Chapter 6 Regulating for governance
Good store governance in a remote economy
It was recognised during the inquiry that a healthy store is one where
the community has the opportunity to participate in decision making about store
well-being outcomes. For this to happen there
must be appropriate governance structures in place to ensure that input.
While a small percentage of remote community stores are privately owned
and operated, a majority are owned and controlled by the Indigenous community
in which the store is located. In these communities the governance body
established to manage community funds may have charge of the store or a
separate legal entity called a ‘store committee’ may be formed for that
purpose. Commonly, a non-Indigenous
manager will be appointed privately or a consultancy such as Australian Retail
Consultants or Outback Stores will be contracted to manage the store.
Community stores in most remote Aboriginal and Torres Strait Islander
communities are run as not-for-profit institutions, but they are also the
social and economic engines of the community. The Office of the Registrar of
Indigenous Corporations (ORIC) estimates the annual turnover of an entry level
store at $1.3 million, but many trade far in excess of this. Indigenous store
management experts Burdon Torzillo Associates advised that a ‘good’ store—one
that is viable, provides healthy foods at a reasonable cost, and maintains
standard hours of service—may achieve a small operating surplus of between five
and eight per cent.
For stores servicing larger communities with larger operating budgets a surplus
can be sufficient to employ many people, fund seed enterprises or support major
infrastructure projects. Even for smaller stores, surpluses are important to
the community to fund a range of social, cultural or other needs which could
not otherwise be supported.
The tensions between commercial and health objectives provide unique
challenges to those involved in running the store. Good store management thus relies on, both:
n the governance
capacity of the community body to direct store policy and hold store management
to account, and
n the store manager’s
ability to maintain a viable business and preparedness to work towards
objectives set by the governance body.
For Indigenous owned community stores, well developed and appropriate
governance structures are therefore essential supports to the necessary consultation,
to ensure that both store managers and owners meet their obligations in
operation of the store, and that processes are transparent and accountable.
The role of store committees
While comprehensive data is not available, many Indigenous communities
establish a store governance body, known as a ‘store committee’, to run their
While the store committee members may not have responsibility for daily
management of their store, they can have an important influence as decision
makers: in choosing management models, determining store food policy, making
decisions about any surplus expenditure, and monitoring store financials.
Store committee entities are structured under state or federal
legislation in a range of corporate or non-corporate forms.
A strong store committee is often comprised of strong leaders, called
directors, who are usually traditional owners. In some areas these will mainly
be senior men, but in other communities women predominate. Lieutenant General John Sanderson AC advised
that a respected leader will have not only cultural seniority but a capacity to
unite the community, with benefits for the store:
…where they have strong leadership, the community stores
function well. People have a sustained presence in that process… There is a community
commitment to what the store does.
The Committee received evidence
from many Aboriginal corporations and store committees proud of their
stewardship of ‘happy’ stores in healthy communities:
The community takes great pride in the presentation,
operation and stocking of its Community Store and comparisons to other
neighbouring stores is a topic of daily discussion.
A good relationship between store
committees, store managers and nutritionists founded good health outcomes in
many communities. Papunya Store Company President Sam Anderson stated:
It is up to people to have their choice, but we have still
got to understand to look after our health as well…if we have got good store
managers, a good committee and people supporting otherwise, we will go a long
way on that stuff.
Jarlmadangah Burru Aboriginal
Community store, located 120 kilometres south east of Derby, demonstrated that
a community council can own and run a strong store with prudent management,
accounting advice and a measure of government funding :
The store contributes to the cost of fuel for the powerhouse
and has provided the community with an essential service [it ] has had to look
at how it can offer community member's food supplies that will enable them to
receive value for money and not lose money in the process. During its' ten
years of operation the store has only recorded one small loss. All profits
generated have been reinvested into the store for improvements and upgrading computers/POS.
Many remote communities comprise numerous clans, some of whom share
traditional custodianship or claim it, and reside with others from other areas.
