New directions in public finance
management in Indigenous affairs
Leon Yeatman, Mapoon Aboriginal Shire Council
Michael Limerick, ISSR (adjunct)
Mark Moran, ISSR
CRICOS Provider No 00025B
Session outline
1. Context – Why public finance management matters in Indigenous
affairs (Mark Moran)
2. The long view – Changing policy frameworks and funding modalities
in Indigenous affairs (Michael Limerick)
3. The view from the frontline – An Aboriginal organisation practitioner’s
perspective (Leon Yeatman)
4. Panel discussion of new directions in public financing and their
potential impacts
5. Questions and discussion
Mark Moran
Chair for Development Effectiveness, ISSR
Starting points…
• Public Finance Management (PFM) - the way that public sector agencies
fund representative organisations impacts their governance capability to
deliver outcomes
• Modality - administrative, financing and accountability arrangements which
enable funds to be converted into local services, governance and
developmental outcomes
• Significance of Indigenous governance to Indigenous well being and
development is well established.
• Not only a means to achieving outcomes, but an outcome in itself
– representativeness to a constituency
– cultural appropriateness
– Indigenous clients prefer and access their services more readily
– vehicles for a degree of self-government
The current situation…
• Julalikari Council Aboriginal Corporation (Tennant Creek)
• Resilient organisation with established track record
• Cross-sectoral service delivery role in the Barkly region (including
housing, aged care, night patrols, work-for-the-dole and training programs
/ delivers municipal and essential services to remote outstations).
• 2011–12 financial report acquitted against 81 different grants
(approximately 30 were carry overs from previous years)
• Corporation covers the costs of its core governance functions by charging
a small percentage administration fee from these grants, where permitted
• Also self-generates some income which it directs to self governance
• General lack of untied general-purpose funding and a multiplicity of small
and short duration grants.
1&2) Clearly defined jurisdiction either by geographical territory or
service delivery mandate
4) Funding secure for medium term (3-5 years)
7) Formal
6)
Performance
incentives
Indicators
for improved
negotiated
governance
that are within
and/orthe
service
reasonable
delivery
influence of the funded organisation
performance
13) Funding conditional on downward accountability mechanisms
What doesn’t work…
• Imposing financing frameworks and performance
measures that have not been jointly negotiated.
• Being blind to the challenges of implementation and in
building Indigenous governance capability
• Cobbling together funding for core governance from
multiple special-purpose grants.
• Building performance frameworks around outcome and
impact measures that are beyond the influence or
capability of the Indigenous organisation.
Michael Limerick
Adjunct Associate Professor, ISSR
Consultant, Limerick & Associates
A practitioner’s perspective…
The following observations are based on past involvement in:
• Administering Queensland Government Indigenous grants programs
• Administering funding and developing legislation for Indigenous councils
• Whole-of-government Indigenous policy advice (Queensland Government)
• PhD field work in three Cape York Aboriginal Councils (2006 and 2007)
• Evaluations of various government programs and initiatives:
–
Palm Island Community Company initiative (2010-11)
–
Cape York Welfare Reform Trial (2012-13)
–
Remote Service Delivery initiative (2013)
• Capacity-building work with Indigenous organisations, including grant
submission-writing
The long view…
• Pre 1970s – government and church administration of Indigenous
peoples (missions and reserves)
• 1970s to 1990s – self-determination policy
– handback of service delivery to Indigenous communities
– preference for Indigenous community organisations
– ‘community-based planning’ and ‘community capacity-building’
– Government-funded Indigenous representative organisations (ATSIC,
Aboriginal Coordinating Council (ACC), Indigenous Advisory Council (IAC), Aboriginal
Justice Advisory Committee (AJAC), Deaths in Custody Overview Committee etc)
The long view…
• 2000s – ‘Overcoming Indigenous Disadvantage’ and ‘Closing the Gap’
– frustration at persistent disadvantage (or even worsening) in Indigenous
communities (e.g. Cape York Justice Study)
– new focus on outcomes and measurement
– achieving mainstream service levels and standards
– New Public Management  competitive tendering, outsourcing
– concerns about capacity and governance problems in Indigenous
organisations
– self-determination language fades  now ‘engagement’ and ‘participation’,
‘partnerships’ and ‘shared responsibility’
– abolition of Indigenous representative bodies  now government wants
direct negotiation with families and communities (e.g. Shared
Responsibility Agreements)
– whole of government coordination challenges  negotiation tables,
Government Champions, COAG Trials, Government Business Managers,
place-based plans, Coordinators-General for remote services
Implications for Indigenous governance
• Compliance burden progressively ramped up through late 1990s and
2000s  reduces autonomy and ability to focus on service delivery
• Imperative for achieving mainstream standards  trumps preference
for Indigenous-controlled service delivery
• Focus on counting/measuring outputs  no accounting for
organisational/community capacity-building as a funded output
• Media focus on nepotism or financial mismanagement in Indigenous
organisations  greater risk aversion by bureaucrats
• Competitive tendering  favours larger non-Indigenous NGOs with
centralised back office functions and standardised systems
• Proliferation of new programs & services and external service providers
 duplication, complexity and coordination issues
 lack of local connections  demands to engage/consult local leaders
 less community ownership or agency in tackling problems
• Abolition of representative bodies  vacuum in Indigenous leadership
A Closing the Gap exemplar: RSD
• National Partnership Agreement for Remote Service Delivery 2008
• COAG decided to focus effort on 29 remote communities to improve:
– services to mainstream levels and standards (benchmarking, measurement
focus, new investments)
– coordination of service delivery (‘Single Government Interface’ (ROCs,
GBMs), Local Implementation Plans (LIPs))
– engagement with community (Local Reference Groups, negotiation of LIPs)
– governance and leadership
• Outcomes:
– more services (but quality affected by speed of rollout?)
