Background

1. Four Northern Territory (NT) Land Councils are established under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) to represent the interests of Aboriginal people within their respective regions and assist them with the management of Aboriginal land. The four NT Land Councils are corporate Commonwealth entities and must comply with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).

2. The Native Title Act 1993 (NTA) provides for the Land Councils’ responsibilities as native title representative bodies. The NTA provides a mechanism for the recognition of the rights and interests of Aboriginal and Torres Strait Islander people in land and waters according to their traditional laws and customs.

3. The Anindilyakwa Land Council (ALC) was established in 1991 to represent the Aboriginal people of the Groote Archipelago. The Council has 26 members comprised of one or two representatives from each of the 14 clan groups of the Groote Archipelago. In 2021–22, the ALC received $7.4 million from the Aboriginals Benefit Account for its operations and distributed approximately $70.2 million in land use rents and royalties.

Rationale for undertaking the audit

4. This performance audit is part of a series of audits of the governance of the NT Land Councils. It was conducted to provide independent assurance to Parliament that the Land Councils’ governance arrangements are effective in meeting legislative obligations under the ALRA, the NTA and the PGPA Act.

5. Land Councils play an important role in securing rights and realising benefits for Aboriginal constituents. Many external stakeholders, including government entities, non-government organisations, and Indigenous and non-Indigenous businesses, rely on the efficient and effective operation of the Land Councils.

Audit objective and criteria

6. The objective of the audit was to assess the effectiveness of the governance of the Anindilyakwa Land Council under the Aboriginal Land Rights (Northern Territory) Act 1976 and the Public Governance, Performance and Accountability Act 2013.

7. To form a conclusion against this objective, the following high-level criteria were applied.

• Has the ALC appropriately exercised its decision-making authority under the Aboriginal Land Rights (Northern Territory) Act 1976 and the Public Governance, Performance and Accountability Act 2013?
• Is the ALC effectively governing its legislative functions under the Aboriginal Land Rights (Northern Territory) Act 1976?
• Has the ALC established appropriate arrangements to promote the proper use and management of resources?

Conclusion

8. The Anindilyakwa Land Council’s governance arrangements under the Aboriginal Land Rights (Northern Territory) Act 1976 and the Public Governance, Performance and Accountability Act 2013 are partly effective.

9. Land Council decision-making authority is exercised under multiple pieces of legislation. The delegation of functions and powers under this legislative framework is complex. A delegation instrument for ALRA functions and powers is not valid. A lack of specificity raises questions over whether functions and powers belonging to the ALC accountable authority under the PGPA Act have been invalidly delegated by the Council. Greater clarity is required for the NT Land Councils in relation to how accountable authority delegations are meant to be implemented under the two Acts.

10. The ALC’s governance of its legislative functions under the ALRA is partly effective. Governance arrangements to manage operations have not fully met the intent of the ALRA with respect to appointments, meetings and training. Governance arrangements to support the exercise of the ALC’s key legislative functions are partly appropriate. In the context of high value land use development proposals, the ALC has not fully met its obligation to satisfy itself that Traditional Owners have understood the proposals they consent to. ALC provides assistance to Aboriginal corporations, as required, however the arrangements lack transparency. Decisions about the distribution of royalty equivalents also lack transparency.

11. The ALC’s arrangements to promote the proper use and management of resources are partly appropriate. Most key policies are established however require further operationalisation. While the ALC has established a system of risk oversight and management, it has not fully met the requirements of the Commonwealth fraud rule. Conflict of interest is not appropriately managed. The ALC’s 2021–2025 Corporate Plan and draft 2021–22 Annual Report comply with most legislative requirements. The performance statements are partly effective in measuring progress. The Audit Committee does not deliver on most of its key mandatory functions and its Chair is not independent from management.

Supporting findings

Exercise of decision-making authority

12. There is a delegation policy, however the Land Council has not validly delegated its functions and powers under the ALRA. A delegation instrument has not been established under common seal of the Land Council. The document that seeks to be a delegation instrument lacks specificity. PGPA Act functions and powers belonging to the accountable authority may have been invalidly delegated by the Land Council. The delegation instrument also allows for sub-delegation, however there is no legislative power for sub-delegation included in the ALRA. (See paragraphs 2.5 to 2.14)

13. A delegation instrument made in 2022 by the Council may invalidly attempt to delegate powers and functions that belong to the ALC accountable authority under the PGPA Act. A lack of specificity with regard to legislative sections in the delegation instrument makes this difficult to determine. There is no governance document regarding how the CEO and Chair of the ALC (the joint accountable authority) expect to manage their joint responsibilities. There is also a lack of clarity as to whether the accountable authority of the ALC has any power to delegate under the PGPA Act and ALRA. (See paragraphs 2.15 to 2.23)

Governance under the Aboriginal Land Rights (Northern Territory) Act 1976

14. The ALC’s governance arrangements to manage and implement its operations are partly appropriate. There is an approved method of choice, however the method of choice is not fully compliant with ALRA requirements. The method of choice is followed. Council members do not receive training or adequate guidance on how to discharge their duties, which are not clearly documented. Arrangements for the Council’s scrutiny of the Chief Executive Officer’s performance review, remuneration and other employment conditions in August 2022, prior to renewing the engagement, were not robust. Council and committee meeting rules are established appropriately but not fully implemented. The Finance Committee does not provide briefings to the Council that allow it to make fully informed decisions. ALC has met the intent of the ALRA in relation to maintaining registers of members. (See paragraphs 3.4 to 3.37)

15. The ALC has partly appropriate governance arrangements to exercise its key legislative functions.

• Negotiating and assisting — Negotiating and assisting activities are not always supported by robust processes. There are procedures for managing section 19 agreements, however not for administering Part IV agreements or land access permits. Compliance with section 19 agreement conditions is not monitored, and monitoring of Part IV agreements is developing. The ALC assists Aboriginal corporations with commercial activities and could provide greater assurance that the ALC is not receiving financial benefit from these arrangements (which is prohibited by the ALRA). Processes to protect sacred sites are largely appropriate.
• Consulting and obtaining consent — An analysis of consultation on section 19 and Part IV agreements showed that Traditional Owners were engaged and consent was sought, however there could be improvements in: how the benefits and risks of proposals are presented; the use of interpreters; broader community engagement; and procedures to identify and deal with the risk that consent has changed following changes to proposals.
• Distribution of monies — There is a clear procedure for the distribution of Part IV agreement monies. Processes to distribute the ALC’s largest category of land use monies (royalty equivalents) lack transparency. The rationale for assessment outcomes is not clearly documented. (See paragraphs 3.38 to 3.94)

Arrangements to promote the proper use and management of resources

16. The ALC has established a system of risk oversight and management. A Risk Management Policy is established, and risk registers have been developed. Reviews of registers are not always timely, and some key risks are missing from the enterprise risk register. Controls are identified for most risks. Corporate policies are established but are not all finalised or fully operationalised and communicated. (See paragraphs 4.2 to 4.18)

17. Arrangements to support the integrity of Land Council operations are partly appropriate. The ALC’s fraud control arrangements have not met the requirements of the mandatory Commonwealth fraud rule in terms of fraud prevention, reporting and recording mechanisms; and the ALC does not have a fraud control plan based on assessed fraud risks. There is a conflict of interest policy and register for senior management and Council members, and some interests are declared. There are few management plans for identified conflicts. Council meeting rules relating to conflicts of interest are consistent with requirements of the PGPA Rule, however, broad exceptions mean that, in practice, the majority of matters discussed at Council meetings are exempt from conflict of interest management. Key interests held by the CEO and Council members (including the Chair) in corporations that receive funding based on decisions of the Council, are not consistently declared and are ineffectively managed. (See paragraphs 4.19 to 4.51)

18. The 2021–2025 Corporate Plan largely complies with the PGPA Rule, however performance measures and targets are not fully effective in measuring performance. The 2021–22 Annual Report was not published as at March 2023. Although the draft 2021–22 Annual Report mostly complies with PGPA Act and Rule and ALRA requirements, it lacks transparency in relation to operations. The line of sight between performance measures in the corporate plan and performance measures in the annual performance statements is somewhat unclear. The ALC has not established a process for gaining assurance over performance information published in the annual report. (See paragraphs 4.52 to 4.63)

19. The Audit Committee does not provide adequate oversight and scrutiny of the ALC’s operations. The Audit Committee is not independent from management and is not effective in the delivery of some of its key mandatory functions under the PGPA Act. It does not appropriately review the ALC’s performance reporting; system of risk oversight and management; and system of internal control. The Audit Committee secretariat is not effective. (See paragraphs 4.64 to 4.85)

Recommendations

Summary of Anindilyakwa Land Council response

20. The ALC’s summary response is provided below and its full response is included at Appendix 1. An extract of the draft report was provided to the Northern Territory Electoral Commission (NTEC), which did not provide a response. The improvements observed by the ANAO during the course of this audit are at Appendix 2.

Thank you for the opportunity to comment on the draft audit report on the Governance of the ALC. We are proud of our achievements and welcome any opportunity to identify improvements to our governance arrangements. Effective governance is a high priority for us.

The ALC has grown rapidly as we work to secure the future of the Groote Archipelago for the benefit of TOs. We believe that the positive impact of our efforts and the governance improvements in recent years must be recognised within the context of the findings of the audit report.

We acknowledge the findings are administrative or procedural in nature, with the identified irregularities being addressed in our responses. We accept 14 out of the 15 audit recommendations and have identified an additional 10 initiatives to improve our governance arrangements that are not identified in the report. We hold the position that we mostly comply with our obligations.

Our view is the findings reflect the rapid growth of the ALC and the challenges in establishing effective governance practices with limited resources in a remote location. Some of our previous requests for additional resources from the funding agency for governance and internal audit have previously been declined.

Introduction

1.1 Four Northern Territory (NT) Land Councils are established under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) to represent the interests of Aboriginal people within their respective regions and assist them with the management of Aboriginal land: the Anindilyakwa Land Council (ALC), the Central Land Council (CLC), the Northern Land Council (NLC), and the Tiwi Land Council (TLC).

Legislative framework

1.2 In addition to the ALRA, the NT Land Councils operate under two key legislative frameworks:

• the Native Title Act 1993 (NTA), which provides for the Land Councils’ responsibilities as Native Title Representative Bodies; and
• the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule), which set the Land Councils’ requirements as corporate Commonwealth entities.¹

Aboriginal Land Rights (Northern Territory) Act 1976

1.3 The ALRA was the first legislation in Australia that enabled Aboriginal and Torres Strait Islander people to claim land rights for Country where traditional ownership could be proven. The ALRA recognises Aboriginal people’s spiritual affiliation and traditional responsibility for Country as the basis for ownership of land.

1.4 The Aboriginal Land Commissioner undertakes inquiries into traditional land claims in the NT.² Upon the Aboriginal Land Commissioner’s satisfaction that the Traditional Owners³ have been correctly identified according to Aboriginal law, he or she provides a report to the Commonwealth minister responsible for the administration of the ALRA and the Administrator of the NT.⁴ The Commonwealth minister decides whether to recommend to the Governor-General of Australia to grant all or part of the land under claim.

1.5 Once land has been granted, it is held by a Land Trust⁵, and Traditional Owners manage their land with the help of their Land Council. Aboriginal land is a form of ‘inalienable’ freehold, which means it cannot be bought or sold, and Traditional Owners of the land have the right of exclusive access and the power to veto proposals to access or use land. As at 2016 Aboriginal people held freehold title to approximately 50 per cent of the NT land mass and 85 per cent of its coastline.⁶

Native Title Act 1993

1.6 Determinations of native title recognise the ongoing connection of Aboriginal and Torres Strait Islander peoples to specific areas of land and waters. Successful claims under the NTA give Aboriginal and Torres Strait Islander peoples a collection of rights, which may include exclusive possession or such rights as the right to camp, hunt, use water, hold meetings, perform ceremony and protect cultural sites.⁷ As at 2016 native title had been recognised over 238,120 square kilometres (17 per cent) of land and waters in the NT.⁸

1.7 Under the ALRA, land rights usually comprise a grant of freehold title to Aboriginal peoples. By contrast, native title arises as a result of recognition, under Australian common law, of pre-existing Indigenous rights and interests according to traditional laws and customs. It does not provide for a process to grant ownership of the land as the ALRA does.⁹

Public Governance, Performance and Accountability Act 2013

1.8 The four NT Land Councils are corporate Commonwealth entities¹⁰ and as such also must comply with the requirements of the PGPA Act and Rule. The four NT Land Councils are also registered as charities with the Australian Charities and Not-for-profits Commission (ACNC).¹¹

Governance structures under the ALRA and NTA

Northern Territory Land Councils

1.9 The CLC and NLC were established in 1973 as part of the Australian Government’s Aboriginal Land Rights Commission (Woodward Royal Commission) to inquire into the appropriate way to recognise Aboriginal land rights in the NT. The function of the Land Councils at that time was to represent the views of Aboriginal people to the Woodward Royal Commission. The CLC and NLC are responsible for the southern and northern parts of the NT, respectively.

1.10 On 26 January 1977 the Woodward Royal Commission’s recommendations were realised through the enactment of the ALRA, which established the CLC and NLC as independent statutory authorities with powers and responsibilities to assist Aboriginal people to acquire and manage their traditional land and seas. The ALRA also made provision for the establishment of other Land Councils in the NT. This led to the creation of the TLC in 1978 (representing the Aboriginal people of Bathurst and Melville Islands) and of the ALC in 1991 (representing the Aboriginal people of the Groote Archipelago).

1.11 The structure of the Land Councils consists of representatives chosen by Aboriginal people living in the region, referred to as ‘members of the Council’, and an administrative arm managed by a Chief Executive Officer (CEO), who is appointed by the Council. The accountable authority of the ALC is defined in the PGPA Rule (section 7A) as the group of persons made up of the Chair of the Land Council and the CEO of the Land Council.

1.12 The Aboriginals Benefit Account was established under the ALRA in 1976 and is the primary source of revenue for the Land Councils. Aboriginals Benefit Account distributions include funding for the administration of Land Councils, royalty payments for distribution to Traditional Owners, and grants to benefit Aboriginal people living in the NT.

