Contents
- Part 1 Executive Summary
- Part 2 Performance reporting
- Part 3 Corporate governance and accountability
- Part 4 Appendices
- Part 5 Financial Management
Annual Report 2008–2009
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Annual Report 2008–2009
Annual Report 2008–2009 » Chapter 15: Appendices » Appendix 10
The Aboriginals Benefit Account (ABA) is established under Part VI of the Aboriginal Land Rights (Northern Territory) Act 1976(the ALRA) and is a Special Account for the purposes of the FMA Act.
The ABA is established for the receipt of statutory royalty equivalent monies, the level of which is calculated by reference to the payment of royalties generated from mining on Aboriginal land in the Northern Territory, and for the distribution of these monies. The major functions of the account are outlined in Table 4.32 of this report on page 367.
In 2008-09, the responsible Minister for the account was the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon. Jenny Macklin, MP.
The ABA is administered by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) in accordance with the requirements of the ALRA and the FMA Act.
In relation to FaHCSIA's 2008-09 Outcome and Output reporting structure, the ABA is part of Outcome 1: Greater self-reliance and economic, social and community engagement for Indigenous Australians and falls under Output 1.2: Services for Indigenous Australians. In 2008-09, Closing the Gap on Indigenous disadvantage was a major new policy measure under Outcome 1.
As part of the Closing the Gap measure, the targeting of jobs and economic participation has been identified as one of the key strategies for reducing Indigenous disadvantage. With a focus on delivering employment, community and economic development opportunities for Indigenous Territorians, the ABA potentially has a valuable role to play in contributing to the Government's Closing the Gap objectives for the Northern Territory. Community and economic development is most successfully achieved by working in consultation and partnership, and the ABA Advisory Committee plays an important role in advising the Minister on beneficial payments from the account.
In the wake of the recent mining boom, the ABA experienced a substantial increase in mining royalty equivalent income in 2008-09, increasing to $218.5 million from $83.3 million in 2007-08. This in turn resulted in a significant increase in payments to incorporated Aboriginal associations, communities and groups (royalty associations) compared to 2007-08 (see Table 4.33 on page 368). These payments are made from the ABA to the Northern Territory Land Councils for distribution to royalty associations for the benefit of those people who are affected by mining operations on Aboriginal land. Royalty associations receive 30 per cent of the royalty equivalent monies paid into the ABA each year, in accordance with section 64(3) of the ALRA.
The high level of royalty equivalent income also enabled the ABA to fund an increased number of beneficial projects under section 64(4) of the ALRA. In 2008-09, the Minister approved funding for 67 beneficial projects and initiatives at a total of $58.4 million, including:
Beneficial projects are designed to deliver benefits that ultimately improve the lives of Indigenous people in the Northern Territory through better employment opportunities, education, infrastructure and health. Some key projects during this period include:
$3.58 million over two years to establish one of the largest watermelon farms in Australia. There will be two bore fields, consisting of four bores each at the farm which when completed, will be leased to private investors, creating ongoing economic and employment opportunities for the traditional owners of the Warrabi Aboriginal Land Trust and nearby community of Ali Curung.
$12.2 million to fund smaller local projects across several remote communities such as the establishment of local market gardens to produce fresh vegetables, refurbishment of community stores, purchase of community and school buses, and funding for ceremonial and funeral activities in communities.
$4.04 million for the construction of quality accommodation with comfortable sleeping facilities, recreation spaces and food preparation areas for the Tiwi College. The facility is for use by 72 students and staff, providing accommodation in six family group homes. This was designed to assist in the long-term attendance of students at the Tiwi College from across both Melville and Bathurst Islands, which form Tiwi Islands.
$1.7 million over four years for the establishment and operation of the Machado Joseph Disease (MJD) Foundation. The foundation will provide research and health services to sufferers of the disease which is an hereditary neuro-degenerative condition that has affected Indigenous people for some 40 years.
$6.86 million for a purpose built office complex for the Central Land Council (CLC). The CLC activities had expanded beyond the capacity of the previous accommodation facilities which had staff operating from six different locations in Alice Springs. The new facility, which was officially opened in June 2009, was purpose built to accommodate the core functions of the CLC at the one location, which will provide benefits to numerous Indigenous people within the region.
Information on individual funding initiatives approved in 2008-09 can be found on FaHCSIA's website at www.fahcsia.gov.au.
In 2008, the Office of Evaluation and Audit (OEA) completed a performance audit of the ABA, which examined and reported on the efficiency, effectiveness, and economy of the account, and its overall management. The OEA report was publicly released in March 2009.
The performance audit provided relevant and useful recommendations on ways to improve the administration of the ABA. Good progress has been made in implementing the recommendations, which is contributing to improved governance, administration and reporting.