– coordination (may have worsened due to extra services & providers?)
– engagement patchy and not sustained
– concerns about emphasis on bureaucratic process and reporting
– no improvement in community governance and capacity (focus was
crowded out by focus on enhancing services) – in fact, arguably, community
control has been further eroded
New directions (or back to the future?)
• Prime Minister’s Closing the Gap Report 2014:
Some of these National Partnerships – such as the Remote Service
Delivery National Partnership – have very complicated and detailed
reporting requirements that have diverted attention from actually
delivering better outcomes. There is too much focus on whether
bureaucratic processes have been completed and not enough focus on
delivering better services and outcomes…
There is also a need to engage Indigenous people more in solving their
own problems. We have to stop pretending that a government policy or
programme on its own can overcome Indigenous disadvantage. No
matter how well coordinated or organised they are, government
programmes alone will never close the gap. (p.4)
New directions (or back to the future?)
• The pendulum may be swinging again – new programs emphasise:
– community involvement in design & delivery
– less red tape / compliance
– more flexibility
– block and pooled funding
– funding tied to outcomes not process
• We will review these new directions shortly, but first, a different practitioner’s
perspective…
Leon Yeatman
Chief Executive Officer, Mapoon Aboriginal Shire
Council
The view from the frontline
• How have things changed since the 1990s?
– direct funding options from Federal and State governments – changes
more recently brought about by the Williams Decision challenging the role
of federal government as prescribed in the constitution – impacts on LG
– the removal of ATSIC as a failed social experiment – creation of the new
Indigenous affairs department now administered through PMC and seeking
to provide funding directly to agencies - Intent to advance self
determination and self governance
– investment in capacity development – minimal collateral options
– land tenure resolution still grappling with outcome of Mabo Decision –
Native Title becomes the new paradigm
– Aboriginal councils transitioning to shire council status
– increased focus on best practices in good governance
The view from the frontline
• How do government’s funding modalities affect Indigenous
organisations and community governance?
–
it is apparent there is a desire for the system to be as efficient and seamless as
possible – impact of policy changes, constantly have to adapt to new guidelines
–
tied grants  can’t pursue local priorities compliance requirements / red tape /
consumes organisation’s time and resources
–
annual funding cycles  planning is challenging where change is being implemented:
this can have adverse effects on the bottom line let alone the organisational structure
(can’t attract good staff etc.).
–
duplication/lack of coordination  in recent times considerable effort has gone into
correcting this issue: particularly as people with working knowledge of the process
transition from NGO into government positions
The view from the frontline
• How can Indigenous organisations exercise self-determination in the
face of this?
–
the only way to exercise any autonomy is to “game the system”
–
maintain good partnerships and relationships with government  earn autonomy,
exploit flexibility
–
economic development – land tenure reform needed to unlock capital, enable
business development and home ownership
Indigenous shire councils QLD…
• State Government Financial Aid Program (SGFA) introduced in 1984 for
the 16 Indigenous councils in Queensland
–
SGFA stands out for longevity – contributing to capacity development
–
SGFA spent on services outside of normal scope, including: housing, aged care, child care,
unprofitable council enterprises
–
Representative: elections every 4 years (compulsory voting, comparable voter turn-out
71%)
• The reporting against these grants is minimal
–
the council’s adopted budget is less and a statement that expenditure was acquitted
–
the legislative requirements of the organisation’s reporting are extensive, including an
annual report, audited statements, asset register, a 5-year corporate plan that incorporates
community engagement, a long-term asset management plan, a long-term financial
forecast, an annual budget including revenue, and an annual operational plan. Policies are
also required in the areas of debt, investment, revenue and internal audit.
• Accountability is achieved inter-governmentally, around the organisation,
not the grant.
–
Outsourced (independently audited)
–
Shared responsibility
Rewarding performance…
• Informal arrangements for rewarding performance
–
Relaxed reporting through notions of ‘earned autonomy’
–
Links to clear partnership programs
• Qld LGAs trial. Total funding pool of $33M reduced to
$4.5 million
–
$1.5 million for a performance-based (Service Delivery Fund) for
reducing operational costs and raising own-source income
–
$1.5 million for a competitive grant (Business Incentive Scheme)
–
$1.5 million in savings
• By grant application where Councils reported retrospectively against the
performance criteria. All Councils received funding, but some more than others
(serious question – rewards for dysfunction).
