matter of policy);
* providing block grants and 2 or 3 year grants to bodies with a history of satisfactory service provision;
* overhauling and rationalising current accounting and reporting requirements -- presently an area of costly duplication.
8.26 The foregoing proposal for legislative and financial reforms will involve a major rethink of the Commonwealth's administrative system for indigenous affairs, and in particular how ATSIC carries out its functions. Recommendations for improvement in accountability, by shifting the weight from the incorporation to the funding regime, have major impacts on the Office of the Registrar of Aboriginal Corporations and ATSIC.
(a) Office of the Registrar
8.27 Main recommendations -
(i) With deregulation of the Act there will be a considerable reduction in administrative requirements, so a reduction in the overall size of the Office would be appropriate. At the same time, the education and training functions -- often emphasised but never implemented need to be appropriately staffed. Peter Daffen, a management consultant engaged under the review, suggests that an overall staff of 10 would suffice, as follows --
* Registrar (1)
* Executive Assistant/Corporate Support (1)
* Registration and Client Assistance Unit (including the Education Officer) (5)
* Compliance Unit (3).
(ii) While the Registrar needs to be independent from ATSIC in carrying out his registration and compliance functions, the present situation, where he acts as if he were a judicial officer beyond any kind of policy direction and control, goes much further than is necessary. In rewriting the Act it is envisaged that the Registrar's role will be reduced to a largely procedural one, much like that of the Corporate Affairs Offices which administer State and Territory Associations Incorporation Acts. Indeed, it may be desirable to follow that trend, and reconstitute the Registrar as a form of office rather than an individual officer. In the proposed 1994 reforms the Registrar was to be replaced by the Australian Indigenous Corporations Commission, but as that body was to consist of a single Commissioner, the change was no more than an enhancement of the Registrar's status. A more useful approach would be to have a small body containing part-time members, who could bring together a range of special skills and experience for decision-making on guidelines and procedures, and other general policy matters. Such an approach would go a long way towards removing the current feeling that the Registrar's decision-making under the present system is arbitrary and inconsistent. As John Ley recommends in Volume 2, access to the Administrative Appeals Tribunal should be open in all appropriate cases, for review of administrative decisions.
(iii) The Registrar and the staff need to be recruited with far greater emphasis on cultural awareness and communication skills. For example, despite its obvious and critical importance, the information package made available by the Registrar's Office to people seeking to incorporate is woefully inadequate. Over and over again people complained during the review about the lack of information, training and advice on what incorporation means, and the roles and responsibilities involved. Given the level of funds handled by many indigenous corporations, and the vital services they provide, it is plainly asking for trouble not to supply them with the necessary educational services.
(iv) A shift in accountability weight from the incorporation to the funding regime should be accompanied by a transfer of administrative resources to the relevant area in ATSIC. The Office of Evaluation and Audit (OEA) is part of ATSIC's structure, and it has a special legislative function in auditing and evaluating the operations of corporations funded by ATSIC, at the behest of the Minister or ATSIC itself. The reforms proposed in this report aim at improving accountability by restructuring the legal basis upon which funds are provided for delivery of services by indigenous corporations, so that the emphasis is taken off reliance on audited financial statements and compliance with statutory requirements as the measures of accountability. There will however, be a remaining need to monitor audited financial statements, and this could best be met, in Peter Daffen's view, by a transfer of 3-4 positions from the Registrar's Office to OEA.
(v) The minimum financial saving of these staffing reforms are estimated at $1.67 million per annum. This saving should be compared with the additional costs of strengthening the Act as was proposed in 1994, estimated by Daffen as being $4.4 million in the first year.
(vi) Some consideration has been given in the past to transferring the Registrar's functions to the Australian Securities Commission (ASC) (see Daffen 1994: 63-64). Such a move would mean that ministerial responsibility for the Act would no longer be vested in the Minister for Aboriginal and Torres Strait Islander Affairs. Presumably a special unit could be set up in the ASC to handle indigenous corporations, but it might be anomalous in a body which is mainly concerned with commercial operations. Any such decision to transfer responsibility for indigenous corporations to the ASC would have important political implications, and the review team was not able in the time available to give detailed consideration to this matter.
