IBAs in Australia Ciaran OFaircheallaigh Griffith University, Brisbane, Australia

1
IBAs in Australia Ciaran OFaircheallaighGriffi
th University, Brisbane, Australia

• Presentation to Workshop on IBAs,
• Achieving Objectives Conference
• Ottawa, 27-29 June 2006

2
Context for IBAs in Australia

• 1992 High Court Mabo decision, recognised
  continued existence of inherent Indigenous rights
  in land.
• Federal legislative response is 1993 Native Title
  Act, created the Right to Negotiate
• When governments intend to grant interests in
  land that can affect native title (e.g. mining
  leases, pipeline corridors, agricultural
  development) native title holders/claimants have
  an opportunity to negotiate with
  developers/governments.
• Initially 6 month negotiating period, extended
  by agreement.

3
Context for IBAs (Cont)

• If no agreement reached, government tribunal
  determines whether and under what conditions
  interest in land may be issued.
• Native title claimants/holders do not have a veto
  on development.
• Scores of agreements negotiated to date, mostly
  re mining, oil and gas, some in agriculture,
  tourism, real estate.

4
Context for IBAs (Cont)

• In some cases IBAs result from corporate policy.
  No legal requirement (e.g. because leases granted
  pre 1993), companies wish to have agreements with
  neighbouring Indigenous communities.
• IBAs also result from legislation in individual
  states, e.g. Queenslands Mineral Resources Act
  requires companies to seek consent of Aboriginal
  trustees for mining leases on Aboriginal
  reserves.

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Major Issues Aboriginal-Company Negotiations

• Funding
• Time frames
• Confidentiality
• Implementation

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Funding

• Reliance on company funding for negotiations
  creates major problems.
• Companies may try and use to influence choice of
  advisers.
• When the going gets tough, company may threaten
  to end funding, undermines Aboriginal negotiating
  position.
• Tied to outcome company wants, which is
  conclusion of agreement and grant of interest.
  Hard to continue involvement of staff/advisers
  into implementation phase, loss of
  expertise/continuity results.

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Funding (Contd)

• Negotiation of process/funding agreements at
  start of negotiation can help address these
  problems, e.g. principles for funding,
  guarantees of funding continuity.
• Very difficult to overcome them completely.

8
Time

• Company time frames may be tight, driven by
  commercial demands.
• Makes it difficult for Aboriginal groups to
  undertake preparations that are the key to
  successful negotiation
• identifying and prioritising goals
• building unity within the group
• building trust between Aboriginal landowners,
  regional land organisations that support them,
  technical advisers
• getting an understanding of the other side.

9
Time (Contd)

• Time pressure on companies can work in favour of
  Aboriginal side
• If company can be helped to meet deadlines, it
  may be prepared to offer better terms e.g.
  financial, environmental management.
• Funding important here more funding can e.g.
  speed up consultation processes while maintaining
  their integrity.
• Commercial context helps, companies can see the
  return on additional funding they provide.

10
Confidentiality

• Almost always applies to negotiations, usually
  to agreements.
• Generally exception to allow information flow to
  affected Aboriginal community.
• Can seriously constrain strategies open to
  Aboriginal negotiations.
• Makes it difficult to share information among
  Aboriginal groups.
• Makes it impossible to establish
  benchmarks/standards for outcomes on key
  negotiation issues

11
Implementation

• Chronic problem with non-implementation of IBAs
  in the past (as in Canada)
• More emphasis on now, including Implementation
  and personnel in agreements.
• Structures to oversee implementation
• Provision for regular review
• Ensuring ongoing input from senior
  decision-makers.

12
Implementation (Contd)

• Still major problems ensuring continuity from
  negotiation to implementation.
• Negotiators move on to next deal
• Turnover in senior company personnel
• Aboriginal elders handing over to younger
  people.
• No funds to continue involvement of negotiators.
• Result is that people who implement often have
  limited understanding of intentions of
  negotiators or context for particular provisions.
  

13
Specific Issues in Aboriginal Government
Negotiations

• Funding
• Time
• Complexity/lack of transparency
• Governments Strategic behaviour

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Funding

• Governments not driven by commercial pressures.
• Face restrictions - public accountability.
• Standard budgetary procedures and budget
  silos.
• Result is that funding provided is often
  inadequate, slow to arrive, affords Aboriginal
  side little flexibility.

