IBA_AR1415_WCAG2AA_02_FINAL accessible_single pg 8mb

ANNUAL REPORT 2014–15

Our vision is for a nation in which the First Australians are economically independent and an integral part of the economy.

Economic independence for Aboriginal and Torres Strait Islander peoples is at the heart of IBA’s vision and programs.

We want Indigenous Australians to have the same financial opportunities as other Australians. Through IBA’s programs, we attempt to remove some of the obstacles that may prevent our customers from creating wealth, accumulating assets and fulfilling their aspirations.

These programs assist Indigenous Australians to buy their own homes, own their own businesses and invest in commercial ventures that provide strong financial returns.

Cover image and internal art: photographs of John Mangu’s Tree of KnowledgeThe artist identifies himself as a Garawirritja man and lives on Elcho Island, off the coast of Arnhem Land.

As noted by the Elcho Island Arts Centre, the Tree of Knowledge is a ceremonial pole that represents the sacred fig tree that grows at Dhudupu, near First Creek on Elcho Island. Traditionally, clans would gather at the sacred fig tree for bungul (ceremony). The ceremony awakens and enlivens the spirits, guiding them home. It is a symbolic ceremony of remembrance and of the passing of traditional knowledge to younger generations.

The original artwork resides in IBA’s national office in Canberra. It was presented to CEO Chris Fry by CareerTrackers, in recognition of IBA’s commitment to the 10x10 Program, a 10‑year partnership to provide internship placements for Indigenous students.

© Indigenous Business Australia 2015. All rights reserved. No part of this report may be reproduced or transmitted by any person or entity, including internet search engines, in any form or by any means, electronic or mechanical, including photocopying (except under statutory exceptions provisions of the Australian Copyright Act 1968), recording or scanning, or used by any information storage and retrieval system without prior written permission from IBA.

Please address enquiries concerning reproduction and rights to:

Corporate Communications Manager Indigenous Business Australia PO Box 7516, Canberra BC ACT 2610

Email [email protected] | Phone 1800 107 107

ISSN 1833–945X

This report can be accessed online at iba.gov.au.

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IBA has taken all reasonable steps to ensure that the contents of this publication do not offend Aboriginal or Torres Strait Islander peoples.

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ANNUAL REPORT 2014–15 iii

CONTENTSThis report describes the operations and performance of IBA in the financial year ending 30 June 2015.

1—Overview 01

Highlights of 2014–15, key information about IBA, our history, reviews from the Chair and the CEO, and a snapshot of IBA’s performance

2—Home ownership 15

Performance of the Indigenous Home Ownership Program

3—Business ownership 39

Performance of the Business Development and Assistance Program

4—Investments 61

Performance of the Equity and Investments Program

5—Corporate governance 89

IBA’s governance framework and processes, including profiles of the IBA Board and Executive Management Team, as well as IBA’s organisational chart

6—People management 121

IBA’s workforce profile and human resources management initiatives and processes

7—Financial performance 135

Summary of IBA’s financial performance, and IBA’s audited Financial Statements for 2014–15

8—Appendices and References 195

Additional information about consultancies and outreach activities as well as a glossary and list of abbreviations, a compliance and better practice index, lists of figures and tables, and an alphabetical index

INDIGENOUS BUSINESS AUSTRALIAiv

LETTER OF TRANSMITTAL

01OVERVIEWHIGHLIGHTS 02

ABOUT IBA 04

CHAIR’S REVIEW 06

CEO’S REVIEW 08

PERFORMANCE OVERVIEW 11

INDIGENOUS BUSINESS AUSTRALIA02

HIGHLIGHTS

Events

JUL 2014 IBA hosted its seventh annual breakfast event for NAIDOC Week, on the Gold Coast (page 128)

SEP 2014 The ‘Galambany’ name was gifted to the IBA Aboriginal and Torres Strait Islander Staff Network (pages 132–133)

OCT 2014 IBA settled its first loan in Queensland for a social housing tenant on community-held land to buy the home they lived in by way of a 99‑year lease (page 24)

DEC 2014 The IBA Board welcomed a new Chair and three new members (pages 93–98)

JAN 2015 CareerTrackers honoured IBA for its commitment to the 10x10 program (pages 124–125)

MAR 2015 IBA implemented policy changes to assist more Indigenous buyers to enter the housing market (pages 19, 22, 28)

MAY 2015 IBA celebrated the 40th anniversary of the first loan granted to assist the Barratt family to buy their own home (page 37)

JUN 2015 IBA hosted a forum where Indigenous organisations came together to endorse the Indigenous Investment Principles (page 69)


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Achievements

517NEW HOME LOANS WERE APPROVED

91% OF IBA HOME LOANS WERE MADE TO FIRST HOME BUYERS

79% OF HOME LOANS WERE IN REGIONAL AND REMOTE AREAS

49NEW BUSINESS LOANS WERE APPROVED

365BUSINESSES WERE PROVIDED WITH BUSINESS ADVICE OR SUPPORT

1,375PARTICIPANTS ATTENDED INTO BUSINESS™ WORKSHOPS

885 JOBSFOR INDIGENOUS AUSTRALIANS WERE SUPPORTED BY IBA BUSINESS LOAN CUSTOMERS AND IBA’S INVESTMENTS

70%OF IBA LOAN CUSTOMERS WERE STILL IN BUSINESS AFTER THREE YEARS

24% OF IBA STAFF MEMBERS WERE INDIGENOUS

$18mWAS PROVIDED IN SALARIES, WAGES AND JOB-RELEVANT TRAINING FOR INDIGENOUS AUSTRALIANS THROUGH IBA’S INVESTMENTS

$4.8mWAS PAID FOR GOODS AND SERVICES PROCURED FROM INDIGENOUS SUPPLIERS THROUGH IBA’S INVESTMENTS


ABOUT IBAIBA is a commercially focused organisation that promotes and encourages self‑management, self‑sufficiency and economic independence for Aboriginal and Torres Strait Islander peoples.

Our vision is for a nation in which the First Australians are economically independent and an integral part of the economy.

We achieve our vision through three core programs—focusing on housing, business development, and investment—that aim to remove obstacles that may prevent Indigenous Australians from accumulating assets, creating wealth and fulfilling their aspirations.

