Annual Report
2013–14

Appendix C

Aboriginals Benefit Account Annual Report 2013–14

Aboriginals Benefit Account overview

Role and functions

The Aboriginals Benefit Account (ABA) is legislated under Part VI of the Aboriginal Land Rights (Northern Territory) Act 1976 (the Land Rights Act) and is a special account for the purposes of the Financial Management and Accountability Act 1997 (the FMA Act).

The ABA receives appropriations based on royalty equivalents, the level of which is determined by the value of the statutory royalties generated from mining on Aboriginal land in the Northern Territory. ABA funds are public money.

The Minister for Indigenous Affairs allocates ABA funds to the four Northern Territory land councils for operational purposes and to the Office of Township Leasing to cover the administration costs and up-front payments associated with township leases. The Minister also approves grants for the benefit of Aboriginal people living in the Northern Territory. In this latter function, the Minister is assisted by the ABA Advisory Committee. Funds are also distributed to royalty associations in areas affected by mining.

The major functions of the ABA are outlined in Figure 5.2.

Figure 5.2 Major functions of the Aboriginals Benefit Account

Function according to section of the Land Rights Act Description
Credits into the ABA, sections 62–63 To receive the equivalent of mining royalty moneys derived from mining operations on Aboriginal land in the Northern Territory, and such other income as outlined in section 63 of the Land Rights Act.
Payments to land councils, subsection 64(1), in accordance with subsection 34(1) To make payments to the Northern Territory land councils in proportions determined by the Minister to meet their administrative expenditure. The Land Rights Act requires the administrative expenditure of the land councils to be in accordance with proposed estimates of expenditure approved by the Minister.
Payments to royalty associations, subsection 64(3) To make payments to the land councils for distribution to incorporated Aboriginal associations (royalty associations) in order to benefit those Aboriginal people who are affected by mining operations. These payments are directly linked to the amount of royalty equivalent moneys received in respect of mining in the areas concerned. Royalty associations receive 30 per cent of the royalty equivalents paid into the ABA.
Beneficial payments, subsection 64(4) For the Minister to make payments for the benefit of Aboriginal people living in the Northern Territory. The ABA Advisory Committee provides advice to the Minister on these payments.
Office of Township Leasing payments, subsection 64(4A) To make payments for acquiring and administering township leases approved under section 19A and leases approved under section 20CA of the Land Rights Act.
Admin payments, subsection 64(6) To make payments to meet expenses associated with administering the ABA.

Operating environment

In 2013–14, the Minister responsible for the ABA was the Minister for Indigenous Affairs, Senator the Hon Nigel Scullion. Prior to the change of government in September 2013 the responsible Minister was the former Minister for Families, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP.

The ABA is administered by the Department of the Prime Minister and Cabinet (PM&C) in accordance with the requirements of the Land Rights Act and the FMA Act.

In relation to PM&C’s 2013–14 outcome and programme reporting structure, the ABA is part of Outcome 2: Indigenous.

The ABA Advisory Committee, established under subsection 65(1) of the Land Rights Act, plays an important role in advising the Minister on beneficial payments under subsection 64(4) of the Land Rights Act.

Following sharp increases in 2008–09 and 2009–10, royalty equivalent receipts into the account fell between 2011–12 and 2012–13 before recovering in 2013–14. During this period there have been an unprecedented number of applications for beneficial payments from the ABA.

Offices

The ABA is administered across two offices–PM&C’s national office which is responsible for advising the Minister on the overall policy and financial management of the ABA, and the Northern Territory state office, which manages ABA section 64(4) grants (including the ABA Community Stores Infrastructure Project) and provides secretariat support to the ABA Advisory Committee.

Strategic direction

During 2013–14, a key focus of the Department was further improving the operations and use of the ABA to ensure greater funding benefits to Aboriginal people in the Northern Territory. Strategic improvements to the processes and guidelines surrounding the administration of the Land Rights Act subsection 64(4) grants began in 2013–14 and will assist in managing the unprecedented demand for these grants. Administrative changes to improve efficiency and transparency of processes and reduce red tape are expected to be finalised and implemented in the second half of 2014.

