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2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
ABORIGINAL AND TORRES STRAIT ISLANDER LAND AND SEA
FUTURE FUND BILL 2018
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Indigenous Affairs,
Senator the Hon Nigel Scullion)
Table of abbreviations and common terms
Abbreviation or
Description
common term
Acts Interpretation Act means the Acts Interpretation Act 1901
means the Future Fund Management Agency established by
Agency
section 74 of the Future Fund Act 2006
ATSI Act means the Aboriginal and Torres Strait Islander Act 2005
means the Aboriginal and Torres Strait Islander Land and Sea
ATSILSFF
Future Fund established by clause 9 of the Bill
means the Aboriginal and Torres Strait Islander Land and Sea
ATSILSFF Investment
Future Fund Investment Mandate and has the same meaning as
Mandate
defined in clause 4 of the Bill
means the Aboriginal and Torres Strait Islander Land and Sea
ATSILSFF Special Account Future Fund Special Account established by clause 12 of the
Bill
Corporations Act means the Corporations Act 2001
CRF means the Consolidated Revenue Fund
DCAF Act means the DisabilityCare Australia Fund Act 2013
Finance Minister has the same meaning as defined in section 8 of the PGPA Act
means the Future Fund established by section 11 of the Future
Future Fund
Fund Act
Future Fund Act means the Future Fund Act 2006
means the Future Fund Board of Guardians established
Future Fund Board
by section 34 of the Future Fund Act
means the Future Fund Special Account established by
Future Fund Special Account
section 12 of the Future Fund Act
means the Indigenous Land Corporation established by
ILC
section 191A of the ATSI Act
means the Indigenous Land Corporation Funding Special
ILC Funding Special Account
Account established by clause 20 of the Bill.
means the Department administered by the Indigenous Affairs
Indigenous Affairs Department
Minister
means the Minister responsible for administering Part 4A of the
Indigenous Affairs Minister
ATSI Act
ITAA means the Income Tax Assessment Act 1997
means the Aboriginal and Torres Strait Islander Land Account
Land Account continued in existence by repealed section 192W of the
ATSI Act
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Abbreviation or
Description
common term
Legislation Act means the Legislation Act 2003
MRFF Act means the Medical Research Future Fund Act 2015
NBF Act means the Nation-building Funds Act 2008
means the Public Governance, Performance and Accountability
PGPA Act
Act 2013
means the following:
Responsible Ministers (a) the Treasurer; and
(b) the Finance Minister
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Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill
2018
Context
1. The Bill gives effect to the Government's decision to establish a dedicated financial
asset fund - the ATSILSFF - to support the making of annual and discretionary
additional payments to the ILC.
2. The ATSILSFF replaces the Land Account, the closure of which will be effected by
the Aboriginal and Torres Strait Islander Land and Sea Future Fund (Consequential
Amendments) Bill 2018.
3. The Bill provides for the transfer of the monies and financial assets currently
allocated to the Land Account to the ATSILSFF, which will be managed by the
Future Fund Board.
4. The Government wishes to invest in financial assets with the aim of achieving
investment returns to support the ILC financially. The purpose of the ILC is to assist
Aboriginal persons and Torres Strait Islanders to acquire and manage land so as to
provide economic, environmental, social or cultural benefits for Aboriginal persons
and Torres Strait Islanders (section 191B of the ATSI Act).
5. Related to the establishment of the ATSILSFF, the Aboriginal and Torres Strait
Islander Amendment (Indigenous Land Corporation) Bill 2018 will extend the
functions of the ILC to include the acquisition of water-related rights and the
management of waters in which there are Indigenous-held water-related rights, in
addition to land acquisition and management functions. To reflect the expansion of
the ILC's functions, the Aboriginal and Torres Strait Islander Amendment
(Indigenous Land Corporation) Bill 2018 will also rename the ILC to the
'Indigenous Land and Sea Corporation'.
Summary
6. The Bill establishes the ATSILSFF on the earlier of:
the day after the Act is proclaimed;
or six months after the Act receives Royal Assent.
7. The ATSILSFF consists of the:
ATSILSFF Special Account; and
the investments of ATSILSFF.
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8. The ATSILSFF is a dedicated investment vehicle to provide a revenue stream to be
used to support the funding of annual and discretionary additional payments to the
ILC. The ATSILSFF replaces the Land Account.
Credits
9. The ATSILSFF will be credited with amounts equal to the:
balance of the Land Account Special Account; and
the value of the investments of the Land Account.
Debits
10. The ATSILSFF Special Account will be debited, to provide an annual payment to
the ILC, to be credited to and paid from, the ILC Funding Special Account. The
Finance Minister and the Indigenous Affairs Minister may, by notifiable
instrument, determine once in a financial year that an additional payment is to be
made to the ILC, after considering advice of the Future Fund Board about the
impact of any additional payment on the sustainability of annual payments to the
ILC. If a determination is made, the Finance Minister must cause an amount equal
to the amount specified in the determination to be debited from the ATSILSFF
Special Account and credited to the ATSILSFF Funding Special Account for
subsequent payment to the ILC.
Investment of the Fund
11. The Future Fund Board will be responsible for deciding how to invest the ATSILSFF to
enhance the Commonwealth's ability to make annual payments or any additional
payments to the ILC.
12. The Bill requires the responsible Ministers to issue an investment mandate to the
Future Fund Board regarding the investment of the ATSILSFF. The purpose of the
investment mandate is to provide a mechanism for the Government to provide
strategic guidance to the Future Fund Board on its expectations for the investment
of the ATSILSFF.
Expenses
13. Expenses associated with investment and administration of the ATSILSFF incurred
by the Future Fund Board will be met from the ATSILSFF.
Reporting
14. The Finance Minister may provide reports, documents and other information to
Ministers.
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15. The Finance Minister has the power to request additional information required to
satisfy the Government that the Future Fund Board's management of the
ATSILSFF complies with legislation and the ATSILSFF Investment Mandate.
16. The Finance Minister has the power to publish information received from the
Future Fund Board, as the Finance Minister deems appropriate and in the public
interest.
Financial Impact Statement
17. The initial credit of the balance of the funds from the Land Account to the
ATSILSFF Special Account will not have a direct impact on underlying cash and
fiscal balances, as these are already part of, and will remain within, the CRF.
18. Positive interest earnings of the ATSILSFF have a positive impact on the underlying
cash and fiscal balances. Costs incurred by the Future Fund Board have a negative
impact on the underlying cash and fiscal balances.
19. Annual payments to the ILC which are derived from the ATSILSFF will be made in
accordance with the provisions of the Bill. The intention is that additional payments
to the ILC which are derived from the ATSILSFF will be made only where the
payments will not impact the sustainability of annual payments. Payments from the
ATSILSFF will have a negative impact on the underlying cash and fiscal balances.
Statement of Compatibility with Human Rights
20. The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
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Aboriginal and Torres Strait Islander Land and Sea Future
Fund Bill 2018
Notes on Clauses
Note: The clauses in the Bill will become sections of the Act on Royal Assent.
Part 1 - Preliminary
Clause 1 - Short Title
21. Clause 1 provides for the Act to be cited as the Aboriginal and Torres Strait
Islander Land and Sea Future Fund Act 2018.
Clause 2 - Commencement
22. Clause 2 provides that the whole of the Act commences on a single day to be fixed
by Proclamation. However, if the provisions do not commence within the period of
6 months beginning on the day the Act receives the Royal Assent, the provisions
commence on the day after the end of that period. Commencement by Proclamation
is intended to provide a level of control over when the Act commences.