Native Title Representative Bodies

1.13 Once a native title determination is made, the NTA prescribes that native title holders must establish a prescribed body corporate¹² to manage and protect their native title rights and interests. Native Title Representative Bodies are organisations appointed under the NTA and funded by the National Indigenous Australians Agency (NIAA) to assist Indigenous people with all aspects of their native title claims, and in some cases the management of native title rights once a claim has been determined. There are 14 Native Title Representative Bodies in Australia, including two in the NT. The NLC is the Native Title Representative Body for the northern region, including the Tiwi Islands and Groote Archipelago, and the CLC represents those within the NT’s southern region.

National Indigenous Australians Agency

1.14 The NIAA was established as an executive agency in May 2019 to provide advice to and support the Minister for Indigenous Australians (the Minister), including in relation to Land Councils and the exercise of his or her powers under the ALRA and the NTA.¹³ These functions were previously undertaken by the Department of the Prime Minister and Cabinet. The NIAA advised the ANAO that:

While [NIAA] is not involved in the daily operations of land councils, it does provide support where required, performance monitoring and some administrative oversight. A range of branches within the [NIAA] provide information and support on various issues, including land and native title programs, Indigenous Portfolio Bodies Section, environment and rangers programs, specific policy and program areas for grants activities, and finance teams.

1.15 Land Councils engage with the NIAA in relation to the administration of funds for operational and capital expenses (from the Aboriginals Benefit Account), land management programs and annual reporting obligations.

Functions of the Land Councils

1.16 The Land Councils’ key functions, under subsection 23(1) of the ALRA, are to:

• negotiate and enter into Aboriginal land use and access agreements with third parties on behalf of Traditional Owners and of other Aboriginal persons interested in the land;
• assist in carrying out commercial activities;
• assist with traditional land claims and the protection of sacred sites;
• consult with Aboriginal people in the Land Council area about the management of land, and protect their interests; and
• supervise, and provide administrative or other assistance for, Land Trusts in the area.

1.17 Section 35 prescribes how Land Councils must distribute the money received from Aboriginal land use and access.

1.18 The key functions of Native Title Representative Bodies are set out in section 203B of the NTA. They are: facilitation and assistance; certification; dispute resolution; notification; agreement making; and internal review. The powers and duties of Native Title Representative Bodies in respect of money received under the NTA arise from the general law and the terms of the relevant agreement.

1.19 The ALRA prescribes that, in carrying out its functions, a Land Council must not take any action unless it is satisfied that Traditional Owners understand the nature and purpose of the action and consent to it; and any Aboriginal group that may be affected by the proposed action has been consulted. The NTA prescribes that the Native Title Representative Body must consult with native title holders and for some of the functions, be satisfied that they consent to the course of action being taken on their behalf. Given that the vast majority of claims to land under the ALRA are settled as at March 2023¹⁴, facilitating the benefits that can be derived from land rights has been identified by the larger NT Land Councils as an increasing focus and priority.

1.20 A core objective of both the ALRA and the NTA is to establish and support land rights of Traditional Owners (under the ALRA) and native title holders (under the NTA). Land Councils are required to have the capability to confirm the identity and traditional connection of specific individuals to particular areas of land. To this end, Land Councils may collect anthropological data and engage specialist expertise.

1.21 Appendix 3 provides more detail on the Land Councils’ powers, functions and duties under the ALRA, the NTA and the PGPA Act.

Land use and access arrangements

1.22 The main types of arrangements for land use and access under the ALRA and NTA, and how the monies received from these arrangements are distributed, are shown in Table 1.1.

Table 1.1: Land use and access arrangements

Note a: Payment arrangements are made as per instructions from Traditional Owners and native title holders.

Note b: In this table township leases are voluntary agreements between Traditional Owners and the Australian Government, established by the Executive Director of Township Leasing under ALRA section 19A. The Executive Director of Township Leasing manages the land in the township on behalf of the Traditional Owners and the community for up to 99 years, including sub-leases to business and governments and the protection of sacred sites. There is one Township Lease in the area of the ALC, over the townships of Angurugu, Umbakumba and Milyakburra. This was established by the Executive Director of Township Leasing in 2008 and transferred to the Anindilyakwa Royalties Aboriginal Corporation in November 2022.

Source: ANAO analysis.

About the Anindilyakwa Land Council

1.23 The ALC’s jurisdiction covers the Groote Archipelago (the Archipelago), which is located off the eastern coast of Arnhem Land, approximately 650 kilometres from Darwin, in the Gulf of Carpentaria.¹⁵ The Archipelago consists of two inhabited islands (Groote Eylandt and Bickerton Island) and approximately 40 smaller islands.¹⁶

1.24 At the 2021 census, the population of the Archipelago was 2541, including 1574 Aboriginal and/or Torres Strait Islander people.¹⁷ Anindilyakwa people reside primarily in three main townships on the Archipelago — Angurrkwa (Angurugu), Ambukwamba (Umbakumba) and Milyakburra. There is also Alyangkwula (Alyangula), a township established by the Groote Eylandt Mining Company (GEMCO) in the 1960s, where most non-Indigenous people reside.¹⁸

1.25 The Council, which the ALC refers to as the ‘Board’, has 26 positions of which 25 were filled as at March 2023, including 12 women. The Chair of the Council was appointed to the position in 2003 and as at March 2023 was in his seventh term.¹⁹ The Council elects a Finance Committee, which is to consist of seven Council members, including the ALC Chair and Deputy Chair.

1.26 As at June 2022 the ALC had 151 employees, 98 of whom were full time, working across ten ‘departments’.²⁰ Forty–nine per cent of ALC employees are Traditional Owners. The ALC has offices on Groote Eylandt, in Cairns and in Darwin.

1.27 In 2021–22 the ALC received $7.4 million from the Aboriginals Benefit Account for its operations. In addition, the ALC received $5.3 million under the NT Indigenous Economic Stimulus Package in 2021–22 and $8 million in 2020–21 to support Indigenous businesses and jobs in the NT.²¹ It also received $2.1 million in grants from the Australian and NT governments.

1.28 Groote Eylandt hosts the world’s largest manganese mine. GEMCO commenced mining on Groote Eylandt in 1964 and in 2023 holds approximately 34,500 hectares of leases over the island. GEMCO and other mining companies must pay royalties and rents for their exploration and mining operations. A portion of these are transferred to the ALC to administer on behalf of the Traditional Owners of the land on which the operations are taking place. Between 2012–13 and 2021–22 the ALC received $646.6 million in royalties and rents for mining and non-mining operations (Figure 1.2).

Figure 1.2: Royalties and rents received by the ALC, 2012–13 to 2021–22a

Note a: The ALC 2021–22 financial statements were not finalised as at March 2023.

Source: ANAO analysis of ALC financial statements.

1.29 In 2022 GEMCO estimated that it would cease mining operations by 2032. The ALC has a 15-year Strategic Plan 2012–2027, and a Future Groote Strategy (2019). Both documents outline social and cultural priorities, and economic development plans to secure an income for Traditional Owners after GEMCO’s closure.²² In 2018 a Local Decision Making Agreement was signed by the NT Government and ALC, in relation to six areas: housing; economic development; law, justice and rehabilitation services; education; health; and local government.²³ Several Aboriginal corporations have been established to lead the implementation of the Local Decision Making Agreement. These include the Anindilyakwa Advancement Aboriginal Corporation and the Groote Holdings Aboriginal Corporation, which are overseeing two major developments.

• Winchelsea Mining Pty Ltd was established in 2018 to exploit a manganese deposit on Akwamburrkba (Winchelsea Island). A mining lease was granted in March 2022 covering 1444 hectares and, as at March 2023, the project was awaiting final mining approvals.
• Little Paradise is an undeveloped area on Groote Eylandt leased for the establishment of a logistics base for the prospective Winchelsea Mine and other economic development projects.²⁴

Rationale for undertaking the audit

1.30 This performance audit is part of a series of audits of the governance of the NT Land Councils. It was conducted to provide independent assurance to Parliament that the Land Councils’ governance arrangements are effective in meeting legislative obligations under the ALRA, the NTA and the PGPA Act.

1.31 Land Councils play an important role in securing rights and realising benefits for Aboriginal constituents. Many external stakeholders, including government entities, non-government organisations, and Indigenous and non-Indigenous businesses, rely on the efficient and effective operation of the Land Councils.

Audit approach

Audit objective, criteria and scope

1.32 The objective of the audit was to assess the effectiveness of the governance of the Anindilyakwa Land Council under the Aboriginal Land Rights (Northern Territory) Act 1976 and the Public Governance, Performance and Accountability Act 2013.

1.33 To form a conclusion against this objective, the following high-level criteria were applied.

• Has the ALC appropriately exercised its decision-making authority under the Aboriginal Land Rights (Northern Territory) Act 1976 and the Public Governance, Performance and Accountability Act 2013?
• Is the ALC effectively governing its legislative functions under the Aboriginal Land Rights (Northern Territory) Act 1976?
• Has the ALC established appropriate arrangements to promote the proper use and management of resources?

Audit methodology

1.34 The audit involved:

• reviewing legislation, regulations, policies and best practice standards;
• reviewing ALC documentation, including charters, meeting papers and minutes, policies and procedures, annual reports, corporate plans and correspondence;
• visits to the NT including the Archipelago, Cairns and Darwin;
• observing meetings of the ALC Council and Finance Committee;
• meetings with Council members and ALC staff;
• meetings with officers from relevant business areas within the:
  • Australian Government (including the NIAA, Office of Township Leasing and Office of the Registrar of Indigenous Corporations);
  • NT Government (including: the Office of the Chief Minister and Cabinet; Department of Infrastructure, Planning and Logistics; and NT Electoral Commission);
  • NT local government; and
• 47 meetings with and 19 submissions from stakeholders including businesses, Aboriginal corporations, members of the public, peak bodies and non-government organisations operating on the Archipelago and NT mainland.

1.35 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $547,300.

1.36 The team members for this audit were Alicia Vaughan, Dr Isabelle Favre, Weinnie Zhou, Dr Jennifer Canfield, Eliza Glascott, Kai Swoboda, Graeme Corbett, Michael Commens, Elizabeth Robinson, Lily Engelbrethsen, Grace Sixsmith, Sean Brindle, Henry Maher, Katiloka Ata, Andrew Grice, Daniel Whyte and Christine Chalmers.

2. Exercise of decision-making authority

2.1 Authorisations and delegations are a fundamental part of good governance. They play an important role in ensuring that the entity is acting in accordance with the legal framework that applies to it. An entity needs to put in place arrangements to devolve decision-making power from the ultimate repository of that power to the relevant officers of the entity, as the ultimate repository of that power cannot do everything.²⁵

2.2 Appendix 4 shows how Land Council decision-makers are defined under the ALRA, Native Title Act 1993 (NTA) and PGPA Act. Under the ALRA, the members of the Council, including an elected Chair and Deputy Chair, are the decision-makers. Under the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule), the accountable authority of the Land Council is defined as the Chair of the Council and the Chief Executive Officer (CEO). The former is to be elected by the Council and the latter is to be appointed by the Council under section 27 of the ALRA, which states that the Council may employ staff.

2.3 Whether the Council, Native Title Representative Body or accountable authority has decision-making authority depends upon the decision that is being made and whether that decision relates to powers and functions under the ALRA, NTA²⁶ or PGPA Act, respectively. Appendix 3 outlines the Councils’, Native Title Representative Bodies’ and accountable authorities’ respective powers and functions under the ALRA, NTA and PGPA Act. In summary: the Land Council is the primary decision-maker in relation to the land; Native Title Representative Bodies have the power ‘to do all things necessary or convenient to be done for or in connection with the performance of its functions’; and the accountable authority is the primary decision-maker in relation to performance and proper use of resources under finance law.

2.4 Under the ALRA and PGPA Act, the Land Council’s and accountable authority’s functions are distinct except for the preparation of budget estimates (ALRA section 34 and PGPA Act section 36) and the preparation of the annual report (ALRA section 37 and PGPA Act section 46). Although functions are clearly distinct with these two exceptions, in practice powers and responsibilities may overlap.

Has the Land Council appropriately delegated its functions and powers under the ALRA?

2.5 The Australian Government Solicitor has noted that when enabling legislation establishes a board or Council as having ultimate control over the operations of the entity, most commonly the enabling legislation prescribes the CEO or director as the officer responsible for the day-to-day management of the entity.²⁷ This may result in the CEO having ‘implied authority’, although the Australian Government Solicitor advises that even so it is generally better that decision-making power be expressly delegated.²⁸ The ALRA is silent on the role of the CEO (in both their capacity as a CEO and as one of the accountability authorities) or other officials, and an instrument of delegation for functions and powers under the ALRA is therefore required.

2.6 If there is a power to delegate, it will usually be found in the enabling legislation. Appendix 5 shows the ALRA provisions in relation to delegation of powers and functions from the Council to: the Chair of the Council; to committees of the Council; and to Land Council staff, including the CEO. These delegations must be made in writing under the Land Council’s common seal. The ANAO examined whether the decision-making authority as defined in the ALRA is properly exercised by the ALC through the Council’s delegation of ALRA powers and functions.

2.7 The Performance Audit of the Northern Territory Land Councils, conducted by Department of Finance’s Office of Evaluation and Audit²⁹ in 2008 concluded that the ALC did not have a clear instrument of delegation. The audit found that:

• the ALC had recorded the delegation of Council functions and powers through minuted decisions at full Council meetings;
• these minutes made broad ‘catch-all’ statements that did not specifically refer to sections of the ALRA;
• staff needing to clarify whether they had delegated authority were referred to meeting minutes;
• this method of recording delegations lacked transparency and specificity, was inefficient, placed too great a burden on delegates to interpret the minutes, and was non-compliant with section 28 of the ALRA; and
• the management of delegations through multiple internal documents increased the risk of inaccuracy, inconsistency and inefficiency.

2.8 The 2008 audit recommended to the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA)³⁰ that the ALC³¹ record in writing under the common seal of the Land Council the functions and powers delegated by the full Council to persons and committees³², and record the functions and powers retained by the full Council.