The reporting framework for 2008-09 (Table 4.31) is aligned with the major functions of the ABA described in Table 4.37. A performance monitoring and reporting framework which will enable improved reporting against a set of high level performance indicators is currently under development.
| Administration of the ABA | |
|---|---|
| 1 | Credits into the ABA |
| 2 | Debits out of the ABA |
| 3 | ABA-Secretariat |
| 4 | Management of the ABA and its investment portfolio |
| Function according to Section of the ALRA | Description |
|---|---|
| Credits into the ABA
Sections 62-63 |
To receive the equivalent of mining royalty monies derived from mining operations on Aboriginal land in the Northern Territory, and such other income as outlined in section 63 of the ALRA. |
| Payments to land councils
Section 64(1), in accordance with section 34(1) |
To make payments to Aboriginal land councils in the Northern Territory in proportions determined by the Minister to meet their administrative expenditure. The ALRA requires the administrative expenditure of the land councils is to be in accordance with proposed estimates of expenditure approved by the Minister. |
| Payments to royalty associations
Section 64(3) |
To make payments to the above mentioned land councils for distribution to incorporated Aboriginal associations, communities or groups in order to benefit those Aboriginal people who are affected by mining operations. These payments are directly linked to the amount of royalty equivalent monies received in respect of mining in the areas concerned. Royalty associations receive 30 per cent of the royalty equivalents paid into the ABA. |
| Beneficial payments
Section 64(4) |
For the Minister to make payments for the benefit of Aboriginal people living in the Northern Territory. The ABA Advisory Committee provides advice to the Minister on these payments. |
| Administration payments
Section 64(6) |
To make payments to meet the expenses of administering the ABA. |
| Office of Township Leasing payments
Section 64(4A) |
To make payments for the acquiring and administration of township leases approved under section 19A of the ALRA. |
Section 63 of the ALRA requires the Commonwealth Government to credit the ABA from time to time, amounts equal to the amounts of any royalties received by the Commonwealth or the Northern Territory in respect of a mining interest in Aboriginal land in the Northern Territory.
Section 62(3) of the ALRA requires interest received from investment of an amount standing to the credit of the ABA to be credited into the ABA. The ABA earns interest from investments of funds that are surplus to immediate needs. Interest earned is receipted directly into the ABA's official bank account and used to make payments as required. Table 4.33 details interest earned for the year.
Resources required for the administration of the ABA account is provided free of charge by FaHCSIA. Resources provided free of charge represent FaHCSIA's staffing costs associated with the management of the ABA account not reimbursed to the Department by the ABA. Resources provided free of charge are included as revenue in Table 4.33 and expenses in Table 4.39.
Financial statement audit services are also provided free of charge to the Department by the Australian National Audit Office.
| 2007-08 $'000 |
2008-09 $'000 | |
|---|---|---|
| Royalty equivalents | 83,257 | 218,515 |
| Interest | 12,253 | 17,224 |
| Resources received free of charge | 1,382 | 1,712 |
| Total ABA income | 96,892 | 237,451 |
Under the Northern Territory (Self-Government) Act 1978, all Commonwealth interests in minerals in the Northern Territory, other than a prescribed substance within the meaning of the Atomic Energy Act 1953, are vested in the Northern Territory.
Title to those substances to which the Atomic Energy Act 1953refers, principally uranium, remains vested in the Commonwealth.
Royalties in respect of uranium and non-uranium mining on Aboriginal land are paid to the Australian Government Department of Resources, Energy and Tourism (DRET) and to the Royalty Branch of the Northern Territory Treasury respectively.
Following advice from these bodies and any necessary determinations made by the Minister, special appropriations are made from the Consolidated Revenue Fund to enable funds equivalent to the amount of royalties received from mining interests on Aboriginal land be credited to the ABA. Advice is provided weekly by the Northern Territory Treasury and twice yearly from DRET.
Table 4.34 provides a break-up of uranium and non-uranium royalty equivalents credited to the ABA for 2007-08 and 2008-09.
| 2007-08 $'000 |
2008-09 $'000 | |
|---|---|---|
| Uranium royalties | 14,139 | 19,306 |
| Non-uranium royalties | 69,118 | 199,209 |
| Total royalty equivalents | 83,257 | 218,515 |
Refer: 2008-09 Financial Statements.
ABA royalty equivalent income is subject to profits recorded by individual mines and world market resources prices and as such is volatile. The following chart shows section 63 receipts from royalty equivalents transferred into the ABA during the past six years.