Helen Williams, Chairperson of the Maningrida Progress Association (MPA)
described how the community mediates store cultural contributions in a
We have got a reference group that gets together. It is a big
group and then we are able to take it back within our board meetings within our
own organisation that we represent…
Store committees are responsible for appointing store managers, many of
whom are non-Indigenous, to their stores. While some managers are very skilled
and committed to the community others are not. Poorly developed governance with
poor store management leads to financial instability. In these instances the
store may typically experience high prices, poor supply of low quality stock
and a high incidence of stock pilfering or other fraudulent behaviour.
It was very apparent during store inspections that running a viable
remote community store is an extremely challenging and complex task for any
remote store manager. Equally, it was clear that some Indigenous communities
have poor capacity for effective store governance despite a very strong
commitment to it. The variance of quality, governance and manager capacity was the
single unifying factor among the diversity of community stores during the
Obstacles to governance
Community stores face many more challenges than stores run in other situations.
Few other Australian communities are locked into a situation where their health
and well-being, as well as their local economy, is largely dependent on one
Remote community stores operate in an environment which is not conducive
to running a business. Small market size, diseconomies of scale in food supply,
high costs for transports and low profits mean that the few private operators
in the area are either very good or extremely bad, with low commitment to their
host communities’ needs (for example, ordering in specific food for diabetics).
The role of the store as the economic centre of a remote community adds
additional challenges: the store must comply with financial standards of
accountability and democratic governance models that do not fit well with
cultural practices of clan ownership and obligation between kin.
Distortion of market power
The Committee was advised by the Department of Families, Housing,
Community Services and Indigenous Affairs (FaHCSIA) that a ‘lack of competition
in remote locations leads to a distortion of market power in favour of store
operators, while remoteness compounds consumer vulnerability.’
Due to cultural factors Indigenous people may not contest the quality of
goods or services they receive, and cannot afford regular travel to other
stores for better prices or services. This supports the
incidence of ‘price gouging’, where high prices, inferior products or poor
services are provided without affecting sales. Bifurcation of demand
between Indigenous and non-Indigenous consumers in remote communities further
reduces the bargaining capacity of Indigenous people, while driving up store
prices and undermining store viability.
The Australian Securities and Investments Commission (ASIC) brought to the
Committee’s attention the role ASIC plays in consumer protection under these
ASIC produces targeted information and resources for
different sections of the community, including resources for Indigenous Australians.
Our Indigenous consumer strategy has three key elements: consumer
education/financial literacy; combating exploitative business activity; and
working with mainstream providers to improve practices and practical access.
Another challenge that remote Indigenous community stores face is the
shortage of experienced and qualified individuals available to manage remote
community stores. The Northern Territory Government advised:
…there was a shortage of qualified individuals available to
manage remote community stores and the difficulty of retaining them makes poor
store management more likely, with communities having little choice whom they
In turn boom and bust cycles associated with good—management—bad
management, as store managers come and go, affects service and the
sustainability of the store.
Cultural obligations and stores
Indigenous cultural protocols bring another dimension to the operation
of remote community stores. As the financial and social hub of the community,
remote stores are at the centre of Indigenous ‘demand sharing’ practices and
In Aboriginal communities obligations to provide goods or finances to
clan members confirm mutual relationship and assert difference.
John Greatorex, Coordinator of Yolngu Studies at Darwin University, gave a Yolngu
perspective from Mapuru in North East Arnhem Land:
We have our own financial literacy, and that means sharing.
It’s ethically responsible for us to offer people money or resources that we
have before we’re asked.
Problems with this in the store context were widely discussed in
evidence. The Committee heard that pressures could be placed on staff to
provide free goods or staff be sacked if they would not provide credit to clan
or kin in community run stores. In store committees the potential for clan
conflict or lack of democratic process could be exploited by store managers in
determining store expenditure.