ObjectivesTo stimulate the economic advancement of Indigenous Australians, IBA pursued three key objectives in 2014–15:

• facilitate Indigenous Australians into home ownership by providing affordable housing loans to Indigenous Australians who would generally not qualify for housing finance, including by addressing barriers such as lower incomes and savings, credit impairment and limited experience with loan repayments

• assist eligible Indigenous Australians to start up, acquire, grow or exit a successful business

• assist Indigenous Australians to achieve economic independence through direct investment and participation in commercial and joint‑venture business enterprises that produce increased financial returns and employment, training and supply chain opportunities.

StakeholdersEffective engagement with both our customers and external stakeholders fosters valuable relationships that help us deliver benefits to Indigenous Australians. IBA’s Stakeholder Engagement Strategy assists us to better direct and orient our services, gain access to new opportunities, and explore new directions and innovation while improving service to customers.

Through outreach activities, such as conference sponsorships and public appearances by IBA executives, IBA encourages actions and shares ideas that contribute to economic advancement for Indigenous Australians. The key outreach activities in 2014 –15 are summarised in the appendix on page 199.


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Legal frameworkIBA is established under the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act) and is a corporate Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

IBA resides in the portfolio of the Prime Minister and Cabinet, and is accountable to the Australian Parliament through the Minister for Indigenous Affairs, Senator the Hon. Nigel Scullion.

HistoryIBA is one of the longest standing Indigenous‑specific commercial organisations, and arguably the most successful. Originally known as the Aboriginal and Torres Strait Islander Commercial Development Corporation (CDC), it was established in March 1990 following the proclamation of the Aboriginal and Torres Strait Islander Commission Act 1989 (ATSIC Act).

In 2001, the CDC was renamed as Indigenous Business Australia through an amendment to the ATSIC Act. At that time the organisation was engaged in 19 business ventures with Indigenous organisations holding equity interests in 15 of them.

Following the abolition of the Aboriginal and Torres Strait Islander Commission in 2005, IBA’s role was expanded under the ATSI Act, to include managing the Indigenous Home Ownership Program and the Business Development and Assistance Program.

By 2009, IBA’s total asset value reached $1 billion. As of 30 June 2015, IBA’s total asset value has increased to $1.2 billion. In 2014–15, IBA delivered 517 home loans and 49 business loans and had 26 active investments, including four trusts.

CEO Chris Fry, Senator the Hon. Nigel Scullion and Chair Eddie Fry


CHAIR’S REVIEWChange, vision, futureThe drive and commitment to achieve the IBA vision requires constant attention. On joining the Board in December 2014, I challenged the organisation to think differently about how IBA can increase its impact, effectiveness, and reach—in particular, how IBA can build and leverage its asset base to dramatically increase the number and volume of loans and investments it makes for the benefit of Indigenous Australians now and into the future.

I have been pleased to see the Board, Executive Management Team and staff embrace that challenge. During the year, IBA started to put integral plans in place including:

• Indigenous Home Ownership Program reviewed its policies and amended interest rates and loan requirements to meet the changing environment

• Business Development and Assistance Program began to reorganise to better support Indigenous businesses to take advantage of the Australian Government’s new Indigenous Procurement Policy

• Equity and Investments Program examined its portfolio of investments and made responsible divestments across the range of assets in order to maximise returns. Another key focus was the move from an approach of direct to pooled (shared) investment vehicles to benefit more Indigenous Australians.

Working towards growthTo keep in step with the trend that the Indigenous population is growing at a faster rate than the non‑Indigenous population, we need a plan that aligns to this changing demographic. IBA’s functions will affect generations to come, not just the immediate one to five years, so our strategies cover both short‑ and long‑term solutions.

In 2015, we celebrated 40 years of the home loan program. It is an achievement to be proud of. The challenge now is to create a future of growth through all our programs. We need to be doing more to allow wealth to be created and passed down to generations of Indigenous Australians.


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As the planning process continues, with a new strategy to be presented next financial year, the guiding concept is to be more proactive in our work. This will include tapping into more home ownership markets, particularly in remote Australia, and partnerships with corporate businesses to generate a broader awareness of Indigenous home ownership and create procurement opportunities for Indigenous businesses. The shift in investments will deliver a set of products that enable more groups to benefit from IBA’s balance sheet.

Part of documenting our view towards the future was the development of the IBA 2015–16 Corporate Plan under the PGPA Act. We see this plan as a fluid document to be updated each year with specific actions. The IBA Board also had training on the PGPA Act, presented by Minter Ellison, to ensure that we continue to comply with our legislative requirements.

Effective 20 October 2015, I take on an additional role as Chair of the Indigenous Land Corporation (ILC) for a three‑year period. I look forward to forging even stronger links between ILC and IBA to further drive a strong economic development agenda for the benefit of Indigenous Australians.

AcknowledgmentsThe year held its share of change among the board members. I particularly thank our Deputy Chair, Anthony Ashby, for stepping up to the Acting Chair role from June to November 2014. Anthony was first appointed to the Board in 2012 and is a valued director. I look forward to continuing to benefit from his experience and insight into the organisation’s goals and directions.

The challenge now is to create a future of growth through all our programs

The Board said farewell to directors Jason Eades, Judy Hardy and Gail Reynolds‑Adamson. Their contribution and service to IBA has set the stage for our future and is appreciated.

We welcomed three new directors: Rick Allert, Glen Brennan and Shirley McPherson. Each brings diverse expertise to round out our growth strategy and direction for better outcomes for Indigenous Australians.

On behalf of the Board, I would also like to acknowledge the continued support of Senator the Hon. Nigel Scullion, Minister for Indigenous Affairs, and the Australian Government, as well as the valued members of our advisory committees.

Finally, my appreciation extends to the IBA staff members and Executive Management Team members, led by CEO Chris Fry, who passionately serve our communities around the country. I commend the hard work of all to date, and look forward to the growth and benefits IBA can provide for Australia’s future.

Eddie Fry Chair


CEO’S REVIEWAchieving results in a challenging environmentA mix of environmental and economic conditions created a vulnerable climate for home, business and investment opportunities in 2014–15.

Rising house prices hit our home loan market in terms of affordability yet we still approved 517 home loans totalling $149.6 million. Since its inception, the Indigenous Home Ownership Program has created an additional $2 billion in personal

asset value for Indigenous Australians. I am particularly pleased with the marketing efforts of our frontline staff who work one‑on‑one with Indigenous Australians to assist them to overcome barriers to home ownership.