2.9 Two ALC documents refer to delegations: the Finance Committee meeting rules and a ‘Delegations Policy’.

• Finance Committee meeting rules — The Finance Committee meeting rules state under the heading ‘Delegated Powers’ that ‘As a committee formed pursuant to s.29A of the ALRA, the Finance Committee shall exercise the powers delegated to it in writing by the ALC.’
• Delegations Policy — The Delegations Policy maps three types of ‘authorities’ (endorse, approve, inform) against different ALC activities and functions, such as purchasing, development of policies and procedures, recruitment and procurement. As an overarching statement, the Delegations Policy establishes that:

The Board of the ALC³³ delegates authority to the Chief Executive Officer (CEO) of the ALC to enable the CEO to manage the organisation. The policy sets out the delegations from the Board to the CEO and from the CEO to the organisation.

In the Delegations Policy, named ‘approvers’ (defined as the ‘person with accountability for deciding’) include the CEO, Audit Committee, Chief Financial Officer (CFO), Human Resources and Performance Manager, departmental managers, support officers and team leaders, among others. The Delegation Policy delegates decision-making authority to the Council Chair for ‘organisation structure’ (this is the only function delegated to the Chair).

2.10 Neither document represents an appropriate delegation instrument.

• The Finance Committee meeting rules are not an instrument of delegation, however assert that certain delegations have been conferred on the Finance Committee by the Council in writing. The Finance Committee is mentioned once in the Delegation Policy, as an ‘endorser’ of the ‘Rulebook for Community Support’ and, additionally, that delegation is invalid for the reasons outlined below.
• The Delegations Policy is not established under common seal of the ALC, as required under section 28 of the ALRA. The Delegations Policy indicates that the policy was approved on 16 March 2022, but does not indicate who approved the policy, and it specifies that the CEO is the ‘content owner’, which is not consistent with the requirements of the ALRA.

2.13 The Delegations Policy has other deficiencies.

• It does not clearly identify which specific sections of the ALRA are being delegated to officials. For example, the Delegations Policy seeks to delegate the ‘Mining Rents and Royalties Distribution Framework’ but does not identify which legislative power in the ALRA it is designating. This lack of specificity makes it difficult to clearly identify which ALRA functions and powers are retained by the Council.
• It delegates provisions of the ALRA which do not provide the Land Council with powers, and which therefore cannot be delegated by the Land Council. For example, the Delegations Policy delegates subsection 64(1) as ‘general expenditure within budget’, however this provision of the legislation relates to moneys being debited from the Aboriginals Benefit Account for distribution between the Land Councils as the Minister for Indigenous Australians (the Minister) determines.
• It explicitly allows for sub-delegation. The specified process involves getting approval in writing from the approver’s line manager, or in the event that a delegate has not been nominated, the sub-delegate is the line manager. For each delegation under this policy a new delegation instrument is required to be made.³⁴ Typically it is not possible for a delegate to ‘sub-delegate’, unless there is a specific legislative power to sub-delegate.

Has the accountable authority appropriately delegated its functions and powers under the PGPA Act?

2.15 The ALC accountable authority has not established any Accountable Authority Instructions under section 20A of the PGPA Act, and there is no delegation instrument relating to the ALC accountable authority’s functions and powers.

2.16 The Delegations Policy (see paragraph 2.9) seeks to delegate functions and powers which may not belong to the Council, but rather to the accountable authority under the PGPA Act. For example, the Council delegates to various ALC officers financial delegations and risk management functions. The lack of specificity in the delegations means the ANAO cannot determine if these are related to functions that are incidental to Council’s functions under the ALRA, or more correctly functions and powers held by the accountable authority under the PGPA Act.

2.17 Separate responsibility for approving the risk framework and risk appetite / tolerance is assigned in the Delegations Policy to the CEO and Council, respectively. Under the PGPA Act the accountable authority of a Commonwealth entity must establish and maintain an appropriate system of risk oversight and management. The risk management function is delegated to the CEO for approval in the Delegations Policy. Risk management is a direct responsibility of the CEO and Chair, under the PGPA Act, as the accountable authority of the ALC.

2.18 The Department of Finance advised the ANAO in February 2023 that how the accountable authority is required to operate is a matter for the accountable authority to determine between themselves (noting that they are jointly responsible for fulfilling the duties and legal obligations under the PGPA Act) and that the PGPA Act provides flexibility to accountable authorities to establish systems of internal control most appropriate to their operating environment (noting that this must be consistent with the proper use and management of public resources).

2.19 It is usual practice for an accountable authority made up of multiple individuals, such as boards, to have an operational charter setting out how the accountable authority operates. The ALC does not have such a document.

2.22 The Finance Minister delegates some of his or her functions and powers to the accountable authority of an entity under section 107 of the PGPA Act. Section 110 of the PGPA Act indicates when an accountable authority may delegate to an official of a non-corporate Commonwealth entity. This provision does not apply to corporate Commonwealth entities, which are legally separate from the Commonwealth. In the case of corporate Commonwealth entities, the delegation requirements should be specified in the enabling legislation — in this case the ALRA. However, the ALRA is silent regarding delegations by the Land Council accountable authority as defined by the PGPA Act. It appears that the accountable authority of a Land Council is not able to delegate his or her functions and powers under existing legislation.

2.23 Auditor-General Report No. 25 of 2022–23 Governance of the Tiwi Land Council made a recommendation to the National Indigenous Australians Agency to, in consultation with relevant stakeholders, clarify the conditions and requirements under which a Land Council accountable authority may delegate its functions and powers. The National Indigenous Australians Agency agreed to the recommendation.

3.1 The Northern Territory (NT) Land Councils’ key purpose is to assist in claiming Aboriginal land and once a claim has been granted, to manage Aboriginal land on behalf of Traditional Owners and other Aboriginal people living in the area of the Land Council. To achieve this purpose, the ALRA prescribes that specific governance arrangements must be in place for Land Councils to manage their operations. The arrangements relate to: appointments to key governance positions; the establishment and conduct of Council and committee meetings; and the establishment of registers of Council and Land Trust members, and Traditional Owners.³⁵

3.2 Land Councils must also establish governance arrangements to support the delivery of their key legislative functions, which pertain to three main types of activities.

• Negotiation and assistance — Land Councils must assist Traditional Owners and Aboriginal people with land claims³⁶, negotiate on behalf of Traditional Owners and other Aboriginal people with third parties wanting to use or access Aboriginal land; and assist Aboriginal people to carry out commercial activities and protect sacred sites.³⁷
• Consultation and consent — Land Councils must consult with Traditional Owners and Aboriginal people in the area of the Land Council about the management of land and endeavour to protect their interests.³⁸
• Distribution of royalties and payments — Land Councils must distribute royalties and other payments, such as rents, to, or on behalf of, Traditional Owners.³⁹

3.3 Land Councils and Land Trusts are exempt from compliance with the Freedom of Information Act 1982.⁴⁰ There are also no appeal or review mechanisms in the ALRA. This reinforces the importance of effective governance arrangements to support the management of Land Councils’ key activities.

Has the Land Council established and implemented appropriate governance arrangements to manage its operations?

Appointment of key governance positions

3.4 The ALRA prescribes how Council and Land Trust⁴¹ members, including the Chair and Deputy Chair of the Council, must be appointed (see Appendix 6). The ALRA specifies that:

• Council Members shall be chosen by Aboriginal people living in the area of the Land Council in accordance with a ‘method of choice’, which is to be approved by the Minister; and
• Land Trust members shall be appointed by the Minister based on nominations from the Council.

Land Trust member appointments

3.5 In accordance with the ALRA, Anindilyakwa Land Trust members are nominated by the ALC Council and appointed by the Minister for Indigenous Australians (the Minister) every five years. Members were last appointed in 2020. There are six positions, of which five were filled as at March 2023.

Council member appointments

Method of choice

3.6 The ALC’s method of choice for Council members was last approved by the Council in February 2018. The Minister approved the method of choice on 26 April 2018.

3.7 There are 26 positions on the ALC Council, comprising 23 clan representatives (one or two for each of the 14 clans) and three community representatives (one for each township of Angurugu, Umbakumba and Milyakburra). Elections to the Council are held every three years. The elections are to take place in two stages.

• Nominations — Members of clans and communities submit individual nominations to the ALC.⁴² If the number of nominations for each clan does not exceed the number of positions available, then the nominated candidates are automatically appointed as Council members.
• Elections — If the number of nominations exceeds the number of positions available, elections within clans and communities are conducted by secret ballot and overseen by a ‘Returning Officer’ from the Northern Territory (NT) Electoral Commission or the Australian Electoral Commission.⁴³ Elections are to be open for no less than seven days.

3.8 Although approved by the Minister, the ALC’s method of choice is not fully compliant with the requirements of the ALRA. The ALRA (subsection 29(1)) stipulates that the members of a Land Council are ‘chosen by Aboriginals living in the area of the Land Council’. However, the ALC’s method of choice states that: ‘The election process is to provide for postal voting for eligible electors not resident in the Groote Archipelago.’ The ALC advised the ANAO that it does not conduct any postal voting.

2018 and 2021 Council member elections

3.9 In 2018 members for nine out of 14 clan groups and one of three communities were declared on the basis of nominations only. In 2021 members for all three communities and all except one clan were declared on the basis of nominations only. Approximately three-quarters of the members elected to the Council in 2021 were current members or had been members in the past.

3.10 The method of choice requires that elections are advertised in public locations at least four weeks before the election commences; and that other methods may also be used to publicise the election (including email, newspaper and verbal communication). In 2018 two complaints were submitted to the NT Electoral Commission stating that there had been inadequate public notification of the ALC elections and that the method of choice was not publicly available. The NT Electoral Commission responded that the ALC was responsible for ‘nomination eligibility and awareness’, and it was ‘satisfied’ that the processes had been ‘adequate’. The NT Electoral Commission did not directly address the complaint that the method of choice was not publicly available. The ALC published the method of choice on its website on 28 March 2023.⁴⁴

3.11 A consistent theme of the ANAO’s consultations with stakeholders in 2022 was concern about the visibility and accessibility of the nomination and election process. In 2021 the ALC advertised the elections (including the call for nominations) at least six weeks before election week. This included: radio broadcasts; flyers displayed in the ALC’s offices and distributed to stakeholders for display in other community locations; and notices posted on the ALC’s website and Facebook page (Figure 3.1).

Figure 3.1: Public notice for September 2021 Council member appointments

Source: ALC.

Guidance and training for Council members

3.12 The method of choice states that at the first meeting after the Council member election, members are to be provided with an induction. Following the 2018 and 2021 elections, the ALC did not provide an induction. In 2021 the minutes of the first meeting record that the Code of Conduct and expectations were discussed. The ALC has not developed training or documentation on the roles and responsibilities of Council and committee members. As at November 2022, six Council members had commenced or completed a governance-related training course through their directorship of other organisations.⁴⁵

Election of the Chair and Deputy Chair

3.13 The method of choice describes the process by which the Chair and Deputy Chair are to be elected. This is done by Council members through an anonymous ballot within 14 days of the completion of the Council member elections. In line with the ALRA, the ALC Chair and Deputy Chair hold office for a period of three years and are eligible for re-election. The 2021 Chair and Deputy Chair election process conformed to the method of choice.

Remuneration of Council Chair and members

3.16 The remuneration of Council members is determined by the Remuneration Tribunal.⁴⁶ As at March 2023 the prescribed remuneration of the Chair as a full-time office holder was $199,330. The prescribed daily fees for Council members when engaged on the functions or duties of the Land Council were $344.⁴⁷ The ALC advised the ANAO that, as at March 2023, seven members of the Council including the Chair were also employees of the ALC. The ALC advised that members who are also full-time or part-time employees of the ALC and who receive a salary for their ALC employment do not receive a Council sitting fee.

3.17 Under subsection 7(11) of the Remuneration Tribunal Act 1973, a full-time public office holder is prohibited from receiving remuneration for holding, or performing the duties of, another public office. The Chair advised the ANAO that he receives sitting fees for seven organisations outside the ALC. It is not clear to the ANAO that the Chair holding multiple paid positions in other organisations is consistent with the Remuneration Tribunal Act 1973. The ANAO did not examine whether the Chair’s performance of duties for other entities impact on his capacity to complete his duties for the Council as a full-time remunerated public office holder.

Chief Executive Officer appointments, employment conditions and reviews

3.18 Under the ALRA, the Council has the power to employ staff, including the CEO of the ALC.⁴⁸ The CEO as at March 2023 was appointed by resolution of the Council in September 2011, following a competitive selection process.

3.19 The power to employ staff (excluding the CEO’s own appointment) was delegated by the Council to the CEO (see paragraph 2.9). The ALC does not have a policy, approved by the Council, documenting the process for the appointment, review and remuneration of the CEO.

• The CEO responsibilities and requirements for performance reviews are defined in the employment contract and in two policies: the Organisational Design Policy (approved by the CEO); and the Human Resource (HR) Policy (approved by the HR manager, who reports to the CEO). Neither policy was endorsed by the Council.
• The CEO’s remuneration is stipulated in his 2022–2027 employment contract, which was signed by the Chair (who does not have the delegation to approve this). The CEO’s previous contract expired in August 2021, and was not renewed until December 2022. The ALC was unable to provide evidence of how the CEO’s remuneration was determined between August 2021 and December 2022.

3.20 The HR Policy requires that CEO performance reviews are conducted annually against Key Performance Indicators (KPIs) established in the employment contract. The reviews involve a self-assessment by the CEO, followed by an assessment by a panel consisting of the Chair of the ALC Audit Committee, Chair of the Council and another Council member. The ANAO analysed the CEO’s performance review for 2022, and observed the Council meeting of 30 August 2022 where the performance review was conducted. The panel assessed the CEO as strongly performing against all KPIs, with one area for improvement (community engagement). The Audit Committee Chair communicated the assessment to the Council, which then resolved to renew the CEO’s contract for five years.

3.21 The full Council was not given: an opportunity to review the performance assessment in detail; a copy of the CEO’s draft contract; or information about the terms of the contract. The Audit Committee Chair advised the Council that the CEO’s salary would increase by around two per cent from the previous year and that a new work location had been added to the contract. The Audit Committee Chair did not advise the Council of: the new salary amount; an increase in potential bonus payments from 7.5 per cent to nine per cent; an increase in annual leave from four to five weeks; or a decrease from 20 to 17.5 per cent in the reduction that is applied to the CEO’s salary as a result of his concurrent position in Winchelsea Mining (see Appendix 8).