To ensure sustainability of the ABA, work has begun in 2013–14 to formulate a new Financial Management Plan. This includes strategies to build equity and the sustainability of the ABA and manage the distribution and use of royalty equivalent payments and how these could potentially provide support for school attendance, jobs and community safety.

The Minister allocated $40 million over four years from the ABA to support basic infrastructure in Northern Territory homelands. This funding will provide support for permanent residents and allow people to stay on country for traditional activities and ceremonial purposes. This decision was based on a proposal from the ABA Advisory Committee which outlined a more strategic and sustainable approach for investing ABA funding to homelands.

The Government is currently considering funding of up to $90 million over four years from the ABA to support the establishment of an Aboriginal housing company to build, manage and maintain housing in remote Northern Territory communities; housing would be owned by the company and would be leased to service delivery staff working in communities.

The Department works with a number of key stakeholders to ensure the effective administration of the ABA and the delivery of benefits to Aboriginal people living in the Northern Territory.

The four Northern Territory land councils (the Northern Land Council, Central Land Council, Anindilyakwa Land Council and the Tiwi Land Council) are important stakeholders.

Aboriginals Benefit Account performance 2013–14

Year in review

Figures 5.3 and 5.4 summarise ABA income and expenditure, respectively.

A recovery in mining royalty equivalent receipts resulted in $156.68 million credited to the Account in 2013–14. This represents a 51 per cent increase on the level of 2012–13 receipts.

Figure 5.3 Summary of Aboriginals Benefit Account income, 2012–13 and 2013–14

  2012–13
$’000
2013–14
$’000
Royalty equivalents 103,566 156,678
Interest 20,808 16,896
Resources received free of charge 2,142 2,450
Lease rental income 1,672 1,604
Other income 0 467
Total ABA income 128,188 178,095

Figure 5.4 Summary of Aboriginals Benefit Account expenditure (inclusive of mining withholding tax), 2012–13 and 2013–14

  2012–13
$’000
2013–14
$’000
Payments to land councils for administrative purposes – Land Rights Act, subsection 64(1) 39,717 37,443
Payments to land councils for distribution to royalty associations – Land Rights Act, subsection 64(3) 31,070 47,470
Payments for the benefit of Aboriginal people in the Northern Territory – Land Rights Act, subsection 64(4) 61,011 40,723
Payments in relation to township leases and sub-leases – Land Rights Act, subsection 64(4A) 2,026 1,876
Administration (suppliers and employees including resources received free of charge) – Land Rights Act, subsection 64(6) 3,108 3,536
Write-down and impairment of assets 1 675
Total expenditure 136,933 131,723

The increase in mining royalty equivalent receipts in 2013–14 led to an increase in payments to royalty associations compared to 2012–13 (see Figure 5.4).

Payments to the land councils under subsection 64(1) decreased on the previous year.

Expenditure on beneficial payments under subsection 64(4) decreased, from $61.011 million in 2012–13 to $40.228 million in 2013–14 (inclusive of mining withholding tax).

Funding highlights

This section covers ABA subsection 64(4) grants approved by the Minister in 2013–14. Grant funding approved in any financial year may be disbursed during that financial year or in subsequent financial years.

Support for business initiatives, cultural and arts festivals, community store infrastructure and sporting and youth engagement programmes were some of the projects to receive funding from the ABA under subsection 64(4) of the Land Rights Act in 2013–14.

New projects approved for funding from the ABA include:

  • $249,956 for the Yagbani Aboriginal Corporation to provide transport and training for the Warruwi women’s healthy tucker programme
  • $232,000 for the Kulainda Farm Trust to invest in infrastructure for the farming business
  • $200,000 for the Gurindji Aboriginal Corporation to refurbish their head office and visitor accommodation enterprise
  • $198,778 for the Janyima Store Aboriginal Corporation to construct a community store for the people of Amanbidji
  • $140,500 for the Merrepen Arts, Culture and Language Corporation to support the 2014 Merrepen arts festival
  • $136,363 for Riding for Disabled (Alice Springs) to promote youth engagement activities.

Community Stores Infrastructure Project

ABA funding for new and upgraded stores and store manager housing in remote Northern Territory Indigenous communities will improve food security and provide community members with employment and training opportunities in the construction industry.