FaHCSIA observed that store committee corporate structures can produce a
‘clear tension between the economic/commercial interests of the store committee
and the social obligations to return revenue to the community’, noting
potential for committee members to receive financial benefit via high prices in
a store or via 'special discounts', and other accountability issues.
Indigenous stakeholders acknowledged that practices such as ‘humbugging’
and nepotism can pose a serious risk to the viability of the store.
Some considered that partnerships with non-Indigenous people in store
governance and management can be helpful to diffuse cultural pressures. Ric
Norton works as the non-Indigenous General Manager of Laynhapuy Homelands
… why we are a relatively stable organisation and have been
quite successful is that our members recognise these problems and take a bit of
a hands-off approach and say, ‘We want this to be run properly, which means we
need non-Indigenous involvement to make sure that happens.’ As individuals,
they can be put under enormous amounts of stress if they are ultimately the
ones who hold the key or whatever.
Other Indigenous stakeholders maintained that ‘demand sharing’ behaviour
as currently understood is not traditional but has evolved in response to need.
In Alice Springs, Darryl Pearce, Chief Executive Officer of the Lhere Artepe
Aboriginal Corporation, commented:
…there is a new model of Aboriginal people who have started
this thing—it is only realistically about 20 or 30 years old—about the pressure
that we apply to families and other people to get something off them. This
whole idea is that ‘I’m your family and you have to pay for me; you have to buy
this and you have to give me that. Give me your car and give me your clothes.’
That is new. That is not traditional in any shape or form. Traditionally, when
you went to a person’s country you sat down. If a kangaroo were killed people
did not just jump up and grab whatever they wanted out of the kangaroo on the fire;
it was broken up and distributed amongst each of the family groups, who then
distributed it amongst themselves.
Reverend Dr Djiniyini Gondarra OAM, Chairman of the Arnhem Land Progress
Aboriginal Corporation (ALPA) one of Australia’s largest independent employers
of Indigenous people, explained that traditional Yolngu law provides strict
distinctions applicable to store management:
Most of contemporary society understands or is being told
that the Aboriginal people of this country share and give. The word for giving
in Arnhem is ‘witj’. They see people working in a store who may be taking a
very important role as a manager or assistant manager and they wonder how that
store is going to survive and make a profit, because their wife, daughter, son,
nephew or whoever might come into the store and say, ‘I want money.’ We are not
stupid. We use the word ‘malu’. Malu is a special word. It is the revenue, the
profit, and that profit is owned, by law. The people who work there know what
is inside the business and what is outside the business. In a contemporary
society people need to know that; that is very clear.
During a public hearing in Canberra, Professor Jon Altman advised the
Committee that Indigenous management is desirable, but education is needed and
the realities of kin pressures must be recognised as part of the business of
remote store operation: bad external managers can get caught up in these
pressures leading to poor outcomes for the store.
The Committee notes that there is potential for tension between profit
incentives and health outcomes as store committees exercise their respective
responsibilities to the store and to the community.
For Indigenous people the measure of success of a community-owned and
managed store is often gauged by its capacity to support a range of cultural,
community development and recreational projects, as well as provide affordable
healthy food. Community members see this as an important contribution to
community well-being, a source of pride and a demonstration of cultural
The Committee recognises that store committees can find arriving at the
right balance difficult, and that frameworks are needed to ensure that the sustainability
of the store and health outcomes are the priority, over and above other surplus
The Committee is therefore of the view that strong self-governance
structures are needed to ensure Indigenous communities are better equipped to
make effective decisions about the management of their store, to define their
community goals and objectives and determine how they can be achieved.
Regulatory frameworks for store governance
Remote community stores can be established under a range of
Commonwealth, state or territory regulatory regimes, leading to complexity and
lack of accountability in their operation.
At the Commonwealth level, community stores may incorporate under the Corporations
Act 2001 or the Corporations and Aboriginal and Torres Strait Islander
Act 2006 (CATSI Act). Many also operate as associations under the relevant
Associations Act in a particular state or territory.