Reflecting a difficult market, our Business Development and Assistance Program provided fewer loans—49 loans, worth a total of $18.3 million. However, the program supported 1,122 jobs through its loan customers, 614 of which were held by Indigenous Australians. We are working hard to implement strategies that can assist Indigenous Australian businesses to maximise opportunities arising from the Australian Government’s new Indigenous Procurement Policy.

Our Equity and Investments Program delivered a return on equity of 5.7 per cent in 2014–15 and 5.5 per cent per annum over the five years to 30 June 2015, and generated cash distributions of $19.6 million to IBA and its Indigenous partners, through its investments.

I have been pleased to see the positive response to, and performance of, the Indigenous Real Estate Investment Trust (I‑REIT) since its inception in 2013. The I‑REIT has increased in value and delivered strong returns to investors. It currently holds five commercial properties, is valued in excess of $87 million and seeks to provide returns to investors from a combination of income and capital growth.

Also as a result of over 18 months’ work and consultation involving key Indigenous groups and stakeholders, the Indigenous Investment Principles were endorsed. The principles lay a good foundation to empower Indigenous Australians, organisations and communities in the modern Australian economy.


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Overall, IBA returned to surplus with a total comprehensive surplus of $6.9 million in 2014–15 (from a previous year deficit of $16 million) and we remain well placed to meet operating commitments (see pages 136–139). In 2014–15, IBA had a cash operating surplus of $2.3 million.

As part of our adherence to the PGPA Act and focus on maintaining systems relating to risk management and fraud control, IBA established a cross‑program project to prepare an overarching credit policy (see page 113).

Focusing on our peopleOur accomplishments for the year are many. I am proud of what staff have done, and recognise our achievements in a year of transition. We continue to mature as an organisation and improve our engagement with customers through innovative means.

Fostering both new and current staff members in a supportive environment is important at IBA. Programs such as Harvard ManageMentor and Frontline Management Certificate IV, and the Galambany Staff Network, offer opportunities for staff to learn and develop through their careers.

Indigenous Australians are at the centre of what we do every day

In January, in recognition of IBA’s commitment to provide internship placements for Indigenous Australians, I was honoured with the gift of the artwork Tree of Knowledge by CareerTrackers (see pages 124–125). I commend the hard work of all our interns, and look forward to advancing our commitment to them over the coming years.

Looking aheadIndigenous Australians are at the centre of what we do every day. We deal with people’s dreams.

As we respond to the changing needs of our customers, variations in government policy settings and a shifting economic climate, it is vital that IBA continues to offer innovative products and focused service delivery, and to embrace a business model based on growth and commercial sustainability.

With a change in board membership midyear, including a new Chair, we are creating a new vision and strategy for IBA’s future. We have already seen results from the work done this year and we are looking forward to advancing the strategies further.


The next financial year will be another of challenge and opportunity. The Board has set a number of bold directives and we have a range of strategies under development in response to those challenges. I am confident that the impact of those strategies will be quite profound for Indigenous Australians and for IBA—better commercial loans, better investments, and better engagement with the corporate world.

The Executive Management Team and staff have been working hard on a growth plan set out by the new Board. We have recognised the challenges in demographic growth and our business trading environment—and we are responding.

Chris Fry Chief Executive Officer

IBA staff at the gala dinner for the CareerTrackers 10x10 Program in February 2015

Photo credit: Tomasz Machnik, Photographer, Flashpoint Labs—Changemaking Photography


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PERFORMANCE OVERVIEWIBA’s budget is managed through the annual portfolio budget statements of the Prime Minister and Cabinet portfolio. IBA’s outcomes and outputs, and corresponding key performance indicators, are described in the portfolio budget statements.

The portfolio budget statements identified one outcome for IBA in 2014–15: improved wealth acquisition to support the economic independence of Aboriginal and Torres Strait Islander peoples through commercial enterprise, asset acquisition, construction and access to concessional home and business loans.

The total appropriation (revenue from Government) for Outcome 1 in 2014–15 was $34 million, and the total price (operating costs) of Outcome 1 was $179 million.

Outcome 1 was delivered through three programs: Indigenous Home Ownership Program, Business Development and Assistance Program, and Equities and Investments Program.

FIGURE 1: HOW IBA’S PROGRAMS ACHIEVE ITS VISION


Indigenous Home Ownership ProgramObjective: This program aims to facilitate Indigenous Australians into home ownership by addressing barriers such as lower incomes and savings, credit impairment and limited experience with loan repayments.

The table below shows IBA’s achievements against the targets set out for the Indigenous Home Ownership Program in the 2014–15 portfolio budget statements. Notwithstanding increased house prices nationally, IBA was still able to assist Indigenous Australian families into home ownership with 517 new loans approved. (See Part 2 for more information.)

Measure Target Result Achieved

Key performance indicators

Number of loans to applicants who have an adjusted combined gross annual income of not more than 125% of IBA’s Income Amount1

80% 80% P

Number of loans to applicants who are first home buyers

90% 91% P

Number of remote Indigenous communities in which IBA is actively facilitating home ownership opportunities

12 12 P

Key program deliverables

Number of new home loans 560 517 O

Aggregate loans in the portfolio 4,505 4,471 O

Total price $29.1m $34.3m

Appropriation $10.9m $10.9m

1 The IBA Income Amount is equivalent to 100 per cent of the national average weekly male earnings, as calculated by the Australian Bureau of Statistics.

The Indigenous population is growing at a faster rate than the non-Indigenous population and is relatively youthful, with 56 per cent of Indigenous Australians aged less than 25 years


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Business Development and Assistance ProgramObjective: This program aims to assist eligible Indigenous Australians to successfully start up, acquire, grow or exit a business.

The table below shows IBA’s achievements against the targets set out for the Business Development and Assistance Program in the 2014–15 portfolio budget statements. IBA commenced a significant redevelopment of the program to achieve greater success for Indigenous Australian businesses in the future. Results for 2014–15 represented positive growth in workshop participation and jobs created, although a drop in loans approved reflected a constrained economic market. (See Part 3 for more information.)