Establishing and implementing meeting and committee rules

Establishment of committees

3.24 The ALC established the Finance Committee in accordance with the ALRA (see Appendix 6).

Establishment of Council and Finance Committee meeting rules

3.25 The ALC has largely complied with the requirements of the ALRA (see Appendix 6) in relation to the establishment of Council and Finance Committee meeting rules, which were approved by the Minister in April 2018. The ALRA prescribes that meeting rules and minutes must be made available for inspection. The Council meeting rules contain the requirement for meeting minutes to be available for inspection, as required, however the Finance Committee meeting rules do not. The ALC advised the ANAO that there have been no requests and that it does not promote the fact that meeting rules and minutes are available for inspection due to administrative burden.

Implementation of meeting rules

3.29 The ANAO analysed records of the Council and Finance Committee meetings to determine if meeting rules were complied with.⁴⁹ Some meeting rules were implemented appropriately.

• Quorum was met for all Council and Finance Committee meetings.
• Council minutes were endorsed as required⁵⁰ and Finance Committee minutes were recorded as being ‘presented’ but not endorsed.
• Decisions were made by a process of ‘moving’ and ‘seconding’ by members, and appropriately recorded.

3.30 The substance or intent of some meeting rules were not met.

• Meeting frequency — In 2021–22 Council meetings were held at least monthly (except for January) in line with the meeting rules, however Finance Committee meetings were held every six months when the meeting rules state that they should be held no less than six times annually.
• Review of key governance documents — The meeting rules state that key governance documents should be reviewed annually by members. ANAO analysis of the minutes for 1 July 2019 to 30 June 2022 shows that this rule was not complied with for all key governance documents, as the meeting rules, register of interests and annual report were not reviewed by the Council each year.
• Briefing for meetings — The meeting rules require ‘briefing papers, presentations and reports to facilitate background and understanding of the matters discussed’. Records examined for 2021–22 showed that the required materials were not circulated to members before, during or after the meetings. The ALC advised the ANAO that the reason for not circulating information ahead of Finance Committee meetings was due to time constraints, to prevent disclosure of confidential matters into the community and to prevent members from being influenced by their constituents. During the meetings observed by the ANAO in August 2022, supporting information was presented on large screens, although some members commented that the text was not always legible.⁵¹

3.33 The ALRA states that Traditional Owners and Aboriginal people living in the area of the Land Council should be able to access meeting minutes. For access to be meaningful, the minutes should be clear and provide more information than just a summary of decisions. The ALC meeting rules require that the minutes are an ‘accurate account of the business discussed and the decisions reached’. Minutes that documented decisions were recorded for all meetings, however the minutes did not record the business discussed, concerns raised or options considered. The ALC advised that this is due to some discussions taking place in Anindilyakwa language, and that as an alternative means of communication with Traditional Owners, the ALC produces videos in Anindilyakwa language. However, the videos do not cover the breadth of matters and decisions dealt with in meetings.

3.35 The role of the Finance Committee is to make recommendations to the Council regarding the distribution of royalties and land lease payments. Under section 28 of the ALRA, decisions over the distribution of royalties and land lease payments must be made by the Council and cannot be delegated.⁵² The Finance Committee meeting rules state under the heading of ‘Delegated Powers’ that:

As a committee formed pursuant to s.29A of the ALRA, the Finance Committee shall perform the following functions conferred upon it by the Anindilyakwa Land Council: 4.1.1 recommendations to the ALC pursuant to s.35(2) and/or s. 35(4) 4.1.2 review matters for an [sic] on behalf of the ALC so as to make recommendations to the ALC concerning matters pursuant to s 35A, s. 35B and/or s. 35C of the ALRA.

3.36 In the 2021–22 meetings of the Land Council, the Finance Committee did not provide complete information to allow the full Council to make informed decisions about the Finance Committee’s recommendations. Until the August 2022 meeting, Council members were briefed on funding applications that were recommended by the Finance Committee, but not those that the Finance Committee had not supported. From August 2022 Council members were briefed on all applications.

Compiling and maintaining registers

3.37 The ALC complies with the ALRA (see Appendix 6) in maintaining a register of Council members. It maintained a record of Land Trust members from 2020 onwards. Schedule 6 of the ALRA provides a detailed description of the area held by the Anindilyakwa Land Trust. The ALC advised that this is sufficient to meet the ALRA requirement to include in registers descriptions of each area of the land held by the Land Trusts and ALC registers do not contain this information. The ALC also maintains a register of Traditional Owners under the ALRA (section 24).⁵³

Has the Land Council established and implemented appropriate governance arrangements to exercise its key legislative functions?

Negotiating and assisting

Negotiating Aboriginal land use and access

3.38 The ANAO examined the ALC’s processes in relation to section 19 agreements, Part IV agreements and permits (see Table 1.1). Section 19 (s19) agreements cover primarily non-mining land use arrangements, Part IV agreements relate to mining and exploration, and permits enable access to Aboriginal land or roads.

Section 19 agreements

3.39 As at November 2022, 34 active s19 agreements were being administered by ALC. The ALC’s policy and procedures outline key steps in the s19 agreement process. The s19 lease template employed by the ALC contains a range of standard conditions with which the lessee must comply, including that the lessee will: not remove any extractive minerals without a separate agreement; endeavour to minimise ‘deleterious’ environmental impacts; obtain authorisation from the Aboriginal Areas Protection Authority (AAPA) for any sacred sites⁵⁴; and maximise employment opportunities for local Aboriginal people. The s19 procedure states that the ALC officer is to monitor the lease for compliance with the conditions of the s19 agreement, report non-compliance to the relevant ALC manager and consult with Traditional Owners on any non-compliance. The ALC adopts a reactive approach to compliance, and does not undertake monitoring to detect non-compliance with lease conditions.

Part IV agreements

3.40 As at February 2023, eight Part IV agreements were being administered by ALC. Under the ALRA, council consent is required for an exploration licence and is not required for a mining agreement.⁵⁵ The Council must enter into a mining agreement, if sought by the holder of an exploration licence, although it may negotiate the terms and conditions. For both mining and exploration, an agreement cannot be entered into unless consultations have been conducted with Traditional Owners and any affected Aboriginal people.

3.41 As at March 2023 the ALC has not developed a policy or procedures to support the administration of Part IV agreements. The ALC’s draft 2021–22 Annual Report stated that ‘Commitments under existing agreements are met’, however systematic compliance monitoring was not undertaken against all key commitments established in agreements (for example Traditional Owner employment and cultural awareness training).

3.42 From February 2022 the ALC began conducting meetings with the Groote Eylandt Mining Company (GEMCO) on a weekly to fortnightly basis. In 2022 it performed two environmental site inspections; and responded to two incident reports from GEMCO where non-conformances were identified. The ALC did not perform any site inspections for Winchelsea Mining exploration activities and conducted one environmental inspection under the related mining agreement in September 2022. The ALC advised the ANAO that it plans to introduce biannual routine inspections in 2023.

Land access permits

3.46 Under the ALRA (section 70), unless a person holds a lease or a license, they cannot enter or remain on Aboriginal land, or use a road on Aboriginal land, without a permit.⁵⁶

3.47 The draft 2021–22 Annual Report states that the ALC issued 875 visitor permits in that year. The ALC has not developed procedures to guide staff through the permit application and management process. However, it has established two advisory groups — a staff advisory group to select research permit applications for presentation to the Council and a Traditional Owners advisory group to provide advice to ALC on permit non-compliance (among other matters). In its draft 2021–22 Annual Report, the ALC reported that it had conducted 40 compliance controls over permits, from which four instances of permit non-compliance were identified. The draft 2021–22 Annual Report states that these instances were referred to the ALC Chair and investigated by NT police.

Assisting with commercial and other activities

3.48 Under the ALRA, the Land Councils are to assist Aboriginal people in the area of the Land Council to carry out commercial activities in a manner that will not cause the Land Council to incur financial liability or enable it to receive financial benefit; and may provide administrative or other assistance to an Aboriginal corporation that received an amount of money from the Council.

3.49 The ALC provides corporate services to 12 Aboriginal corporations and one proprietary company on the Groote Archipelago. These services are stipulated in a service deed established between the ALC and each corporation, with provision for additional services to be provided as required. Services include payroll, human resources, governance assistance and business development.

3.50 Of the 13 organisations assisted by the ALC, the Anindilyakwa Royalties Aboriginal Corporation (ARAC) is the largest recipient of royalty equivalents on average.⁵⁷ The ALC established ARAC in 2016 as a means of disbursing royalty equivalents within the legislated timeframe.

3.51 ARAC oversight and staffing arrangements overlap those of the ALC: five of ARAC’s eight Board members are members of the ALC Council; and ARAC does not have its own CEO (or equivalent). Approximately 80 per cent of ALC employees are contracted to ARAC. In 2021–22 ARAC paid the ALC $8.1 million in employee costs, using royalty equivalents distributed to ARAC by the ALC. ARAC contracted employees report to the ALC CEO and appear on the ALC organisation chart.

3.52 The ALC advised that, where operational funding provided by the NIAA is insufficient to meet ALC needs, it uses royalty equivalents to fund ARAC, and in turn ARAC pays for the relevant ALC employee costs. There is a lack of transparency regarding how much time these ARAC-paid employees are spending undertaking work for ALC. While the ANAO did not perform analysis to identify any instances of financial benefit to the ALC, there is a risk that employee costs paid by ARAC to the ALC could result in financial benefit if the labour provided in return is not commensurate.

Assisting with the protection of sacred sites

3.55 The ALRA prescribes that the Land Councils must take measures to assist in the protection of sacred sites on land in the area of the Land Council. Most work undertaken by the ALC to protect sacred sites is triggered by the lodgement of land use proposals. The ALC’s Organisational Design Policy requires anthropologists to undertake fieldwork to identify Traditional Owners of the relevant land and seek their advice on any sacred sites. For each proposal, the anthropologists are to prepare a report documenting the results of these consultations with Traditional Owners. The ALC employs two anthropologists for this purpose.

3.56 The s19 agreement procedure states that where potential sacred sites are identified, the application should be placed on hold pending further advice from the anthropologists. The ALC may request that the applicant obtain an Authority Certificate from the AAPA. Based on ANAO examination of two groups of land use proposals (relating to Winchelsea Mining and Little Paradise logistics base, see paragraph 1.29), potential sacred sites were confirmed by ALC, and a clause was appropriately included in the relevant land use agreements requiring the applicants to obtain an Authority Certificate.

3.57 From mid-2021 the anthropology reports included a Traditional Owner Identification Document.⁵⁸ There is no standard process or documented procedure for conducting anthropological fieldwork or preparing Traditional Owner Identification Documents. The ALC anthropologists advised the ANAO that an applicant often modifies their original proposal during or after the consultation process. The s19 agreement policy and procedures do not provide guidance on what to do in these circumstances.

Consulting and obtaining consent

3.58 The ALRA determines that, in carrying out its functions, a Land Council shall have regard to the interests of, and shall consult with, the Traditional Aboriginal Owners of the land in its area and any other Aboriginal people interested in the land. The ALRA further specifies that a Land Council shall not take any action unless it is satisfied that:

• the Traditional Owners of that land understand the nature and purpose of the proposed action and, as a group, consent to it⁵⁹; and
• any Aboriginal community or group that may be affected by the proposed action has been consulted and has had adequate opportunity to express its view to the Land Council.⁶⁰

3.59 The ALC’s processes for consulting with Traditional Owners and obtaining consent in relation to s19 lease agreements are detailed in the s19 agreement policy and procedures. These consultation processes are consistent with the ALC’s obligations under the ALRA to consult. As the ALC has not developed a policy or procedures to support the administration of Part IV agreements, the ALC advised the ANAO that it refers to the s19 agreement policy and procedures when consulting on Part IV agreements. The ALC also advised that while special access permits require consultation, recreation and work permits do not.

3.60 The ALC undertakes three types of consultations in response to land use proposals: anthropological consultations; community information meetings; and Traditional Owner meetings.⁶¹ The ALC refers collectively to these last two types of consultations as ‘community meetings’, and community meetings where consent is being sought are called ‘decision meetings’.

3.61 The s19 agreement procedure prescribes methods for publicising and conducting community meetings, including assisting attendees to interpret information about the proposal and seeking further information from the applicant as required. A translator is to be engaged if required, and a Community Liaison Officer may also assist in conveying information.

3.62 The ALC executed 15 land use agreements in 2021–22. Of these, 12 were s19 agreements and three were Part IV agreements. Eleven of the 12 s19 agreements related to the Little Paradise logistics base development⁶², and 10 of the 11 were considered together as part of the same consultation process. The ANAO assessed consultations conducted for the 10 of the 11 Little Paradise agreements that were considered as part of the same consultation process and for the one⁶³ Part IV agreement that related to Winchelsea Mining (Table 3.1).⁶⁴

Table 3.1: ANAO assessment of consultations for Little Paradise and Winchelsea Mining s19 and Part IV agreements

Key: ◆ Fully demonstrated ▲ Partly demonstrated ■ Not demonstrated

Source: ANAO analysis against ALRA and ALC Section 19 Lease policy and procedure.

Engagement of Traditional Owners and other Aboriginal people

3.63 The total number of Traditional Owners identified by the ALC as affected by the Little Paradise proposals was 271, including 44 senior clan members. The total number of Traditional Owners identified by the ALC as affected by the Winchelsea Mining proposal was approximately 230, including 27 senior clan members. There are no targets for the proportions of senior clan members who must be consulted and the ALC defers to Traditional Owners to determine when attendance is adequate (see paragraph 3.72).

3.64 For the Little Paradise proposals, public advertising, for instance through flyers, was not undertaken. One of the three Traditional Owner clans was not invited to the first of two decision meetings, which resulted in deferral of the decision until the clan could be consulted. This led to amendment of the s19 agreement procedure to prevent similar errors in future.

• The ALC recorded 15 consultations with Traditional Owners.⁶⁵ This included two decision meetings, which were attended by 14 and nine senior clan members, respectively.
• The ALC did not hold separate community meetings to consult with other Aboriginal residents who were not Traditional Owners of the land subject to the Little Paradise proposals. However, 24 such community members attended one or both of the decision meetings.