Clause 3- Simplified outline of this Act
23. Clause 3 provides a high level introduction to the provisions in the Bill, to aid
readability. The outline is not intended to be comprehensive and should not be
relied on in place of the substantive provisions in the Bill.
Clause 4 - Definitions
24. Clause 4 provides definitions of the terms and expressions used in the Bill.
Clause 5 - Crown to be bound
25. Clause 5 provides that the Act binds the Crown in each of its capacities but does not
make the Crown liable to be prosecuted for an offence.
Clause 6 - Extension to external Territories
26. Clause 6 provides that the Act extends to every external Territory.
Clause 7 - Extra-territorial application
27. Clause 7 provides for the geographical reach of the Act to apply outside of
Australia. This is due to the likelihood that the Future Fund Board will invest the
ATSILSFF in overseas markets.
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Part 2 - Aboriginal and Torres Strait Islander Land and Sea Future
Fund
Division 1 - Introduction
Clause 8 - Simplified outline of this Part
28. Clause 8 is an overview of Part 2 to assist with readability. The note explains that
the Land Account, which the ATSILSFF replaces, was continued in existence by
repealed section 192W of the ATSI Act.
Division 2 - Aboriginal and Torres Strait Islander Land and Sea Future
Fund
Clause 9 - Establishment of the Aboriginal and Torres Strait Islander Land and
Sea Future Fund
29. Clause 9 establishes a financial asset fund - the ATSILSFF - consisting of the
ATSILSFF Special Account and investments of the ATSILSFF.
Clause 10 - Transfer of balance of the Aboriginal and Torres Strait Islander Land
Account
30. Clause 10 provides for the transfer to the ATSILSFF Special Account of an amount
equal to the balance of the Land Account immediately before the commencement of
this section.
31. Note 1 explains that the Land Account was continued in existence by repealed
section 192W of the ATSI Act.
32. Note 2 explains that the balance of the Land Account does not include the value of a
financial asset that represents the investment of an amount standing to the credit of
the Land Account. This is to help ensure there is no double counting when the Land
Account is closed, and initial crediting of the ATSILSFF occurs.
Clause 11 - Transfer of investments of the Aboriginal and Torres Strait Islander
Land Account
33. Clause 11 deals with the transfer of investments of the Land Account to the
ATSILSFF.
34. Subclause 11(1) applies to financial assets, which immediately before the
commencement of this section, were investments of the Land Account. The note to
subclause 11(1) explains that the Land Account was continued in existence by
repealed section 192W of the ATSI Act.
35. Subclause 11(2) provides that after the commencement of section 11, the financial
assets are taken to be investments of the ATSILSFF.
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36. Subclause 11(3) requires the Treasurer or the Finance Minister to cause the financial
assets to be transferred to the Future Fund Board as soon as practicable after the
commencement of clause 11. The Treasurer or the Finance Minister are responsible
for transferal of assets as responsible ministers.
37. The existing investments of the Land Account are term deposits held in the name of
the Department of the Prime Minister and Cabinet. The transfer of these investments
will mean that the deposits will now be held in the name of the Future Fund Board.
Division 3 - Establishment of the Aboriginal and Torres Strait Islander Land
and Sea Future Fund Special Account
Clause 12 - Establishment of the Aboriginal and Torres Strait Islander Land and
Sea Future Fund Special Account
38. Clause 12 establishes the ATSILSFF Special Account, which is a special account
for the purposes of section 80 of the PGPA Act.
39. A special account is an appropriation mechanism that sets aside an amount within
the CRF to be expended for specific purposes. Any amounts credited to the
ATSILSFF Special Account are quarantined from other amounts within the CRF
and can only be debited from the ATSILSFF Special Account for the purposes set
out in the Bill.
40. The note to this section is included to assist the reader by clarifying that amounts
could be credited to the ATSILSFF Special Account by an Appropriation Act.
Clause 13 - Credits of amounts to the Aboriginal and Torres Strait Islander Land
and Sea Future Fund Special Account
41. Clause 13 establishes a mechanism for amounts, other than the initial transfer of
amounts from the Land Account, to be credited to the ATSILSFF Special Account.
42. Subclause 13(1) provides that the responsible Ministers may, by writing, determine
an amount to be credited to the ATSILSFF Special Account, either as a lump sum or
in instalments. Note 1 alerts the reader to subsection 33(3) of the Acts Interpretation
Act, which will enable the responsible Ministers to vary or revoke a determination
made under subclause 13(1). Note 2 refers the reader to other provisions of the Bill
which also provide for amounts to be credited to the ATSILSFF Special Account.
43. Subclause 13(2) provides that a determination under subclause 13(1) is a legislative
instrument but the instrument is not subject to disallowance. Such determinations
would usually be regarded as administrative, rather than legislative, in character.
However, having the determination as a legislative instrument ensures transparency
of amounts credited as a matter of public interest.
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44. A determination under subclause 13(1) is expected to be made only in exceptional
circumstances following the initial credit under clause 10. Amounts credited under
clause 13 are expected to be provided from other Appropriation Acts. In this
respect, the determination is a tool for the Government to manage its financial
arrangements. Disallowance could also undermine commercial certainty, given that
once an amount is credited to the ILSFF Special Account, the Future Fund Board
may invest the amount in any financial assets under clause 30 of the Bill.
45. Providing for a determination under subclause 13(1) to be a legislative instrument
that is not disallowable is consistent with arrangements for other Funds invested by
the Future Fund Board (see Item 3 of Schedule 1 of the Future Fund Act, section 15
of the MRFF Act, and sections 15 and 134 of the NBF Act).
Clause 14 - Purposes of the Aboriginal and Torres Strait Islander Land and Sea
Future Fund Special Account - main purposes
46. Clause 14 sets out the main purposes of the ATSILSFF Special Account. These
purposes are consistent with the objects of the Bill, namely to transfer amounts to:
the ILC Funding Special Account for the purpose of making annual payments to
the ILC; and
the ILC Funding Special Account for the purpose of making discretionary
additional payments.
47. Note 1 refers the reader to clause 22 of the Bill, which deals with annual payments.
Note 2 refers the reader to clause 25 of the Bill, which deals with discretionary
additional payments.
Clause 15 - Purposes of the Aboriginal and Torres Strait Islander Land and Sea
Future Fund Special Account - purposes related exclusively to the investments
etc. of the Aboriginal and Torres Strait Islander Land and Sea Future Fund
48. Clause 15 relates to the payment of various expenses that may be incurred by the
Future Fund Board, which relate exclusively to the investments of the ATSILSFF,
and which do not relate to the main purposes of the ATSILSFF Special Account. It
sets out the additional purposes for which the ATSILSFF Special Account may be
debited.
49. This provision includes as a purpose of the ATSILSFF Special Account the
payment of expenses of an investment standing to the credit of the Land Account
(paragraph 15(h)). This provision is included as a precaution so that if such
expenses are incurred prior to the closure of the Land Account, but time does not
allow for those expenses to be paid from the Land Account before it is closed, the
ATSILSFF Special Account can be debited for the purpose of paying those
expenses. Without this provision there would be no appropriation to support the
payment of those expenses once the Land Account is closed.
50. The note directs the reader to section 80 of the PGPA Act, which appropriates the
CRF for expenditure for identified purposes of a special account.
