As noted in the previous chapter, the committee received 13 submissions to its inquiry. The organisations which provided submissions, included NACCHO, the Kimberley Land Council, the National Native Title Tribunal (NNTT), ORIC and the NIAA.
The committee also received evidence from a number of stakeholders during a public hearing held in Canberra on 23 September 2021.
The following chapter considers stakeholders’ views regarding the CATSI Act and the proposed amendments put forward by the bill, and details the committee’s views and recommendation.
Support for the CATSI Act
In providing their views in relation to the provisions of the bill, a number of stakeholders acknowledged the importance of the CATSI Act, particularly as a means of supporting self-determination for Aboriginal and Torres Strait Islander corporations.
The Central Land Council, for example, indicated its support for the continuation of the CATSI Act as a special measure, and noted that it is ‘to the benefit of Central Australian Aboriginal people to have the ability to form and manage corporations in a way that takes account of their unique cultural and living circumstances’.
NACCHO also expressed support for the CATSI Act, and submitted that it ‘provides a vehicle to ensure corporations delivering services to our people remain community-controlled’.
Further, NACCHO indicated that:
… it is an understatement to say that the CATSI Act is important to the Aboriginal and Torres Strait Islander health sector. It is a primary vehicle that has been available, in its original form, since 1976, for Aboriginal and Torres Strait Islander people to control and take responsibility for their own health. It facilitates self-determination and sets out rules for how our members and directors are appointed from our communities. The CATSI Act also provides the rules to establish policies for the governance of our organisations, for their financial management, control and reporting. It has had a significant impact on our costs and benefits to Aboriginal and Torres Strait Islander peoples for about 45 years.
At the same time, however, a number of stakeholders argued that there are many ways in which the CATSI Act could be improved. It was also stressed that Indigenous organisations need to be closely involved in any proposals for change – including through this bill – to ensure that they do not undermine the original intention of the CATSI Act.
One of the central issues raised by submitters – prior to any comment on the provisions contained in the bill – related to stakeholder involvement in the development of the legislation. The Victorian Aboriginal Heritage Council (VAHC) argued, for example, that to be regarded as a special measure, a proposal ‘must be assessed by reference to the wishes of the group for whom advancement of their enjoyment and exercise equally with others of human rights and fundamental freedoms is sought’.
Further, the VHAC indicated that:
The council is concerned that the process leading to the current bill was flawed. The bill was not developed in genuine partnership with Aboriginal and Torres Strait Islander peoples. As committed to by the Commonwealth government under the July 2020 National Agreement on Closing the Gap. If it had been developed in a genuine partnership, Aboriginal and Torres Strait Islander organisations would have been involved in developing the proposals, not just responding to them. There would have been resources allocated to those organisations to participate as equals in this process and there has not been.
In addressing the issue of consultation, NACCHO also pointed to the National Agreement on Closing the Gap, and argued that it was developed around four priority reform areas:
Shared decision-making: Aboriginal and Torres Strait Islander people are empowered to share decision-making authority with governments to accelerate policy and place-based progress on Closing the Gap through formal partnership arrangements.
Building the community-controlled sector: there is strong and sustainable Aboriginal and Torres Strait Islander community-controlled sector delivering high quality services to meet the needs of Aboriginal and Torres Strait Islander people across the country.
Improving mainstream institutions: governments, their organisations and their institutions are accountable for Closing the Gap and are culturally safe and responsive to the needs of Aboriginal and Torres Strait Islander people, including through the services they fund.
Aboriginal and Torres Strait Islander-led data: Aboriginal and Torres Strait Islander people have access to, and the capability to use, locally-relevant data and information to set and monitor the implementation of efforts to close the gap, their priorities and drive their own development.
NACCHO submitted that for progress to be made, these four priorities (and the principles that underpin them) need to be embraced by all parties.
