Referral
1.1
The Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 (the bill) was introduced in the House of Representatives on 25 August 2021 by the Minister for Indigenous Australians, the Hon. Ken Wyatt, MP.
1.2
On 26 August 2021, and pursuant to the 10th report of the Senate Standing Committee for the Selection of Bills, the Senate referred the provisions of the bill to the Senate Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 14 October 2021.
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The Senate Selection of Bills Committee noted that the bill was being referred to the committee to investigate ‘the impact of the bill on the standards for ATSI Corporations’.
Conduct of the inquiry
1.4
The committee advertised the inquiry on its webpage, and set 17 September 2021 as the closing date for submissions. The committee also wrote to a range of key stakeholder groups and organisations, drawing their attention to the inquiry and inviting them to make written submissions.
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The committee received 13 submissions, which are listed at Appendix 2. The submissions were also published on the committee’s inquiry webpage.
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The committee held a public hearing – via videoconference – in Canberra on 23 September 2021, and took evidence from a number of key stakeholders, including the National Aboriginal Community Controlled Health Organisation (NACCHO), the Central Land Council, the Office of the Registrar of Indigenous Corporations (ORIC) and the National Indigenous Australians Agency (NIAA). A full list of witnesses is provided at Appendix 3.
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The committee also had access to the information obtained during several past reviews of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). These reviews included the release of discussion papers, submissions and public consultations with stakeholders.
Acknowledgement
1.8
The committee would like to thank those organisations and individuals who provided written submissions to the inquiry, and those who provided evidence at the public hearing. Your efforts have greatly assisted the committee in its deliberations.
Structure of the report
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This report consists of three chapters. Chapter 1 provides an overview of the inquiry and background to the bill and its regulatory context. It also provides a summary of the development of the CATSI Act and the reviews that have been undertaken since the Act came into effect.
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Chapter 2 outlines the key provisions of the bill, and Chapter 3 considers the issues raised by stakeholders in relation to the bill, and sets out the committee’s conclusions and recommendation.
The Corporations (Aboriginal and Torres Strait Islander) Act 2006
1.11
In 2007, the CATSI Act replaced the Aboriginal Councils and Associations Act 1976 (the ACA Act). The ACA Act had been in place for over 30 years, and was the primary vehicle for the incorporation of approximately 3000 Aboriginal and Torres Strait Islander associations. These associations are central to the delivery of government services – at both a Commonwealth and state and territory level.
1.12
The CATSI Act came into effect on 1 July 2007. It was introduced with the purpose of providing Indigenous corporations with a fit-for-purpose regulatory framework, and to make it simpler for Aboriginal and Torres Strait Islander persons to form and manage corporations. While the CATSI Act reflects many of the requirements of the Corporations Act 2001 (Corporations Act), it also provides the level of flexibility and support required to meet the unique cultural circumstances of Aboriginal and Torres Strait Islander people.
1.13
As noted above, corporations registered under the CATSI Act play a central role in delivering services and supporting economic development in Indigenous communities, particularly in remote Australia. In introducing the bill, the Minister for Indigenous Australians, the Hon. Ken Wyatt, MP noted that since its commencement, the CATSI Act has had a central role within the Indigenous economic and corporate sector, and argued that the sector currently provides ‘vitally important services such as health, education, housing and employment to Aboriginal and Torres Strait Islander peoples.’
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The CATSI Act supports Indigenous corporations by encouraging high standards of corporate governance and financial management, and it also provides regulatory tools for assisting corporations in difficulty, such as special administrative provisions.
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The objectives of the CATSI Act are:
(a)
to provide for the Registrar of Aboriginal and Torres Strait Islander Corporations (the Registrar);
(b)
to provide for the Registrar’s functions and powers;
(c)
to provide for the incorporation, operation and regulation of those bodies that it is appropriate for the Act to cover;
(d)
to provide for the incorporation, operation and regulation of bodies that are incorporated for the purpose of becoming a registered native title body corporate (RNTBC) (without limiting paragraph (c)); and
(e)
to provide for the duties of officers of Aboriginal and Torres Strait Islander corporations and regulate those officers in the performance of those duties.
Special measures
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While containing may of the same provisions as the Corporations Act, the CATSI Act also contains unique provisions which make it a ‘special measure’.
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The purpose of a special measure is to provide for the advancement of particular racial or ethnic groups, so that those groups can enjoy the same human rights and fundamental freedoms as others. As a special measure, the purpose of the CATSI Act is to ensure that Aboriginal and Torres Strait Islander people can form corporations that serve their needs.