Figure 4.6: Section 63 royalty equivalent receipts transferred to the ABA for the last six years
Table 4.35 provides a summary of total expenditure from the ABA for 2008-09.
| Payments from the ABA | 2008-09 ($'000) |
|---|---|
| Beneficial payments to Aboriginal people in the NT-64(4) | 26,031 |
| Administration [suppliers-64(6) and employees-64(6)] | 1,890 |
| Payments township leases-64(4A) | 1,773 |
| Payments to land councils for administrative purposes-64(1) | 28,711 |
| Payments to land council for distribution to royalty associations-64(3) | 65,554 |
| Total expenditure | 123,959 |
Refer: Income Statement in the 2008-09 Financial Statements.
Table 4.36 lists ABA monies paid to the four Northern Territory land councils to meet their administrative costs.
| Section 64(1) payments to land councils-administration costs | 2007-08 $'000 |
2008-09 $'000 |
|---|---|---|
| Northern Land Council | 11,601 | 13,028 |
| Central Land Council | 7,783 | 11,967 |
| Tiwi Land Council | 1,928 | 1,768 |
| Anindilyakwa Land Council | 640 | 850 |
| Total | 21,952 | 27,613 |
Refer: Note 4E Payments to land councils for administrative purposes as reported in the Financial Statements.
Under section 64(3) of the ALRA, 30 per cent of the royalty equivalent monies must be paid to each land council in the area of which a mining interest is situated or mining operations are being carried on. These monies are distributed to Aboriginal organisations (royalty associations) in those areas affected by mining operations. Payments to royalty associations have increased this year in line with the increase in royalty equivalent income received.
| Section 64(3) payments to land councils for distribution to royalty associations | 2007-08 $'000 |
2008-09 $'000 |
|---|---|---|
| Northern Land Council | 6,508 | 9,629 |
| Central Land Council | 7,265 | 7,272 |
| Anindilyakwa Land Council | 10,206 | 46,031 |
| Total | 23,979 | 62,932 |
Refer: Note 4F Distribution to land councils as reported in the Financial Statements. NB: Tiwi Land Council did not receive any payment as there were no profitable mining operations in any of its areas.
Under section 64(4) the Minister can make payments to or for the benefit of Aboriginal people living in the Northern Territory. The Minister is advised by the ABA Advisory Committee in relation to these payments.
Table 4.38 lists expenditure under section 64(4) for 2008-09 and 2007-08.
| 2007-08 Actual ($'000) |
2007-08 Accrual ($'000) |
2008-09 ($'000) | |
|---|---|---|---|
| Total beneficial payments | 20,311 | 403* | 26,031 |
* Relates to an accounting adjustment in prior years; a number of grants were incorrectly recorded in the Financial Statements as expenses rather than commitments.
Administration costs associated with the running of the ABA are captured under section 64(6) and 64(4A) of the ALRA. Table 4.39 provides a breakdown of administration and Office for Township Leasing (OTL) expenses for the ABA for 2008-09 and 2007-08, including consultancy services and services provided free of charge to the ABA.
| Expenditure under sections 64(6) and 64(4A) | 2007-08 $'000 |
2008-09 $'000 |
|---|---|---|
| 64(6) payments | ||
| Resources free of charge | 1,382 | 1,712 |
| Committee members' sitting fees/superannuation | 17 | 29 |
| Consultancy services | 215 | 92 |
| Committee meeting expenses | 51 | 58 |
| 64(4A) payments | ||
| Office for Executive Director Township Leasing administrative expenses | 457 | 1,088 |
| Payments for township leases | 278 | 499 |
| Total administrative costs of the ABA | 2,400 | 3,478 |
Refer: Notes 4A employee benefits, 4B suppliers and 4D payments for township leases in the 2008-09 Financial Statements.
Consultancy expenditure under section 64(6) for 2008-09 was $91,719 (net of GST). Table 4.40 lists consultancy services used by the ABA for 2008-09.
| Consultancy | 2008-09 ($'000) |
|---|---|
| Financial services: | |
| KPMG Darwin | 83 |
| Deloitte Touche Tohmatsu | 9 |
| Total consultancy costs | 92 |
Under the Income Tax Assessment Act 1936, payments made from royalty equivalents credited to the ABA, are subject to Mining Withholding Tax (MWT) at a rate specified in the Income Tax (Mining Withholding Tax) Act 1979. In accordance with the Taxation Laws Amendment Act (No. 3) 1994, the current rate of tax applied to payments of MWT is four per cent.
From 1 July 2003, the Australian Taxation Office (ATO) determined the ABA to be a large Pay as You Go (PAYG) Withholder. MWT liabilities on payments made are paid on or before due dates in accordance with the Large withholders guide to PAYG Withholdingissued by the ATO. Table 4.41 shows the total MWT for 2008-09.
| 2007-08 $'000 |
2008-09 $'000 | |
|---|---|---|
| MWT expenditure for the year | 2,296 | 4,460 |
Refer: 2008-09 Financial Statements.