A separate category of stores are those controlled by Torres Strait or Northern
Territory shires, and those established under state legislation in Queensland
by the Islanders Board of Industry and Service (IBIS) under the Aboriginal
and Torres Strait Islander Communities (Justice, Land and Other Matters) Act
While the majority of stores in remote Indigenous communities are
community owned, a small number of stores servicing Indigenous people in remote
Australia are not owned by an Indigenous organisation. For example, in the
Northern Territory around 15 per cent of stores currently licensed as part of
the Northern Territory Emergency Response are not Indigenous owned.
Responsibility for the regulation of Indigenous-owned stores is spread
across different Commonwealth, state and territory agencies:
n the Office of the
Registrar of Indigenous Corporations (ORIC) has responsibility for those
registered under the CATSI Act,
n the Australian
Securities and Investments Commission (ASIC) oversees governance matters for stores
under the Corporations Act, and
n state and territory
business affairs agencies deal with corporate governance issues for stores,
assisted by ASIC. 
Stores may additionally be structured differently under each
n the CATSI Act
provides for either store-specific entities or operation under registered
community councils or corporations,
n the Corporations Act
provides for stores to be registered as proprietary and public companies, and
the classes of each, and
n state and territory associations
acts provide the most variation, with non-corporate forms of associations
comprising sole traders, partnerships, trusts and joint ventures.
Jurisdiction and non-compliance issues
ASIC advised the Committee that the potential for stores to be formed in
overlapping jurisdictions and with different individuals adds to the complexity
for remote store operators. Some community stores, for example:
…use more than one form of association and, within that
group, a mix of corporate and non-corporate bodies…The shareholders of a
proprietary company limited by shares may be an ORIC company or an association.
A proprietary company may also act as the trustee of a trust and enter into a
management agreement with another entity to run a store. 
ASIC concluded that this leads to confusion about ownership of the store,
where information can be obtained about the store (that is, which state, territory
or Commonwealth agency is responsible), and what a person’s rights are in
relation to the management of that store.
The Registrar of Indigenous Corporations Anthony Beven confirmed that
ORIC regularly deals with store governance bodies structured in complex
subsidiary trusts or ASIC registered entities, citing two contemporary
… the other store we are currently running in Burringurrah in
Western Australia is the Burringurrah Community Aboriginal Corporation. It then
has a subsidiary, and the subsidiary is registered with ASIC and it runs the
store. In Mutitjulu, you have the Mutitjulu Community Aboriginal Corporation,
which is registered with my office. It owns all the shares in Gumlake Pty Ltd,
which is an ASIC corporation, and it is the trustee of a trust, the Ninti
Trust, which runs the store in Mutitjulu. So the complexities of the
registration schemes around the country are… difficult to deal with.
ORIC further advised that this complexity limits its capacity to
regulate Indigenous stores. Even if the parent body is registered with ORIC, it
cannot assist with advice or services as these subsidiary trusts or entities as
the Office’s powers under the CATSI Act only apply to the registered body.
Overall, advice from government agencies involved in regulation of the
stores made it clear that the variety and complexity of arrangements for store
registration also makes it difficult to assess both compliance rates under each
regime and the number of stores under each jurisdiction.
Research conducted on store governance in 2002 identified problems such
as lack of accountability of store managers and disagreements concerning
distribution of store profits, bad debts, and high committee costs.
FaHCSIA considered that non-compliance rates are still likely to be high but
had no consistent data on this:
While no data is available regarding non-compliance for community
stores specifically, FaHCSIA’s annual report on Indigenous corporate compliance
for 2007-2008 indicated that 41 per cent of all Indigenous corporations in
Australia were not fully compliant with reporting requirements under the CATSI
The introduction of income management and a store licensing system in
the Northern Territory (discussed in more detail later in the report) has given
some confirmation that non-compliance is an issue under current governance
structures while also providing estimates of the number of stores in different
jurisdictions. These are that 75 stores, 30 per cent, are registered with ORIC,
less then ten per cent are regulated by ASIC, and the majority are formed under
the Northern Territory Associations Act 2003 (NT Associations Act).