In evidence, NACCHO stated that consultation in relation to the bill had been ‘cursory at best’. It was also argued that by not involving organisations like NACCHO in the decision-making process – as part of the steering group or to provide advice – the government:
… has lost a critical opportunity to demonstrate its commitment to the first priority reform under the new National Agreement on Closing the Gap – that is, that Aboriginal and Torres Strait Islander people are empowered to share decision-making authority with governments to accelerate policy and place based progress on closing the gap through formal partnership arrangements.
The NIAA acknowledged that some stakeholders had been critical of the consultation process. At the same time, however, it was submitted that the amendments outlined in the bill were the result of extensive consultation and the NIAA expressed confidence that the proposed amendments ‘reflect the interests and expectations of Indigenous Australians’.
In evidence, NIAA representatives told the committee that:
These consultations consisted of deep engagement across the sector represented by CATSI organisations and were conducted in three phases. We asked stakeholders what they wanted to have considered in the review, we developed changes based on public submissions and consultation sessions and then we sought feedback on the proposed legislative changes. It’s important to note that, while government facilitated the process, these amendments were driven by CATSI corporations, interested parties and the community. We note some of these changes have been subject to years of consultation and we are pleased now to bring these forward.
In representing the Office of the Registrar of Indigenous Corporations (ORIC), the Registrar indicated support for the consultation process and said:
... I applaud the National Indigenous Australians Agency for the consultation program that was undertaken as part of the review particularly under the very trying circumstances of a global pandemic. Three separate phases of consultation were offered, over 22 weeks, through a variety of channels and formats, with a significant report written after each phase.
When asked directly about the issue of co-design, the Registrar, Mr Selwyn Button, indicated that while the latest review process had been led by the NIAA, his office had been involved through the stakeholder group and the steering committee. Mr Button noted that:
…the process around co-design has been about ensuring that people are sitting at the table, having direct conversations about how the changes may affect them, and the things that are going to reduce the regulatory burden, and supporting corporations to get on with their business.
Mr Button also indicated that following the introduction of the previous bill – the Strengthening Governance and Transparency bill – one of the things he had undertaken to do was to get NACCHO, the Native Title Council and others to the table and have a direct conversation about the issues. Further, Mr Button stated that:
We took notice of exactly what they were saying then, and we used that to insert into this process as well. So it has not been a short process. It has not been something we haven’t had many conversations and consultations around.
Special measures requirements
In addition to the concerns raised by stakeholders in relation to consultation, the committee received a substantial submission from the First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Native Title Aboriginal Corporation and The Institute of First Nations Governance Professionals Ltd (the First Nations Group) regarding the legal analysis of the special measures requirements.
The First Nations Group submitted that ‘any amendments to the Act in the Bill under consideration of the Senate that arise from the Review are the result of a fundamentally flawed process’. It was argued that the amendments perpetuate the notion of the CATSI Act as a legally justifiable special measure, when it has not been properly considered and tested against the law regarding special measures – despite this issue being a focus of the Comprehensive Review.
Specifically, the group submitted that the Comprehensive Review only considered whether the CATSI Act as a whole was justifiable as a special measure, whereas the law requires every provision of the CATSI Act to be subjected to the special measures test. In addition, it was argued by the organisations that:
The approach taken by the Comprehensive Review favours giving powers of regulation and control to the government (a negative discriminatory approach) versus an approach that focuses on what benefits and assistance can be provided to Indigenous corporations to aid them to overcome their disadvantages (a positive discriminatory approach).
The amendments proposed in the bill will add elements of further regulation in an already over-regulated sector. This will encourage more CATSI corporations to transfer from the CATSI Act to the Corporations Act because the benefits being offered by ORIC are out-weighed by regulatory over-reach.
The bill contains amendments that are inconsistent with rights of self-determination of Indigenous people.
The Comprehensive Review took the position that no alternatives to a separate incorporation regime would be suitable, which is fundamentally flawed given that the Australian Charities and Not-for-profits Commission (ACNC) regime was introduced in 2012 and governs a majority of Indigenous corporations.