(b) ATSIC
8.28 Main recommendations -
(i) The proposed reforms will face ATSIC with a major challenge -- it would be pointless to shift the weight of accountability from the Act and the Registrar, who cannot deliver the goods, to ATSIC, if it cannot deliver the goods. The review clearly demonstrates that the funding regime is the area where improvements are needed -- in tailoring the service agreement between the funding agency and the service-providing corporation and articulating that with the corporation's rules -- but that is skillful work, and ATSIC's performance shows that it does not at present have the capability for this task. Therefore, in conjunction with a review of the present funding regime there needs to be a comprehensive review of the present administrative system for monitoring performance in the application of funds to service delivery. This administrative review would need to be realistic about the possibilities for improvements in this area under ATSIC's current structure. There is considerable dissatisfaction, picked up during the current review, with the way grant funds are administered; as one team member observed, the main hostility to ATSIC comes from its grantees. The improvements necessary will only come from reforms right through the system, starting with provision of advice and assistance at the time that bodies are planning to incorporate and apply for funds for provision of a particular community service.
(ii) The administrative review would need to consider options other than improvements within ATSIC's own establishment. For the necessary expertise at community level (where recruitment of suitably qualified public servants has proved difficult), greater use may need to be made of outside skills. ATSIC already supports a large body of accountants to monitor compliance with the present defective accountability requirements, but a broader range of expertise needs to be available to support the internal accountability needs identified under the present review. The contracting out of monitoring and mentoring service delivery at regional and local levels to suitable bodies (eg, the resource centres in the Kimberley and similar bodies elsewhere) is another option to be considered.
(iii) The present review cannot canvass all the options, but there can be no mistaking the importance of the reforms needed if there are to be real improvements in accountability.
8.29 The review has concluded that there are major problems with the Act and the way it is administered, in terms of its cultural appropriateness, its effectiveness in providing accountability and its use as a vehicle for self-governance. The three elements are interrelated -- revolving around the concept of effective decision-making by groups over their affairs -- so genuine improvement in the results of that decision-making depends on the comprehensive legislative, financial and administrative reforms advocated in this chapter. Piecemeal reforms will only address part of the problem, and cannot produce the improvements in outcomes which government and indigenous people are demanding.
8.30 This report, being based on a review of an Act, concentrates on legislative reforms, but has indicated the need for financial and administrative reforms to accompany rewriting of the present Act. If the general thrust of this report is accepted, the next step is to carry out the financial and administrative review which will indicate reforms necessary in those areas to carry through the overall reform, and achieve the full benefits of the rewritten legislation. The rewriting of the present Act is not dependent on the accompanying financial and administrative reforms, but it would be largely unproductive in their absence, and ideally the three areas would be reformed together.
8.31 There is another practical reason why the three reform initiatives need to be coordinated -- at the moment there are some 2,600 corporations registered under the ACA Act, the great majority of which are still active. A major reform of the Act along the lines recommended in this report would mean changing the basis of their operations. Because the thrust of that reform would be to deregulate the Act and its impact on their operations, enabling them to operate in ways more suited to their wishes, needs and circumstances, it is not likely that the proposed reform of the Act would be resisted by the groups incorporated under its provisions, but a very careful process of explanation and consultation would need to be planned and conducted to ensure awareness and support for the proposed reform. The rewritten Act would need to contain transitional arrangements, providing for the voluntary conversion of existing corporations onto the new regime.
8.32 But it is not just a matter of "deregulation" of the Act, for a counterpart of that step under the above recommendations is that those bodies which are receiving public funds for provision of community services must have their funding arrangements reformed -- and this involves not just a system of service agreements to replace the existing grants, but also a review of the rules of corporations which are receiving grants. Such reviews will have to be done consultatively case-by-case, and will be time-consuming and demand skilled resources. Most corporations are being funded on a yearly basis so the opportunity is there to require a review of their rules as a condition of further funding, but clearly the size of the undertaking will mean careful planning, prioritisation and a phased implementation, over a transitional period of probably some years' duration. As with any transition, it is desirable to get it over quickly so that full advantage can be taken of the benefits under the new arrangements as soon as possible. Also, during the transition two systems -- the old and the new -- have to be maintained.
8.33 Under the above proposals for reform, the key consideration from a timing view-point is that the financial and administrative systems need to be reviewed as an essential follow-up of the proposed legislative reform, in order for the benefits in improved accountability to be realised. A policy decision to reform the legislation along the lines proposed could be the "circuit-breaker" for the wider reforms, which could then be undertaken on the basis of the changes proposed here. If the review of the financial and administrative systems is begun fairly soon, it could be expected to report to government around the time that new legislation was being introduced. The conversion of existing corporations over to the new Act's regime could then be phased in with implementation of the financial and administrative reforms identified in that follow-up report.
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URL: http://www.austlii.edu.au/au/journals/AUIndigLawRpr/1997/49.html