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Time

• Multiple players, complex processes, lack of
  commercial pressures slows Gov time frames.
• Often appears to lack an outcomes focus,
  content to see processes drag on.
• However when political imperatives brought to
  bear Gov wants things done yesterday
• Result is that Gov. often fails to meet
  deadlines but then imposes arbitrary and harsh
  time limits on Aboriginal side.

16
Complexity/Lack of transparency

• Multiple players, bureaucratic and political, at
  different levels of government.
• Not easy to establish what roles and powers
  various government players have, where key
  decisions will be made on negotiation and
  implementation.
• Hard to establish what drives/motivates different
  government players.
• Rarely a single or coherent government view. This
  can cause problems, but can also offer
  opportunities.
• May be possible to establish alliances, e.g. with
  officers at local level who may have shared
  interests with Indigenous people.

17
Strategic behaviour

• Most companies only concerned with specific
  matter under negotiation. Gov more inclined to be
  strategic i.e. to introduce wider
  considerations.
• May seek concessions on issues not related to
  matter under negotiation.
• May be reluctant to consider specific options in
  a negotiation because wary of precedents that
  favour Aboriginal interests.
• Makes it harder to find outcomes that work for
  both parties.

18
Getting Money, Managing Money

• Two major issues in IBAs are
• How to structure payments made to Aboriginal
  people by developers.
• How to manage income that flows from projects to
  Aboriginal people/communities so as to maximise
  the benefits they generate.

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Getting money

• Approaches are often simplistic and fail to
  serve Aboriginal (or company) interests, i.e.
  fixed dollar amounts per year.
• Do not allow Aboriginal peoples to benefit from
  project expansion or price increases.
• If Aboriginal groups can recognise commercial
  needs of developers, may be able to negotiate
  much more favourable financial arrangements.

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Example

• New iron ore mine, medium sized company,
  substantial borrowing, critical to recover
  capital quickly.
• Aboriginal group lacked organisational capacity,
  needed funding injection to get established.
• Aboriginal groups economic research suggested
  project had substantial economic potential and
  relatively low risk (e.g. first 10 years output
  covered by long term contracts)

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Example (Contd)

• Financial arrangement
• 1 million up front payment to help Aboriginal
  group establish organisational capacity.
• Free issue of shares in company to Aboriginal
  community (substantial potential for capital gain
  once venture established)
• Modest royalty until company reaches cumulative
  output of 20 Million Tonnes (MT) iron ore
  (repayment of debt).
• Substantial royalty for next 20 MT (until
  recovery of capital).
• Royalty increases again for remainder of mine
  life.

22
Managing Money

• Comalco Agreement, Cape York, 2001
• Bauxite mine, expected life 50 years
• Aboriginal groups had seen benefits from other
  mines dissipated.
• Determined to achieve long-term and sustainable
  benefits.
• Substantial royalty payments, including share of
  government royalties.

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Comalco Agreement (Contd)

• 60 of income into long-term investment fund.
• All income reinvested for 20 years.
• From year 21, capital preserved, income available
  for expenditure on economic/social development.
• 5 allocated to implementation costs.
• 17.5 for current spending on community economic
  and social development.
• 17.5 for current expenditure by individual land
  owning groups.
• Current spending can be on a wide variety of
  cultural, social or economic purposes.
• No cash payments to individuals.

24
Argyle Diamond Mine Agreement, Western Australia,
2005

• Financial provisions
• Fixed payments to affected communities, variable
  payment to Aboriginal Traditional Owner (TO)
  groups, related to profits.
• Individual payments to small number of senior
  Aboriginal TOs.
• Remaining TO payments to Charitable Trust (70),
  Special Purposes Trust (30).

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Argyle Agreement (Contd)

• Charitable Trust
• Until 2009, 86 to Sustainability Fund, for
  long-term investment. Income reinvested until end
  of mining. 100 to S.Fund after 2009.
• Until 2009, 14 to Partnership Fund, for joint
  community development projects with government or
  private partners.
• After 2009, up to 25 of capital and income can
  be invested in local businesses.

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Argyle Agreement (Contd)

• Special Purposes Trust
• All income flowing to Trust allocated for
  benefit of 7 Estate Groups in agreed proportions.
• Estate Groups submit annual plans, money
  released if they conform to rules set out in
  agreement.
• Payments from trust are to create benefits in
  areas such as employment, business, health,
  education, culture.