More significant limitations for store governance under Association Acts
cited were that:
n these Acts are
intended for small not-for-profit organisations such as social and sporting
clubs and so are unsuited to a not-for-profit functioning uniquely as an essential
service and a commercial entity generating million dollar turnovers, and
n there is a lack of
well-developed remedies for non-compliance, in particular, there is no
administrative infringement scheme, meaning that prosecution is the only means
As noted, the various corporate and non corporate associations and
trusts are the most common forms of governance structures adopted by Indigenous
organisations in the Territory, and are likely to be prevalent in other states.
Lynne Curran, Manager of the Office of Indigenous Policy Coordination Group, FaHCSIA,
advised this supported widespread regulatory failure and non-compliance:
Unfortunately, in many cases, the existing state and
territory regulations are not enforced. That goes to standards in respect of
basic things about associations—there is no follow-up or compliance activity
around financial statements or things of that type. More fundamentally, there
is often very poor or no enforcement of OH&S or food safety standards. That
is just as important for food security as having things on the shelves.
The Committee also heard that even where corporate governance
requirements are technically complied with, store committees and directors may
not be informed of the store’s business position. The Kaltukatjara Community
Corporation (KCC), for example, described apparent conflict of interest and
transparency issues evolving out of overlapping governance structures for its
store, consultant manager and the accountancy firm:
From an audit perspective the accounting firm and Nin[ti]
stores maintain appropriate records and show them to the appropriate
authorities; however the management is constructed in several layers and set up
in such a way that it is hard to identify where any profits are heading. From
an annual turnover of between
$2-$3 million the community receives $46,000 and that is not by way of cash but
stock from the store. Profit in abeyance is also stock not cash reserves.
The submission also reported that Ninti Stores did not provide adequate
notice of meetings or documentation, including financial statements, to store directors.
In response in Alice Springs, Operations Manager of Ninti Corporate Services Richard
Bugg advised that the management consultancy obeyed corporate governance requirements
but did not provide minutes and statements because of a lack of English
literacy among directors. Provision of financial statements had also led to
‘agitation’ for store surplus reserves.
The Committee is of the view that store committees should understand
their obligations to direct the store for community benefits, and managers should
understand their responsibility to report on the store operations in a way
which can be understood by the directors.
A further complexity arises due to factionalism between clans. Difficult
personalties in store committee or councils can exacerbate factionalism with
potential threats to store stability. The Committee heard from John Tregenza,
Mai Wiru Health Unit Manager, Nganampa Health Council, about personality issues
in the community council at Amata, in the Anangu Pitjantjatjara Yankunytjatjara
(APY) Lands, which prevented the community from dealing with problems of
quality and pricing in the store over a period of five years. 
In this respect the Committee notes that registration with ORIC under
the CATSI Act would have provided benefit. When a store committee is formed it
is required to design a dispute resolution process and set this out its rule
book. As the Registrar advised, the
fact that the dispute rules are determined by the corporation gives legitimacy
to the process and creates a greater sense of ownership and commitment to
ORIC also advised that registration under the CATSI Act provides a
useful range of remedies for non-compliance. The Registrar can authorise an
examination of the governance affairs and financial records of Indigenous
corporations to ensure that store governance processes and agreed constitution
rules are followed. An examination of key corporations is conducted annually,
in effect providing a free annual audit.
Greg Gumielli, store manager at Papunya store, advised of improvements
to store accountability and transparency processes since the store committee
registered its constitution with ORIC:
Now that they have the committee, we are held under our
constitution to have a minimum of four meetings a year. I have asked Centre
Accounting Services, and they must attend at least two to three of them per
year, so there should be a financial report given at each of those meetings. At
stock takes we are audited by Deloittes. They come out and do a full audit of
our stock take, financials on hand. They go right through Centre Accounting
Services and their operational capacity with our financials, and they ensure
that everything is correct.
