This is a short memorandum to examine the potential economic opportunities for indigenous Australians created through the native title process. The memorandum is not intended to be a legalistic account of the native title process. The intention is, that this memorandum may be read and understood by those with little or no exposure to the native title process.
Through the native title process traditional owner groups (“T/O groups”) assert native title rights and interests in land and waters. The Native Title Act 1993 (“NTA”) requires mining companies (“proponents”), governments and developers to pay compensation to traditional owner groups where their native title rights and interest will be affected by activities. These activities are known as future acts. There are two main types of agreements, Indigenous Land Use Agreements referred to ILUAs (pronounced IIL-U-WA), or, a right to negotiate agreement. A T/O group need not have to have finalised their native title claim to be entitled to enter into future act agreements.
Compensation may not only be in monetary terms, it can include business development, training and education. T/O groups may even negotiate with a proponent for preferential contracting to supply services to that proponent. Compensation may even take the form of a land swap. For example, a State government might want to expand a port in a region such as Gladstone, Queensland. To expand that port they will need to negotiate with the T/O group if their native title rights and interest are going to be effected. The T/O group must be compensated for the effect on their native title rights and interests under the NTA.
The range of compensation depends on a number of factors including:
- the proponent;
- the activity;
- the effect on the group’s native title rights and interests;
- the agreement that is ultimately negotiated; and
- the State that the T/O group is in.
Compensation can be paid as a “one off” payment in the tens, hundreds or millions of dollars, depending on the factors mentioned above. Some agreements are based on annual payments to the T/O group for the life of the project, being anything from 20 to 40 years.
A T/O group is not restricted to only having one agreement across their entire country. Agreements with proponents will usually be over a particular project area and will only bind that proponent. If another proponent wants to operate outside of that area, and the groups native title rights and interests will be effected, then the second proponent will be required to enter into negotiations with that T/O group. Depending on the region some T/O groups will have dozens of agreements for compensation with different proponents and different levels of government.
There are particular nuances in the Act, which I will not explore here. However, for present purposes, the central issue is that traditional owners groups collectively receive significant amounts of money annually through the future act regime.
It is important to note that these agreements are confidential. Because of that no one to my knowledge has placed a value on the future act regime or has properly considered the amount of overall compensation being paid to T/O groups. However, taking into consideration the extent of the energy and resource sector, the number of traditional owner groups, and the potential number of agreements both past and present it would be easy to assume that the total liabilities both paid and owing to traditional owner groups under agreements in Australia would be realistically into the billions of dollars.
Monies held in Trust
The usual requirement when negotiating an agreement is that the proponent will require that a corporate entity and trust be established before any compensation is paid. The terms of the corporate entity and trust are established by the T/O group themselves with the legal advice. Proponents do not have any input into the establishment of those bodies. Equally, once the benefit is transferred to the T/O group the proponents normally do not have a say in its distribution or use. Nor would the proponent want a say in the distribution in use, proponents need not assume the role of regulator and/or prosecutor.
The future act regime provides T/O groups a level of financial capacity. The activity in the energy and resource sector creates the environment where that financial capacity may be utilised to create economic sustainability for T/O groups. Especially when the T/O groups and the proponents operating on their country already have a pre-existing relationship. That relationship is built on the sometimes years it takes to negotiate and finalises these agreements. The opportunities that might be available should be viewed against the demands of the energy and resource sector. T/O groups should be able to utilise the benefits created from the future act regime to capitalise on the growth in the energy and resource sector.
Barrister-at-Law and RES Director