Percentage of loan accounts that were successfully finalised through loan repayment1

75% 42% O

Percentage of loan customers still in business one year after commencing business

85% 91% P

Percentage of loan customers still in business two years after commencing business

75% 79% P

Percentage of loan customers still in business three years after commencing business

65% 70% P


Number of new IBA loans approved 80 49 O

Number of new loans facilitated with other lenders in the broader economy, including split loans

10 9 O

Number of businesses or prospective businesses provided with business advice or support

490 365 O

Number of participants that attended Into Business™ workshops

750 1,375 P

Number of Strategic Economic Development Initiatives

15 5 O

Number of Business Development Initiatives 30 24 O

Number of jobs created/supported by IBA business loan clients

500 1,122 P

Number of Indigenous people in jobs created/supported by IBA business loan clients

300 614 P

Number of active loans in the portfolio 300 277 O


Appropriation $23.4m $23.4m

1 Calculated from the number of loan payouts made by clients during the year divided by all loan closures (including payouts, write‑offs and debts waived).


Equity and Investments ProgramObjective: This program aims to assist and develop Indigenous Australians to achieve economic independence through direct investment and participation in commercial enterprises.

The table below shows IBA’s achievements against the targets set out for the Equity and Investments Program in the 2014–15 portfolio budget statements. IBA achieved its target portfolio return for the financial year and delivered returns to Indigenous partners in excess of the stated target. IBA actively pursued new investment opportunities and exited from existing investments in order to re‑use capital for further growth. (See Part 4 for more information.)



Portfolio return to IBA (budget year)1 5.4% Cash +3%

5.7% P

Portfolio return to IBA (rolling five years)2 6.5% Cash +3%

5.5% O

Number of Indigenous co‑investors supported3

25 28 P

Portfolio return to Indigenous co‑investors4 5.4% Cash +3%

6.1% P

Proportion of Indigenous jobs supported by the investment portfolio5

20% 28% P


Appropriation6 – –

1 This measure indicates portfolio return to IBA during the year. It is calculated as the after‑tax return generated by IBA’s share of the investment portfolio in the budget year, expressed as a percentage of the average value of IBA’s share of the investment portfolio during the budget year (‘portfolio value’). It excludes valuation increments/decrements and IBA’s financial investments and the interest earned thereon.

2 This measure indicates portfolio return to IBA over a rolling five‑year period (inclusive of the designated year). It is calculated as the average of the after‑tax returns generated by the investment portfolio (expressed as a percentage of portfolio value) in each of the past five budget years. It excludes valuation increments/decrements and IBA’s financial investments and the interest earned thereon.

3 Number of Indigenous investors supported includes current Indigenous co‑investors, Indigenous co‑investors to whom investments were sold during the budget year and Indigenous investors supported through advisory services via IBA’s Acquisitions Unit or Traditional Owner and Native Title Unit.

4 This measure indicates portfolio return to IBA’s Indigenous co‑investors during the year. It is calculated as Indigenous co‑investors share of the after‑tax return generated by the investment portfolio in the budget year, expressed as a percentage of the average value of Indigenous co‑investors share of the investment portfolio during the budget year.

5 Total number of Indigenous people employed by employing investment‑portfolio entities, expressed as a percentage of total workforce, measured quarterly and averaged across those quarters to account for fluctuations in staffing levels intra‑year.

6 This program does not receive government funding, but covers its operating expenses by prudently managing the investment portfolio.

02HOME OWNERSHIPOBJECTIVES 16

PERFORMANCE 16

IMPACTS AND CHALLENGES 17

PROGRAM ACHIEVEMENTS 18

LOAN PRODUCTS AND PARAMETERS 28

ASSET MANAGEMENT 31

RISK MANAGEMENT 38

OUTLOOK 38


OBJECTIVESIBA’s Indigenous Home Ownership Program facilitates increased levels of home ownership among Indigenous Australians by providing affordable home loans.

The program is targeted at first home buyers and aims to address barriers such as loan affordability, low savings, impaired credit histories and limited experience with long‑term loan commitments. The program sets interest rates, deposit requirements and other support arrangements at appropriate levels that will assist people who may otherwise not be able to enjoy home ownership.

PERFORMANCEIBA achieved all of its home ownership key performance indicators for 2014–15 yet fell just below target for its two key program deliverables (see Table 1).

IBA exceeded its lending commitment target by $3.9 million with a total commitment valued at $183.9 million for the year. However, a higher average loan amount meant that the number of loans approved was slightly under the projected target. This is consistent with performance in the previous two years.

Policy changes were implemented in March 2015 to adjust for market conditions and assist more Indigenous home buyers to enter the housing market. These changes proved to be effective in increasing interest in the home ownership market, and IBA expects their positive impacts to continue in 2015–16.

IBA approved 517 new loans enabling 1,249 Indigenous Australians to enjoy the benefits of home ownership

ANNUAL REPORT 2014–15 17

PART 2: HOME OWNERSHIP

TABLE 1: INDIGENOUS HOME OWNERSHIP PROGRAM PERFORMANCE SUMMARY, MEASURED AGAINST THE PORTFOLIO BUDGET STATEMENTS TARGETS FOR 2014–15



Number of loans to applicants who have an adjusted combined gross annual income of not more than 125% of IBA’s Income Amount1

80% 80% P

Number of loans to applicants who are first home buyers

90% 91% P

Number of remote Indigenous communities in which IBA is actively facilitating home ownership opportunities

12 12 P


Number of new home loans 560 517 O

Aggregate loans in the portfolio 4,505 4,471 O

1 The IBA Income Amount is equivalent to 100 per cent of the national average weekly male earnings, as calculated by the Australian Bureau of Statistics.

IMPACTS AND CHALLENGESAccording to the 2011 Australian Census, the Indigenous Australian home ownership participation rate rose from 26 per cent in 1971 to reach 37 per cent in 2011, but remained significantly below the participation rate of other Australian households, which was 70 per cent.

In the 40 years since the first Australian government‑financed home loan to assist an Indigenous Australian to purchase their home was approved, more than 16,000 loans have been provided. Since taking responsibility for the Indigenous Home Ownership Program in 2005, IBA has made an important contribution to increasing Indigenous Australian home ownership.

The value of home ownership to IBA’s customers is considerable. It includes both direct economic benefits, such as increases in personal wealth, and broader indirect benefits, including stability in employment, better education outcomes for children, improved health, and reduced costs to government. IBA estimates that the home


ownership program has created an additional $2 billion in personal asset value for its customers.