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Clause 16 - Purposes of the Aboriginal and Torres Strait Islander Land and Sea
Future Fund Special Account - purposes not related exclusively to the
Aboriginal and Torres Strait Islander Land and Sea Future Fund
51. Clause 16 relates to the payment of various expenses that may be incurred by the
Future Fund Board in respect of its broader functions under this Bill, as well as the
Future Fund Act, the MRFF Act, the NBF Act and the DCAF Act.
52. This provision sets out the range of additional purposes for which the ATSILSFF
Special Account may be debited in respect of costs that are common to the Funds
for which the Future Fund Board is responsible.
53. The note directs the reader to section 80 of the PGPA Act, which appropriates the
CRF for expenditure for identified purposes of a special account.
Clause 17 - Future Fund Board must ensure that there is a sufficient balance in the
Aboriginal and Torres Strait Islander Land and Sea Future Fund Special
Account to cover authorised debits etc.
54. Clause 17 requires the Future Fund Board to take all reasonable steps to ensure that
the amount standing to the credit of the ATSILSFF Special Account is sufficient to
cover amounts to be debited from the ATSILSFF Special Account.
55. The note assists readers to understand the obligations of the Future Fund Board in
respect of this requirement, explaining that this provision may require the Future
Fund Board to realise an investment of the ATSILSFF.
Division 4 - Inter-fund transfers
Clause 18 - Transfers from the Aboriginal and Torres Strait Islander Land and
Sea Future Fund to the Future Fund
56. Clause 18 allows for transfers of amounts from the ATSILSFF Special Account to
the Future Fund Special Account. The purpose of this provision is to enable
reimbursement to the Future Fund Special Account of expenses incurred in relation
to the ATSILSFF that have been debited from the Future Fund Special Account.
The section allows the Finance Minister to direct that one fund is to be debited and
the other fund credited a specified amount.
57. Subclause 18(3) is included to assist readers, as a direction under subclause 18(1) is
not a legislative instrument within the meaning of subsection 8(1) of the
Legislation Act. Directions of this type are administrative in character because they
are merely the application of a legal power in a particular case (i.e. they do not
determine or alter the content of the law itself).
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Part 3 - Indigenous Land Corporation Funding Special Account
Clause 19 - Simplified outline of this Part
58. Clause 19 is an overview of Part 3 to assist with readability.
Clause 20 -Indigenous Land Corporation Funding Special Account
59. Clause 20 establishes the ILC Funding Special Account as a special account for the
purposes of the PGPA Act.
60. A special account is an appropriation mechanism that sets aside an amount within
the CRF to be expended for specific purposes. Any amounts credited to the ILC
Funding Special Account are quarantined from other amounts within the CRF and
can only be debited for the purpose set out in clause 21 of the Bill.
61. The note is included to assist the reader by clarifying amounts that could be credited
to the ILC Funding Special Account by an Appropriation Act.
62. Subclause 20(3) states that the Secretary of the Indigenous Affairs Department is
responsible for the ILC Funding Special Account. This makes it clear that the
Future Fund Board has no responsibility for this account or for making payments
directly to the ILC.
Clause 21 - Purpose of the Indigenous Land Corporation Funding Special Account
63. Clause 21 provides that the purpose of the ILC Funding Special Account is to
facilitate the making of payments to the ILC. Note 1 directs the reader to section 80
of the PGPA Act, which appropriates the CRF for expenditure for identified
purposes of a special account. Note 2 directs the reader to clause 22 of the Bill,
which provides for annual payments to the ILC. Note 3 directs the reader to clause
25 of the Bill, which provides for additional payments to the ILC.
Clause 22 - Annual payments to the Indigenous Land Corporation
64. Clause 22 provides for annual payments to the ILC. Payments are channelled to the
ILC from the ATSILSFF Special Account via the ILC Funding Special Account.
65. For the financial year beginning on 1 July 2018, subclause 22(1) requires the
Indigenous Affairs Minister, on behalf of the Commonwealth, and on the first
business day in October, to pay the ILC an amount equal to the amount that would
have been paid to the ILC from the Land Account under subsection 193(2) of the
ATSI Act, if the Land Account had not been closed. The note explains that
subsection 193(2) of the ATSI Act provided for annual payments to the ILC from
the Land Account.
66. For later financial years, subclause 22(2) requires the Indigenous Affairs Minister,
on behalf of the Commonwealth, and on the first business day in October, to pay the
ILC an amount calculated using the specified formula.
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67. Subclause 22(3) provides for rounding of amounts calculated under subclause 22(1)
and subclause 22(2) of the Bill.
Clause 23 - Annual payments--pre-payment transfers to the Indigenous Land
Corporation Funding Special Account
68. Clause 23 requires the Finance Minister to cause an amount equal to the amount
worked out under clause 22 of the Bill to be debited from the ATSILSFF Special
Account and credited to the ILC Funding Special Account on the business day
before the first business day in October in a financial year. This is to facilitate the
making of the annual payment to the ILC from the ILC Funding Special Account.
69. In practice, if in a financial year the first business day in October is a Monday, the
transfer would occur on the Friday immediately beforehand.
Clause 24 - Annual payments--indexation factor
70. Clause 24 stipulates the formula for calculating the indexation factor for a financial
year. The indexation factor is then used to determine the amount of the annual
payment to be made to the ILC under clause 22 of the Bill.
Clause 25 - Additional payments to the Indigenous Land Corporation
71. Clause 25 establishes a mechanism for making discretionary additional payments to
the ILC. This provision reflects the Government's commitment to enhance the
ability of the ATSILSFF to support the making of annual indexed payments to the
ILC over the long term and that additional payments would only be made if this aim
is not put at risk. The advice provided by the Future Fund Board regarding the
impact that making an additional payment would have on the sustainability of the
annual payments will be an important part of the decision-making process. In
practice, it is intended that the Indigenous Affairs Minister would initiate the
process for making an additional payment to the ILC by writing to the
Finance Minister.
72. Subclause 25(1) provides that the Finance Minister and the Indigenous Affairs
Minister may, by notifiable instrument, determine that the Indigenous Affairs
Minister must, on behalf of the Commonwealth, pay a specified amount to the ILC
on a specified day.
73. Subclause 25(2) sets out the matters the Finance Minister and the Indigenous
Affairs Minister must have regard to in making an additional payment determination
under subclause 25(1), including advice given by the Future Fund Board under
clause 27 of the Bill in relation to a draft of the determination. The Ministers may
also have regard to any other matters they consider relevant.
74. Subclause 25(3) provides that the Finance Minister and the Indigenous Affairs
Minister may only make one additional payment determination in a financial year.
The effect of this provision is that there can only be one additional payment to the
ILC in a financial year.
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75. Subclause 25(4) provides that the day specified in an additional payment
determination for making an additional payment to the ILC must be at least 30 days
after the determination is made.
76. Subclause 25(5) provides that if the Finance Minister and the Indigenous Affairs
Minister make an additional payment determination, the Finance Minister must give
a copy to the Future Fund Board at least 30 days before the day specified for
making the additional payment to the ILC.
Clause 26 - Additional payments--pre-payment transfers to the Indigenous Land
Corporation Funding Special Account
77. Clause 26 requires the Finance Minister to cause an amount equal to the amount
specified in an additional payment determination to be debited from the ATSILSFF
Special Account and credited to the ILC Funding Special Account on the day before
the day specified in the additional payment determination for the making of the
additional payment to the ILC.
Clause 27 - Additional payments--advice given by the Future Fund Board
78. Clause 27 requires the Finance Minister and Indigenous Affairs Minister to obtain
advice from the Future Fund Board, that they must have regard to, before making an
additional payment determination under clause 25 of the Bill.
