Bills Digest No. 196  1998-99 Commonwealth Grants Commission Amendment Bill 1999

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This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.


Passage History
Main Provisions
Concluding Comments
Contact Officer and Copyright Details

Passage History

Commonwealth Grants Commission Amendment Bill 1999

Date Introduced: 30 March 1999

House: House of Representatives

Portfolio: Finance and Administration

Commencement: On Royal Assent



The Bill provides the Commonwealth Grants Commission with the statutory authority to investigate and make recommendations regarding the financing of works and services for indigenous people.



The Second Reading Speech for this Bill is very brief - comprising 400 words. It simply indicates the Bill is part of the Government's current agenda in indigenous affairs and says it represents a step in 'providing a better basis for the distribution of funding for indigenous affairs' - a commitment which is identified as being part of the Government's 1998 election campaign.

The general issue of funding for indigenous people has been the subject of controversy under the current and previous Governments. Some more recent controversies have centred on the role of the Aboriginal and Torres Strait Islander Commission ('ATSIC'), and others have involved broader considerations of the philosophical and social basis for 'special' funding of particular sections of the community.(1) The Second Reading Speech implicitly raises these issues by referring to the Government's hope that the Bill will 'further [its] aim of improving the situation of Australia's indigenous people by ensuring that an independent assessment of their need for services and programs is undertaken.'(2)

The question of ATSIC's role and independence, and issues of indigenous self-determination are not directly dealt with in the Speech, however they are relevant to the policy issues raised by this Bill, most particularly with respect to access to information generated by the proposed independent authority.

The Commonwealth Grants Commission ('the Commission') is an independent statutory authority which was established in 1933 to assess claims made by States for financial assistance. Early in its history the Commission was involved in examining the need for 'special grants' for the States, but since the introduction of uniform income taxation in 1942 Commonwealth payments to the States (and Territories) have been more substantial and regular. During the mid 1970's the pool of general revenue assistance was distributed according to 'per capita relativities' set in 1975-76, however these relativities are now reviewed annually and the method by which they are calculated is also reviewed on a five yearly basis.(3)

The Commission is an advisory body that responds to terms of reference and does not have the power to initiate and pursue inquiries on its own authority other than within limited statutory provisions. However as part of its examination of 'relative disabilities' in determining the distribution of funding between the States and Territories it takes into account issues of indigenous disadvantage. At a Workshop organised by the Council for Aboriginal Reconciliation in late 1998, Mr Bob Searle, the Commission's Secretary explained that Aboriginality is one of the 'disability factors' behind the Commission's recommendations on how Commonwealth General Revenue Grants should be distributed and

that Aboriginality is a specific disability factor in 18 of the 40 State functions the Commission analyses as it attempts to equalise the capacity of each State/Territory to deliver the average standard service.(4)

This Workshop also identified problems with the state of available data regarding indigenous disadvantage and said that:

Since reliable data is an essential tool of effective benchmarking, this is clearly an obstacle that must be overcome as quickly as possible.(5)

The Workshop reflected that there has been misinterpretation of the role of ATSIC and that:

Within current resources ATSIC is hard-pressed trying to meet its core obligations as a source of policy advice and as a monitor of program delivery to Aboriginal and Torres Strait Islander people. It is certainly not in a position, either through its legislative charter or in terms of capacity, to fill gaps left by mainstream providers at either the State or Commonwealth level.(6)

These statements indicate that, arguably, there are advantages to the Commission having statutory authority to investigate the equities in the funding of works and services for indigenous people. The Commission's role in determining the fair distribution of Commonwealth funding between the States and Territories is likely to be enhanced by recognising the need to address the endemic disadvantages faced by sections of the indigenous people in the Australian community. It is important to note in this context that there is scope for the Commission to take advice and evidence from interested parties (s. 20 Commonwealth Grants Commission Act 1973). However the provisions of the Bill do not address the policy question of whether funding should be provided to ATSIC allowing it to adequately provide policy advice and monitor program delivery.