The main aim of the examination process is to identify governance and
financial issues within a corporation before they become major issues. If
intervention is warranted, ORIC will appoint a special administrator to assist
corporation members to solve problems and return the corporation to their full
control, while ensuring business operations continue during the process.
In some instances, community stores may need the assistance of an
administrator, appointed by ORIC, to assist a store that may be heading towards
insolvency or already insolvent. In Mimili, located in the APY Lands in South
Australia, Meertens Chartered Accountants were brought in as an administrator
to assist the store in November 2008. The Registrar advised that Mimili store
is now a solvent, financially viable and profitable store under the management
of Outback Stores.
The Registrar advised that the cost of the administration process is
high, with a maximum period under administration being to six months. Costs
start at $7 000 per month for administration of an art centre, for example, and
peak at $66 000 for more detailed work. At Mimili, costs on average were
between $10 000 to $15 000 a month but peaked at $40 000.
Given the expense of assisting an insolvent store, there is big price
incentive to Government to ensure that store governance and management
structures are functional and meet their obligations effectively.
The Committee considers that current arrangements for the regulation of
community stores are inconsistent and provide inadequate governance regimes.
The complexity and overlapping regulations do not facilitate optimal levels of
good governance for community stores.
Current complex arrangements not only confuse store committee members
about their rights and obligations under each jurisdiction, but simultaneously
open up loopholes for non-compliance while reducing regulator capacity to apply
enforcement and deliver advice.
Proposal for a national registration framework
In response to the problems outlined above, ORIC has recommended that
all remote stores which are Indigenous owned should be incorporated under the
CATSI Act. The Registrar of Indigenous
Corporations, Anthony Beven maintained that the CATSI Act offers an existing
national framework uniquely framed to both achieve community objectives and
meet high standards of compliance:
Registration under the legislation I administer, the CATSI Act, provides a wide range of benefits. It provides a strong regulatory framework at a
national level. It operates across Australia—it is not restricted to certain
jurisdictions. It also has the flexibility to take account of local customary
needs and obligations. We also provide corporate governance support and
services and we have specialist staff that only deal with Aboriginal and Torres
Strait Islander people. So our role is delivering services in the corporate
governance area to Aboriginal and Torres Strait Islander people. That is 100
per cent of what we do.
The Registrar further maintained that as most stores are Aboriginal‑owned
or controlled, a well-structured store committee, aware of its governance
responsibility and obligations, is the key to both the stability of the stores
and the realisation of health and well-being objectives for an Indigenous
community as a whole.
The Committee notes that Indigenous corporations registered under the
CATSI Act must comply with obligations to ensure accountability and promote transparent
practices in decision making:
corporations are obliged to discharge their duties with care and diligence, in
good faith and in the best interests of the corporation. An offence is
committed if a Director uses their position dishonestly or recklessly to directly
or indirectly gain an advantage, or cause detriment to the corporation,
n store directors are
required to adhere to the rules of the corporation's rulebook, which sets out
additional directors' obligations and responsibilities when making financial decisions
for the corporation. If rules to achieve particular objectives are specified, such
as how store profits or surpluses are to be used, then directors are obliged to
act in accordance with these rules,
n a corporation's directors
must obtain member approval to give a financial benefit to a related party of
the corporation. The CATSI Act clearly specifies procedures to ensure open and
transparent disclosure to members when seeking approval for the payment of
related party benefits,
n the Registrar may
authorise an examination of the financial records of an Indigenous corporation
and may also initiate an examination in response to an apparent risk within a
corporations with a consolidated gross operating income of $100 000 or more are
required to provide the Registrar with an annual audited financial report, or
financial reports based on reports to government funding agencies (where
n the Registrar has the
power to investigate alleged breaches of the CATSI Act and refer breaches to
the Commonwealth Director of Public Prosecutions for prosecution. If laws other
than the CATSI Act are breached, the Registrar will refer the matter to the
relevant authority such as the Australian Federal Police. 