The First Nations Group submitted that the ACNC regime is a suitable alternative option that would allow Indigenous corporations to incorporate under the Corporations Act (or the Incorporated Associations Act) in the same way that other entities incorporate. The special needs of Indigenous corporations could then be addressed in a way similar to how the special needs of charities and not-for-profits are taken into account under the ACNC Act.
In its submission to the Comprehensive Review, the group proposed an alternative that was based on having Indigenous corporations incorporate under the Corporations Act or the Incorporated Associations Acts of the states and territories. This alternative would include a Special Regulatory Assistance Scheme to support all Indigenous corporations – not just CATSI corporations – to access the assistance they need to both understand and meet the relevant regulatory requirements that apply to them.
The Comprehensive Review did not specifically respond to the suggestion that every provision of the CATSI Act should be subjected to the special measures test.
The issue was addressed by confirming that the preamble to the CATSI Act states that the Act is a special measure for the purposes of the Racial Discrimination Act 1975. It also notes that while the CATSI Act is designed to mirror many provisions of the Corporations Act, it also contains unique provisions that characterise it as a special measure. These provisions include:
incorporation provisions for Aboriginal and Torres Strait Islander corporations;
support for corporations; and
Response to the bill
Submitters acknowledged that there had been some positive gains made and included in the new legislation. Overall, there was support for:
the modernisation of a number of governance arrangements;
measures that would allow greater flexibility;
measures that would allow the appointment of independent directors for 12-month periods; and
measures that would allow for the redaction of sensitive personal information (to protect members).
Stakeholders identified a number of concerns in relation to the bill, including the rejection of Recommendation 1, the nature of the review process, discriminatory standards, the frequency of Annual General Meetings (AGMs), and the size classification of corporations being based on revenue. These concerns are discussed below.
Statement on capacity building (Recommendation 1)
Stakeholders raised concerns regarding Recommendation 1 of the CATSI Act Comprehensive Review not being incorporated into the bill. The recommendation proposed that the objectives of the CATSI Act ‘be amended to better reflect its role by referring to capacity building, promoting modern governance and accommodating Aboriginal and Torres Strait Islander tradition and circumstance’.
It was argued that the inclusion of this statement would emphasise the ongoing need for collaboration and coordination with peaks, and would ensure that struggling corporations could be assisted prior to punitive measures being required. Further, NACCHO argued that the Commonwealth needs to be seen to be committed to capacity building and working collaboratively with Indigenous communities and their organisations.
NACCHO acknowledged that issues such as capacity building and promoting modern governance are addressed within ORIC’s functions and powers. It argued, however, that if this intention is not clearly articulated in the objectives of the CATSI Act, it could be easily overlooked (or misunderstood).
NACCHO submitted that it has developed a very positive relationship with the Commonwealth Department of Health. This was a relationship developed over the 50 years of the sector’s history, and on the whole, they have worked collaboratively to address emerging governance issues. It was argued, however, that there are still too many instances where concerns in relation to the governance and/or finances of Indigenous organisations are raised too late for early remedial action to be taken, or before an intervention takes place and results in unintended damage within the community.
NACCHO concluded that:
It must be remembered, therefore, that no matter how good the legislation may be – in this case the CATSI Act – it is always important to consult closely with the sector long before punitive action is put into effect. An overarching statement as suggested in recommendation 1 would go some way in underlining this collaborative approach and clarifying the intent in this respect and the importance of capacity building.
The NIAA acknowledged that disappointment had been expressed about Recommendation 1 not being incorporated into the bill. In response, it noted that the CATSI Act specifies that, in addition to conducting research in relation to matters affecting CATSI corporations, the functions of ORIC include conducting public education programs on the operation of the CATSI Act and on the governance of CATSI corporations.