In the 2011 Census, there were 209,000 Indigenous households, with only 74,000 households in home ownership. To bridge the gap between Indigenous home ownership and that of the wider Australian population, approximately 65,000 Indigenous households would need to move into home ownership.

However, the Indigenous population is growing at a faster rate than the non‑Indigenous population and is relatively youthful, with 56 per cent of Indigenous Australians aged less than 25 years compared to 32 per cent of the non‑Indigenous population. This provides both opportunities and challenges.

A growing, youthful population has the potential to contribute to the productivity of the nation through participation in the workforce, which would make home ownership more achievable. A challenge for those living in remote communities is the additional barriers they experience, such as financial institutions’ lack of readiness to accept restrictive land tenure arrangements, higher construction costs and the absence of established residential property markets.

PROGRAM ACHIEVEMENTSFundingThe level of funding for new housing loans is limited to the capital available. The capital pool depends on the amount of customer repayments received by IBA, the value of loans that are discharged early, and additional capital injections.

In 2014–15, IBA received $158.9 million in revenue, comprising $134.6 million from loan repayments and early loan discharges, $23.2 million in new appropriations and $1.1 million from bank interest on funds held by IBA.

The total amount of funds committed in 2014–15 was $183.9 million, including carried‑forward commitments of $34.4 million. The total expenditure for the year was $148.7 million. An amount of $35.2 million in outstanding commitments will be carried forward to 2015–16.



LendingIBA’s target was to approve 560 new loans in 2014–15. IBA approved 517 new loans with a total value of $149.6 million. The average property purchase price was $354,100 and the average loan amount was $290,200; an increase from $340,000 and $256,150, respectively, in 2013–14. This new lending will enable 1,249 Indigenous Australians (including dependants) to enjoy the social and economic benefits of home ownership.

Depending on the customer’s circumstances, particularly where they have a higher income, IBA may provide funds under a split loan arrangement. In this case, IBA lends part of the funds needed to buy a home and the customer borrows the remaining funds from another lender. In 2014–15, 105 loans (20 per cent of the total number of loans approved by IBA) were funded under split loan arrangements. Through these arrangements, IBA effectively leveraged $26.2 million in external funding, enabling more Indigenous Australians to purchase their own homes than otherwise would have been the case.

Figure 2 shows the distribution of new loans across geographical areas, demonstrating that the majority of loans were provided in regional Australia.

First home buyersIBA’s housing loans are targeted towards Indigenous first home buyers who would not generally qualify for housing finance from other sources. In 2014–15, IBA’s performance target was to make at least 90 per cent of loans to first home buyers. IBA met this target, achieving 91 per cent of loans to first home buyers.91 per cent of

new housing loans were approved to first home buyers

Many first home buyers, particularly those living in major towns and cities with good education and employment opportunities, have sufficient income to service a mortgage. However, they may not have sufficient savings for the up‑front capital costs of purchasing a home, including a deposit, stamp duty, conveyancing and other fees.

In March 2015, IBA introduced a new loan product, Fee Finance, to assist first home buyer customers who have the earning capacity to meet housing loan repayments but do not have sufficient savings to pay all the costs associated with purchasing a home. These costs may include government stamp duty; the costs of property valuations and building and pest inspections; conveyancing costs; and mortgage registration fees. A Fee Finance loan is in addition to the customer’s property purchase loan and has different terms, including a shorter loan term (maximum ten years).


FIGURE 2: DISTRIBUTION OF NEW HOUSING LOANS, BY GEOGRAPHICAL AREA, 2014–15

Geographical area Major city Regional Remote Total

ACT Canberra 3 1 ‑ 4

NSWSydney region 14 9 ‑ 23Bourke ‑ 1 7 8Central Coast 18 7 ‑ 25Coffs Harbour 1 35 ‑ 36Dubbo ‑ 21 ‑ 21Queanbeyan 3 17 ‑ 20Tamworth ‑ 7 ‑ 7Wagga Wagga ‑ 25 ‑ 25

NTDarwin region ‑ 17 ‑ 17Alice Springs/Apatula ‑ ‑ 16 16Katherine ‑ ‑ 2 2Tennant Creek ‑ ‑ 2 2

QLDBrisbane region 31 25 ‑ 56Cairns/Cape York ‑ 24 4 28Mount Isa ‑ ‑ 2 2Rockhampton ‑ 25 ‑ 25Roma ‑ 6 1 7Townsville ‑ 14 ‑ 14

SAAdelaide region 17 7 ‑ 24Ceduna ‑ 1 1 2Port Augusta ‑ 4 ‑ 4

TASTasmania ‑ 28 ‑ 28

VICMelbourne/Victoria 5 50 ‑ 55

WAPerth region 16 34 ‑ 50Broome ‑ ‑ 9 9Derby ‑ ‑ 1 1Geraldton ‑ 4 ‑ 4Kununurra ‑ ‑ 2 2

Total 108 362 47 517 21% 70% 9%

Note: Geographical areas are based on the Australian Bureau of Statistics Australian Indigenous Geographic Classification and Accessibility/Remoteness Index of Australia.




Customer profilesThe typical IBA housing loan customer in 2014–15 was a couple with dependants, on a combined annual income of $83,000. They were most likely to purchase their first home in a non‑metropolitan area. Approximately 44 per cent of IBA’s housing loan customers were couples with dependent children. Other customers were single parents (14 per cent), couples with no dependants (24 per cent) or single people (18 per cent). The median age of customers was 31.

The IBA Income Amount is equivalent to 100 per cent of the national average weekly male earnings, as calculated by the Australian Bureau of Statistics: at 30 June 2015, the Income Amount was $79,664. In 2014–15, IBA met its performance target to provide 80 per cent of loans to applicants who have an adjusted combined gross annual income of not more than 125 per cent of the IBA Income Amount.

To further assist low‑income customers, in March 2015 IBA increased the income threshold from $35,000 to 70 per cent of the Income Amount ($55,765 at 30 June 2015) for customers accessing IBA’s reduced commencing interest rate loan of 3.0 per cent.

