Unlocking the potential of the ‘Indigenous Estate’

Unlocking the potential of the ‘Indigenous Estate’

Developing the appropriate settings for the management and access to the Indigenous Estate is critical to enable it to achieve its potential, to generate opportunities and choice and to bring Aboriginal and Torres Strait Islanders benefits and influence on the national stage.

Associate Director, Advisory

KPMG Australia

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Indigenous Australia line design – teal and white

Jonathan Taylor, Indigenous Development Specialist, KPMG Australia and
Eddie Fry

Across the Australian landmass, Aboriginal and Torres Strait Islander peoples hold a rich base of assets and rights. Indeed, according to estimates, Indigenous people now own or have controlling interests in some 40% of the Australian land mass under various forms of title and legislation.

The repossession and growth of the Indigenous Estate in the last 40 years by Aboriginal and Torres Strait Islander people has been significant.

The challenge now is both to continue to grow the Indigenous Estate and more importantly to cause its assets to be converted to bring Aboriginal and Torres Strait Islanders benefits and influence to the national stage.

The assets comprising the Indigenous Estate include tangible assets: the land and waters of the Estate, and the resources located on or within it, and also intangible assets – cultural and intellectual property rights, as they exist in forms of expression (arts, dance, music, language); traditional cultural, environmental and bioscience practices, and other forms of traditional knowledge.

And the Indigenous Estate continues to grow through:

  • the acquisition, development and management of land
  • the flows of funds from royalties and rents from resources, land use and other agreements, and the investment of those funds – domestically and internationally
  • the development and growth of Indigenous businesses and
  • revitalisation or enhancement of intellectual and cultural property and knowledge, and new forms of expression and works.

Steps to assist the Indigenous Estate reach its full potential

1. We need to better understand the Indigenous Estate

Whilst there have been many studies on particular regions or landholdings, a structured identification or assessment of the assets of the Indigenous Estate is required, coupled with an understanding (driven by appropriate consultation) of the aspirations and opportunities desired by Indigenous communities and groups within their respective regions or landholdings.

Once this understanding of aspirations and opportunities increases, we can establish an enabling ecosystem/framework for Indigenous economic development and the Estate can be grown by and in line with the aspirations of Aboriginal and Torres Strait Islander groups and communities.


2. We need to establish a consistent, national, enabling framework for economic development

To allow Aboriginal and Torres Strait Islander people the full opportunity to protect, and if they wish, develop or harness, their respective interests in the Indigenous Estate, a framework is needed that enables the potential of these assets to achieve the outcomes that Aboriginal and Torres Strait Island peoples choose.

Such a framework should establish the mechanisms and support structures that enable Aboriginal and Torres Strait Islander people to:

  • establish governance structures that are sufficiently agile to participate effectively in economic and investment activity, whilst also reflecting cultural and community needs and expectations
  • develop the commercial capability necessary to make informed strategic, investment and commercial decisions
  • access capital and advice from aligned partners who can work effectively alongside Aboriginal and Torres Strait Islander people.

In addition, it must:

  • articulate the role of each key institution, agency and segment in the spectrum of Indigenous economic development, the role it is expected to play and its inter-relationship with the others and
  • identify the resources, skills, products and services required for each player to be fully effective as an enabler of the economic aspirations of Indigenous Australians.


3. We need to ensure policy settings are enabling, not inhibiting

Current policy settings for economic development of the Indigenous Estate do not articulate a clear framework and can impose requirements seen to inhibit economic activity, rather than enable it.

For example, in certain circumstances organisations are often compelled to incorporate under prescriptive governance regimes which are compliance driven rather than commercially agile. The weight of effort necessarily then goes to meeting reporting and related obligations, rather than strategic and/or commercial decisions, let alone economic development. Many organisations are simply not resourced or ill-equipped otherwise to operate in these contexts, and are caught in a cycle of compliance, audit and reporting, rather than growth.

Similarly, royalty arrangements have often limited Indigenous communities’ ability to make risk-based commercial decisions that suit their circumstances, and instead the agreements have enforced the use of an external trustee or adviser with a deliberately conservative mandate, and with incentives/drivers that are not always well aligned with the community’s own aspirations.


4. We need to plan for sustainability

Over the course of many years, there have unfortunately been many examples where communities or organisations have lacked a long-term plan for the use and development of their assets.