Specifically, the NIAA pointed to the fact that:
Section 658-5 of the CATSI Act requires that in performing his or her functions and exercising his or her powers, the Registrar must have as aims (among others): to facilitate and improve the effectiveness, efficiency, sustainability and accountability of CATSI corporations; and to have regard to Aboriginal and Torres Strait Islander tradition and circumstances.
The NIAA argued, therefore, that the implementation of Recommendation 1 was not considered necessary, particularly as these considerations are already appropriately addressed by ORIC’s functions, powers and aims, and are specifically addressed in the CATSI Act.
Registered Native Title Bodies Corporate (Recommendation 62)
Of primary concern to some stakeholders was that the bill would not implement Recommendation 62 of the CATSI Act Comprehensive Review.
Recommendation 62 proposed that a ‘separate division of the CATSI Act be created that is dedicated to those provisions specific to Registered Native Title Bodies Corporate’ (RNTBCs).
The National Native Title Council (NNTC) and its members indicated strong support for this recommendation, and submitted that RNTBCs are different to other corporations incorporated under the CATSI Act, or companies incorporated under the Corporations Act. It was argued that RNTBCs are not entities established voluntarily by a group of individuals (with the purpose of pursuing a common purpose), nor are they entities that can be conveniently reconfigured, replaced or wound up.
RNTBCs are incorporated because the Native Title Act requires that native title holders establish a corporation to represent and manage or hold their native title rights and interests in trust. RNTBCs must be incorporated under the CATSI Act, and unlike other corporations, they must be designed and supported to exist in perpetuity, because the native title rights and interests they hold or manage will continue forever, and be exercised by succeeding generations of native title holders.
The NNTC advised that, in addition to its obligations under the CATSI Act and general law, RNTBCs have critical statutory functions to perform under the Native Title Act. These include obligations to hold or manage the native title rights and interests of its society in accordance with the Native Title Act and the detailed provisions of the Native Title (Prescribed Bodies Corporate) Regulations 1999 (PBC Regulations).
The Kimberley Land Council indicated its support for the NNTC’s view that the CATSI Act should contain a separate division dedicated to provisions which are specific to RNTBCs. It was argued that the CATSI Act does not sufficiently recognise the unique characteristics and circumstances of RNTBCs, which include the following:
Regulation of corporations by both the common laws and statute assumes that a corporation is brought into existence because of a decision by founding members that a corporate form is the appropriate way to achieve their common purpose. This choice is absent from the circumstances leading to the incorporation of RNTBCs. In the case of Prescribed Bodies Corporate (PBCs), common law holders are compelled to nominate a corporation to be the prescribed body corporate to hold native title rights and interests on trust or act as agent of the common law holders.
Many RNTBCs are brought into existence without any capacity to comply with basic legal obligations arising under both the Native Title Act and the CATSI Act. This means that from day one, without support from third parties, they are effectively counting down to non-compliance and potential administration or deregistration.
Mandatory meeting requirements are particularly onerous for RNTBCs and often serve no purpose whatsoever if the only business of the corporation is to hold on trust or act as agent in respect of native title rights and interests. In such cases, the RNTBC will have no business to report to members other than a generic general report and the election of directors until the next AGM.
RNTBCs have obligations to non-members and are also governed by more than one system of laws. The legal pluralism which governs the conduct of RNTCBs is not sufficiently provided for in the CATSI Act.
The Kimberley Land Council submitted that, for these reasons, separate regulation of RNTBCs is required. At the very least, it was argued, this separate regulation should be achieved through a stand-alone part of the CATSI Act which deals with RNTBCs.
The NIAA noted that feedback in relation to recommendations that were not being taken forward in the current legislation included references to Recommendation 62. The NIAA detailed the references to RBTBCs currently contained in the CATSI Act as:
five stand-alone sections;
six sections that need to be read in conjunction with other parts of the CATSI Act;
twelve paragraphs, two sentences, 21 subsections and one note.