FIGURE 3: NEW HOUSING LOANS, BY CUSTOMER INCOME, 2014–15



Regional and remote areasIBA’s Indigenous Home Ownership Program provides Indigenous Australians in regional and remote areas access to home loan finance where they would not normally have the opportunity to borrow money to buy their own homes.

More than 79 per cent of customers purchased homes in regional and remote areas

In 2014–15, more than 79 per cent of new loans (409 loans) were approved for customers purchasing homes in regional and remote areas, while 9 per cent (47 loans) were approved for areas classified as remote or very remote.

Figure 4 shows the breakdown of housing loans approved based on the Accessibility/Remoteness Index of Australia (ARIA) classifications. ARIA is an Australian Bureau of Statistics (ABS) endorsed measure of remoteness and is determined by the road distances to the nearest ABS‑defined Urban Centres. The map in Figure 2 demonstrates the distribution across Australia.

FIGURE 4: NEW HOUSING LOANS, BY ACCESSIBILITY/REMOTENESS INDEX OF AUSTRALIA CLASSIFICATIONS, 2014–15

In 2014–15, IBA provided five housing loans and other support to assist Indigenous tenants living in remote New South Wales locations to move from rental housing, including social housing, to home ownership. These loans were the final ones to be provided through the New South Wales Remote Aboriginal Home Ownership Scheme, funded by the New South Wales Department of Family and Community Services, which will be superseded by other arrangements in 2015–16.


Emerging marketsIBA’s Indigenous Home Ownership Program prioritises applications from customers living in ‘emerging market’ communities where there are good prospects for them to achieve successful home ownership outcomes. This generally means that land tenure is suitable security for a loan, a 99‑year leasing administration system is in place, and the local community has a history of good governance and social stability.

The targeted assistance is designed to overcome barriers such as a lack of access to financial institutions and services, lower incomes, lack of access to housing loan finance, substantially elevated construction costs and an absence of residential property markets. In addition to its standard loan finance support, the assistance measures that IBA offers to emerging market applicants can include paying up‑front loan establishment and support costs, and providing grants to eligible borrowers.

In 2014–15, IBA made 25 visits to nine emerging market communities: Angurugu, Milikapiti, Milyakburra, Umbakumba and Wurrumiyanga in the Northern Territory and Hope Vale, Palm Island, Wujal Wujal and Yarrabah in Queensland. The combination of these nine emerging market communities and the three remote communities noted in the following paragraph makes up the twelve communities in which IBA facilitated home ownership opportunities in 2014–15. IBA settled its

first loan in Queensland for a social housing tenant on community‑held land to buy the home they lived in by way of a 99‑year lease

It was expected that a number of home loan applications in Yarrabah and Palm Island would have been approved in 2014–15. However, due to delays in the issue of 99‑year leases by the respective leasing entities, these were not able to be finalised. It is anticipated that they will proceed early next financial year. In 2014–15, IBA did approve three housing loans in remote Indigenous communities in Queensland classified as emerging markets. One of those loans, settled in October 2014, was the first in Queensland (Yarrabah) to enable a social housing tenant on community‑held land to buy the home they lived in by way of a 99‑year lease.

Customers transitioning to other lendersThe term of an IBA home loan is typically 32 years, although most home loan customers discharge their loans early—on average, after approximately ten years. Having established adequate equity in their homes, IBA customers often turn to other lenders when they want to trade up to a larger home to accommodate changing family circumstances.

In 2014–15, 376 customers discharged their IBA loans, up from the 349 customers in 2013–14. The majority of these customers transitioned to the mainstream finance sector to either refinance their existing home loan or upgrade to a new home.



Marketing and promotionOn a trial basis from November 2014 to 30 June 2015, IBA assigned two full‑time staff to conduct outreach activities for the Indigenous Home Ownership Program. In addition to undertaking routine promotional activities and one‑on‑one interviews, these staff members worked extensively with a range of private and public sector employers with large numbers of Indigenous employees to promote the home ownership assistance available from IBA.

The trial was very successful: 19 per cent (1,078) of all new home lending enquiries were directly attributable to outreach activities, as detailed in Figure 5. Over 800 Indigenous Australians attended these home information sessions.

The increased promotional activity resulted in IBA being featured in a number of regional radio interviews, which further raised awareness of home ownership opportunities available through IBA.

Options are currently being developed to build on the success of the initiative to date in both improving and extending the outreach activities. Total home loan enquiries grew by 5.3 per cent, demonstrating a growing interest among Indigenous Australians in home ownership.

FIGURE 5: INDIGENOUS HOME OWNERSHIP PROGRAM ENQUIRIES, BY SOURCE, 2014–15

Portfolio growthIBA’s target was to grow its housing loan portfolio to 4,505 loans. At 30 June 2015, the portfolio consisted of 4,471 active loans. However, the value of the portfolio grew by 6.5 per cent, increasing to $928.3 million.


SEE CHANGEFor many years, Kacey and Richard Leach struggled to find affordable long-term rental accommodation for their large family. They were desperate to put an end to constant moving and cramped living conditions.

The couple had approached a mainstream lender about applying for a housing loan, but ‘on paper’ their financial situation looked unappealing. After they picked up a leaflet advertising IBA’s Indigenous Home Ownership Information Sessions, the tide began to turn for their family.

Kacey says, ‘We went in [to the IBA office] … and I said “I don’t think I’m eligible for this but can you have a look?”’ Testing out their assumptions about their eligibility meant Kacey and Richard were able to secure a loan from IBA.

In 2015, the family moved into a new, seaside home. The surfboards, bikes and sports gear scattered across the yard suggest that the children love their family’s new stability and active outdoor lifestyle.

Encouraging other Indigenous Australians to test out their eligibility assumptions by attending an Indigenous Home Ownership Information Session, Kacey says: ‘Don’t sit around ruling yourself out or thinking about why it won’t work. Just have a go and talk to someone—you never know where it might lead’.



‘An IBA loan was the best thing to happen to our family’ —Kacey Leach, NSW

The Leach family enjoying their seaside access in NSW

‘An IBA loan was the best thing to happen to our family’ —Kacey Leach, NSW


LOAN PRODUCTS AND PARAMETERSIBA provides loans to Indigenous Australians so they can purchase an established residential property, construct a new home, buy land or make essential improvements to an existing home.

IBA also offers eligible customers loans for other housing‑related purposes, including home improvements or repairs, changing family circumstances, loan refinancing where the customer otherwise would likely lose their home, and property settlements.

