EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 156
Issued by the Authority of the Parliamentary Secretary to the Minister for Finance and Administration
Lands Acquisition Act 1989
Lands Acquisition Amendment Regulations 2005 (No. 2)
Section 140 of the Lands Acquisition Act 1989 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Section 6 of the Act defines “Commonwealth Authority” for the purposes of the Act. That definition includes an authority ‘that is not declared by the regulation to be an exempt authority.’
Schedule 1 to the Lands Acquisition Regulations 1989 (the Principal Regulations) lists authorities which are exempted from the provisions of the Act. The effect of exempting an authority is that it would not, at any time in the future, have access to the use of the compulsory acquisition powers in the Act on its behalf, while ever it remains exempt. It will, however, provide a measure of flexibility to operate in the commercial property market.
The purpose of the Regulations is to make the Indigenous Business Australia (IBA) an exempt body for the purposes of the Act, giving it the necessary flexibility to perform the functions for which it has been created.
The IBA was established in 1990 to perform a range of commercial activities following the passage of the Aboriginal and Torres Strait Islander Act 1989. Specifically, its legislative charter requires that it advance the commercial and economic interests of Aboriginal persons and Torres Strait Islanders by accumulating and using a substantial capital asset for the benefit of the Aboriginal and Torres Strait Islander peoples. It is required under section 147 of the Aboriginal and Torres Strait Islander Act 2005 to engage in commercial activities.
The IBA is currently involved in some 30 business activities as joint ventures, partnerships or outright ownership. Many of these investments resulted in acquiring business assets including land. These include equity in mining joint ventures, tourism resorts, waste disposal facilities etc. The IBA also owns a portfolio of office buildings, which have a variety of commercial lease arrangements attached to them.
These investments are in complex legal structures in order to make immune unrelated businesses from the failure of any one of the investments. The IBA uses trusts and nominee companies as a matter of course.
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Following passage of the Aboriginal and Torres Strait Islander Act 2005, the responsibility for the Indigenous home ownership programme and the Indigenous business development programme has been transferred to the IBA. The home ownership programme comprises a $351 million home loan portfolio with over 4,000 current loans and a related trust account with current cash balances of $56 million. The business development programme comprises some $70 million in current loans and an annual recurrent element of $30 million per annum.
The Aboriginal and Torres Strait Islander Act 2005 also provides for the scheduling of assets and liabilities to be transferred to the IBA from the Aboriginal and Torres Strait Islander Commission (ATSIC) and the Commonwealth. These are, in the main, existing housing and business loans and a number of mortgagee-in-possession properties.
The IBA has an investment charter and is not on annual appropriation for its equity investment activities. The enabling legislation clearly requires that the IBA act in a commercial environment. The IBA needs to have the flexibility to carry out its functions to engage in commercial activities and to promote and encourage Indigenous self-management and economic self-sufficiency, and the prescription of IBA as an exempt authority would provide that flexibility.
The Act specifies no conditions that need to be met before the power to make the proposed Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
Overview
The Lands Acquisition Amendment Regulations 2005 (No. 2) were enacted to address a legislative gap concerning the flexibility required for specific entities to engage in commercial activities without the constraints of compulsory acquisition powers. This amendment to the Lands Acquisition Act 1989 was introduced to exempt the Indigenous Business Australia (IBA) from the compulsory acquisition provisions, thereby enabling it to operate more freely in the commercial property market. The amendment was issued under the authority of the Parliamentary Secretary to the Minister for Finance and Administration. The primary objective of the Regulations is to provide the IBA with the necessary flexibility to perform its functions as defined in the Aboriginal and Torres Strait Islander Act 2005, which includes advancing the commercial and economic interests of Aboriginal persons and Torres Strait Islanders through various business activities.
Scope and Application
The Lands Acquisition Amendment Regulations 2005 (No. 2) amend the Lands Acquisition Regulations 1989 by adding the Indigenous Business Australia (IBA) to the list of authorities exempted from the compulsory acquisition powers provided by the Lands Acquisition Act 1989. This exemption is crucial for the IBA, which was established to advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples. By being exempt from the Act, the IBA gains the necessary flexibility to engage in commercial activities and manage its diverse business investments, including equity in mining joint ventures, tourism resorts, waste disposal facilities, and a portfolio of office buildings with various commercial lease arrangements. These investments are structured in complex legal forms to safeguard unrelated businesses from the failure of any single investment, often involving trusts and nominee companies. The exemption allows the IBA to operate effectively in the commercial property market, fulfilling its legislative mandate under the Aboriginal and Torres Strait Islander Act 2005 to promote Indigenous self-management and economic self-sufficiency. The Regulations provide a specific measure to support the IBA’s function without the constraints imposed by the compulsory acquisition powers of the Act.
Key Provisions
The Lands Acquisition Amendment Regulations 2005 (No. 2) fundamentally alter the operation of the Lands Acquisition Act 1989 by designating the Indigenous Business Australia (IBA) as an exempt authority under section 6 of the Act. This exemption (referenced in Schedule 1 of the Principal Regulations) ensures that the IBA will not be subject to the compulsory acquisition powers outlined in the Act, thereby allowing it the flexibility necessary to engage in commercial activities and advance the economic interests of Aboriginal and Torres Strait Islander peoples. This change is intended to enable the IBA to function effectively within the commercial property market, without the constraints that would apply if it were not exempt.
These Regulations impose specific obligations on the IBA by ensuring that it can operate as a commercial entity without the hindrance of compulsory acquisition provisions. The IBA must adhere to its legislative charter, which mandates advancing the commercial and economic interests of Aboriginal and Torres Strait Islander peoples through various business activities. This includes managing a portfolio of business assets such as equity in mining joint ventures, tourism resorts, and office buildings, all of which are structured to insulate unrelated businesses from the risks associated with any single investment. The use of trusts and nominee companies is a common practice for these purposes.
Failure to comply with the conditions set out in these Regulations could result in significant legal consequences for the IBA. While the Act does not explicitly outline penalties for breaches, non-compliance could lead to legal challenges regarding the IBA’s operations and its status as an exempt authority. Such breaches might also impact the IBA’s ability to manage its investment portfolio and fulfill its legislative obligations under the Aboriginal and Torres Strait Islander Act 2005.
The Regulations provide the IBA with the flexibility to carry out its functions, including its investment charter and its role in the Indigenous home ownership and business development programmes. The IBA is not subject to annual appropriations for its equity investment activities, which underscores the importance of its exemption status. This legislative change is designed to support the IBA’s mission of promoting Indigenous self-management and economic self-sufficiency, ensuring that it can operate effectively in a commercial environment without the constraints imposed by compulsory acquisition laws.