1.18
In material issued by the NIAA, it is explained that for CATSI corporations:
A majority of a corporation’s members and directors must be Aboriginal and Torres Strait Islander people. This ensures that Indigenous people control their corporations.
The CATSI Act also allows corporations to operate in a culturally appropriate way. For example, corporations can:
hold meetings and keep their books in languages other than English, as long as there are English versions available; and
have rules that take account of Aboriginal and Torres Strait Islander tradition and circumstances.
The CATSI Act also specifically states that the Registrar must take into account the tradition and circumstances of Aboriginal and Torres Strait Islander people in undertaking his or her role.
CATSI Act - reviews
1.19
By 2016, the CATSI Act had been in operation for ten years and there had been considerable growth in the Indigenous corporate sector. The decision was therefore made to undertake a review, which would examine the ongoing relevance of the Act. Specifically the review was tasked with investigating whether the Act was still relevant and useful for the people and entities it had been designed to benefit.
KPMG Review – Regulating Indigenous Corporations
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In late 2016, the Department of the Prime Minister and Cabinet (PMC) commissioned KPMG to conduct the review. The purpose of the review was to inform consideration of how the Registrar could most effectively support the capacity of Aboriginal and Torres Strait Islander corporations to maintain good governance and strong financial management, as well as identify whether amendments to the CATSI Act were required to meet this objective.
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The resulting report, titled Regulating Indigenous Corporations, concluded that overall, ORIC was doing a good job in what was a challenging regulatory environment. The report also pointed to opportunities to enhance ORIC’s contribution to improved governance of Indigenous corporations, particularly as it ‘becomes a more modern, intelligence led, risk-based regulator’. The report also recommended that a technical review of the CATSI Act be undertaken, to identify strategies which would streamline, strengthen and better align the Act with mainstream corporate regulation.
DLA Piper Technical Review
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In July 2017, the then Minister for Indigenous Affairs, Senator the Hon. Nigel Scullion, announced an independent review; to determine whether technical amendments to the CATSI Act were required. The review also examined ways to align the CATSI Act with changes in corporate law and regulation – particularly changes to the Corporations Act. The Registrar of Aboriginal and Torres Strait Islander Corporations commissioned law firm DLA Piper Australia to undertake the review. In conducting the review, DLA Piper undertook a series of consultations and discussions with stakeholders and sought written submissions on a discussion paper.
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In October 2017 the report, titled the Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Technical Review) was provided to the Registrar. The Technical Review made 69 recommendations across a wide range of issues and identified a number of themes (which were raised during stakeholder consultation). These included:
Indigenous corporations play a unique role in Indigenous communities and in the provision of services to Indigenous peoples;
there is no ‘single’ form of CATSI corporation and ‘one size does not fit all’;
smaller CATSI corporations require additional support and it is appropriate to reduce the regulatory burden that is imposed upon small CATSI corporations;
while CATSI corporations look to the Registrar and ORIC for assistance and support, the autonomy of CATSI corporations requires that regulation is often based upon additional disclosure; and
the Registrar can play a greater role with respect to certain matters relating to native title regulation.
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The NIAA noted that the themes identified during the Technical Review were important, and these issues should underpin any changes to the CATSI Act. The NIAA also acknowledged the tension between getting the regulatory balance correct (to safeguard the interests of those members and communities that rely on CATSI corporations) and making sure that regulation does not impinge on the autonomy of CATSI corporations.
Department of the Prime Minister and Cabinet – Internal Review
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In 2018, PMC conducted an internal assessment of the recommendations that came out of the Technical Review (the Internal Review). The decision was made – based on 30 of the Technical Review’s recommendations – to take forward amendments to the CATSI Act. Recommendations that were not progressed included:
recommendations relating to external administration and insolvency, which it was deemed would create unnecessary inconsistency between the insolvency laws applying to CATSI corporations and companies registered under the Corporations Act; and
twenty recommendations related specifically to the governance of native titled Prescribed Bodies Corporate (PBCs).
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Following the Internal Review, PMC – in conjunction with ORIC – developed a Discussion Paper which outlined proposed amendments to the CATSI Act. The proposed amendments were based on the recommendations that came from the Technical Review process. In August and September 2018, ORIC conducted consultation on the proposed amendments.