79. Subclause 27(1) provides that, before making an additional payment determination,
the Finance Minister and the Indigenous Affairs Minister must provide a draft of the
determination to the Future Fund Board, and require the Future Fund Board to give
advice to the Ministers, within a specified period, about the impact of the making of
the determination on the sustainability of annual payments to the ILC under
clause 22 of the Bill. The Ministers must also require the Future Fund Board, in
giving advice, to have regard to the ATSILSFF Investment Mandate, and any other
specified matters. The note explains that clause 22 of the Bill deals with annual
payments.
80. Subclause 27(2) requires the Future Fund Board to comply with a request for
advice.
81. Subclause 27(3) provides that the period specified by the Finance Minister and the
Indigenous Affairs Minister for the Future Fund Board to provide advice must not
be shorter than 90 days from the day of the request for advice. This is to allow the
Future Fund Board sufficient time to appropriately consider and advise on the
impact of the proposed additional payment, specified in the draft determination, on
the sustainability of the annual payments.
82. Subclause 27(4) provides that the Finance Minister and the Indigenous Affairs
Minister must not require the Future Fund Board to have regard to matters that are
inconsistent with the Bill or the ATSILSFF Investment Mandate in giving its
advice.
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83. Subclause 27(5) declares that the obligation on the Finance Minister and the
Indigenous Affairs Minister to require the Future Fund Board, in giving its advice,
to have regard to the ATSILSFF Investment Mandate and any other specified
matters does not, by implication, limit the matters to which the Future Fund Board
may have regard in giving its advice.
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Part 4 - Investment of the Aboriginal and Torres Strait Islander Land
and Sea Future Fund
Clause 28 - Simplified outline of this Part
84. Clause 28 is an overview of Part 4 to assist with readability.
Clause 29 - Objects of investment of the Aboriginal and Torres Strait Islander
Land and Sea Future Fund
85. Clause 29 sets out the objects of investment of the ATSILSFF.
86. Subclause 29(1) is intended to reinforce that amounts are invested by the Future
Fund Board for the main object of enhancing the ability of the Indigenous Affairs
Minister, on behalf of the Commonwealth, to make annual and discretionary
additional payments to the ILC.
87. Subclause 29(2) sets out that the ancillary objects of the investment of the
ATSILSFF are to enhance the ability of the Commonwealth and the Future Fund
Board to discharge costs, expenses, obligations and liabilities and make payments
for purposes as set out in clauses 15 and 16 of the Bill.
Clause 30 - Investment of the Aboriginal and Torres Strait Islander Land and Sea
Future Fund
88. Clause 30 takes account of the investment powers provided for under section 58 of
the PGPA Act. However, subclause 30(1) expands on those powers to provide for
the investment of the ATSILSFF in a broad range of financial assets. Specific
conditions on the acquisition of derivatives are covered separately in clause 40 of
the Bill. This approach to the investment of the ATSILSFF is consistent with
investment arrangements for other Funds invested by the Future Fund Board.
89. Investments of the ATSILSFF will be made in the name of the Future Fund Board
(rather than the Commonwealth) to make clear that the Future Fund Board manages
the ATSILSFF at arm's length from the Government. However, beneficial
ownership of the ATSILSFF assets remains with the Commonwealth at all times.
90. The note directs the reader to clause 40 of the Bill in relation to the acquisition of
derivatives.
Clause 31 - Management of investments of the Aboriginal and Torres Strait
Islander Land and Sea Future Fund
91. Clause 31 sets out rules for the management of investments of the ATSILSFF by
the Future Fund Board.
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92. Subclauses 31(1) and (2) provide that income derived from an investment of the
ATSILSFF, including a return of capital or another form of financial distribution,
must be credited to the ATSILSFF Special Account. This is consistent with the
requirements under sections 81 and 83 of the Constitution (which, in effect, provide
that public money forms part of the CRF and can only be spent if authorised by an
appropriation made by law). In practice, any amount that has not been invested must
be credited to the ATSILSFF Special Account.
93. Subclauses 31(3) to (5) relate to the arrangements that will apply in relation to the
realisation of assets, and allow the Future Fund Board to authorise, prior to an
investment maturing, that the proceeds of this investment be automatically
reinvested with the same entity. This avoids the need for the proceeds of realisation
of the investment to be treated as public money and credited to the CRF, only to be
then re-appropriated and reinvested. Any reinvestment is an investment of the
ATSILSFF.
94. Subclauses 31(6) provides that section 58 of the PGPA Act does not apply to an
investment of the ATSILSFF. Section 58 of the PGPA Act authorises the Finance
Minister or the Treasurer to invest public money in only a limited range of
investments, such as government bonds and bank deposits. However,
subclause 30(1) of the Bill provides for the investment of the ATSILSFF in a
broader range of financial assets.
Clause 32 - Aboriginal and Torres Strait Islander Land and Sea Future Fund
Investment Mandate
95. Clause 32 provides the Government, as owner of the ATSILSFF, with a mechanism
for articulating its expectations for how the ATSILSFF will be invested and
managed by the Future Fund Board. This provision establishes a framework that
enables the Government to give strategic guidance to the Future Fund Board while
preserving the Board's role in managing the investments of the ATSILSFF at arm's
length from the Government. This approach is consistent with the arrangements in
place for the other Funds invested by the Future Fund Board.
96. Subclause 32(1) provides the responsible Ministers with the power to give the
Future Fund Board written directions in relation to the performance of its
ATSILSFF investment functions. The responsible Ministers must issue at least one
such direction. Subclause 32(3) provides that directions under subclause 32(1) are to
be known collectively as the ATSILSFF Investment Mandate.
97. Note 1 to subclause 32(1) explains that ATSILSFF investment function is defined in
clause 4 of the Bill. Note 2 to subclause 32(1) alerts the reader to subsection 33(3)
of the Acts Interpretation Act, which will enable the responsible Ministers to vary or
revoke a direction under subclause 32(1).
98. While the responsible Ministers can issue new directions at any time, the intention
is that the ATSILSFF Investment Mandate will reflect the Government's policy
intent with regard to the investments of the ATSILSFF. Any new directions would
be expected therefore to take account of significant policy changes or material
changes in the investment environment faced by the ATSILSFF.
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99. The requirements in following subclauses of the Bill give the Future Fund Board
and Parliament assurance that the responsible Ministers must make appropriately
considered directions in regard to investment targets, while providing the Ministers
flexibility to take account of broader policy issues and national interest
considerations.
100. Subclause 32(2) provides that in setting an ATSILSFF Investment Mandate the
responsible Ministers must have regard to maximising the return on the ATSILSFF
over the long term consistent with international best practice for institutional
investment. The Ministers must also have regard to the annual payments to be made
by the Indigenous Affairs Minister, on behalf of the Commonwealth to the ILC, and
to any other matters the responsible Ministers consider relevant. The note refers the
reader to clause 22 of the Bill, which deals with annual payments to the ILC.
101. Subclause 32(4) provides that the ATSILSFF Investment Mandate may include, but
is not limited to, statements about policies the Future Fund Board must pursue in
relation to risk and return and the allocation of the ATSILSFF to particular asset
classes.
102. Subclause 32(5) makes it clear that a direction under subclause 32(1) prevails over
clause 33 of the Bill to the extent of any inconsistency, and must not otherwise be
inconsistent with the Bill.