3.65 For the two Winchelsea Mining proposals, meetings were advertised through flyers (and radio for the mining proposal), and the ALC met with relevant Traditional Owner clans and other Aboriginal people.

• The ALC recorded 36 consultations with Traditional Owners and other community members.⁶⁶ Six decision meetings were conducted, which were attended by between five and 15 senior clan members. The ALC was unable to provide minutes of the final decision meeting. Both Traditional Owner clans affected by the proposals were invited to all decision meetings.
• Traditional Owner meetings were also attended by other Aboriginal people living in the area. In addition, the ALC organised six community meetings in 2017 and 2020 for these residents to discuss the proposals although it did not retain minutes for two of these.

Understanding

3.66 Means employed by the ALC to communicate details of the proposals in meetings included: PowerPoint presentations in mostly plain English and large font; site maps; computer-generated images of proposed developments; and opportunities for Traditional Owners to ask questions. For the Winchelsea Mining proposals, the ALC also commissioned a video, which it presented at a decision meeting on 10 October 2017.⁶⁷

3.67 The ALC’s 15-year Strategic Plan 2012–2027 outlines a number of considerations for consulting with Anindilyakwa people, including that trained interpreters are ‘critical’ for meetings where complex information will be presented. An interpreter was engaged for none of the Little Paradise meetings and four of the 17 meetings on the Winchelsea Mining proposals.

3.68 Meeting minutes record instances of attendees inquiring about details of the proposals, including aspects of environmental and cultural protection. Responses were provided by ALC representatives, including staff with legal, anthropological and technical expertise. ANAO consultations and analysis of ALC records indicate that Traditional Owners may not have understood some aspects of the proposals presented for Little Paradise and Winchelsea Mining, such as the payment scheme or expected impacts on the community.

3.69 Traditional Owners were briefed on the benefits of the proposals, however there was little briefing on the risks and potential costs to them such as limitations to land access, impacts on the environment or the volume of royalties that would be diverted away from other potential projects. The ANAO identified one documented instance of Traditional Owners being alerted to a risk when the ALC CEO, in his capacity as a director of Winchelsea Mining, advised five Traditional Owners in attendance at a 4 September 2018 exploration decision meeting:

There is risk in this project and there are unknowns, no one has ever drilled on Winchelsea before so no one knows what’s there. There won’t be any money at this early stage but if/when production starts that’s when the profit sharing would kick in.

Consent

3.72 ALC advised the ANAO that a key indicator of consent is the attendance of senior clan members at the decision meeting, however this was not consistently established. Minutes did not document the ALC confirming with attendees that the right people were present for either of the Little Paradise decision meetings; and did document this for four of the six Winchelsea Mining decision meetings.

3.73 The Traditional Owners’ final decision is to be formally documented in the meeting minutes, including any specific conditions or actions. Little Paradise and Winchelsea Mining proposal meeting minutes recorded the final decision for seven of the eight meetings⁶⁸ conducted between August 2017 and March 2022.

3.74 While consent was provided at specific points in the proposals’ development, the ALC did not seek Traditional Owners’ consent to subsequent changes to the proposals.

• Traditional Owners’ consent to the Little Paradise proposals was sought (and granted) without the ALC receiving complete and up-to-date application forms from the proponent, Groote Holdings Aboriginal Corporation. Various additional changes were made to the Little Paradise plans subsequent to Traditional Owners’ consent to the original proposals.
• As at March 2023 plans are not finalised for Winchelsea Mining, for which consent was provided in March 2021.

3.76 The s19 agreement procedure requires the Council to be informed of consultation outcomes. The meeting minutes do not demonstrate that the Council was briefed on the consultation outcomes for the Little Paradise and Winchelsea Mining proposals.⁶⁹ However, at least one third of the Council members had also attended the relevant consultations.

Disputes and complaints

3.77 The ALRA establishes a duty of Land Councils to attempt conciliation of disputes with respect to land in the area of the Council.⁷⁰ The ALRA does not include requirements for complaints management, however in order to ensure the Land Council is representing the interests of its constituents effectively and transparently, complaints should be handled effectively. The Commonwealth Ombudsman’s Better Practice Complaint Handling Guide identifies attributes of a strong complaints system, including: actively encouraging complaints; supporting early resolution; communicating outcomes; and feeding back systemic issues.⁷¹

3.78 ALC does not have a disputes conciliation function and advised that disputes are ‘not regular’ and are typically resolved without ALC intervention.

3.79 The ALC developed an External Complaints Policy and register in July 2022, and added a complaints form to its website in September 2022. These are largely consistent with the Commonwealth Ombudsman’s principles, with potential for improvements in four areas.

• While managers were advised of the new External Complaints Policy via email and an intranet post, training was not conducted.
• The External Complaints Policy does not outline a referral process for complaints received by phone or in person, which the ALC advised is how complaints are typically received.
• The register does not include a field for recording details of the resolution.
• The External Complaints Policy aims to ‘identify and implement improvements’ addressing the causes of complaints however does not outline arrangements for the capture of systemic issues or lessons learned.

3.80 As at February 2023 the complaints register contained two complaints. One related to a potential land access breach and the other related to a matter outside the ALC’s scope of responsibilities.

Distributing royalties and other payments

3.82 The ‘ALC Sources of Funding and Rent/Royalties Distribution Model’ (Distribution Model) describes which funds are received by the ALC and how they are used or distributed. This was updated annually from 2021 and is supported by policies and procedures for the distribution of royalty equivalents. While other payments (Part IV agreements and township leases) are not covered by a specific policy, the Distribution Model provides some key information on the distribution methods for these funds. Figure 3.2 describes how land use agreement monies received in 2021–22 by the ALC were distributed (see Table 1.1).

Figure 3.2: Distribution of royalties and other payments, 2021–22

Note a: GHAC — Groote Holdings Aboriginal Corporation; ARAC — Anindilyakwa Royalty Aboriginal Corporation; AAAC — Anindilyakwa Advancement Aboriginal Corporation; AHAC — Anindilyakwa Housing Aboriginal Corporation.

Source: ANAO analysis of ALC’s draft 2021–22 Annual Report, other ALC documents and advice from ALC.

3.83 The ANAO examined the distribution of payments from royalty equivalents and Part IV agreements as they are the most material forms of agreements for the ALC. In 2021–22 these two types of payments represented 93 per cent ($65.4 million) of the payments distributed by the ALC.

Distribution of royalty equivalents

3.84 Royalty equivalents since 2012–13 have ranged from $15.1 million in 2016–17 to $86.0 million in 2018–19. The Finance Committee’s key function is to make recommendations to the Council regarding the distribution of royalty equivalents to various Aboriginal corporations. Finance Committee meetings are conducted twice annually over three to four days. Meetings are attended by the ALC CEO, CFO, Legal and Executive Operations Manager and other ALC staff. An ALC staff member presents the requests for funding to the Finance Committee. Finance Committee recommendations are then presented to the Council.

3.85 The ALC draft 2021–22 Annual Report includes a performance measure for ‘transparent governance processes to allocate [royalty equivalent] monies to Aboriginal corporations’, which is described as ‘demonstrated’.⁷² The ANAO considered ALC distribution processes in relation to the following characteristics.

• Information for applicants — The promotion of the opportunity for funding; communication about eligibility, funding priorities and the assessment method; and communication of the outcome of the assessment, including the rationale for the decision.
• Information for decision-makers — Applications which include sufficient information; and adequate due diligence applied to applications to support the decision-makers’ assessment.
• Assessment of applications — Assessment made against the funding priorities and in accordance with an agreed assessment method; and records kept documenting a clear rationale for the decision.

3.86 The ANAO analysed 128 requests for funding submitted to the ALC for two rounds of royalty equivalents (February and August 2022). The information for applicants and decision-makers was partly effective, and the assessment of applications was ineffective (Table 3.2).

Table 3.2: Requests for royalty equivalent funding, February and August 2022

Key: ◆ Fully effective ▲ Partly effective ■ Not effective

Source: ANAO analysis of 128 requests for funding submitted to the ALC for two rounds of royalty equivalents (February and August 2022).

3.90 Beyond the annual report, the ALC does not have any formal mechanisms for reporting back to the community on how royalty equivalents are distributed and used. In the ANAO’s consultations with Traditional Owners and other stakeholders in 2022, a consistent theme was a desire for more communication from the ALC on the use of royalty equivalents.

Distribution of Part IV agreement monies

3.92 Part IV agreement monies are received under one of the GEMCO leases and distributed to two main recipients: the Anindilyakwa Mining Trust (Trust); and Traditional Owners of the land on which the mining operations take place. The Trust was established in 2006 with the aim of achieving an investment target of $650 million to sustain future activities for the benefit of Traditional Owners after GEMCO mining ceases.⁷³

3.93 The GEMCO lease prescribes that the ALC will distribute the monies received in the following way: an annual rent of $600,000 (indexed) is to be paid to Traditional Owners of the lease area; and the balance of monies is to be paid to the Trust, two weeks after receipt by the ALC. Under the Distribution Model, payments are to be made to each clan in proportion to the area of clan land within the mining lease. Relevant clan representatives review and approve a list of Traditional Owners, and provide instructions to the ALC regarding how payments are to be distributed. In February 2022 the ALC met with six clans for this purpose.

3.94 A written record of the approvals and directives is to be retained by the ALC and recorded in a database. Evidence of payments made are to be reconciled to the ‘rent list’ and retained by the ALC.

4.1 Under the PGPA Act, Commonwealth entities are accountable to the Parliament and the public for the proper use and management of public resources to deliver programs and services and achieve outcomes. Effective management of risk, fraud and probity; a robust policy framework; a corporate plan and annual report, including performance statements; and an audit committee are key mechanisms under the PGPA Act to implement this duty.⁷⁴

Has the Land Council established a system of risk oversight and management and a policy framework that are appropriate?

Risk oversight and management

4.2 The PGPA Act (section 16) requires accountable authorities of Commonwealth entities to establish and maintain appropriate systems and internal controls for the oversight and management of risk. The Commonwealth Risk Management Policy supports the PGPA Act. As a corporate Commonwealth entity, the ALC is not required to comply with the Commonwealth Risk Management Policy, however the Policy states that corporate Commonwealth entities ‘should align their risk management frameworks and systems with this policy as a matter of good practice’.⁷⁵

Risk management policies and risk appetite

4.3 In January 2022 the ALC updated a Risk Management Policy first developed in 2020, which complies with key requirements in the Commonwealth Risk Management Policy. The Risk Management Policy sets out requirements to record, measure, report and action risks and defines risk and control owners. The Risk Management Policy includes the ALC’s risk appetite, which is a tolerance for ‘High residual risk ratings where key control effectiveness is assessed as Effective.’

Risk assessment

4.4 The Risk Management Policy requires that the ALC maintain an ‘ALC risk profile’ (enterprise risk register) and departmental risk registers, each to be reviewed annually with material risks reviewed twice annually.⁷⁶ The Risk Management Policy requires periodic review of controls.

4.5 ALC developed risk registers for all 10 of its departments in 2020–21, and a separate strategic risk register in 2021–22. These were used to inform the development of the ALC’s enterprise risk register in April 2022.⁷⁷ As at January 2023, eight of the 10 departmental risk registers had not been reviewed in the previous 12 months. Material risks were not reviewed twice annually as required by the ALC policy.

4.6 The 2021–22 enterprise risk register comprises 15 risks across 10 categories.⁷⁸

• Controls are identified for 14 of 15 enterprise risks. Controls have not been identified for a financial risk regarding external party contract management, which is rated ‘Extreme’, although two treatments are identified.
• Of the 15 enterprise risks, four have a residual risk rating of ‘Extreme’. These risks exceed the ALC’s risk appetite, and additional treatments are identified for all four. The ALC advised the ANAO that its risk appetite statement ‘is not yet in use’.
• Some treatments may be insufficient for the high or extreme residual risks. For example, a risk of ‘ALC staff maltreating vulnerable people [which would] have major consequences [for] ALC reputation and ability to operate in the archipelago’ has no controls and one treatment: ‘Require ALC staff to have an Ochre card’.⁷⁹
• The ALC’s enterprise and departmental risk registers do not adequately address some key enterprise risks, for example: compliance risks relating to the ALC’s obligations under the ALRA; probity and conflict of interest risks; and reputational risks regarding related entities.

4.7 There is no training on risk management beyond workplace health and safety. The ALC advised the ANAO that staff engagement on risk occurs through workshops run with each department to develop departmental risk registers.

Risk monitoring and reporting

4.8 The Risk Management Policy requires the enterprise risk register to be presented to the Council annually. The enterprise risk register has not been presented to the Council.

4.9 In October 2022 the ALC commenced monthly monitoring and reporting to management on the status of actions arising from fraud, risk and other reviews. As at January 2023, of 87 risk management action items identified across all departments: 18 were complete; 51 were ‘on track’; and 18 were ‘off track’. The ALC advised the ANAO that risk updates are also delivered at weekly manager meetings (which include the CEO), although these are not minuted.

Policy framework

Establishment of policies

4.10 Policies and procedures are an important part of an entity’s system of internal controls. The ALC’s Organisational Design Policy states that the Human Resources and Performance (HR) Manager is responsible for establishing a governance framework through maintaining a set of approved policies and procedures. The ALC has developed a Governance Framework Policy, which provides guidance on developing, maintaining and approving policies, including requirements for review.

4.11 From 2020 to 2022 the ALC reviewed its corporate policies and procedures. As at February 2023, 51 corporate policies and procedures were drafted, covering most key resource management issues, and of which 28 were approved by either the CEO, the HR Manager or other department managers. For the remaining 23, the policy approver was not specified.

4.12 Table 4.1 provides an overview of ANAO’s assessment of ALC’s key governance policies, focusing on whether the policies are sufficiently detailed and clear, and consistent with the PGPA Act’s requirement for proper use and management of resources.

Table 4.1: Selected key governance policies^a

Key: ◆ Fully demonstrated ▲ Partly demonstrated ■ Not demonstrated N/A – not relevant to the PGPA Act

Note a: Risk management and fraud policies are examined in separate sections of this report.

Note b: Assists the reader to clearly understand their obligations and what actions are required of them.

Source: ANAO analysis.