Another issue to be noted regarding the Bill is that the role of the Commission in monitoring issues of indigenous disadvantage has been on the agenda for some time. In Going Forward: Social Justice for the First Australians, a submission presented to the then Prime Minister, the Hon Paul Keating MP, on 17 March 1995 there was a recommendation that the Commission should be given the power to establish measures to assess the performance of State and Territory governments in addressing Aboriginal and Torres Strait Islander needs.(7)

In 1995 the Human Rights and Equal Opportunity Commission's Aboriginal and Torres Strait Islander Social Justice Commissioner said in his third report that:

The proposal for a Grants Commission review of funding arrangements in regard to Aboriginal communities and organisations is not new. During the Commonwealth Grants Commission's 1993 review of the relativities for the distribution of funds between the States and Territories, the Commission received submissions from a number of Aboriginal organisations. A number of Aboriginal people appeared before the Commission in Darwin in December 1992. The Commission summarised the proposals suggested by these people and the organisations as follows:

the Commonwealth Grants Commission should recommend to the Commonwealth Government that fiscal equalisation be applied to Aboriginal communities, Aboriginal local governing bodies and other Aboriginal service organisations; and,

the Commonwealth Grants Commission should establish an inquiry to investigate:

- how fiscal equalisation could be applied to Aboriginal communities, Aboriginal local governing bodies and Aboriginal service organisations;

- how a system of block funding could be introduced in the context of the current multiplicity of funding sources which involve different levels of government;

- how the relevant needs of communities could be assessed;

- the extent to which block funding should be extended to cover the range of services provided to communities;

- what should be done about funding for regionally provided services such as health, legal aid and resource agencies; and,

- what financial, administrative and accounting practices would need to be implemented as part of any move to block funding.(8)

The Social Justice Commissioner went on to recommend:

That the Commonwealth Government initiate:

A comprehensive study by the Commonwealth Grants Commission of the potential application of the fiscal equalisation principle among Indigenous communities in Australia. Such a study to be undertaken in a manner which allows for the outcomes to be broken down into both States/Territories and regions; and

A specific reference to the Commonwealth Grants Commission to explore solutions to the enormous and inequitable capital infrastructure needs of Indigenous communities.(9)

At the Australian Reconciliation Convention in May 1997 a session was held regarding 'Accountability in Service Delivery.' In a strongly worded speech Mr Aden Ridgeway, spoke about cuts to ATSIC and the process by which indigenous Australians are the 'most scrutinized and audited group of people in this country.' (It should be noted that the Commission has powers of reporting regarding funding arrangements and distribution rather than being an auditing body). Mr Ridgeway also identified that there were problems with the system of government accountability and that while, the Commonwealth Grants Commission takes into account indigenous disadvantage in determining the formula for distribution of financial assistance grants, this is not always reflected in the spending patterns of governments.(10)

Mr Searle, the Commission's Secretary, spoke at the same session and reflected that:

The process of reconciliation would be enhanced if the uncertainty at present associated with responsibilities to the Aboriginal and Torres Strait Islander people were removed from the structure of public service provision.(11)

ATSIC are not on the record as having responded to the introduction of this Bill, although it should be noted that in their submission to the Keating Government Recognition Rights and Reform: A Report to Government on Native Title Social Justice Measures ATSIC recommended that:

The Commonwealth Government should, in consultation with ATSIC, initiate a comprehensive inquiry into the level and effectiveness of expenditure by the States and Territories and local Government on service provision for Aboriginal and Torres Strait Islander peoples. This inquiry should be conducted by the Commonwealth Grants Commission or an independent expert as a matter of urgency and be completed by the end of 1995. The inquiry should have particular regard to current assessments of State/Territory expenditure requirements and general community standards, and would encompass, among other things:

a. recurrent and capital needs of indigenous communities to upgrade and maintain service provision to an acceptable and standard level, comparable to wider community standards, by 2001;

b. the range of revenue sources for Aboriginal and Torres Strait Islander community service provision, including community raised revenue and that currently provided or administered at Commonwealth, State/Territory or local Government levels; and

c. options for funding service provision on a regional basis.