The project has seen upgrades completed on community stores in Areyonga, Milikapiti and Willowra. New store builds are well progressed in Haasts Bluff and Papunya, and underway in Peppimenarti and Bulman. It is anticipated that tenders will be let in 2014 for works on stores and store manager housing in a further six communities.

Fund Management and reporting framework

PM&C is responsible for ensuring that the ABA complies with the Land Rights Act and relevant financial legislation and that it meets its financial accountability responsibilities to the Government and Parliament. Section 64B of the Land Rights Act requires PM&C to keep accounts and prepare financial statements in respect of the ABA, as determined by the Minister for Finance. Section 64B also requires the Auditor-General to report on the financial statements to the Minister for Indigenous Affairs.

The reporting framework for 2013–14 (Figure 5.5) is aligned with the major functions of the ABA, as described in Figure 5.2.

Figure 5.5 Aboriginals Benefit Account activity reporting framework

Administration of the ABA
1: Credits into the ABA
2: Debits out of the ABA
   2.1: Payments to land councils
   2.2: Payments to royalty associations
   2.3: Beneficial payments
   2.4: Office of Township Leasing payments
   2.5: Administration payments
3: ABA secretariat
4: Management of the ABA and its investment portfolio

Aboriginals Benefit Account activities 2013–14

Credits into the Aboriginals Benefit Account

Section 63 of the Land Rights Act requires the Commonwealth to credit to the ABA royalty equivalent moneys, the level of which is equivalent to the royalties received by the Commonwealth or the Northern Territory for mining on Aboriginal land in the Northern Territory.

Subsection 62(3) of the Land Rights Act requires interest received from the investment of ABA funds to be credited into the ABA. The interest earned from investments is receipted directly into the ABA’s official bank account. Figure 5.3 details interest earned for the year, as well as royalty equivalent income, resources received free of charge and lease rental income.

The majority of resources required for the administration of the ABA were provided free of charge by the responsible Commonwealth department. Resources provided free of charge represent staffing costs associated with the management of the ABA not reimbursed to the Department by the ABA. Resources provided free of charge are included as revenue in Figure 5.3 and expenses in Figure 5.11.

Financial statement audit services are provided free of charge to the Department by the Australian National Audit Office.

Royalty equivalent receipts

Under the Northern Territory (Self-Government) Act 1978, all Commonwealth interests in minerals in the Northern Territory (other than a prescribed substance within the meaning of the Atomic Energy Act 1953) are vested in the Northern Territory.

Title to those substances to which the Atomic Energy Act refers, principally uranium, remains vested in the Commonwealth.

Royalties from uranium mining on Aboriginal land are paid to the Australian Government Department of Industry, and royalties from non-uranium mining on Aboriginal land are paid to the Northern Territory Treasury.

Following advice from these bodies and any necessary determinations made by the Minister, special appropriations are made from the Consolidated Revenue Fund to enable funds equivalent to the amount of royalties received from mining on Aboriginal land to be credited to the ABA. Advice is provided regularly by the Northern Territory Treasury and twice yearly by the Department of Industry.

Figure 5.6 details uranium and non-uranium royalty equivalents credited to the ABA for 2012–13 and 2013–14.

Figure 5.6 Royalty equivalent receipts, 2012–13 and 2013–14

  2012–13
$’000
2013–14
$’000
Uranium royalties 12,241 9,378
Non-uranium royalties 91,325 147,300
Total royalty equivalents 103,566 156,678

ABA royalty equivalent income is volatile because it is subject to profits recorded by individual mines, which are subject to the world resources market. Figure 5.7 shows section 63 receipts from royalty equivalents transferred into the ABA in the past eight years.

Figure 5.7 Section 63 royalty equivalent receipts transferred to the Aboriginals Benefit Account, 2006–07 to 2013–14

a chart showing Section 63 royalty equivalent receipts transferred to the Aboriginals Benefit Account, 2006–07 to 2013–14

Debits out of the Aboriginals Benefit Account

Aboriginals Benefit Account expenditure in 2013–14

Figure 5.4 provides a summary of total ABA expenditure in 2012–13 and 2013–14.