103. Subclause 32(6) provides that a direction under subclause 32(1) will not commence
until at least 15 calendar days after it is issued. This is to allow the Future Fund
Board time to adjust to any revised directions issued by the responsible Ministers.
Importantly, the Future Fund Board will be able to know with certainty when the
new direction will come into force.
104. Subclause 32(7) provides that prior to issuing a direction, the Treasurer and the
Finance Minister must consult with the Indigenous Affairs Minister. This
requirement recognises the portfolio responsibility of the Indigenous Affairs
Minister for the ILC, and role in making payments, on behalf of the
Commonwealth, to the ILC which are derived from the ATSILSFF.
105. Subclause 32(8) provides that a direction under subclause 32(1) is a legislative
instrument, and as such must be tabled in Parliament and registered on the Federal
Register of Legislation. Note 1 alerts the reader that a direction is not subject to
disallowance, in accordance with regulations made for the purposes of
paragraph 44(2)(b) of the Legislation Act. Note 2 alerts the reader that a direction is
not subject to sunsetting, in accordance with regulations made for the purposes of
paragraph 54(2)(b) of the Legislation Act. This approach enables the public and the
Parliament to hold the Government accountable for the directions it issues to the
Future Fund Board without impeding the Government's ability to manage its
finances.
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Clause 33 - Obligation on Future Fund Board in performing investment functions
106. Clause 33 specifies that in making the investments for the ATSILSFF, the Future
Fund Board will seek (subject to the Act and the ATSILSFF Investment Mandate)
to maximise the return earned on the ATSILSFF over the long term, consistent with
international best practice for institutional investment. It is expected that
international best practice will be reflected in the investment policies of the
ATSILSFF. In making investments for the ATSILSFF the Future Fund Board will
aim to facilitate the Government's ability to achieve the objects of the Bill, that is to
enhance the ability to make payments to the ILC.
Clause 34 - Limitation on Aboriginal and Torres Strait Islander Land and Sea
Future Fund Investment Mandate
107. Clause 34 specifies that the responsible Ministers cannot direct the Future Fund
Board to use the assets of the ATSILSFF to invest in a particular financial asset, for
example shares in a particular company. It also prevents the responsible Ministers
from issuing a direction that has the effect of requiring the Future Fund Board to use
the assets of the ATSILSFF to support a particular business entity, activity or
business.
Clause 35- Future Fund Board to be consulted on Aboriginal and Torres Strait
Islander Land and Sea Future Fund Investment Mandate
108. Consistent with arrangements for the other Funds invested by the Future Fund
Board, the responsible Ministers are required to consult the Future Fund Board
before issuing an ATSILSFF Investment Mandate direction.
109. Subclause 35(1) requires the responsible Ministers to send a draft of a direction
under subclause 32(1) of the Bill to the Future Fund Board and invite the Board to
make a submission within a specified time limit. The specified time limit will be
determined on a case by case basis with regard to relevant circumstances and
priorities at the time. It may be the case that urgent changes are required in the
national interest. In this situation it would be reasonable for the Future Fund Board
to be asked to consider a draft direction quickly. However, where there is less
urgency, or the change in the ATSILSFF Investment Mandate is substantial, it
would be reasonable to provide the Future Fund Board with a longer period of time
to consider a draft direction. The responsible Ministers are required to consider any
submission received from the Future Fund Board within the specified time limit.
110. Subclause 35(2) provides that any submission received from the Future Fund Board
on a draft direction must be tabled in the Parliament, with the direction. In this way,
the views of the Future Fund Board on the expected impact of the ATSILSFF
Investment Mandate or any changes will be available to the public.
Clause 36 - Compliance with Aboriginal and Torres Strait Islander Land and Sea
Future Fund Investment Mandate
111. Clause 36 deals with compliance of the Future Fund Board with the ATSILSFF
Investment Mandate.
19
112. Subclause 36(1) requires the Future Fund Board to take all reasonable steps to
ensure that all policies and decisions regarding the operation and investment of
ATSILSFF are in accordance with the ATSILSFF Investment Mandate issued by
the responsible Ministers. Since the ATSILSFF Investment Mandate is intended to
provide broad guidance to the Future Fund Board, it may contain directions that
require the Board to apply its judgment on whether or not ATSILSFF investments
comply with the ATSILSFF Investment Mandate.
113. Subclause 36(2) requires that if the Future Fund Board becomes aware of a breach
of the ATSILSFF Investment Mandate, the Board must inform the responsible
Ministers in writing as soon as is practicable, and set out a proposed strategy to
bring the operations of the ATSILSFF into compliance with the ATSILSFF
Investment Mandate.
114. Similarly, subclauses 36(3) and 36(4) provide that if the Government identifies
areas where the Future Fund Board is not complying with the ATSILSFF
Investment Mandate, the responsible Ministers can issue written directions to the
Future Fund Board to provide an explanation and to take action to remedy the
situation. The Future Fund Board is required to comply with any such directions,
noting that the responsible Ministers are the final arbiters on what is intended by the
ATSILSFF Investment Mandate.
115. Subclause 36(5) provides that any transactions undertaken by the Future Fund
Board and subsequently deemed not to have complied with the ATSILSFF
Investment Mandate remain valid, and the Future Fund Board is required to honour
any commitments made. This protects third parties who enter into transactions with
the Future Fund Board or its agents in good faith.
116. Subclause 36(6) is included to assist readers, as a direction under subclause 36(3) is
not a legislative instrument within the meaning of subsection 8(1) of the Legislation
Act. Directions of this type are administrative in character because they are merely
the application of a legal power in a particular case (i.e. they do not determine or
alter the content of the law itself).
Clause 37 - Future Fund Board must not trigger the takeover provisions of the
Corporations Act
117. Clause 37 aims to minimise market distortion and eliminate the potential for
conflicts of interest for the Government as a market regulator. It provides that the
Future Fund Board is prohibited from triggering the takeover provisions under
section 606 of the Corporations Act.
118. Section 606 of the Corporations Act essentially prohibits acquisitions of relevant
interests in the voting shares of a listed company, or unlisted company with more
than 50 shareholders, if a person's voting power increases from a figure at or below
20 per cent to a figure above 20 per cent (or from a figure above 20 per cent but
below 90 per cent to a higher figure) - unless the shares are acquired in one of the
circumstances set out at section 611 of that Act.
20
119. It is the Government's intention that the takeover threshold be adhered to quite
strictly in relation to listed companies and unlisted companies with more than 50
shareholders. Therefore, subclause 37(1) provides that the exceptions under
section 611 of the Corporations Act (that is, exceptions to the prohibition in
section 606) do not apply in relation to acquisitions by the Future Fund Board if the
acquisition is the result of the performance by the Future Fund Board of its
ATSILSFF investment functions.
120. Subclause 37(2) provides that if for some reason the Future Fund Board has not
complied with section 606 of the Corporations Act (as it is applied to the Future
Fund Board under subclause 37(1)) the relevant transactions will still be valid. The
aim of this provision is to ensure third parties are not affected adversely by any non-
compliance of the Future Fund Board.
121. The note assists the reader by referring to section 39 of the Future Fund Act, which
sets out the application of the Corporations Act to the Future Fund Board.
Clause 38 - Borrowing
122. Section 38 prohibits the Future Fund Board from borrowing money, except for
short-term borrowing associated with the settlement of transactions, or in other
circumstances prescribed in the rules.
123. The overall aim of this provision is to ensure that the Future Fund Board is able to
operate efficiently without exposing the Budget to undue risk.