4.13 The examined policies are mostly clear and detailed, and aligned to relevant PGPA Act requirements. Exceptions are described below.

• Credit Card Policy — The policy requires that credit cards are used for ‘business purposes’ only but does not define business purposes or provide examples. Credit card expenses were approved in 2021–22 for a variety of purposes, including dining out with internal or external stakeholders.
• HR Policy — The policy commits to equal opportunity and merit-based employment decisions. However, the policy states that ‘vacancies to be filled must be put to market unless approved by the CEO.’ This provision means that the CEO can override merit-based processes, although the ANAO did not assess whether this had occurred.
• Interests and Gifts Policy — Some aspects of the policy are generic and could be made more specific to the ALC. There are some inconsistencies in the instructions for dealing with conflicts of interest. Section 4 notes that ‘ALC Officers will, where possible, withdraw from decisions where there is possible conflict’ [ANAO emphasis]. Section 5 notes that ‘All ALC Officers must absent themselves or otherwise withdraw from discussions, negotiations and decisions that may advance their personal interests’ [ANAO emphasis]. The Interests and Gifts Policy is examined in more detail in paragraphs 4.27 to 4.29.
• Procurement Policy — The policy is one page in length and not sufficiently detailed. The policy states that the ALC applies the Commonwealth Procurement Rules (CPRs)⁸⁰ and that the ALC must establish and maintain appropriate systems for procurement to achieve value for money (the core rule of the CPRs). Other than this reference, the policy does not outline guidance to address probity risks and procedures, assessment processes or how value for money should be demonstrated and documented.
• Travel Policy — The policy states that all travel requests are to be approved by the relevant manager but does not outline the necessary considerations for manager approval.
• Vehicle Usage Policy — The policy requires that vehicles be used for ‘ALC business’ only, unless authorised by the relevant department manager. The policy does not outline the necessary considerations for manager approval of use for non-business purposes. The policy also states that workplace participants’ family members may ‘use ALC vehicles for allocated vehicles only’. It is unclear what this statement means.

4.14 Several important policies to support governance do not exist. There is no contract management policy (and this is not addressed in the Procurement Policy), privacy policy, whistle-blowers policy or fraud policy.

Operationalisation and communication of policies

4.15 Key artefacts (including templates and procedures) required by some policies are missing or remain in development. For example, the legal obligations register supporting the Compliance Policy is incomplete. In August 2022 a Business Improvement Coordinator was employed to drive the implementation of policies. As at March 2023 ALC did not have an effective process to assure that policies and procedures are complied with.

4.16 Policies approved between 2020 and 2022 were published on the ALC intranet. Of the 28 approved policies, records show that 22 were communicated to staff upon completion or following an update.⁸¹ Policies and procedures are incorporated into induction processes for new staff. Further training is not required by the Governance Framework Policy and is not provided. Analysis of Council meeting minutes identified several instances during 2021–22 of specific policies being discussed, including the Code of Conduct Policy, Vehicle Usage Policy and Travel Policy.

Are there appropriate arrangements to support the integrity of the Land Council operations?

Fraud control

4.19 Under section 27 of the PGPA Act and under section 10 of the PGPA Rule, an official of a Commonwealth entity must not improperly use his or her position to gain, or seek to gain, a benefit or an advantage for himself or herself or any other person, and the accountable authority of a Commonwealth entity must take all reasonable measures to prevent, detect and deal with fraud relating to the entity. Requirements for fraud control by Commonwealth entities are contained in the 2017 Commonwealth Fraud Control Framework⁸², which consists of three tiered documents — the fraud rule, fraud policy and fraud guidance. As a corporate Commonwealth entity, the ALC must comply with the fraud rule, which ensures a minimum standard for managing the risk and incident of fraud. While Land Councils are not bound by the fraud policy or fraud guidance, the government ‘considers both documents as better practice for corporate Commonwealth entities and expects that these entities will follow the fraud guidance and fraud policy where appropriate in meeting the requirements of the fraud rule’.⁸³

4.20 The ALC’s fraud control arrangements fall short of the minimum requirements established in the fraud rule (see Appendix 7). The ALC: has not developed a fraud control plan that deals with identified risks; has undertaken limited fraud training; does not have a confidential reporting process; and does not have a mechanism for recording and reporting incidents of fraud or suspected fraud.

4.24 This audit did not examine potential instances of fraud, however, the ALC became aware of two incidents of attempted fraud during 2021 and 2022. Both incidents were remediated before a loss was incurred to the ALC or other parties. In response to one of the incidents, the ALC procured software to check the consistency of vendor details and mitigate the risk of fraudulent payments.

4.25 The ALC’s draft 2021–22 Annual Report indicates that ‘during the reporting period, the ALC performed a review of Fraud Risk across the organisation’ which did not identify any fundamental control gaps or failings. The 2020–21 and 2021–22 annual reports stated that there had been no instances of fraud reported or detected in the reporting periods.

Conflicts of interest management

Conflict management policy

4.26 The Australian Commission for Law Enforcement Integrity’s guide on conflict of interest management states:

Agencies should provide clear and consistent guidance to employees on how to identify, declare and manage conflicts of interest. Agency executives and management should regularly communicate about the conflict of interest framework and how it is implemented.⁸⁴

4.27 In June 2022 the ALC established an Interests and Gifts Policy, replacing a policy from 2015. The Interests and Gifts Policy explains what conflicts of interest are and provides several examples relevant to the ALC. It highlights the heightened risk of conflicts faced by the ALC due to its remote location and ‘tight knit community’ and ‘limited opportunities for diverse commercial relationships in the region’.

4.28 The Interests and Gifts Policy requires ALC ‘officers’ (defined in the policy as the accountable authority, Council members and department managers) to disclose conflicts as soon as they become aware of them, or to complete a nil declaration annually. Conflicts that appear to be unmanaged may be reported to the CEO, Audit Committee Chair or other identified management personnel. To manage actual or potential conflicts of interest, officers must:

• withdraw from discussions, negotiations and decisions that may advance their personal interests; and
• where a conflict cannot be avoided, seek advice from the Legal and Executive Operations Manager, and document the basis of the decision and reasonable steps implemented, to preserve the interests of the ALC.

4.29 Officers and coordinators⁸⁵ are required to disclose gifts received valued at $150 or more using a declaration form, and inform their supervisor about gifts valued at less than $150. Officers and coordinators are required to discourage vendors from providing gifts in the first instance.

Conflict of interest management

CEO and department managers

4.30 The ALC established a register of declared interests for the CEO and managers in June 2022, called the ‘ALC Declared Interests Register’. Guidance instructs staff to record: nature of interest (commercial or relationship); description; date of declaration; date interest commenced; date interest ended; and ‘notes’. There is no provision in the ALC Declared Interests Register or elsewhere to document how the potential conflict would be managed.

4.31 As at March 2023 the ALC Declared Interests Register included 26 declarations, all made on 30 June 2022 by 13 staff (the CEO and the 12 managers).

• Five managers made a ‘nil’ declaration.
• Of the 21 declarations describing an interest, the ‘notes’ section was blank for 13, and completed for eight. The completed notes section described:
  • for two, the interest in greater detail but no description of a management plan;
  • for two, information on how the risk would be managed, which was insufficient⁸⁶; and
  • for four, sufficient information on how the risk would be managed.

4.32 The CEO’s declaration identified an interest arising from the ALC’s employment of his spouse (who was first employed by the ALC in 2014). The ‘notes’ section of the declaration was left blank, and no management plan was included in the register or elsewhere. The CEO had not made a written declaration of the interest prior to 2022.

4.33 The ALC entered into a one-month casual employment contract with the CEO’s spouse in May 2014. In June 2016 it entered into a full-time ongoing employment contract for the role of finance officer. There were weaknesses in the process for establishing the permanent contractual arrangements in 2016.

• 2014 — The short-term appointment was taken to the Council for approval and the meeting minutes document that the CEO declared an interest and left the room. The Council was briefed on the length and basis of employment, the role and the funding source. The Council resolved to approve the appointment and the contract was signed by the ALC Chair.
• 2016 — The permanent position was not advertised and no alternative candidates were considered. The appointment was taken to the Council for approval and the meeting minutes document that the CEO declared an interest and left the room. The minutes discuss the role, and the location and department of employment, however do not document clear approval of the appointment, including the terms and conditions of employment. The contract was signed by the CEO, who was also involved in the drafting of the contract.

4.34 Management of the potential ongoing conflict could be achieved through line reporting relationships. The CEO’s spouse reports to a department manager, who reports to the CEO. There have been instances where the CEO’s spouse has sought and received spending authority directly from the CEO.

4.35 The ALC established a gifts register in April 2022. As at 5 December 2022 one declaration had been documented in the gifts register.

Council members

4.36 Section 29AA of the ALRA requires that each member of a Land Council make a written declaration of their direct or indirect pecuniary interests, in a register of interests kept by the Council. This is to be done in accordance with a determination made by the Minister for Indigenous Australians (the Minister).

4.37 Such a determination had not been made by the Minister as at March 2022. Despite this, the Council meeting rules require that such a register be maintained and updated annually, when new members join or when there is a change to their interests. A register of interests was in place, called the ‘ALC Board Register of Interests’.

4.38 As at March 2023 the ALC Board Register of Interests listed all 25 Council members however five of these had not made declarations. Of the other 20 members, conflicts were declared for 17, with the remaining three making ‘nil’ declarations. Where conflicts were identified in the register, the entry comprised a list of corporations with no details provided of the nature of the conflict — for example, whether it constituted a direct or indirect interest and what the member’s role (if any) was in the corporation.

4.39 The ANAO compared the interests declared in the ALC Board Register of Interests as at June 2022 to directorships in Aboriginal corporations receiving ALC funding and found that interests had been correctly identified for all members, except the Council Chair, who did not declare his interest in Winchelsea Mining, of which he is the paid Chair and a director (see paragraph 4.46).

4.40 Council member conflicts are required to be managed during the conduct of meetings. The Council and Finance Committee meeting rules state that during a meeting:

if a matter arises and Members in attendance have a material personal or pecuniary interest in the matter, all relevant Members must announce their interest in the matter and must not be present to participate in the discussion and decisions pertaining to that matter.

4.41 The meeting rules allow for three exceptions.

• The matter relates to all or substantially all Traditional Owners of the Groote Archipelago region.⁸⁷
• The matter relates to the payment of royalties, rents and other mining derived income to individual Traditional Owners of the Groote Archipelago region, other than to an organisation.
• The member holds knowledge and information that will be useful to inform the discussion and decision-making pertaining to the matter.⁸⁸

4.42 The meeting rules relating to conflicts of interest are consistent with subsection 12(2) of the PGPA Rule. However, as a result of the exceptions, the majority of matters discussed or decided by the Council and Finance Committee are exempt from conflict of interest management.

4.43 The ANAO reviewed the Council meeting minutes for 2021–22. There was no declaration of conflict of interest. The ANAO identified 10 instances where a conflict of interest may have arisen⁸⁹, however the minutes do not record that the member left the meeting and do not provide sufficient information to determine whether one of the exceptions applied.

4.44 The ANAO reviewed a random sample of 56 of the 112 royalty equivalent funding requests (see Table 1.1) made to the Council in 2022. Forty-three (77 per cent) of the applications were submitted by Aboriginal corporations that had at least one director at the Finance Committee meeting where they were considered. Of the 51 applications that were subsequently considered by the full Council, 45 (88 per cent) were submitted by Aboriginal corporations that had at least one director at the Council meeting where they were considered. One recorded instance of a conflict was identified in a Finance Committee meeting, and in this instance, the person left the room. No other declarations were documented.

Managing potential conflicts of interest related to the Anindilyakwa Advancement Aboriginal Corporation, Groote Holdings Aboriginal Corporation and Winchelsea Mining

4.45 In 2021–22 the ALC distributed $47.8 million in royalty equivalents to 13 Aboriginal corporations. Fifty per cent were provided to two Aboriginal corporations: Anindilyakwa Advancement Aboriginal Corporation (AAAC) and the Groote Holdings Aboriginal Corporation (GHAC), which received, respectively, $4.5 million and $19.5 million. AAAC and GHAC also received funding from the ALC as part of the Northern Territory (NT) Indigenous Economic Stimulus Package. This amounted to $10.2 million in 2020–21 and 2021–22, representing 77 per cent of the total grant funding available to the ALC.

4.46 AAAC holds 60 per cent of the shares in Winchelsea Mining, and GHAC will own the Little Paradise logistics base assets being developed to support the Winchelsea Mining venture (see paragraph 1.29). Figure 4.1 shows the directorships and senior positions of, and main financial flows between, the ALC, AAAC, GHAC and Winchelsea Mining. The figure shows that the ALC Chair and CEO have interests in GHAC and Winchelsea Mining, either as Chair, CEO or director.

Figure 4.1: Relationships between ALC, AAAC, GHAC and Winchelsea Mining, 2021–22

Note a: Five ARAC directors, including the ALC Chair, are members of the ALC.

Note b: The Stimulus Package funding was provided to the ALC over two financial years 2020–21 and 2021–22.

Note c: Four AAAC directors are also members of the ALC.

Note d: Five GHAC directors, including the ALC Chair, are members of the ALC.

Note e: The Chair of the ALC Audit Committee is the founding director of Enmark Pty Ltd.

Source: ANAO analysis of ALC draft 2021–22 financial statements, AAAC 2021–22 financial statements, GHAC 2021–22 financial statements and advice from ALC. AAAC and GHAC financial statements are publicly available from the Office of the Registrar of Indigenous Corporations website, https://www.oric.gov.au/ [accessed 23 January 2023].

4.47 The involvement of the ALC Chair, CEO and CEO’s spouse in organisations that, in 2021–22, received the majority of royalty equivalents and that, in 2020–21 and 2021–22, received the majority of NT Indigenous Economic Stimulus Package funds, creates a risk of conflicted interests. Appendix 8 analyses how this specific risk was managed by the ALC and demonstrates that: the risk has been partly recognised and documented by the ALC; not all potential conflicts were declared; not all declared conflicts have a management plan; and the management plans that exist for declared conflicts are not fully implemented.