In 2014–15, the new Fee Finance loan was introduced to assist customers who do not have sufficient savings to fund certain costs associated with purchasing their first home.

AssessmentIBA uses industry‑based loan assessment practices when considering housing loans, including factors such as the customer’s income, servicing capacity and credit history, and the value of the property being purchased. All loans are secured by a registered mortgage, protecting IBA’s substantial investment in housing loans.

Interest ratesIBA’s housing loans have varying commencing interest rates, depending on the individual customer’s circumstances and loan requirements. Interest rate settings are adjusted from time to time to assist customers enter the home ownership market while still balancing the need to preserve and grow IBA’s capital base for future home lending. The IBA Home Loan Rate is benchmarked against a range of other lenders’ standard variable interest rates for owner‑occupied properties.

In response to continuing pressure on loan affordability, historically low interest rates and heightened competition for entry‑level housing in 2014–15, IBA discounted its standard introductory interest rate by 0.5 per cent. The discount commenced on 1 March 2015 and was ongoing at 30 June 2015.



In 2014–15, 85 per cent of new IBA customers received loans at starting interest rates of 4.0 per cent or 4.5 per cent; a further 8 per cent of customers received loans at a starting interest rate of 3.0 per cent. The interest rate is capped for a minimum period of 12 months then increases by 0.5 per cent on 1 January each year until it reaches the IBA Home Loan Rate. At 30 June 2015, the IBA Home Loan Rate was 5.25 per cent, which was lower than the rates of all of the major banks.

First home buyers who obtain part of their funds from an external lending institution generally receive a starting interest rate of 4.0 per cent on their IBA loan, capped for three years. At the end of this period, the rate increases by 0.5 per cent on 1 January each year until it reaches the IBA Home Loan Rate. Customers on lower incomes (up to 70 per cent of the IBA Income Amount—$55,765 at 30 June 2015) may have a starting interest rate as low as 3.0 per cent. Figure 6 shows the number of loans approved by commencing interest rates.

At 30 June 2015, the IBA Home Loan Rate was 5.25 per cent, which was lower than all of the major banks’ loan rates

Customers purchasing homes in Indigenous communities classified as emerging markets (see page 24) receive a commencing interest rate appropriate to their income level. Customers with a family income above $35,000 and below $80,000 start at a commencing interest rate of 4.5 per cent. Customers on lower incomes start at a lower commencing interest rate, while those on incomes of $80,000 or more receive the IBA Home Loan Rate.

FIGURE 6: NEW HOUSING LOANS, BY COMMENCING INTEREST RATE, 2014–15


Loan termsHousing loan terms are usually 32 years, but may vary depending on the customer’s circumstances. Where practical, IBA sets loan terms so that a customer’s monthly loan repayment will be the maximum they can afford, taking into account their overall living expenses. As their loan progresses, many customers can make additional repayments or maintain their repayments at a higher level, enabling them to repay their loans sooner. Figure 7 shows the distribution of loan approvals for different loan terms.

FIGURE 7: NEW HOUSING LOANS, BY LOAN TERM, 2014–15

DepositsIBA removes two significant barriers to home ownership for Indigenous Australians by having lower deposit requirements than other lenders do, and not requiring customers to take out mortgage insurance.

IBA expects customers to provide the highest amounts of deposit they can reasonably afford, including any first home owner assistance they receive from their state or territory government. In 2014–15, IBA customers still borrowed, on average, 93 per cent of the funds required to purchase their home.



ASSET MANAGEMENTThrough rigorous asset management, IBA preserves its asset base which provides funds for future lending and assists customers to retain ownership of their homes. The following sections highlight some of the characteristics of IBA’s housing loan portfolio and its portfolio management practices.

Loan portfolio balancesIBA’s housing loan portfolio grew by a net amount of $56.6 million in 2014–15, bringing the total value of the portfolio to $928.3 million. Interest charged on loans during the year was $41.5 million. The value of the portfolio after accounting adjustments for recognising assets at their fair value was $636.4 million. The fair value assessment is an accounting adjustment made to reflect the value of the portfolio based on market expectations of risk and return. Figure 8 shows the growth in the portfolio value over the past ten years.

FIGURE 8: TOTAL VALUE OF HOUSING LOANS IN PORTFOLIO OVER TEN YEARS TO 2014–15


A FIRM GRIPBy their own admission, Daniel Rennie and Alex Burbury wouldn’t have described themselves as ‘financially savvy’ four years ago, when they were newly engaged. Since then, pursuing and achieving home ownership has changed that—and much more.

After a few years of planning and saving, Daniel and Alex began making enquiries into securing a housing loan. A family friend suggested the couple look into IBA’s Indigenous Home Ownership Program, which they did.

When their mortgage agreement was finalised, in 2014, the couple realised just how much buying their own home had come to mean to them. ‘We just cried and cried and cried, and we bought a bottle of champagne and cried some more’, said Alex.

‘I hope Alex and I can inspire other people to give it a crack, not to give up, and to push to create the future they want’, said Daniel. ‘There’s a lot of pride and self-respect issues amongst our mob, worrying about, “Am I asking for a handout?” But I know many Indigenous people do need that help and advice because there are cultural barriers in dealing with banks and asking for money’.

After initially looking at houses in the inner city, Daniel and Alex changed tack and decided to buy land and build a home further afield. They moved into their new home in February 2015.

‘As a side effect of this I have been able to set other goals for myself, too, like losing weight, training more and quitting smoking. And Alex is doing the same’, said Daniel.



‘So we’re building health as well as a house’—Daniel Rennie

Daniel Rennie and Alex Burbury moving into their new home in February 2015

‘So we’re building health as well as a house’—Daniel Rennie


Geographical distribution of loansThe geographical distribution of the loan portfolio by state or territory, and by regional and remote classification, is shown in Figures 9 and 10 respectively.

FIGURE 9: TOTAL HOUSING LOANS, BY STATE OR TERRITORY, 30 JUNE 2015

FIGURE 10: TOTAL HOUSING LOANS, BY ACCESSIBILITY/REMOTENESS INDEX OF AUSTRALIA CLASSIFICATIONS, 30 JUNE 2015



Loan‑to‑valuation ratioThe majority of IBA’s new customers can only contribute minimum deposits, which means that their loans have a high loan‑to‑valuation ratio (LVR).