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As part of the consultation, the Registrar wrote to all CATSI corporations (approximately 3000). CATSI corporations were invited to attend public consultations, provide written submissions or were offered one-on-one meetings.
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In addition, the Registrar and PMC had regular meetings with the Prime Minister’s Indigenous Advisory Council, and met with individual councillors outside of meetings, to provide updates and seek advice.
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The consultation also included:
public consultations in 14 locations across Australia, attended by over 200 people;
one-on-one consultation sessions with 12 corporations;
four live radio broadcasts;
two presentations – made to approximately 100 people; and
13 individual consultations with peak bodies – which included native title bodies.
The Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018
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A bill, based on the recommendations of the Technical Review (and feedback received during the ORIC and PMC consultation process) was developed by PMC and ORIC and introduced into the Senate on 5 December 2018.
Inquiry - Senate Finance and Public Administration Legislation Committee
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The bill, titled the Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018 (the Strengthening Governance and Transparency bill) was subsequently referred to the Finance and Public Administration Legislation Committee (the committee), for inquiry and report.
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In addition to a joint submission provided by PMC and ORIC, the committee received seven submissions to its 2018 inquiry. The majority of submissions called for greater consultation and a broader review of the CATSI Act – including a review of the CATSI Act as a special measure under the Racial Discrimination Act 1975.
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The committee tabled its report on 11 February 2019, and recommended that the bill be passed. Opposition and Greens Senators on the committee lodged dissenting reports, which raised issues similar to those raised in the submissions and argued that the scope of the review had not been sufficiently broad, and more consultation was required in relation to the proposed amendments.
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Before the bill was able to be considered by the Senate, the Parliament was prorogued because the 2019 general election was called. The bill subsequently lapsed in July 2019.
Comprehensive Review of the CATSI Act 2019-20
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Prior to the development of the legislation that is the subject of the committee’s current inquiry, Minister Wyatt announced a further, more comprehensive review of the CATSI Act.
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On 11 December 2019, the Minister requested that a Comprehensive Review address the criticisms received about the development process for the Strengthening Governance and Transparency bill and during the Technical Review consultations. The Comprehensive Review also considered:
whether the CATSI Act is meeting its objectives and whether it is still an appropriate special measure for the advancement and protection of Indigenous people (as set out in the Act’s preamble);
whether the functions and powers of the Registrar are appropriate, effective and adequate;
possible amendments to the CATSI Act which would better support the regulation of CATSI corporations; and
the consistency and interaction of the CATSI Act with other relevant legislation, including the Corporations Act, the Australian Charities and Not-for-Profit Act and the Native Title Act.
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The Comprehensive Review was led by the NIAA and was overseen by a Steering Committee comprised of senior representatives from NIAA, ORIC and other Commonwealth regulatory bodies. A Reference Group of key stakeholders also provided advice and input into the conduct of the review.
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The first phase of consultation started in December 2019 and finished at the end of February 2020. Consultation included:
the release of a CATSI Act review website;
an online survey which invited feedback on the aspects of the CATSI Act that should be considered as part of the review; and
the development of a Draft Report (the report built on the findings of previous reviews and covered the expanded scope of the Comprehensive Review).
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The Draft Report – which was published in July 2020 – took into consideration:
documents and feedback from the 2018 consultations (including the Discussion Paper, written submissions in relation to the Discussion Paper and written submissions to the Senate inquiry into the Strengthening Governance and Transparency bill);
the Strengthening Governance and Transparency bill;
a review of relevant legislation; and
responses provided to the initial survey and written submission received.
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The NIAA then followed up, by seeking feedback on the Draft Report. This was done through: the provision of information via the CATSI Act Review mailing list and social media, stakeholder engagement through virtual consultation sessions, individual consultation sessions for industry stakeholders and traditional owners, the examination of survey responses, and the receipt of written submissions.
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The Final Report of the CATSI Act Review was completed in October 2020 and released by the Government in February 2021. The Final Report made 72 recommendations for amendments to the CATSI Act, for consideration by the Australian Government, which reflected the feedback received during the second phase of consultation.
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The Review found that:
… the special incorporation needs of Aboriginal and Torres Strait Islander people, as identified in the 2002 review of the Aboriginal Councils and Associations Act 1975, continue to exist in some form. The review further noted the CATSI Act is vital to self-determination but, in its current form, is not fully meeting the needs and expectations of Aboriginal and Torres Strait Islander people.