Payments to land councils for administrative expenses

Figure 5.8 lists ABA moneys paid in 2012–13 and 2013–14 to the four Northern Territory land councils to meet their administrative costs.

Figure 5.8 Subsection 64(1) payments (net of mining withholding tax) to land councils for administrative costs, 2012–13 and 2013–14

Land council 2012–13
$’000
2013–14
$’000
Northern Land Council 18,597 17,569
Central Land Council 16,555 15,305
Tiwi Land Council 1,482 1,526
Anindilyakwa Land Council 1,556 1,603
Total 38,190 36,003
Note: Further details can be found in Part 4, financial statements.

Payments to royalty associations

Under subsection 64(3) of the Land Rights Act, 30 per cent of the royalty equivalent monies must be paid to each land council in the area in which a mining operation is situated. These moneys are distributed to Aboriginal organisations (royalty associations) in those areas affected by mining operations.

Figure 5.9 lists payments made in 2012–13 and 2013–14 to land councils for distribution to royalty associations.

Figure 5.9 Subsection 64(3) payments (net of mining withholding tax) to land councils for distribution to royalty associations, 2012–13 and 2013–14

Land council 2012–13
$’000
2013–14
$’000
Northern Land Council 6,698 7,731
Central Land Council 316 402
Anindilyakwa Land Council 22,812 37,438
Total 29,826 45,571
Note: Further details can be found in Part 4, financial statements.

Beneficial payments

Under subsection 64(4) of the Land Rights Act, the Minister can make payments for the benefit of Aboriginal people living in the Northern Territory. The ABA Advisory Committee advises the Minister on these payments.

Figure 5.10 lists expenditure under subsection 64(4) for 2012–13 and 2013–14.

Figure 5.10 Subsection 64(4) expenditure – beneficial payments (net of mining withholding tax), 2012–13 and 2013–14

Subsection 64(4) beneficial payments 2012–13
$’000
2013–14
$’000
Total beneficial payments 59,472 39,935

Subsections 64(6) and 64(4A) administrative payments

Costs associated with the administration of the ABA and the Office of Township Leasing are captured respectively under subsections 64(6) and 64(4A) of the Land Rights Act. Figure 5.11 provides a breakdown of administration and Office of Township Leasing expenses for the ABA for 2012–13 and 2013–14, including consultancy services and services provided free of charge to the ABA.

Figure 5.11 Departmental administration, subsections 64(6) and 64(4A) expenditure (exclusive of GST), 2012–13 and 2013–14

Departmental administration expenditure and expenditure under subsections 64(6) and 64(4A) 2012–13
$’000
2013–14
$’000
Departmental administration expenditure
Resources provided free of charge 2,142 2,450
Subsection 64(6) payments
Committee members sitting fees/superannuation 147 161
Consultancy services 68 22
Committee meeting expenses 91 101
Payments to meet the administration of the ABA 98 0
ABA Stores Infrastructure Project 562 801
Subsection 64(4A) payments
Office of Township Leasing administrative expenses 1,250 1,134
Payments for township leases 763 742
Total administrative costs of the ABA 5,121 5,412
Note: Further details can be found in Part 4, financial statements.

Office of Township Leasing

Under the Land Rights Act, administration costs and up-front payments associated with township leases and other leases administered by the Executive Director Township Leasing are drawn from the ABA. This legislative arrangement reflects that reformed land arrangements in townships on Aboriginal land can assist with better service delivery and improved housing management, and both facilitate home ownership and increase economic development for landowners and other residents.

Expenditure for this purpose represents 1.4 per cent of the total ABA drawdown for 2013–14.

Consultancy services

Figure 5.12 lists consultancy services used by the ABA in 2012–13 and 2013–14.

Figure 5.12 Consultancy services (GST inclusive), 2012–13 and 2013–14

Consultancy 2012–13
$’000
2013–14
$’000
KPMG Darwin 75 24
Total consultancy services 75 24

Mining withholding tax

Under the Income Tax Assessment Act 1936, payments made from royalty equivalents credited to the ABA are subject to mining withholding tax (MWT) at a rate specified in the Income Tax (Mining Withholding Tax) Act 1979. In accordance with the Taxation Laws Amendment Act (No. 3) 1994, the current rate of tax applied to payments of MWT is 4 per cent.