Main Provisions

The Bill is quite brief. It amends the Commonwealth Grants Commission Act 1973 ('the Principal Act') in four ways.

The explanatory part of the Principal Act's Title is modified to include a reference to the Commission's expanded role - i.e. its role in making 'recommendations concerning the ...financing of works and services in respect of indigenous persons' (item 1 of Schedule 1). A definition of 'indigenous person' is inserted into the definitions section (item 2). This definition corresponds to standard definitions in use.

Item 3 inserts a new section (proposed section 18) which enables the Commission to make inquiries relating to indigenous persons when the Minister refers a matter to the Commission. The matters which may be referred by the Minister are quite broad and include works and services for indigenous persons which are provided or funded (directly or indirectly) by the Commonwealth, and other financial assistance grants made to States and Territories.

Item 4 applies the Principal Act's standard tabling procedures for reports to those reports made under proposed section 18. These tabling procedures provide the Minister with a discretion to table the reports made by the Commission (subs. 25(1)), unless the Government is to introduce legislation 'relating to the subject of a report,' in which case the Minister is required to table the relevant report (subs. 25(2)).


Concluding Comments

In the current climate of tension between sections of the indigenous community, including ATSIC, and the Government, it is difficult to see what impact this legislation might have. Rlations between the Commonwealth Grants Commission and ATSIC seem to have been productive and the data generated by the Commission could be useful in improving funding arrangements. One possible difficulty in the arrangements is that indigenous self-determination does not seem to have featured as a policy consideration in this matter. The Commission reports to the Minister for Finance and while the Minister may choose to table the reports in Parliament there is no requirement that this occur unless legislation is to be introduced which is connected to a report by the Commission. Amendments which would ensure public access to the reports of the Commission might facilitate indigenous participation in the policy debates which follow completion of such reports.



  1. See for instance, 'A sorry saga of official neglect' The Age, Thursday 27 May 1999; 'Howard breaks vow, fuels fires of division: black leader' The Canberra Times Thursday 27 May, 1999; 'ATSIC head says Indigenous health needs overlooked' ABC Newslink, 25 October, 1997; 'Aboriginal leaders condemn PM's address to nation' ABC Newslink, 30 November, 1997; 'Accusations fly as angry ATSIC censures Herron' Sydney Morning Herald, March 25, 1998; 'Herron seeks ATSIC crackdown' Sydney Morning Herald, July 11, 1998.

  2. Mr Slipper, Second Reading Speech, House of Representatives, Official Hansard, 30 March 1999, 4694-4695.

  3. Commonwealth Grants Commission, Annual Report 1997-98, see generally Chapter 2, 'The Historical Background', pp. 6-12.

  4. 'The Threshold of Benchmarking,' Bob Searle, Proceedings of the Benchmarking Workshop, 18-19 November 1998, Council for Aboriginal Reconciliation.

  5. Executive Summary, Proceedings of the Benchmarking Workshop, 18-19 November 1998, Council for Aboriginal Reconciliation.

  6. Ibid.

  7. This submission was identified as the first major task of the Council for Aboriginal Reconciliation in its second term and its recommendations were based on extensive consultations with indigenous communities organised jointly by the Council for Aboriginal Reconciliation and ATSIC.

  8. Aboriginal and Torres Strait Islander Social Justice Commissioner, Third Report, 1995, p. 89.

  9. Ibid., p. 91.

  10. 'Human Rights and Indigenous Australians: Accountability in Service Delivery', AD Ridgeway, May 1997.


'Human Rights and Indigenous Australians: Accountability in Service Delivery', RJ Searle, May 1997.


Contact Officer and Copyright Details

Kirsty Magarey
10 June 1999
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1999

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Published by the Department of the Parliamentary Library, 1999.

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