Table 4.42 lists the ABA closing balance as at 30 June 2009 as disclosed in the Financial Statements on an accrual basis, excluding future commitments.
| 2007-08 $'000 |
2008-09 $'000 | |
|---|---|---|
| Balance carried forward from previous year | 146,794 | 192,880 |
| Income minus Expenses (Surplus) | 46,086 | 113,492 |
| Closing balance as at 30 June | 192,880 | 306,372 |
Refer: 2008-09 Financial Statements. Total Equity excludes future commitments.
As part of its administrative responsibilities for the ABA, FaHCSIA provides secretariat support to the ABA Advisory Committee. The ABA Advisory Committee is established under subsection 65(1) of the ALRA to advise the Minister in connection with debiting the Account for the purposes of making beneficial payments under section 64(4) of the ALRA.
2008-09 was a busy year for the advisory committee as it dealt with an increased number of applications for funding under the ABA. The committee met three times to consider applications and formulate advice to the Minister in relation to beneficial payments. The outcomes of each meeting held in 2008-09 are listed below.
During this period, FaHCSIA and the ABA Advisory Committee worked together on developing new funding guidelines, application forms and a new ABA Advisory Committee Members Handbook. The handbook is intended to support the governance of the committee by outlining roles and responsibilities and the operations of the committee. The new guidelines and application forms will further support the work of the advisory committee and provide applicants with improved information on applying for funding under the ABA.
August 2008 meeting (Groote Eylandt)
The committee considered 49 applications for funding:
December 2008 meeting (Darwin)
The committee considered 47 applications for funding:
April 2009 meeting (Darwin)
The committee considered 43 applications for funding:
The ABA Advisory Committee has 14 members elected by the four Northern Territory Land Councils, and one Chairperson appointed by the Minister. Land council representatives are elected from within the land council's own membership. The membership of the committee in 2008-09 is listed in Table 4.43 below.
At the end of June 2009, Dr Miriam-Rose Baumann's period of appointment as Chair expired. During her term, Dr Baumann provided strong and committed leadership to the Committee and has made a valuable contribution to improving opportunities and conditions for Aboriginal people in the Northern Territory in her many areas of public service.
In the second half of 2008-09, an open expression of interest process was held for the position of Chair of the ABA Advisory Committee. The appointment of the new Chair is anticipated at the beginning of 2009-10.
| Chairperson | ||
|---|---|---|
| Dr Miriam-Rose Baumann
Daly River |
||
| Northern Land Council | ||
| Mr Samuel Bush-Blanasi
Katherine Ms Margaret Daiyi Darwin/Daly/Wagait Mr Bunug Galaminda West Arnhem |
Mr Wali Wunungmurra
East Arnhem Mr Jacob Lansen Ngukurr |
Mr Jeffrey Dixon
Borroloola/Barkly Mr Roy Harrington Victoria River District |
| Central Land Council | ||
| Mr Lindsay Bookie
Eastern Plenty Region Ms Veronica Lynch Alice Springs Region |
Mr Harry Nelson
Tanami Region Ms Gina Smith Tennant Creek Region |
Mr Phillip Wilyuka
South West Region |
| Anindilyakwa Land Council | ||
| Mr Tony Wurramarrba
Groote Eylandt | ||
| Tiwi Land Council | ||
| Mr Matthew Wonaemirri
Milikapiti | ||
FaHCSIA is responsible for ensuring that the ABA complies with the Aboriginal Land Rights (Northern Territory) Act 1976and relevant financial legislation and meets its financial accountability responsibilities to the Government and the Parliament. Section 64B of the ALRA requires FaHCSIA to keep accounts and prepare financial statements in respect of the ABA, as determined by the Minister for Finance. Section 64B also requires the Auditor-General to report on the financial statements to the Minister for Families, Housing, Community Services and Indigenous Affairs.
Each year FaHCSIA seeks information from relevant mining companies in relation to the estimates and timing of royalties payable in respect of mining on Aboriginal land in the Northern Territory. The information is sought to facilitate the preparation of annual projections of receipts and payments for the ABA and to meet Budget obligations.
The ABA investment strategy is focused on cash flow requirements, preservation of the fund and management of risk. Monies which are surplus to immediate requirements are invested under section 39 of the FMA Act.
In order to minimise the risk of any loss, section 39 of the FMA Act restrict the investment of public money to a limited number of specified low-risk investments like government bonds, state and territory bonds, term deposits and negotiable cash deposits (NCDs) with a bank.
The ABA had the following term deposits and NCDs with Australian banks as at the 30 June 2009.
| 2007–08 $’000 |
2008–09 $’000 |
|
|---|---|---|
| Interest bearing deposits | 131,540 | 217,309 |
| Negotiable certificates of deposit | 59,217 | 69,220 |
| Total ABA investment portfolio | 190,757 | 286,529 |
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