4.48 In Council funding decisions, the ANAO observed disproportionate benefit to the entities with which the CEO is associated. During the two 2022 Finance Committee meetings (at which the ALC CEO was present), 112 requests for funding valued at $109.1 million were reviewed. The Finance Committee resolved to recommend to the Council 79 requests valued at $69.7 million. The Council adopted all of the Finance Committee’s recommendations. The ALC CEO was the applicant, either on behalf of GHAC or AAAC, for 16 requests, totalling $25.7 million. All 16 requests made by the ALC CEO were approved in part or in full for an amount of $25.4 million, including one request that was approved for $1 million more than the original request. In summary, requests submitted by the ALC CEO represented 24 per cent of funding applied for, and 36 per cent of approved funding; and the success rate for requests submitted by the ALC CEO was 99 per cent by value, compared to a success rate for the other applicants of 53 per cent by value.

4.49 In the above example, there was no clear reason for the ALC CEO being the applicant on behalf of AAAC, since the ALC CEO holds no formal position in AAAC (although he is co-CEO and director of Winchelsea Mining, which is a subsidiary of AAAC). The majority of applicants for royalty equivalent funding are Groote-based Aboriginal corporations that do not generally have the opportunity to personally present their applications to Finance Committee meetings taking place in Cairns or Darwin. In contrast, the ALC CEO attends all Finance Committee meetings.

4.50 Given the influence of the Chair and CEO over the ALC’s funding and management decisions; the financial benefit that AAAC, GHAC and consequently Winchelsea Mining obtain from the ALC; and the ALC Chair’s, CEO’s and CEO’s spouse’s positions in GHAC and Winchelsea Mining; the risk of conflicts of interest is high. The current management strategies applied to this risk are either insufficient or not implemented.

Are the corporate plan and annual report consistent with legislative requirements?

Corporate plan

4.52 The ANAO assessed the ALC’s compliance with requirements for its corporate plan as set out in the PGPA Rule and Department of Finance (Finance) guidance (see Appendix 9). The ALC’s 2021–2025 Corporate Plan⁹⁰ fully met the requirements for its reporting period; introduction; operating context; explanation of entity purpose and key activities to achieve that purpose; and timeliness of publication. However, improvements could be made in relation to performance measurement.

4.53 The structure and content of the ‘Performance’ section of the Corporate Plan provides some meaningful performance information, however it could be improved.⁹¹

• Some measures are based on general functions of an organisation, which do not demonstrate the ALC’s level of achievement against its specific purpose.⁹²
• The measures are focused on activities mainly and outputs sometimes; they do not measure effectiveness in achieving outcomes or efficiency.
• The wording of some measures is long and contains multiple elements, making it difficult to comprehend what is being measured.
• Five of the 36 performance measures do not have targets. For the remaining measures, some targets are not specific, meaningful or explained. For example, 14 of the 36 performance measures have ‘demonstrated’ or ‘qualitative’ as the target.
• The ALC does not disclose how achievement of some targets will be measured.

Annual report

4.54 Subsection 46(1) of the PGPA Act requires that ‘an entity’s annual report must be given to the responsible minister by the 15th day of the fourth month after the end of the reporting period’ (15 October for Land Councils). On 28 October 2022 the ALC CEO wrote to the Minister stating that the ALC was unable to submit its 2021–22 Annual Report by that date. On 7 November 2022 the Minister agreed to ‘receiving the final draft ALC 2021–22 Annual Report when it is finalised’. As at March 2023 the ALC 2021–22 Annual Report has not been finalised.

4.55 The draft 2021–22 Annual Report is mostly compliant with the PGPA Act and Rule and the ALRA requirements (see Appendix 9). The ANAO identified one instance of non-compliance.

• Regard to audience — The information included in the draft 2021–22 Annual Report is concise overall. However, there is a lack of transparency around the operational arrangements between the ALC and Anindilyakwa Royalties Aboriginal Corporation (ARAC) (see paragraphs 3.50 to 3.53). For instance, the draft 2021–22 Annual Report states that the ALC has 151 employees and that 11 business units ‘support the CEO, Chair and ALC Board to achieve the goals of the ALC’. Approximately two thirds of employees are sub-contracted to ARAC, and the four largest business units representing 110 positions are staffed with ARAC-funded positions. The draft 2021–22 Annual Report credits a large number of activities conducted by ARAC to the ALC. Six of the performance measures directly attribute the work conducted to achieve the measure to one of the business units funded by ARAC.

Annual performance statements

The ‘clear-read’ principle

4.56 A clear line of sight between an entity’s planning documents (corporate plan) and its key reporting document (annual report) is known as the ‘clear-read’ principle.⁹³ There is not always a clear line of sight between the ALC’s 2021–2025 Corporate Plan and the annual performance statements in the draft 2021–22 Annual Report. Of the 36 performance measures reported in the annual performance statements, 15 are worded differently to those in the corporate plan. Some of the differences are minor, however five of the measures in the 2021–22 annual performance statements are substantively different from those set out in the corporate plan for 2021–22 and do not measure the same thing.

PGPA Rule section 16F requirements

4.57 The annual performance statements of an entity, published in the annual report, must provide information about the entity’s performance in achieving its purposes and comply with any requirements prescribed under section 16F of the PGPA Rule. The ALC’s draft 2021–22 annual performance statements met these requirements (see Appendix 9).

Development of the corporate plan and annual report

4.58 While a Land Council accountable authority is required to prepare and submit a corporate plan and annual report to the Minister under the PGPA Act, the Council has specific functions under the ALRA and should be involved in the development of the corporate plan and the annual report. The accountable authority should also gain assurance that the information published in the corporate plan and annual report, including in the performance statements, is complete and accurate.

4.59 The ALC accountable authority and Council were involved in the development and approval of the 2021–2025 and 2022–2026 corporate plans and draft 2021–22 Annual Report. In summary:

• ALC staff met with the ALC CEO, Chair and Deputy Chair to keep them informed on and gain input regarding the corporate plan and annual report;
• the CEO conducted reviews of the corporate plan and provided comments on specific sections of the plan; and
• the Council was provided with a video explaining aspects of the ALC 2022–2026 Corporate Plan and the Council subsequently endorsed the 2022–2026 Corporate Plan.

4.60 The ALC employed a new staff member in May 2021 whose responsibilities include the collation of the annual performance statements, using information provided by department managers. There is no process to verify the completeness and accuracy of information provided by the managers.

4.61 The ALC engaged with the National Indigenous Australians Agency (NIAA) and Department of Finance (Finance) when preparing the 2021–2025 Corporate Plan. Finance provided guidance on improving the Plan, and NIAA advised the ALC that the draft Plan met the minimum content requirements of the PGPA Act.

Do the Audit Committee and internal audit function provide adequate oversight and scrutiny of the Land Council’s operations?

Internal audit function

4.64 An internal audit function is an important mechanism in relation to the accountable authority’s responsibility under section 16 of the PGPA Act to establish a system of internal control.⁹⁴ As at March 2023 the ALC did not have an internal audit function.

4.65 In December 2022 the ALC developed, for the first time, an internal audit program covering 2022 to 2033. The internal audit program was endorsed by the ALC Audit Committee Chair and CEO in December 2022 and was not reviewed or endorsed by the Council, the Council Chair or other members of the Audit Committee. The internal audit program covers HR, information technology, finance and governance; and sets out the proposed timing and frequency of internal audits. In December 2022 the ALC applied to the NIAA for funding to engage an internal auditor to complete the planning of internal audits. The NIAA did not approve the bid, as it considered there was sufficient capacity within the ALC to meet the requirement.

4.66 The absence of an in-house or outsourced internal audit function to date reinforces the importance of the Audit Committee to provide advice and assurance to the accountable authority that its key responsibilities under the PGPA Act are met.

Establishment and composition of the Audit Committee

4.67 The ALC is partly compliant with the PGPA Rule requirements and Finance guidance in relation to the establishment and composition of an Audit Committee (see Appendix 10).

Charter

4.68 The ALC has an Audit Committee and Audit Committee Charter, with content that meets PGPA requirements.

Member characteristics

Skills and experience

4.69 PGPA Rule subsection 17(3) specifies that an Audit Committee must consist of at least three persons who have appropriate qualifications, knowledge, skills or experience to assist the committee to perform its functions.

• As at March 2023 the Audit Committee had four members.
• The draft 2021–22 Annual Report indicates that the Chair has qualifications in accounting and auditing and experience at a business consulting practice and accounting firm.
• The three other Audit Committee members are Council members. As members of the Council, they have knowledge of the ALC’s operations. The draft 2021–22 Annual Report indicates that they also have experience in managing organisations and are directors of Aboriginal corporations. There is no information in the draft annual report on other qualifications and technical skills.

Independence

4.70 The 2018 Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 and Rule, stated that ‘[t]he independence of audit committees from the day-to-day activities of management is critical to the contribution that they can make to good governance in an entity’.⁹⁵ Consistent with the PGPA Rule, there were no ALC employees on the Audit Committee as at March 2023 (although there were Council members, as noted above). The Audit Committee Chair is not an employee of the ALC or a member of the Council. However, in relation to the independence of the Audit Committee Chair, the ANAO has identified several significant issues.

• The Chair of the Audit Committee is the founding director of Enmark Pty Ltd (Enmark). Between 2014–15 and 2021–22 the ALC paid $896,056 in fees to Enmark for consultancy services. Between 2017–18 and 2021–22 Enmark was one of the top three consultants by value engaged by the ALC.
• Enmark provides consultancy and other services to several Aboriginal corporations receiving royalty equivalent funding from the ALC. This includes GHAC and AAAC.

4.71 While the Charter requires each Audit Committee member to provide annual written declarations to the Council declaring any material personal interests that would preclude them from being members of the Audit Committee, neither the Audit Committee Chair nor the other members made a such a declaration.

Remuneration

4.72 Finance guidance does not establish a standard for Audit Committee remuneration and indicates that the remuneration should be commensurate with the importance of responsibilities and the commitment required.⁹⁶ The draft 2021–22 Annual Report noted that members other than the Chair were paid $334 for each meeting attended.⁹⁷

4.73 The ALC Audit Committee Chair is paid on the basis of hours worked and travelled on Audit Committee business (with a reduced hourly pay rate for time spent travelling), and expenses are recovered at cost. In 2021–22 the Chair received $58,352 in fees, $12,765 for travel and $10,040 for expenses. Of the four NT Land Councils, this is the highest level of remuneration for an Audit Committee Chair, and the amount of fees paid is approximately nine times as high as the next highest paid Chair in 2021–22.⁹⁸

4.74 In its review of the minutes for the eight Audit Committee meetings held between January 2020 and June 2022, the ANAO noted that, where start and end times were available, meeting duration ranged from 30 to 135 minutes.

Rotation

4.75 The 2018 Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 and Rule recommended that accountable authorities ‘establish an audit committee membership rotation policy, with maximum appointment terms to ensure regular rotation of committee membership’.⁹⁹ Finance guidance indicates that the Finance Secretary wrote to all accountable authorities in August 2019 drawing their attention to this recommendation.¹⁰⁰

4.76 The ALC’s Audit Committee Charter includes term limits for Audit Committee members who are also Council members, set at the term the person is appointed to the Council as a member. The Charter is silent on the reappointment of Audit Committee members. There is no limit to the number of three-year terms for the independent Audit Committee Chair. The Charter notes that ‘[s]tability, knowledge and experience are important to the composition of the committee’. As at March 2023 the Audit Committee Chair had held the position since the ALC established an Audit Committee in 2012–13 and in December 2021 was reappointed to the role for a further three years. The remaining three members of the Audit Committee were appointed during 2014–15, 2018–19 and 2021–22, respectively.

Effectiveness of Audit Committee operations

Frequency of meeting

4.78 The Charter requires that the Audit Committee meet at least four times annually. The Audit Committee met four times each year between 2017–18 and 2020–21, and met three times in 2021–22.

Mandatory functions and reporting

4.79 Appendix 10 presents the ANAO’s assessment of the effectiveness of the ALC Audit Committee’s operations against the PGPA Rule requirements and Finance guidance.

Mandatory functions

4.80 The PGPA Rule requires that the audit committee review the appropriateness of the accountable authority’s financial reporting, performance reporting, system of risk oversight and management and system of internal control. The Audit Committee’s mandatory functions have largely not been executed effectively. While the Audit Committee performs its role in oversighting the preparation of the ALC’s annual financial statements there is limited attention given to other mandatory functions.

• Review of financial reporting — The Audit Committee did not consider financial reporting at two of its three meetings in 2021–22.
• Review of performance reporting — The Audit Committee did not review the ALC’s performance reporting, including the annual performance statements in 2021–22. There was no consideration of the appropriateness or completeness of the ALC’s performance measures.
• Review of risk oversight and management — The Audit Committee did not consider the ALC’s risk management arrangements in 2021–22.
• Review of system of internal control — The Audit Committee considered aspects of the ALC’s internal control arrangements in 2021–22 including fraud awareness and delegations. The Chair of the Audit Committee commissioned a review of ALC’s payroll processing on 6 March 2022 (which was discussed at the Audit Committee’s meeting on 13 April 2022) for which a report was provided to the Audit Committee Chair on 25 May 2022.

Mandatory reporting

4.81 The Audit Committee has mandatory functions in relation to reporting in the annual report, and to the Land Council. The Audit Committee’s mandatory reporting requirements were partly met. Exceptions are noted below.

• Written statement — The Audit Committee provided a written statement to the Council in December 2021 about its view on the financial report for 2020–21 but not to the accountable authority. The Audit Committee has not provided a written statement of its view on the appropriateness of the ALC’s performance reporting; system of risk oversight and management; and system of internal control.
• Assessment of Audit Committee performance and Audit Committee charter — The Audit Committee’s Charter includes a provision that the Chair of the Committee shall initiate an annual self-assessment on the performance of the Committee and Charter.¹⁰¹ Neither the Council nor the Audit Committee meeting minutes for 2020–21, 2021–22 and the first three Council meetings of 2022–23 recorded that a review of Audit Committee performance was undertaken. The Audit Committee’s Charter was updated during this period, with changes endorsed by the Council on 1 March 2022.