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The bill therefore proposes improvements to the CATSI Act, and as a package aims to ‘reduce the regulatory burden on CATSI corporations, especially smaller corporations’.
Purpose of the bill
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The stated purpose of the bill is to meet the needs and expectations of Aboriginal and Torres Strait Islander people, support the realisation of economic and community development opportunities, and provide a tailored and effective regulatory framework for Aboriginal and Torres Strait Islander corporations formed under the CATSI Act.
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The bill implements – either in whole or in part – a large majority of the 72 recommendations made by the Final Report of the CATSI Act Review.
Objectives of the bill
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The Explanatory Memorandum (EM) to the bill outlines that the stated objectives of the bill are to:
reduce the administrative burden on CATSI corporations by making it easier to satisfy reporting and meeting obligations;
provide greater flexibility for CATSI corporations to enable the realisation of economic and community development priorities;
ensure governance requirements are fit-for-purpose by expanding the capacity of CATSI corporations to determine their own operational rules;
increase transparency of CATSI corporation operations through improved reporting for members, common law holders and other stakeholders;
enhance support for CATSI corporations that are experiencing difficulties to enable these entities [to] return to health and, ultimately, the control of their members;
streamline the process of winding up defunct CATSI corporations;
enhance the efficacy of operations by increasing access by CATSI corporations to modern technology, including for managing their membership bases; and
provide the Registrar with expanded powers to enable a graduated, proportionate response to non-compliance.
Outline of the bill
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The EM also provides a general outline of the bill. In summary, the bill amends the CATSI Act in order to:
(a)
require a review of the legislation every 7 years (Part 1);
(b)
broaden the Registrar’s investigation and compliance powers, including by empowering the Registrar to accept enforceable undertakings (Part 2);
(c)
introduce provisions to make it easier for CATSI corporations to manage their membership bases and provide members with greater privacy of their personal information (Part 3);
(d)
allow greater flexibility in the design of corporate structures for CATSI corporations (Part 4);
(e)
streamline the size classification criteria for CATSI corporations (Part 5);
(f)
amend meeting and reporting requirements to take account of unexpected circumstances and provide greater flexibility to corporations, as well as increase transparency to members through access to reports (Part 6);
(g)
provide for constitutions for CATSI corporations that are fit-for-purpose (Part 7);
(h)
increase the transparency of senior management arrangements, including by reporting senior management remuneration to members and to the Registrar (Part 8);
(i)
simplify related party transactions to remove red tape (Part 9);
(j)
simplify directors’ requirements, including making it easier for CATSI corporations to appoint independent directors (Parts 10 and 11);
(k)
enable the Registrar to use a wider range of platforms to publish notices (Part 12);
(l)
update the requirements in relation to storing information (Part 13);
(m)
align the Act with relevant sections of the Corporations Act, including to expand whistle-blower provisions (Part 14);
(n)
provide certainty to corporations following an examination or compliance notice (Part 15);
(o)
provide for a special account to hold unclaimed funds from deregistered corporations to be used for the protection of Indigenous assets vested in the Registrar (Part 16);
(p)
improve special administration and deregistration processes, including streamlining processes where the majority of directors of a corporation have requested the appointment of a special administrator (Part 17); and
(q)
implement minor technical amendments, including simplifying the process in the Native Title Act when a registered native title body corporate changes its name and allowing medium corporations to have their financial statements reviewed rather than audited (Parts 18, 19 and 20).
Legislative scrutiny
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Following the introduction of the bill, the legislation was examined by the Senate Standing Committee for the Scrutiny of Bills (the Scrutiny Committee).
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In accordance with Senate Standing Order 24, the Scrutiny Committee examined the bill to determine the effect of the proposed legislation on individual rights, liberties and obligations, and on parliamentary scrutiny.
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The Scrutiny Committee provided its comments on the bill, noting that it had specific concerns in relation to the issues of ‘reversal evidential burden’, ‘strict liability’ and ‘privilege against self-incrimination’, and requested further advice from the Minister on some of these issues.
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Appendix 1 to this report provides the comments of the Scrutiny Committee in further detail.
Statement of compatibility with human rights
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The EM to the bill notes that the bill is compatible with human rights because the measures contained in the bill may be characterised as components of a broader ‘special measure’ – being the CATSI Act in its entirety. It is also noted that the bill includes a mechanism for a review of the CATSI Act every seven years to ‘ensure the effectiveness of the Act as a special measure for the advancement and protection of Aboriginal peoples and Torres Strait Islanders’.