The NIAA submitted that the five stand-alone sections were not sufficient for a dedicated chapter in the CATSI Act. The committee was advised, however, that to assist NRTBCs to understand their obligations under the CATSI Act, the NIAA and ORIC will be drafting a guide that identifies the references to NRTBCs, and provides a comprehensive outline of both general and specific requirements for NRTBCs.
The NIAA argued that the guide will provide greater flexibility to explain in plain English the sections that NRTBCs may be subject to and exempt from, and include a brief description as to why this may be the case. The NIAA advised the committee that:
The CATSI Act Review Final Report made a number of recommendations requiring further work; particularly in relation to RNTBCs and the CATSI Act. Development of a standalone chapter in the CATSI Act for RNTBCs will be considered further as the work around the outstanding recommendations progresses and will be deliberated as part of the second tranche of changes to the CATSI Act.
Reporting of remuneration of key management personnel
Concerns were raised about the proposed new remuneration reporting requirement which would require CATSI corporations to table remuneration reports at AGMs which would disclose the remuneration (salary and benefits) paid to key management personnel.
Stakeholders, including the Kimberley Land Council, submitted that the reporting requirements for executive officers of CATSI corporations should be no more onerous than reporting requirements under the Corporations Act. The Council observed that under the Corporations Act, the requirement for remuneration reports in relation to key management personnel to be included in directors’ reports applies only to listed companies. It argued, therefore, that:
CATSI corporations are not analogous to listed companies and the imposition of reporting requirements similar to those of listed companies is not justified and will be unreasonably onerous.
The Kimberley Land Council submitted that the effect of these provisions may be to deter appropriately skilled and experienced candidates from accepting positions with RNTBCs and other corporations regulated by the CATSI Act. It also put forward the view that:
Recruitment of suitable candidates to CEO and other executive management positions in remote areas is already challenging and mandatory reporting of remuneration benefits may act as a deterrent to potential candidates as it requires reporting of their confidential and private information that would not occur if they were employed in the private sector (other than listed corporations).
The ACNC, however, expressed support for the proposed changes, which, it argued, ‘should enhance transparency and accountability’. The Commission also noted that:
The Commonwealth Government has announced that from 1 July 2022, most large charities, being those with annual revenue exceeding $3 million, will be required to report on remuneration paid to responsible persons and senior executives and this change will lead to greater harmonisation between the ACNC and ORIC frameworks.
The amendment was also supported by ORIC, which submitted that remuneration of directors and senior executives of CATSI corporations is an area of complaint and dispute, and one most associated with major prosecution. The Registrar told the committee that:
It saddens and appals me that a few unscrupulous people will take advantage of some of the most vulnerable people in the community for financial gain. I am pleased to see that the National Indigenous Australians Agency has persevered with the measure first proposed in the 2018 Bill to report on the remuneration of senior executives, noting that this proposal has been modified so that reporting would not be made public, but would be available to members through a new remuneration report. I consider that the compromise represents a genuine commitment to consultation and co-design on behalf of the Agency, and a real win for members who wish to know how their corporation is spending its funds.
This amendment was described by the NIAA as a good example of ‘where feedback from stakeholders has been reflected in taking forward this change’. The NIAA continued that the change had been revised from the proposal in the second phase of consultation to make remuneration publicly available.
The NIAA told the committee that:
Due to the consistent feedback during the second phase of consultation that this information should not be publicly available, this amendment now requires the remuneration reporting be made available to members, but it will be exempt from being made public through proposed changes to the Corporations (Aboriginal and Torres Strait Island Regulations) 2017.
Annual General Meetings
NACCHO raised concerns about the amendment which proposes to permit small corporations to hold AGMs less frequently. It was submitted that while it may seem like a minor concern, AGMs are a critical element for some of the more remote, small and vulnerable communities. This amendment, it was argued, would have the effect of depriving members of a key mechanism to ensure accountability of its board and officials.