Secretariat support

4.82 The ALC Audit Committee Charter requires that the Council and CEO provide secretariat support to the Audit Committee, including by taking minutes of meetings and ensuring that the meeting agenda and supporting papers are circulated prior to the meeting, after approval by the Audit Committee Chair. Papers can help members prepare for meetings and understand relevant issues. The ANAO reviewed the minutes and papers for the nine scheduled Audit Committee meetings conducted between January 2020 and June 2022. The secretariat support was not adequate.

• There were no minutes for two of the eight meetings that were held.¹⁰² For six meetings, minutes were one page or less.
• Of the eight meetings that were held during this period, there were no papers for three meetings; and 11 of the 20 papers for the remaining five meetings related to ANAO financial and performance audit work only. The ALC was not able to provide evidence that papers were provided prior to the meeting.

Appendix 1 Anindilyakwa Land Council response

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s 2022–23 Corporate Plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

Appendix 3 Powers, functions and duties of the Land Councils

Land Councils’ powers

1. The Land Councils’ powers are mainly described in section 23AA, section 27 and Part IV of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). The Land Council has the power to determine priorities, allocate resources, employ staff, give directions to Land Trusts, receive moneys and grant licenses.

2. Section 203BK of the Native Title Act 1993 (NTA) establishes that a native title representative body has the power to do all things necessary or convenient to be done for or in connection with the performance of its functions.

3. Section 20A of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) indicates that the accountable authority has the power to give instructions to an official about a matter relating to finance law.

Land Councils’ functions

4. The Land Councils’ functions are mainly described in subsection 23(1) of the ALRA. In summary, these include to:

• ascertain and express the wishes of Aboriginals living in the area of the Land Council regarding the management of Aboriginal land;
• protect the interests of relevant Aboriginal people;
• assist Aboriginal people to protect sacred sites;
• consult with relevant Aboriginal people regarding any proposal relating to the use of the land;
• negotiate with persons having interests in the land;
• assist Aboriginals living in the area of the Land Council to carry out commercial activities (so long as this is done in a manner that will not cause the Land Council to incur financial liability or receive financial benefit);
• assist Aboriginal people with traditional land claims; and
• keep registers of Council and Land Trust members.

5. Sections 34 and 37 also establish the Land Councils’ functions in relation to preparing estimates of administrative or capital costs for ministerial approval; and obligations in relation to preparing an annual report under the PGPA Act.

6. Under the NTA (section 203BB), Native Title Representative Bodies’ key functions are to facilitate and assist through research and preparation of native title applications; and assist Prescribed Body Corporates and native title holders in consultations, mediations, negotiations and proceedings relating to native title applications, future acts, Indigenous land use agreements and rights of access. Other functions include certification of applications for determination and registration of native title (section BE), dispute resolution (section BF), notifications (section BG) and agreement making (section BH).

7. Under the PGPA Act, accountable authority functions include to keep records (section 37), including those relating to the approvals of a commitment of relevant money (section 18) and those relating to financial transactions and position (section 41); prevent, detect and deal with fraud (Section 10); establish and determine the functions of an audit committee (sections 17 and 45); and prepare a corporate plan (sections 16E and 35), budget estimates (section 36), performance statements (sections 16F and 39), annual financial statements (section 42) and an annual report (section 46).

Land Councils’ duties

8. Under the ALRA, Land Councils’ primary duties relate to: consulting and obtaining consent from Traditional Owners and affected Aboriginal people (subsection 23(3) and section 23AA); attempting dispute conciliation (subsection 25(1)); disclosing pecuniary interests (section 29AA); spending money and disbursing royalties, and exploration and mining interest payments, within six months (section 35). The various provisions set out when the Land Council has a duty to seek the Minister’s approval and keep the Minister informed.

9. Under the NTA, the duties of the Land Councils as Native Title Representative Bodies relate primarily to financial management and access to information.

10. The duties applying to the Land Council accountable authority under the PGPA Act include: disclosing material personal interests that relate to the affairs of the entity (section 13); governing the entity to promote the proper use and management of public resources (section 15); establishing and maintaining systems relating to risk and control (section 16); encouraging cooperation of officials with others (section 17); taking account of the risk and effect of imposing requirements on others (section 18); and keeping the Minister informed (section 19). This is in addition to general duties prescribed in sections 25–29.

Appendix 4 Decision-making authority

Table A.1: Decision-makers under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA)

Source: Extracts from the Aboriginal Land Rights (Northern Territory) Act 1976.

Table A.2: Decision-makers under the Performance and Accountability (PGPA) Act 2013 and the Public Governance, Performance and Accountability Rule 2014

Source: Extracts from the Public Governance, Performance and Accountability Act 2013 and the Public Governance, Performance and Accountability Rule 2014.

Table A.3: Decision-makers under the Native Title Act 1993 (NTA)

Source: Extract from Native Title Act 1993 (Cth), Native Title (Recognition as Representative Body – Central Land Council) Instrument 2018, and Native Title (Recognition as Representative Body–Northern Land Council) Instrument 2018.

Appendix 5 Delegation of ALRA powers and functions

1. Under section 28, the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) prescribes that the Land Council may delegate its functions and powers, with some exceptions: to the Chair or another member of the Council; or to a member of staff.¹⁰³

2. Under subsection 28(2) and section 29A, the Council may also appoint one or more committees of its members to assist it in relation to the performance of any of its functions or the exercise of any of its powers¹⁰⁴, also with some exceptions.

Table A.4: Delegation under the Aboriginal Land Rights (Northern Territory) Act 1976

Source: Extracts from the Aboriginal Land Rights (Northern Territory) Act 1976.

Appendix 6 Requirements for governance arrangements

Appointment of key governance positions

1. The Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) prescribes how Council and Land Trust¹⁰⁵ members, including the Chair and Deputy Chair of the Council must be appointed.

• Land Trust members — ALRA (section 7) establishes that, unless the Minister for Indigenous Australians (the Minister) determines otherwise, the membership of Land Trusts will consist of a Chair and three other members, appointed by the Minister upon receiving from the Land Council nominations of Aboriginal people living in the area of the Land Council, or whose names are set out in a Traditional Owners register. Trust members are appointed for a maximum of five years and are eligible for re-appointment. It does not specify a method to nominate Land Trust members.
• Council members — ALRA (section 29) establishes Council members’ eligibility criteria and that Council members shall be Aboriginal people living in the area of the Land Council, or whose names are set out in a Traditional Owners register, chosen by Aboriginal people living in the area of the Land Council in accordance with a ‘method of choice’. The method of choice is to be approved by the Minister. Section 29 also establishes that a Land Council may, with the approval of the Minister, co-opt a maximum of five Aboriginal people living in the area of the Land Council as additional members of the Council. A range of disqualifying events apply to candidates for election or to elected members.¹⁰⁶
• Chair and Deputy Chair — ALRA (section 30) establishes that the Land Council shall elect two members of that Council as the Chair and the deputy Chair for a period of three years. The Chair and Deputy Chair are eligible for re-election.
• Land Council staff — ALRA (subsections 27(1) and 27(2)) establish that Land Councils have the power to employ staff and to determine the terms and conditions of the employment of Land Council staff. It is implied that this includes the Chief Executive Officer (CEO) of the Land Council.

Establishment of committees

2. ALRA (section 29A) establishes that a committee can be appointed by the Council to assist it in relation to the performance of any of its functions or the exercise of any of its powers and must comprise at least seven members or such other number as is prescribed by the regulations.

Establishment of Council and Committee meeting rules

3. In relation to Council meetings, ALRA (section 31) establishes that:

• a Land Council must have written rules, which must be approved by the Minister;
• these rules must be made available for Traditional Owners in the area of the Land Council and any Aboriginal people living in the area of the Land Council to inspect;
• the quorum for meetings must be half the number of the Council members if there is an even number of members in the Council; or half minus one if there is an odd number;
• a Land Council must keep minutes of its meetings, which Traditional Owners and any Aboriginal living in the area of the Land Council must be able to inspect; and
• decisions must be made by a majority of the members present, and in the case of an equal vote, the member presiding the meeting will have a casting vote.

4. In relation to committee meetings, section 29A of the ALRA establishes that:

• rules must be established for committee meetings and provided to the Minister; and
• minutes of meetings must be kept by the Land Council, and made available for Traditional Owners and any Aboriginal living in the area of the Land Council to inspect.

Compiling and maintaining registers

5. ALRA (paragraph 23(1)(g)) prescribes that Land Councils must keep a register of Council members; and a register of Land Trust members which includes descriptions of each area of the land held by the Land Trust(s). Under ALRA (section 24), Land Councils may compile and maintain a register of the Traditional Owners.

Appendix 7 Anindilyakwa Land Council compliance with the Commonwealth fraud rule

1. Section 10 of the Public Governance, Performance and Accountability Rule 2014 prescribes the six primary measures that the accountable authority of a Commonwealth entity must take to prevent, detect and deal with fraud.

Table A.5: Anindilyakwa Land Council’s compliance with the Commonwealth fraud rule

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Source: ANAO analysis of ALC fraud review and other records.

Appendix 8 Conflict of interest management — Mining and other interests

Table A.6: Conflict of interest management — Anindilyakwa Advancement Aboriginal Corporation (AAAC), Groote Holdings Aboriginal Corporation (GHAC) and Winchelsea Mining

Note a: The ALC Board Register of Interests relates to ALC Council members (see paragraph 4.37).

Note b: The ALC Declared Interests Register relates to ALC staff (see paragraph 4.30).

Note c: The minutes of the 2019, 2020, 2021 and 2022 Council meetings when the 12-month CEO performance review was discussed do not record any further discussion of the CEO’s role in Winchelsea Mining or whether the 20 per cent salary reduction should be revisited.

Note d: Winchelsea Mining is a subsidiary of AAAC.

Source: ANAO analysis.

Appendix 9 Anindilyakwa Land Council compliance with corporate plan, annual report and performance statements requirements

Corporate Plan

1. Section 35 of the Public Governance, Performance and Accountability Act 2013 (PGPA) requires the accountable authority of a Commonwealth entity to prepare a corporate plan in accordance with any prescribed rules and give the corporate plan to the responsible Minister and Finance Minister.

2. Section 16E of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) sets out the relevant requirements for corporate plans which includes the period it is to cover, mandated topics, and presentation and publication requirements. The Department of Finance (Finance) also prepares guidance to assist entities to prepare their corporate plan.¹⁰⁷

Table A.7: Compliance of Anindilyakwa Land Council’s 2021–2025 Corporate Plan with PGPA Rule 16E requirements

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Source: ANAO analysis of Anindilyakwa Land Council 2021–22 Corporate Plan.

Annual report

3. Annual reporting requirements are established in the PGPA Act and the PGPA Rule. Guidance issued by Finance outlines mandatory content, preparation and publication arrangements and defines mandatory digital publication requirements.

4. The ALRA also requires Land Councils to include in their annual report information relating to fees; amounts held or paid under certain agreements; and details about committees, township leases and consultants.

Table A.8: Compliance of Anindilyakwa Land Council’s draft 2021–22 Annual Report with PGPA Act, PGPA Rule and ALRA requirements

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Source: ANAO analysis of Anindilyakwa Land Council’s draft 2021–22 Annual Report.

Annual performance statements

5. The annual performance statements of an entity, published in the annual report, must provide information about the entity’s performance in achieving its purposes and comply with any requirements prescribed under section 16F of the PGPA Rule.

6. This audit examined whether, at a high level, the measures and targets provide meaningful performance information. It did not assess whether the Land Council’s performance statements met the requirements of the PGPA Rule, and in particular draws no conclusions about reliability, verifiability, potential bias or measurability over time. The Auditor-General’s functions include auditing the annual performance statements of Australian Government entities in accordance with the PGPA Act as set out in section 15 of the Auditor-General Act 1997. These audits apply a comprehensive methodology to the assessment of selected entities’ performance statements. See Auditor-General Report No. 23 2021–22 Audit of the Annual Performance Statements of Australian Government Entities — Pilot program 2020–21.

Table A.9: Compliance of Anindilyakwa Land Council’s 2021–22 Annual Performance Statements with PGPA Rule section 16F requirements

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Note a: The statement should include a declaration that the performance statements were prepared as soon as practicable after the end of each reporting period for the entity; specifying the relevant reporting period; and presenting accurately the entity’s performance, including by providing information about the entity’s performance in achieving its purposes and complying with any requirements prescribed by the PGPA Rule.

Source: ANAO analysis of the Anindilyakwa Land Council’s 2021–22 Annual Performance Statements.

Appendix 10 Anindilyakwa Land Council compliance with Audit Committee requirements and guidance

1. The purpose of an audit committee is to provide independent advice and assurance to the entity’s accountable authority. Section 45 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) states that the accountable authority of a Commonwealth entity must ensure that the entity has an audit committee. The Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) states that the accountable authority of a Commonwealth entity must, by written charter, determine the functions of the audit committee for the entity, and that these must include reviewing the appropriateness of the accountable authority’s financial and performance reporting; system of risk oversight and management; and system of internal control for the entity.¹⁰⁸ The PGPA rule also states that the audit committee of a corporate Commonwealth entity must consist of at least three persons who are not employees of the entity and who have appropriate qualifications, knowledge, skills and experience.

2. In September 2021, Department of Finance released a guide (Finance guidance) for corporate Commonwealth entities on the role of audit committees.¹⁰⁹ The Finance guidance sets out the better practice principles for the establishment and operation of a corporate Commonwealth entity audit committee, to help ensure that the committee provides independent advice and assurance to the entity’s accountable authority. The Finance guidance states that:

Audit committees are integral to good corporate governance. They provide advice to accountable authorities, assist them to meet their duties and obligations, and support the development of key practice and capacity within corporate Commonwealth entities.¹¹⁰

Table A.10: Effectiveness of the Anindilyakwa Land Council Audit Committee Charter and member composition

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Source: ANAO analysis of Anindilyakwa Land Council Audit Committee and other records.

3. Finance guidance states that the audit committee ‘should inherently have sound knowledge of the entity’s operating context … In order to understand and review the entity’s processes and systems the committee also actively pursues information from relevant areas of the entity’.¹¹¹

Table A.11: Effectiveness of the Anindilyakwa Land Council Audit Committee operations

Key: ◆ Fully compliant ▲ Partly compliant ■ Not compliant

Source: ANAO analysis, based on analysis of Audit Committee meeting minutes and papers for 2021–22, and discussions with the Audit Committee members and ALC officials.