The consequences of this have been wide ranging. In some cases funds have been disbursed or applied for short-term needs, or invested into local, high risk businesses or activities, with no amounts set aside for longer term use or intergenerational benefit. In other cases, the activities undertaken by such organisations have been opportunistic and reactive, and misaligned with community expectations.

Where funds have consistently been used for the short term, or are locked in an illiquid local business or asset prone to distress, the capital base of the organisation affected is depleted permanently. This is particularly stark where the funds have arisen from a land use or other agreement in which there has been an ‘asset swap’ or ‘conversion of interest’, in which the group has exchanged inherent rights to an asset (lands, waters, related rights and/or intellectual property), for financial assets (primarily cash) or other rights.

It is becoming increasingly apparent that establishing an appropriate plan, and subsequently an asset base which provides for financial sustainability, often better positions organisations to meet community expectations (whether relating to community development or otherwise) over the long term.


5. We need to invest in building true commercial capability

Building commercial capability allows Indigenous groups and communities to test, challenge and change the (often imposed) structures to which they are subject.

Within the Indigenous Estate, there are too few examples where commercial capability has been fostered genuinely and sustainably, with the focus instead being on coursework and training. Commercial capability cannot be developed solely in the abstract – rather, it is best developed in the context of, and when it is integrated into, real and tangible projects, for example where groups have co-invested in real ventures and have called upon to plan for and make decisions about how their money will be invested or used, and how the underlying assets and businesses are managed.


6. We need to improve access to appropriate commercial expertise and advice

The lack of understanding of the opportunities within Indigenous Australia, the small asset base of many organisations, and the remoteness and other barriers to effective engagement with many Indigenous communities has meant that, generally, communities have not been able to access the most appropriate and highest quality advice needed to engage in commercial activity.

As the Estate becomes better understood, and as corporate and wider segments have become increasingly engaged with Indigenous Australia, this has started to change – there is still much room for improvement.


7. We must ensure that institutions, policies and structures that manage and regulate access to Indigenous landholdings are used creatively and flexibly

Mechanisms exist, and have indeed been utilised, to lease and otherwise make land available where native title rights and interests or statutory land rights exist for commercial activity (where desired).

For the institutions, policies and structures that manage and regulate access to and with Indigenous landholdings, we must ensure we think laterally and creatively about how to create the necessary certainty, balancing risk and reward, to achieve the outcomes being sought. Accordingly, we must look within existing laws, such as the flexibility afforded by the ‘Indigenous Land Use Agreement’ (ILUA) Scheme within the Native Title Act 1993 (Cth).

Agreements concluded under the ILUA provisions can be remarkably flexible, covering a wide array of matters, including to support commercial activities, or to provide long-term, binding and legally enforceable rights to an individual. Similar outcomes can be achieved via existing provisions in statutory land rights schemes.

 

The time to start is now

The time to start working towards achieving the potential of the Indigenous Estate is now.

Over the past decade in particular we have witnessed Aboriginal and Torres Strait Islander communities and groups engage in an accelerated period of agreement-making. The financial benefits arising from this agreement-making activity has largely been generated by extractive resources-related activity associated with the mining boom.

Studies conducted estimate that there could be up to $10-15 billion in investable assets in the Indigenous Estate, much of which is held in trusts. While there remains a reasonably long tail of operational activity left to run, the benefits that can flow from such activity into the Indigenous Estate are inevitably finite.

In the boom and bust cycle associated with the extractive resources industry, the challenge is to now ensure that this wealth derived from a non-renewable asset, works for and benefits both current and future generations by creating opportunity and facilitating independence.

It is time for governments and the institutions that manage, and govern access to the Indigenous Estate, to look beyond the next electoral cycle and work with Aboriginal and Torres Strait Island groups, communities and individuals to focus on the future that these groups, communities and individuals want to achieve. They must be structured in such a way as to give Aboriginal and Torres Strait Islander groups and communities access to appropriate and professional advice, absent self-interest and ‘short-termism’.

Critically, in addition to working to generate a long-term plan and vision that is driven by Aboriginal and Torres Strait Island people about what they wish to achieve, we must continue to allow the Indigenous Estate to link with the broader Australian economy and vice versa, so that investments, opportunities and benefits are generated for Aboriginal and Torres Strait Islander people, if they so choose.

Igniting the Indigenous economy

This report presents a collaboration of ideas focused on the economic development of Indigenous Australia.

 
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