124. Subclause 38(3) provides that the rules may specify circumstances in which it is
appropriate for the Future Fund Board to be able to borrow. The rules may also be
used to clarify any uncertainty on whether a particular activity constitutes
borrowing. While it is not anticipated that the Future Fund Board will have a need
to borrow, this provision allows for unforeseen events or changes in the investment
environment without the need to amend the primary legislation. The power to make
rules is provided for in clause 56 of the Bill.
Clause 39 - Aboriginal and Torres Strait Islander Land and Sea Future Fund
investment policies
125. Clause 39 requires the Future Fund Board to formulate, publish and comply with a
number of policies on its investment activities. The aim of this provision is to ensure
rigour and transparency around how the Future Fund Board performs its investment
function in relation to the ATSILSFF, including risk management, performance
assessment and benchmarks.
126. Subclauses 39(1) and 39(7) require the Future Fund Board to formulate and comply
with policies and any additional matters specified in the rules. A note at the end of
subclause 39(1) reminds the reader that, under subsection 33(3) of the Acts
Interpretation Act, the Future Fund Board is able to repeal, rescind, revoke, amend,
or vary any such policies.
127. Subclause 39(2) provides that the policies that the Future Fund Board develops must
be consistent with the ATSILSFF Investment Mandate.
21
128. Subclauses 39(3) and 39(4) provides that the Future Fund Board must publish such
policies on the internet.
129. Subclauses 39(5) and 39(6) provide that the Future Fund Board must conduct
reviews of these policies periodically, and when the responsible Ministers change
the ATSILSFF Investment Mandate. It is not expected that the results of the reviews
would be published. However, if a review resulted in any changes to policies, it is
intended that the updated policies would be published on the internet.
130. Subclause 39(8) provides that if the Future Fund Board enters into a transaction
which is not consistent with a policy that it has published under this section, the
transaction will still be valid. This ensures that third parties are not affected by a
failure of the Future Fund Board to comply with policies formulated under
subclause 39(1). However, subclause 39(7) provides that the Future Fund Board is
required to take all reasonable steps to comply with the policies it develops under
subclause 39(1).
131. Subclause 39(9) is included to assist readers, as a policy formulated under
subclause 39(1) is not a legislative instrument within the meaning of subsection 8(1)
of the Legislation Act. Such policies are administrative in character, and do not
determine or alter the content of the law. Rather they are administrative policies that
the Future Fund Board are require to formulate and comply with, to ensure rigour
and transparency around how the Board performs its investment function.
Clause 40 - Derivatives
132. Derivatives are widely used by financial market participants as a tool for risk
management. As the sophistication, size and mobility of capital markets around the
world increases, investment managers are looking for ways to maximise the returns
on investments while minimising the volatility of results. The types and volumes of
derivatives being traded has grown as the underlying markets have created demand
for these types of instruments.
133. Clause 40 provides for the Future Fund Board to make use of derivatives for certain
purposes. This includes as a risk management tool and to achieve indirect exposure
to assets that it could not otherwise achieve. The Future Fund Board may also use
derivatives to reduce the transaction cost of achieving required exposures.
134. Subclause 40(1) enables the Future Fund Board to acquire a derivative for specified
purposes, but makes it clear that the Board cannot acquire or use derivatives for the
purposes of speculation or leverage.
135. Subclause 40(2) provides that the acquisition of derivatives under this section
cannot be inconsistent with the requirement under section 39 of the Bill for the
Future Fund Board to formulate a policy on its investment strategy and take all
reasonable steps to comply with that policy.
136. Subclauses 40(3) and 40(4) provide that derivatives must be held in the name of the
Future Fund Board and are taken to be an investment of the ATSILSFF.
22
137. Similar to other investments, derivatives may be realised by the Future Fund Board
under subclause 31(3) of the Bill.
Clause 41 - Additional financial assets
138. Clause 41 provides that if the Future Fund Board becomes a holder of another
financial asset (for example through a capital distribution) that asset becomes an
investment of the ATSILSFF and is therefore subject to all the restrictions and
requirements for investments of the ATSILSFF.
Clause 42 - Securities lending arrangements
139. Clause 42 provides that the Future Fund Board is able to enter into securities
lending arrangements. Lending of securities is commonplace among institutional
investors. It may also take collateral as part of a securities lending arrangement. Any
collateral it takes is either credited to the ATSILSFF Special Account or becomes an
investment of the ATSILSFF.
Clause 43 - Investment managers
140. Clause 43 deals with the use of investment managers by the Future Fund Board for
purposes in connection with the ATSILSFF.
141. Subclause 43(1) provides that the Future Fund Board is able to hire one or more
investment managers. An investment manager is defined broadly to include
custodians, transition managers and other investment managers. However, the
Agency is excluded from this definition as it is generally expected that investment
activities, such as acquiring derivatives or investing money, will be outsourced.
142. Unless approved by the responsible Ministers, the Future Fund Board must use
investment managers to invest money in financial assets, acquire derivatives, and
enter into securities lending arrangements or to realise financial assets.
143. Subclause 43(2) provides that the responsible Ministers may provide approval in
writing for certain methods of investment, other than through investment managers,
should it be prudent and cost effective to do so.
144. Subclauses 43(3) and 43(4) provide that the Future Fund Board is required to ensure
that investment managers operate within this Bill and must report on the state of
investments of the ATSILSFF to the Future Fund Board and the Agency. It would
be expected that such obligations are set out in the contractual arrangements
between the Future Fund Board and the investment manager.
Clause 44 - Refund of franking credits
145. Under subsection 84B(1) of the Future Fund Act, the Future Fund Board is deemed
to be an exempt institution that is eligible for a refund of franking credits under the
ITAA. As the Future Fund Board is exempt from income tax, it may have an
investment bias towards assets whose return had not previously been subject to
income tax (such as debt instruments or unfranked dividends). Refunding franking
credits removes any potential bias against franked dividends.
23
146. Clause 44 deals with the refund of franking credits and provides that if the Future
Fund Board receives a refund of a tax offset under the ITAA and the tax offset is
attributable to the investment of the ATSILSFF, any refund received is credited to
the ATSILSFF Special Account. Note 1 refers the reader to section 84B of the
Future Fund Act. Note 2 refers the reader to Division 3 of the ITAA, which deals
with refunds of tax offsets.
Clause 45 - Realisation of non-financial assets
147. Clause 45 requires the Future Fund Board to realise an asset that ceases to be a
financial asset or any asset acquired by the Board (as an investment of the
ATSILSFF) that is not a financial asset. This could include circumstances where the
Future Fund Board holds an asset which was mistakenly acquired by the Board, or
given to the Board, or which ceases to be a financial asset.
148. The section requires that a non-financial asset is to be treated as a financial asset up
to the time it is realised. Subclause 45(1) ensures that the asset is considered an
investment of the ATSILSFF and that relevant provisions relating to investments of
the ATSILSFF apply to that asset for the time it is held by the Future Fund Board.
Clause 46 - Additional function of the Future Fund Board
149. Clause 46 provides that the functions of the Future Fund Board include the function
of investing amounts in accordance with the Act.
24
Part 5 - Reporting obligations etc.
Clause 47 - Simplified outline of this Part
150. Clause 47 is an overview of Part 5 to assist with readability.
Clause 48 - Finance Minister may require Future Fund Board to prepare reports
or give information
151. Clause 48 provides that the Finance Minister may require, in writing, that the
Future Fund Board prepare a report or a document on one or more specified matters
relating to the performance of the Future Fund Board's functions under this Act.