The NIAA acknowledged the concern that this amendment could impede transparency and accountability to members. In response to these concerns, it advised that:
A decision to not hold an AGM for up to 2 years must be passed by special resolution which requires at least 75 per cent of the votes cast by members entitled to vote on the resolution. Therefore, it is in the hands of members as to whether they agree not to hold an AGM. Further, corporations that pass such a special resolution will be required to advise the Registrar of any significant changes in their circumstances during the time they are not holding an AGM, and the Registrar will have the power to require the corporation to hold an AGM if she or he considers it necessary. Alternatively, the Registrar can also call a meeting. Lastly, corporations are still required to prepare reporting during the time they are not holding meetings, which is accessible to members by request or on ORIC’s website.
Size classification of corporations
There was also some concern raised in relation to the proposed amendment which would alter the basis of size classifications for corporations, so that they are based purely on revenue.
While the broad principle was generally supported, it was also argued that while the amendment has the potential to reduce the reporting requirements for some small corporations, it also has the potential to increase reporting requirements for a number of mid-size corporations.
The NIAA acknowledged these concerns – particularly in relation to the possibility of some CATSI corporations being subject to an increased regulatory burden. The NIAA subsequently indicated that there had been little support shown during consultations regarding a two-tiered classification system. The NIAA advised the committee that:
During the second phase of consultation for the CATSI Act Review, the proposal to have a 2 size classification framework was canvassed and received almost no support. It should also be noted that if the revised ACNC size classification thresholds are adopted, around 50 CATSI corporations will have increased reporting requirements, while around 200 will have reduced reporting requirements.
The CATSI Act is the primary vehicle for the incorporation of approximately 3000 Aboriginal and Torres Strait Islander associations, which play a central and unique role in delivering services and supporting economic development in Indigenous communities. The committee notes that evidence to the inquiry indicated broad support for the CATSI Act, particularly as a means of supporting self-determination for Aboriginal and Torres Strait Islander corporations.
In recognising the considerable growth in the sector, the government has undertaken several important reviews into the intent and outcomes of the CATSI Act, to ensure the Act remains fit for purpose. These reviews have incorporated thorough consultation with associations and other stakeholders, while applying a co-design approach.
To the extent possible, the bill before the committee incorporates the feedback of those who engaged with the consultation process. The bill will progress a number of important objectives, including a reduced administrative burden on CATSI corporations, providing greater flexibility to their operations and increasing efficiency through improved access to and use of technology.
During the inquiry, arguments were put forward in evidence in favour of every provision of the CATSI Act being tested against the special measures test of the Racial Discrimination Act. The committee notes, however, that there remains broad support for the continuation of the CATSI Act to continue as a special measure in its entirety.
The committee agrees that it is to be benefit of Aboriginal and Torres Strait Islander people to have the ability to form and manage corporations in a way that takes account of their unique cultural circumstances, as provided for by the special measures in the CATSI Act.
The committee acknowledges the concerns raised by stakeholders about specific provisions within the bill, and likewise the questions that arose from the Scrutiny of Bills Committee’s examination of the legislation.
However, the committee notes the NIAA’s advice that the consultation on the bill was thorough, and further, that the NIAA has read the concerns raised by the Scrutiny of Bills Committee and has, as far as is possible, incorporated this feedback into the amendments put forward in the bill. The committee commends the NIAA for taking this approach, and for its considerable efforts in consultation throughout the process of developing the bill.
The committee also notes the acknowledgement by the NIAA that there are several areas of the bill which require further consideration and that these issues are slated for further consideration and review in the near future. The committee trusts that this ongoing process will help to address any remaining concerns stakeholders might have regarding the bill.
Overall, the committee is of the view that the measures proposed in the bill represent a positive step for Indigenous Australians, and will support the ability to form and manage Indigenous corporations in a way that benefits First Australians and takes account of their unique cultural circumstances.
The committee recommends that the Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 be passed.
Senator Claire Chandler