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New South Wales Aboriginal Land Council

Review of the Policy on Local Aboriginal Land Council Funding and

Financial Obligations

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CONTEXT 2007 and 2008 – major changes for NSWALC Out of administration New ALRA New Council Administrative, financial, governance and structural

reforms Opportunity and timely to review our policy and

procedures for LALC funding

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CONTEXT

Current policy developed in 2005 The Draft Policy on Local Aboriginal Land

Council Funding and Financial Obligations has been developed ensuring that the requirements of the Aboriginal land Rights Act have been :– i.e. Section 106 (8)(e),113, 114, 153, 158, 159,

161, 162 and 163

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OBJECTIVE

Ultimate aim is to support LALCs to operate at a high standard while still maintaining high levels of accountability

Streamline processes and reduce complexity Enable Zone offices to operate with more discretion

to respond to individual circumstances Demonstrate good management across the network

to stakeholders

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OBJECTIVE

Be consistent with general applicable principles of Administrative Law such as;– The requirement that powers be exercised

reasonably and for proper purposes; and– The requirement to act fairly in a procedural

sense

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Working Party

A Working Party was established to undertake a review of the current Policy on Local and Regional Aboriginal Land Council Funding and Financial Obligations.

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Working Party Members

Councillors

Councillor Craig Cromelin – Wiradjuri Region

Councillor Stephen Ryan – Central Region

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Working Party Members

Staff

Mr Lesley Turner, Director - Southern Zone Ms Jenny Bedford, Operations Manager - Southern Zone Mr Tony Sutherland, Director - Western Zone Mr Robert Barnes, Operations Manager – Western Zone Mr Andrew Riley, Director - Northern Zone Mr Trent Lynwood, Operations Manager - Northern Zone Mr Steve Merritt, Director – Eastern Zone Ms Carole Di Franco, Senior LALC Support – Eastern Zone Mr Neil Mandel, Network Services

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Main Recommendations

A separate “stand alone” Policy on Local Aboriginal Land Council Funding and Financial Obligations;

A new name - Policy on Local Aboriginal Land Council Funding and Financial Obligations

A revised Procedures framework to implement the changed policy;

A Risk Management approach relating to financial and performance;

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Main Recommendations

Reduce the 6 funding categories to 2; Introduce the concept of cessation of funding

for non-compliance; and Simplify the types of funding arrangements

and have just 2 – a Funding Agreement or an Assistance Agreement.

Introduce a standard LALC Management Support System for all NSWALC.

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Stand Alone Policy

Currently NSWALC has a policy titled Local and Regional Aboriginal Land Council Funding and Financial Obligations.

This includes Policy and Procedures all in the one document which presents a problem if NSWALC is to consider changes to policy.

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Stand Alone Policy

The working group has proposed a new policy with the following;– a set of principles; – a risk management approach; – financial and operational performance; – funding / assistance agreements;

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A Stand Alone Policy

– new funding categories;– new reporting requirements; and– cessation of funding aspects.

Name changed to Policy on Local Aboriginal Land Council Funding and Financial Obligations

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PRINCIPLES NSWALC’s principle objective is to support

LALCs to ensure sound and sustainable financial and operational management.

NSWALC will adopt a risk management approach to making funding decisions.

LALCs should not be unduly penalised for falling short of minimum operational performance standards.

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PRINCIPLES

NSWALC is to work closely with LALCs in ensuring satisfactory performance and proper management; and

The funding policy should focus on early identification of problem areas and on timely intervention and assistance where required.

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RISK MANAGEMENT Can be defined as consideration of events

that could occur and what would be the impact if such events occurred (likelihood and consequence).

These considerations enable risk events to be identified and if there is a likelihood of them occurring, strategies can be developed that would either reduce the likelihood or mitigate the impact of these events.

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RISK MANAGEMENT

Sound management practices The principle of risk management The need for a decrease in complexity for

NSWALC and LALCs; and The need to focus attention on overall good

management.

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FINANCIAL AND OPERATIONAL PERFORMANCE

LALCs are required to meet minimum operational performance standards:– Generate sufficient income to pay expenses;– Have enough cash at bank and investments to

cover liabilities as well as any employee leave entitlements;

– Collects rents when they fall due;

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FINANCIAL AND OPERATIONAL PERFORMANCE

LALCs are expected to:– Pay rates and charges when they fall due;– Lodge Business Activity Statements and taxes

when they fall due;– Ensure debts are paid, as and when they fall due

(as referred to in s91 (1) (e)), and are in line with the budget;

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FINANCIAL AND OPERATIONAL PERFORMANCE

LALCs are expected to:– Ensure employee related payments meet

legislative requirements, i.e. workers comp, superannuation; and

– Have at least 50 voting members.

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FUNDING CATEGORIES Principle change is the reduction of funding

categories from six to two (funded and unfunded).

There will be two main funding categories:– F - Funded– UF - Unfunded

Note that those LALCs under Administration will be classified as Funded

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FUNDING AND ASSISTANCE AGREEMENTS

All LALCs will be provided with a funding or maybe an assistance agreement from NSWALC;

These agreements will outline the terms and conditions under which NSWALC will provide financial and other support to LALCs;

The agreements will also outline the range and type of financial and performance reports required to be lodged under the ALRA or the terms of the agreement.