This report or information must be provided as outlined in the Finance Minister's
request.
152. The Finance Minister may choose to publish any report or document provided, but
the report or document is not a legislative instrument.
Clause 49 - Keeping the responsible Ministers informed etc.
153. Clause 49 requires the Future Fund Board to notify the responsible Ministers of any
information that the responsible Ministers should know, including by providing any
written information to the Finance Minister. This could include significant
investment results, concerns regarding fraud and any non-compliance with the
Future Fund Board's policy on conflicts of interest.
Clause 50 - Finance Minister may give reports to other Ministers etc.
154. Clause 50 allows the Finance Minister to give reports, documents and other
information to another Minister. This includes reports and documents under
subclauses 48(1) or 49(2) and any other information obtained by the
Finance Minister under the Act. It is intended that the Finance Minister may use this
provision to inform the Indigenous Affairs Minister about matters relating to the
ATSILSFF, given the responsibility of the Indigenous Affairs Minister for the ILC,
and for making payments to the ILC on behalf of the Commonwealth.
25
Part 6 - Miscellaneous
Clause 51 - Simplified outline of this Part
155. Clause 51 is an overview of Part 6 to assist with readability.
Clause 52 - Delegation by the Finance Minister
156. Clause 52 enables the Finance Minister to delegate certain of the Finance Ministers
powers under the Act.
157. Under subclause 52(1), the Finance Minister may, in writing, delegate his or her
powers under clauses 13, 23 and 26 of the Bill to the Secretary of the Finance
Department or to an SES employee (or acting SES employee) in that Department.
158. The Finance Minister's powers under clauses 13, 23 and 26 relate to the
determination of a specified amount to be credited to the ATSILSFF Special
Account (in the case of clause 13) or pre-payment transfers from the ATSILSFF
Special Account to the ILC Funding Special Account to facilitate payments to the
ILC (in the case of clauses 23 and 26). Delegation of these functions to the
Secretary of, or SES official in, the Finance Department facilitates the efficient
administration of these matters.
159. Subclause 52(2) allows the Finance Minister to delegate, in writing, the Finance
Minister's powers under clause 18 of the Bill to the Secretary of the Finance
Department; or to an SES employee (or acting SES employee) in that Department;
or to the Chair of the Future Fund; or an SES employee (or an acting SES
employee) of the Agency. Clause 18 relates to the transfer of funds from the
ATSILSFF Special Account to the Future Fund Special Account.
160. The note assists the reader by referring to the relevant section of the Acts
Interpretation Act in relation to the expressions 'SES employee' and 'acting SES
employee'.
161. It is envisaged that the delegate will be accountable to the Finance Minister for his
or her actions under any delegation. Subclause 52(3) reinforces this intention by
requiring the delegate to comply with any direction of the Finance Minister in
exercising powers under a delegation.
Clause 53 - Delegation by the Treasurer
162. Under subclause 53(1), the Treasurer may, in writing, delegate his or her powers
under clause 13 of the Bill to the Secretary of the Treasury Department or to an SES
employee (or acting SES employee) in that Department. Clause 13 of the Bill relates
to the determination of a specified amount to be credited to the ATSILSFF Special
Account. Delegation of this power to the Secretary of, or SES official in, the
Treasury enables the efficient administration of these matters.
163. The note assists the reader by referring to the relevant section of the Acts
Interpretation Act in relation to the expressions 'SES employee' and 'acting SES
employee'.
26
164. It is envisaged that the delegate will be accountable to the Treasurer for his or her
actions under any delegation. Subclause 53(2) reinforces this intention by requiring
the delegate to comply with any direction of the Treasurer in exercising powers
under a delegation.
Clause 54 - Delegation by the Indigenous Affairs Minister
165. Under subclause 54(1) the Indigenous Affairs Minister may, in writing, delegate his
or her powers under subclauses 22(1) and (2) to the Secretary of the Indigenous
Affairs Department or to an SES employee (or acting SES employee) in that
Department.
166. The note assists the reader by referring to the relevant section of the Acts
Interpretation Act in relation to the expressions 'SES employee' and 'acting SES
employee'.
167. Clause 22 of the Bill deals with annual payments to the ILC. Delegation of these
functions to the Secretary of, or SES official in, the Indigenous Affairs Department
enables the efficient administration of these matters.
Clause 55 - Review of operation of Act
168. Clause 55 allows for the responsible Ministers to require that a review of the Act be
undertaken before the tenth anniversary of the Act's commencement. This review
mechanism is intended to provide the opportunity to consider whether the Act is
providing the outcomes envisaged.
Clause 56 - Rules
169. Clause 56 provides that the Finance Minister may, by legislative instrument, make
rules covering matters required to be prescribed in this Bill, or matters that it would
be convenient to prescribe for the purposes of this Bill.
170. Enabling the making of rules rather than regulations accords with the Office of
Parliamentary Counsel's Drafting Direction No. 3.8 - Subordinate Legislation.
Paragraph 2 of that Drafting Direction states that "OPC's starting point is that
subordinate instruments should be made in the form of legislative instruments (as
distinct from regulations) unless there is good reason not to do so".
171. Paragraph 3 of the Drafting Direction states that matters such as compliance and
enforcement, the imposition of taxes, setting amounts to be appropriated, and
amendments to the text of an Act, should be included in regulations unless there is a
strong justification otherwise. The Bill does not enable the rules to provide for any
of the types of matters listed. This is clarified by subclause 56(2) of the Bill, which
specifically prevents the rules from including these types of matters.
27
172. In addition, clause 56 of the Bill clarifies that the rules made under the Bill are a
legislative instrument for the purposes of the Legislation Act. Pursuant to
sections 38 and 39 of that Act, all legislative instruments and their explanatory
statements must be tabled in both Houses of the Parliament within 6 sitting days of
the date of registration of the instrument on the Federal Register of Legislation.
Once tabled, the rules will be subject to the same level of Parliamentary scrutiny as
regulations (including consideration by the Senate Standing Committee on
Regulations and Ordinances), and a motion to disallow the rules may be moved in
either House of the Parliament within 15 sitting days of the date the rules are tabled
(see section 42 of the Legislation Act).
28
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act
2011
Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill
2018
173. The Aboriginal and Torres Strait Islander Land and Sea Future Fund Bill 2018 (the
Bill) is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
174. The Bill gives effect to the Government's decision to establish a dedicated financial
asset - the ATSILSFF - to support the making of annual and additional payments by
the Commonwealth to the ILC.
175. The Bill provides for the transfer of the monies and assets currently allocated to the
Land Account to the ATSILSFF, which will be managed by the Future Fund Board.
176. The Government wishes to invest in financial assets with the aim of achieving
investment returns that can be used to support the making of those annual and
additional payments to the ILC.
177. The ILC is established by section 191A of the ATSI Act for the purpose of assisting
Aboriginal people and Torres Strait Islanders to acquire and manage land so as to
provide economic, environmental, social and cultural benefits (section 191B of the
ATSI Act). This is in recognition that many dispossessed Aboriginal persons and
Torres Strait Islanders are unable to regain control of land under the Native Title Act
1993 (either because of historical extinguishment or disconnection to traditional
lands).
178. The Aboriginal and Torres Strait Islander Amendment (Indigenous Land
Corporation) Bill 2018 will broaden the purposes of the ILC to include the provision
of assistance in relation to the acquisition of 'water-related rights' and the
management of 'indigenous waters' ('water-related rights' and 'indigenous waters'
will be defined in that Bill).