From 1 July 2003, the Australian Taxation Office determined the ABA to be a large pay-as-you-go (PAYG) withholder. MWT liabilities on payments made are paid on or before due dates in accordance with the PAYG withholding for large withholders guide issued by the Taxation Office.

Figure 5.13 shows the total MWT for 2012–13 and 2013–14.

Figure 5.13 Mining withholding tax, 2012–13 and 2013–14

Mining withholding tax 2012–13
$’000
2013–14
$’000
MWT expenditure for the year 4,323 4,127
Note: Further details can be found in Part 4, financial statements.

Total equity

Figure 5.14 lists the ABA’s closing balances on 30 June in 2013 and 2014 as disclosed in the financial statements on an accrual basis, excluding future commitments.

Figure 5.14 Total equity, at 30 June

Total equity 2012–13
$’000
2013–14
$’000
Balance carried forward from previous year 438,280 429,535
Income minus expenses (surplus) (8,745) 46,372
Closing balance as at 30 June 429,535 475,907
Note: Further details can be found in Part 4, financial statements. Total equity excludes future commitments.

Advisory Committee

The ABA Advisory Committee is established under subsection 65(1) of the Land Rights Act to advise the Minister on beneficial payments under subsection 64(4) of the Land Rights Act (see Figure 5.16).

As part of its administrative responsibilities, PM&C provides secretariat support to the ABA Advisory Committee.

In 2013–14 the Committee met in Darwin three times – in July, October and March – to consider a large number of applications, provide input to policy and programme development and formulate advice to the Minister in relation to beneficial payments.

During these meetings the committee considered 308 applications for funding worth $366.47 million. Of these applications 124 were supported, 169 were not supported, 15 were deferred and one was withdrawn.

Management of the Aboriginals Benefit Account and its investment portfolio

The ABA investment strategy is focused on cash-flow requirements, preservation of the fund and management of risk. Monies that are surplus to immediate requirements are invested under section 39 of the FMA Act.

To minimise the risk of any loss, section 39 of the FMA Act restricts the investment of public money to a limited number of specific low-risk investments such as government bonds, state and territory bonds, term deposits and negotiable cash deposits with a bank.

Figure 5.15 shows the term deposits that the ABA had with Australian banks on 30 June in 2013 and 2014.

Figure 5.15 Aboriginals Benefit Account investment portfolio at 30 June

  2013
$’000
2014
$’000
Interest bearing deposits 402,129 455,685
Total ABA investment portfolio 402,129 455,685
Note: Further details can be found in Part 4, financial statements.

Figure 5.16 Aboriginals Benefit Account Advisory Committee members, 2013–14

Mrs Patricia Brahim Chairperson
Northern Land Council
Ms Lisa Mumbin Katherine/Beswick Mr Andy Garnarradj West Arnhem until November 2013
Mr Wayne Wauchope West Arnhem from November 2013
Mr Wali Wunungmurra East Arnhem/Yirrkala until November 2013
Mr Djawa Yunupingu East Arnhem from November 2013
Ms Donna Sullivan Darwin/Daly/Wagait until November 2013
Mr James Sing Darwin/Daly/Wagait from November 2013
Mr Leonard Norman Borroloola/Barkly until November 2013
Mr David Harvey Borroloola/Barkly from November 2013
Mr Keith Rory Borroloola/Barkly from May 2014
Ms Grace Daniels Ngukurr/Numbulwar
  Mr George King Victoria River District until November 2013
Mr Shadrack Retchford Victoria River District until November 2013
Ms Elaine Watts Victoria River District from May 2014
 
Central Land Council
Ms Veronica Lynch Alice Springs Region Mr Conrad Ratarra Tjuwanpa Mr Harry Nelson Tanami Region
Mr Maurie Ryan North West Region   Ms Sandra Morrison Tennant Creek Region
Anindilyakwa Land Council
  Mr Tony Wurramarrba AO Groote Eylandt  
Tiwi Land Council
  Mr Andrew Tipungwuti Milikapiti