ORIC also advised of its powers to provide a fully developed service to
build capacity for compliance, support community control and store viability,
incorporation advice, governance training, financial monitoring and mentoring,
a dispute resolution system and, in the event of store failure, the power to
take the store into administration to restore viability track, and
n assistance to Indigenous
store committee to design their own corporate structures, or ‘rule books’,
which take into account customary needs and obligations as well as make
community specific requirements, such as provisions for health policy,
instructions for uses of surpluses and rules on book up.
ORIC’s proposal was supported in the evidence as providing the right
balance between robustness and flexibility.
Store governance and management experts Burdon Torzillo and Associates saw
that incorporation under the CATSI Act should be compulsory for all Indigenous corporations,
in providing the necessary framework to meet compliance and store committee
member’s needs. It also recommended that terms for directors should be two
years and rotational, and that there should be expert appointed non-member directors
on store committees to mentor and attend quarterly meetings.
ASIC identified a range of problems for regulators and stores under
current complex incorporation arrangements. The Commission considered that, in
addition to consumer protection benefits, incorporation under one jurisdiction could
reduce business costs, improve training opportunities and provide a more
consistent regulatory approach.
As noted above, under current arrangements ORIC can not provide firm
advice on the number of stores it currently administers under the CATSI
legislation. Changes to registration in July 2007 allowed preliminary
assessment indicating that 48 registered corporations currently run a ‘shop’,
being a business of some type. Otherwise, the Registrar
advised, there are 2 700 Indigenous corporations registered under the CATSI
Act, with half in remote and regional Australia. Progress is being made under Memoranda
of Understanding (MOUs) in place with South Australia, Western Australia and
the Northern Territory to promote transferral to ORIC.
The Committee notes, given numbers, that a mandatory requirement for transferral
of Indigenous store governance bodies under associations legislation to the
CATSI Act should be relatively straightforward under most state and territory
legislation. It is notable, however, that Queensland does not have an MOU with
ORIC and that stores operated under Queensland legislation and those run by
shire councils in the Torres Strait would apparently not be covered under any
requirements for transferral to the CATSI Act.
Similarly, improved regulation of privately owned and run stores could
not be effected under any mandatory requirement applying to Indigenous owned
and controlled stores. The Committee notes that reported poor consultation and
compliance among private-owned stores supports the need for improvement in this
The Committee sees advantage for store operators in registration under
the CATSI Act. The flexibility it offers will more effectively match the needs
and responsibilities of store committees in their governance roles: to
structure their governance rules and objectives according cultural
requirements, and incorporate health objectives according to their own design.
This in itself would provide an empowering experience, bringing with it
ownership and confidence to engage more effectively in the management of the
The Committee also notes that store committees have the power to specify
health and other objectives in their rule books which must then be complied
with. An annual audit of key corporations by ORIC, along with constitutional
requirements for regular meetings with accountants, also provides a model of
probity which will support store stability in the long term.
The Committee considers that registration under the CATSI Act offers an
appropriate balance of autonomous direction and regulatory safeguards which
will provide transparency, sound financial management practices and ultimately
have positive outcomes for community well-being.
The Committee recommends that the Australian Government
support proposals that Indigenous owned and controlled community stores
register as corporations under the Corporations and Aboriginal and Torres
Strait Islander Act 2006.
In addition, the Committee recommends the Australian
Government actively promote and encourage registration under the Office of
the Registrar of Indigenous Corporations.
The Committee also considers that, in the process of designing corporate
rule books, ORIC should offer a nutrition policy template to assist store
committees. This template and requirements should be consistent with the
recommendations made earlier in this report regarding healthy store policies.
The Committee notes that store constitutions allow for ‘observers’ to
attend store committee meetings. The Committee is of the view that this
provides capacity for store committee members to require, at designated meetings,
that store manager/s and nutritionists should attend if the community wishes
In making these recommendations the Committee is aware that stores in
Queensland, as government run and IBIS stores, do not currently have formal
mechanisms to promote community input into the management of their stores. The
Committee urges the Queensland Government to remedy this and to do so in
consultation with ORIC where appropriate.