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FUNDING AND ASSISTANCE AGREEMENTS

Without limiting the types of reports, they may include:– Community, Land and Business Plans

(implementation, progress/status);– Community Benefit Schemes– Operational / Financial Reports

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MAKING A FUNDING DECISION

NSWALC can only fund LALCs that are not prohibited from receiving funds pursuant to s.163 of the ALRA 1983;

NSWALC will only offer Funding Agreements to LALCs who are in a funded category and may offer Assistance Agreements to LALCs in an Unfunded category.

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FINANCE PROVISIONS

BUDGETs.158

Must be submitted by

21 April

APPLICATIONs.52

Must be submitted by

31 March

Funding Agreement

s.162

ANNUAL REPORTING

Periodic ReportsTo be submitted

to NSWALC within 4 weeks of end of period

PerformanceReports

Audited Financial Statements

Annual Reports

Maintain Records and Accounts

s.153(1)

Financial Statements(Incl. assets and liabilities)

Bank StatementsAccounts to Auditor by 14 September

s.153(4)

Audit to NSWALCBy 1 November

s.153(5)

Must include1. Management Letter 2. Copies of all Insurance

PoliciesReg. 95

Membership Rolls

Voting Rolls

Minutes of Meetings

Attendance List of Meetings

Lease, contracts & other documents

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BUDGETSs.158

AUDITED STATEMENTS

s.153

FUNDING AGREEMENTS

s.162

PERIODICREPORTS

s.159

APPLICATION s.52

ASSESSMENT APPROVAL s.106

ANNUAL REPORTS

s.161

PERFORMANCEREPORTS

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REPORTING REQUIREMENTSReporting requirements will be

streamlined. LALCs will be required to provide financial reports and also to report against their community land and business plan.

LALCs will be able to demonstrate up to 10 per cent variation in expenditure against budget line items.

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LALC MANAGEMENT SUPPORT SYSTEM

A new database, the LALC Management Support System, will be used to monitor performance against five key operational areas.

The LMSS provides the diagnostic tool to inform the risk category (which in turn informs the delegate in relation to how funds will be offered and what reporting regime the LALC’s will be required to adhere to) and the LALC management plan.

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Overview / SummaryFinancial ManagementProperty ManagementSystems ManagementHuman ResourcesGovernance

LALC MANAGEMENT SUPPORT SYSTEM

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NEXT STEPS

The ARLA requires NSWALC to refer the policy to each Local Aboriginal Land Council for comment, and consider any submissions made by any Local Aboriginal Land Council within 30 days of the referral of the policy, and obtain the approval of the Minister and the Policy /gazetted.

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NEXT STEPS

The revised policy will take effect on its publication in the Gazette or on a later day specified in the policy.

NSWALC staff and LALCs will need to implement the new arrangements from that date.

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SUMMARY OF ISSUES

The procedures are less prescriptive and allow greater flexibility.

The ultimate aim is to support LALC’s to operate at a high standard while still maintaining high levels of accountability.

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SUMMARY OF ISSUES

The proposed policy provides the framework;

The procedures provide guidance and instruction on how the policy framework will be operationalised.

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Comparison – Current and Proposed Policy

CURRENT PROPOSED

POLICY / PROCEDURES SEPARATE(1 DOCUMENT) STAND ALONE

6 FUNDING CATEGORIES 2 FUNDING CATEGORIES (F) OR (UF)

BREACH REGIME LESS COMPLEX COMPLIANCE REGIME

s162 AND 163

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Comparison – Current and Proposed Policy

CURRENT PROPOSED

Policy complex Simplifies – less prescriptive allow flexibility

Termination Clause By NSWALC or LALC

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Comparison – Current and Proposed Policy

CurrentFunding AgreementsUF 2 “Out of Policy” AgreementsAdministratorsBreach database regime12 months rates non-paymentPayment of Essential Services

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Comparison – Current and Proposed Policy

Proposed Funding Agreement. Assistance Agreements. 28 days to rectify non compliance. Otherwise assistance agreement

negotiated. If beyond 90 days the funding agreement

is terminated, funds forfeited. An Assistance Agreement can be negotiated

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Comparison – Current and Proposed Policy

ProposedLALC Management Support System Assessment against five key operational

areas– Financial Mgt, Office Systems Mgt, Property Mgt,

Human Resources and Governance– Auditors 2nd Certificate is also used to assess /

measured 20 % weighting against each key area LALCs assessed on above and total

determines its indicative level of risk i.e. within one of the following three levels

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Comparison – Current and Proposed Policy

Low Risk 90% - 100% - Funded Quarterly & six

monthly reporting

Medium Risk 70% - 89% - Funded quarterly and

quarterly reporting

High Risk 50% - 69% Funded monthly and

monthly reporting

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Process from here?

Approval of Draft Policy : 3 Mar 2009 Feedback from LALCs : 10 Apr 2009 Approval of Final Policy : 30 Apr 2009 Ministerial Approval and Gazettal : 30 May

2009 Implementation of LALC Risk Assessments Recommendations to the NSWALC Board Approval of grants for costs and expenses Issue 2009/2010 Funding Agreements 1 Jul

2009

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THE END

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