–
Strategic alliances between leaders – joint tasks and advocacy
–
Some support may exist among Council CEOs to be rewarded for their governance performance,
but unlikely if preceded by a funding cut
• Negotiate performance measures (within capability limits), with explicit
incentives for governance and service delivery performance
New directions in public finance
management
Evaluating the potential…
New (?) directions: community control
• Renewed emphasis on Indigenous community connections of providers:
–
Remote Jobs and Communities Program tender –
• ‘The RJCP is based on community ownership and involvement; it will encourage and
promote a collaborative, community-driven approach to conducting employment and
participation activities’;
• SC1: ‘Demonstrated connections to, or acceptance by (all) communities within a Remote
Region’ (30%)
–
Vocational Training and Employment Centres tender –
• ‘the involvement of one or more Indigenous businesses in the delivery of the VTEC is
encouraged’;
• ‘A VTEC operates with the support of the local Indigenous Community: Detail
partnerships (current or proposed) with local Aboriginal and Torres Strait Islander
community/ies and organisations that will contribute to the success of the project.’
–
Indigenous Advancement Strategy application –
• ‘Clearly state how you will enhance Indigenous participation in the design and delivery of
the activity’;
• ‘Does your project have the support of the Indigenous communities in which you
propose to operate?’
 More Indigenous organisations succeeding (or at least included in bids)
New directions: Outcome payments
• Funding based on outcomes, not mode of delivery:
–
Vocational Training and Employment Centres tender:
• ‘The unit cost is $13,500 for job seekers … Payment will be made at 26 weeks of
retention in employment… It is up to the VTEC provider to decide on the best use
of this money to achieve the 26 week employment outcome…’
–
Indigenous Advancement Strategy application:
• ‘Provide specific details on the proposed targets you expect to deliver the
outcomes against the Programme stream(s)… Note these targets will form the
basis for contract negotiations with the Commonwealth.’
–
Remote Jobs and Communities Program:
• Funding paid through Activity Payments, Job Placement Payments, Outcome
Payments (Employment Outcomes (e.g. 7, 13, 26 weeks), Education Outcomes,
Participation Outcomes)
 Potential for more flexibility, innovation & tailoring of project delivery
BUT back-ending outcome payments  transfers risk to provider  may
disadvantage Indigenous orgs with less cashflow / capacity to carry debt
 In theory, less reporting and compliance around mode of delivery
BUT confounded by bureaucratic tendency to micro-manage
New directions: Pooled funding
• Pooling of funding:
–
Remote Jobs and Communities Program – in remote regions, pooling of all funds for:
• Job Services Australia (JSA),
• Disability Employment Services (DES),
• Indigenous Employment Program (IEP) and
• Community Development Employment Projects (CDEP)
–
Indigenous Advancement Strategy:
• all Indigenous programs now consolidated in Dept of PM & Cabinet
• collapsed 150 different programs into 5 program streams with broadly defined
objectives
• applications can relate to more than one program stream (in fact, this is
encouraged)
 Scope for more holistic, community development approaches to
project design and delivery
New directions: Incentive-based funding
• Incentive-based funding
–
Indigenous Councils Service Delivery Fund:
• $1.5M quarantined from Qld Govt’s core council funding
• performance-based incentive funding where council can demonstrate it has
implemented initiatives to reduce operating costs and increase own-source
revenue
–
Forrest Review
• ‘This report recommends… that the Commonwealth Government introduce
performance-based payments into funding arrangements for land councils and
native title representative bodies. We must reward results.’
 Encouragement for innovation
BUT will increases in own-source revenue be used to justify cuts to the overall
core governance pool in the future?
Modalities that maximise autonomy
• Grants for core governance:
–
General Purpose Grants for Indigenous local governments:
• State Government Financial Aid program (Queensland)
• Financial Assistance Grants (Commonwealth)
–
Aboriginal Community Controlled Health Organisations:
• primary health care base (PHC – Base) grant
• 2011 move to single head funding agreements with 3 year terms
• Direct appropriations to Commonwealth entities:
–
Torres Strait Regional Authority
–
Wreck Bay Aboriginal Community Council (Jervis Bay Territory)
• Funding based on citizen entitlements:
–
CDEP
–
Medicare fee-for-service revenue for ACCHOs
• Performance-based grants:
–
growing use in the international development context
Escaping government dependency
• Non-government revenue streams increase autonomy:
– native title agreement revenue
– philanthropic sector
– enterprise revenue / profits
 hope for (some) Indigenous organisations
Where to now?
• Evaluate innovative funding modalities  use evidence base to
broaden and embed successful approaches in standard practice
• Encourage governments to assess impacts of funding modalities on
Indigenous governance
• Highlight the evidence that strong, accountable Indigenous governance
improves outcomes
• Capture what is already happening, especially downward accountability
mechanisms and networking
• Invest more in Indigenous governance capacity-building
– new targeted programs; AND
– built into service delivery funding modalities as a funded output