The Committee also considers that, with any proposal to promote the
national licensing of stores, consideration should be given to requiring
privately run stores to be incorporated under the Corporations Act 2001,
to improve probity of private store operation under regulation of ASIC.
Governance training and support
While there are store committees which have very well developed
governance skills, there are many who are poorly prepared to meet the
challenges and responsibilities of store directorship.
As noted above, the role of a store committee is to act as a conduit to
the appointed store managers about community expectations and to participate in
decision-making and monitoring of the financials of the store. The requirements
can be set out in store corporation rule books and in the contractual
agreements made with any store manager or consultancy a store committee may
Surveys indicate that compliance with these obligations for most store
committees is nominal. In turn failure to meet reporting obligations and
inability to oversee and assess store managers/consultancy compliance with
contracts opens the way to fraud and threatens the viability of the store.
Stakeholders strongly supported the need for both financial literacy and
governance training so that store committee members better understand their
rights and obligations, and are more confident to act on them.
The Committee notes that ASIC, ORIC and the Australian Taxation Office presently
operate joint initiatives with Commonwealth, State and Territory agencies
responding to the national need for Indigenous governance training and support.
ORIC leads on this in work with the Northern Territory Government, the Community
Stores Unit of FaHCSIA and the Institute
for Aboriginal Development on delivery of the ‘Building Strong Stores’ (BSS)
training program in regional centres across the Territory. ORIC also offers
accredited training up to certificate level IV and a diploma in business
governance which it delivers regionally. All courses are offered free on a voluntary
basis, with preference given to participants from FaHCSIA licensed stores for
the BSS. ORIC pays the travel, meals and accommodation costs for all
ASIC has also collaborated with ORIC on the BSS program and has produced
publications for Aboriginal directors of corporations and to improve the
financial literacy of Indigenous consumers. The Commission identified a national
need for culturally and corporate effective programs and recommended that an
independent assessment of existing programs should be conducted.
FaHCSIA advised that the department has Indigenous engagement officers working
through the Remote Services Delivery National Partnership to ‘grow the
capability of community members to participate in their store’.
ORIC is at present the only body that consistently allocates funds for
training of Indigenous corporations among bodies responsible for stores.
The Committee believes that the Corporations and Aboriginal and
Torres Strait Islander Act 2006 (CATSI Act) provides an appropriate
combination of rigour and flexibility for Indigenous store governance.
Regulation under one corporate regulator would result in benefits for
Government and its agencies, which would have an improved capacity to collect
statistical information about the sector, identify the challenges and
aspirations of Indigenous store owners, and develop initiatives to improve
governance and hence community health outcomes.
The Committee concludes that the registration of Indigenous owned stores
under the CATSI Act would provide a foundation for certainty and security for
both communities and store operators with improved accountability in store
governance and management.
If a greater number of stores become registered corporations under the
CATSI Act, then the training and oversight role of ORIC will also increase.
Given the importance of training and support to ensure sound governance systems
and well functioning store committees, the Committee is concerned that any
expansion of ORIC’s role is accompanied by an appropriate increase in funding
to ensure it is able to continue to deliver its valuable services to a greater
number of Indigenous corporations.
The importance of governance, financial management and literacy training
being conducted in the language local to Indigenous communities was also
emphasised throughout the inquiry, although it is acknowledged that there are
difficulties in sourcing skilled interpreters.
The Committee emphasises that training should always be culturally
appropriate. Given the importance of communities understanding governance
requirements and responsibilities and acquiring a degree of financial literacy,
greater use should be made of skilled interpreters for training and
The Committee recommends that the Office of the Registrar of
Indigenous Corporations receive additional funding to provide governance and
financial management training to community stores that register under the Corporations
and Aboriginal and Torres Strait Islander Act 2006.