179. By establishing the ATSILSFF, and providing for the transfer of assets of the
Land Account to the ATSILSFF, the Bill seeks to enhance the Commonwealth's
ability to make payments to the ILC, which seeks to strengthen the links of
Aboriginal and Torres Strait Islander peoples to their land and seas.
29
Human rights implications
180. The Bill is machinery in nature (in that it establishes and provides for the
management of the ATSILSFF, and for the channeling of payments from the
ATSILSFF to the ILC), and does not directly advance or limit a relevant human
right or freedom. However, the establishment of the ATSILSFF will enhance the
Commonwealth's ability to make payments to the ILC, and, as a consequence, will
enhance the ILC's ability to pursue its statutory purposes. Because of this, the Bill
indirectly engages the right to self-determination, rights to equality and non-
discrimination, and the right to enjoy and benefit from culture.
Right to self-determination
181. The right to self-determination is contained in article 1 of the International
Covenant on Civil and Political Rights (ICCPR) and article 1 of the International
Covenant on Economic, Social and Cultural Rights (ICESCR). The right is also
contained in Article 3 of the UN Declaration on the Rights of Indigenous Peoples
(UNDRIP). UNDRIP does not create legally binding obligations, but informs the
way governments engage with and protect the rights of Indigenous people.
182. The UN Committee on the Elimination of Racial Discrimination has stated that the
right to self-determination involves 'the rights of all peoples to pursue freely their
economic, social and cultural development without outside interference.'1 The right
is understood widely to be exercisable in a manner that preserves territorial
integrity, political unity and sovereignty of a country.
183. Section 3 of the ATSI Act states that the objects of the ATSI Act includes to
promote the development of self-management and self-sufficiency among
Aboriginal persons and Torres Strait Islanders. The ILC is a vehicle for facilitating
the achievement of this objective, by enabling Aboriginal persons and Torres Strait
Islanders to increase their economic status, promote their social-wellbeing, and
maintain their culture.
184. By establishing a financial structure that will enhance the ability of the ILC to assist
Aboriginal persons and Torres Strait Islanders to realise economic, environmental,
social and cultural benefits from land and waters, the Bill indirectly advances the
right of Aboriginal and Torres Strait Islander peoples to self-determination.
Rights of equality and non-discrimination
185. The rights of equality and non-discrimination are contained in articles 2, 16 and 26
of the ICCPR, article 2 of the ICESCR and article 5 of the Convention on the
Elimination of All Forms of Racial Discrimination (CERD).
186. These rights recognise that all human beings have the right to be treated equally and
to not be discriminated against.
1
CERD, General Recommendation 21, The right to self-determination (Forty-eighth session, 1996), UN
Doc A/51/18, annex VIII (1996), [125]
30
187. Of particular relevance in the context of the Bill, CERD establishes a general
prohibition on racial discrimination. The Racial Discrimination Act 1975
implements this prohibition in Australian domestic law.
188. The purposes of the ILC in section 191B of the ATSI Act involve a clear distinction
based on race. In accordance with its functions in sections 191D and 191E of the
ATSI Act, the ILC acquires land and divests it to Aboriginal or Torres Strait
Islander corporations, or provides assistance to Aboriginal or Torres Strait Islander
Corporations to acquire land. This enables the Aboriginal and Torres Strait Islander
membership of these corporations to realise benefits from the land acquired. This
arrangement may mean persons other than Aboriginal persons and Torres Strait
Islanders are provided with a different level of assistance to acquire property and
obtain the benefits of land ownership.
189. In this respect, the ATSI Act in its establishment of the ILC may be characterised as
a 'special measure' within the meaning of article 1(4) of the CERD and
subsection 8(1) of the Racial Discrimination Act 1975. 'Special measures' are an
exception to the general prohibition on racial discrimination, and are designed to
'secure to disadvantaged groups the full and equal enjoyment of human rights and
fundamental freedoms.' For a measure to be characterised as a 'special measure' it
must:
be for a particular group or individuals;
be taken for the sole purpose of securing the adequate advancement of that
group or those individuals;
be 'necessary'; and
not continue after its objectives have been achieved.
190. The ILC is established for Aboriginal persons and Torres Strait Islanders, and for
the sole purpose of providing assistance to Aboriginal persons and Torres Strait
Islanders. The ongoing need for the ILC is evident in the continuing levels of
disadvantage confronting Aboriginal persons and Torres Strait Islanders compared
to other Australians, including in relation to economic self-sufficiency, positive
cultural identity, and social and emotional well-being.
191. The arrangements for the ILC are appropriate, adapted and proportionate, as they
promote the development of self-management and self-sufficiency among
Aboriginal persons and Torres Strait Islanders with minimal impact on the broader
community.
192. The ATSI Act in its establishment of the ILC may also be regarded as legitimate
differential treatment. The principle of legitimate differential treatment allows
countries to treat particular groups differently, provided particular criteria are met.
The justification for differentiation must be reasonable and objective. There must
also be a clear and reasonable relationship of proportionality between the aim
sought and the measure and its effects.2
2
CESCR, General Comment No 20, Non-discrimination in economic, social and cultural rights (art 2,
31
193. The rationale for the establishment of the ILC is to establish an institutional
arrangement to address historical dispossession in circumstances where native title
is unable to be recognised. The role of the ILC is proportionate to the aim of
addressing historical dispossession and promoting self-management and
self-sufficiency, with minimal impact on other persons.
194. The Bill indirectly engages rights to equality and non-discrimination, by facilitating
the continuation of arrangements that differentiate on the basis of race but that may
be characterised as a 'special measure', and as legitimate differential treatment.
Right to enjoy and benefit from culture
195. The right to enjoy and benefit from culture is contained in article 27 of the ICCPR
and article 15 of the ICESCR.
196. Article 27 of the ICCPR protects the rights of individuals belonging to ethnic,
religious and linguistic minorities with in a country to enjoy their own culture,
practice their own religion and use their own language. The UN Human Rights
Committee has interpreted this right to include 'a particular way of life associated
with the use of land resources, especially in the case of indigenous peoples.'3 It has
also stated that 'the enjoyment of those rights may require positive legal measures
of protection and measures to ensure the effective participation of members of
minority communities in decisions which affect them.'4
197. Article 15 of the ISESCR protects the right of all persons to take part in cultural life
and to enjoy the benefits of scientific progress and its applications. The UN
Committee on Economic Social and Cultural Rights has interpreted this right to
include a right to traditional land, as it relates to Indigenous Peoples.5
198. The Bill indirectly advances this right by establishing a financial structure that will
enhance the ability of the ILC to assist Aboriginal persons and Torres Strait
Islanders to acquire land, and in so doing enable Aboriginal persons and Torres
Strait Islanders to practice their own cultures.
Conclusion
199. The Bill is compatible with human rights because it indirectly advances the right to
self-determination and the right to enjoy and benefit from culture, and indirectly
facilitates the continuation of a special measure and arrangements that constitute
legitimate differential treatment.
para 2), UN Doc E/C.12/GC/20, 2 July 2009, [13].
3
HRC, General Comment 23, Article 27, UN Doc CCPR/C/21/Rev.1/Add.5 (8 April 1994), [7].
4
Ibid.
5
ICESCR, General Comment 21, Right of everyone to take part in cultural life (art 15, para 1a), UN Doc
E/C.12/GC/21 (21 December 2009, [36].
32