A high percentage (86 per cent) of loans in IBA’s housing loan portfolio have a LVR of 75 per cent or more, in sharp contrast to the broader lending market which has only 32 per cent of loans in that category (a proportion of which may be investment property purchases). The weighted‑average LVR for IBA’s loan portfolio in 2014–15 was 87 per cent compared to an industry average of 61 per cent. (Industry comparisons are sourced from the Standard & Poor’s Residential Mortgage‑Backed Securities Performance Watch Report, March 2015.)

ArrearsIBA supports its customers at all stages of the process of applying for, committing to, and managing the financial impact of buying their first home.

The Indigenous Home Ownership Program has appropriate arrears management and loan after‑care arrangements that allow for early intervention and management of arrears cases. Where a customer is unable to maintain loan repayments due to unemployment, illness or other genuine financial hardship, IBA may assist by varying loan repayments, adjusting the loan term or interest rate, or agreeing to a short‑term deferment of loan repayments.

The relationship between the loan officers and the customers is maintained throughout the course of a loan. IBA’s personalised ongoing support for customers operates beyond the normal mandate of a bank or other financial institution. However, the rate of arrears in IBA’s housing loan portfolio is higher than that of other lenders, which is to be expected given the higher risk profile of IBA’s loan portfolio and IBA’s focus on low‑income first home buyers who are more susceptible to economic downturns. Figure 11 shows the comparison of IBA arrears rates to those of the broader housing loan industry.


FIGURE 11: COMPARISON OF ARREARS LOAN BALANCES OF IBA AND MAINSTREAM LENDERS, MARCH 2015

Note: Industry comparisons are sourced from the Standard & Poor’s Residential Mortgage‑Backed Securities Performance Watch Report, March 2015.

At 30 June 2015, IBA loans that were more than 30 days in arrears comprised 8.2 per cent of the total value of the loan portfolio. This compares to an industry average benchmark figure of 1.1 per cent. Loans that were more than 90 days in arrears at 30 June 2015 comprised 3.6 per cent of the total value of the loan portfolio, compared to an industry average benchmark of 0.5 per cent.

IBA’s arrears rate compares favourably to the industry benchmark for non‑conforming loans (high‑risk, non‑standard loans). The industry average of non‑conforming loans more than 90 days in arrears was 2.7 per cent, compared to 3.6 per cent of IBA loans in this category.

While IBA takes every possible step to ensure that customers have the capacity and intent to service loans, some arrears and losses are inevitable. At 30 June 2015, 123 loans (2.8 per cent) were subject to repayment arrangements, and IBA had taken possession of eight properties under mortgagee‑in‑possession arrangements. Before exercising its mortgagee powers, IBA worked extensively with each customer to ensure that they were given every possible opportunity to retain their home.

In 2014–15, IBA sold 32 properties under its mortgagee‑in‑possession powers, for a net loss of $1.8 million. This loss reflected depressed markets in the areas where the sales occurred. IBA continued to pursue repayment arrangements to recover its losses.



CELEBRATING 40 YEARSIn 1974, Len Barratt was a fireman with the Canberra Fire Brigade, earning a regular wage, and striving for a better future for his family. Len heard about the Aboriginal Loans Commission, an authority established in November 1974 to provide finance for Indigenous Australians wanting to buy their own homes.

On 27 May 1975, the Barratts became the first recipients of an Aboriginal Loans Commission loan. They used the loan to purchase their home in the Canberra suburb of Kambah.

In their Kambah home, the Barratts raised 12 children in a stable, secure environment with positive role models. Their daughter, Niki Donnelly, is now working for IBA, and raising her own family, to continue the positive cycle of asset and wealth creation for future generations.

After going through several restructures, the commission’s loan program became the Indigenous Home Ownership Program, which is now administered by IBA.

‘IBA staff are dedicated to home lending. They deal with the home loan process from start to finish’—Niki Donnelly, Canberra, ACT

Photograph that appeared in the Canberra Times, 27 May 1975


RISK MANAGEMENTIBA accepts a greater level of risk than other home lenders do, in providing loans to a high‑risk market segment. However, IBA is conscious of its fiscal obligations to maintain and grow a capital base to support future home lending and achieve the organisation’s core objective of increasing Indigenous home ownership. IBA manages risk by having prudent lending policies and processes, and employing experienced staff members to oversee lending activities. IBA adopts a flexible approach whereby each case is considered on its merits.

From a financial perspective, IBA’s loan receivables are considered riskier than those of mainstream lenders. IBA accepts a lower rate of return than mainstream lenders would accept given the same level of risk. The risk and return characteristics that IBA accepts are reflected in the fair valuation of its loan portfolio, detailed in the accompanying financial statements (see Part 7 of this annual report).

IBA’s approach to managing external risks, including changes in market conditions, involves conducting ongoing risk identification and assessment, and developing and implementing appropriate measures to minimise the occurrence and impact of risk.

OUTLOOKThe projected revenue and new appropriations will allow IBA to support an estimated 560 new home loans in 2015–16. The total home loan portfolio is expected to increase to 4,675 loans.

By providing housing loans to eligible applicants, IBA will give priority to the Australian Government’s initiatives to give Indigenous Australians in remote areas strong incentives to take up work by being mobile and relocating to stronger labour markets. IBA will also continue to give priority to applicants seeking to purchase or construct homes in remote communities.

The Australian National Audit Office is undertaking a performance audit of the Indigenous Home Ownership Program. When the report is released, IBA will consider the report’s findings and respond accordingly to the audit.

03BUSINESS OWNERSHIPOBJECTIVES 40

PERFORMANCE 40

IMPACTS AND CHALLENGES 43

BUSINESS OPPORTUNITIES 44

BUSINESS LOAN PORTFOLIO 52

RISK MANAGEMENT 59

OUTLOOK 60


OBJECTIVESThe Business Development and Assistance Program supports the development and growth of sustainable businesses to assist Indigenous Australians achieve self‑employment, job opportunities and commercial success, and provide employment opportunities for others.

As part of the program, IBA creates flexible pathways into business ownership through its Into Business™ workshops, concessional finance, pre‑ and post‑loan business support, and access to commercial banking connections.

PERFORMANCEWhile the Business Development and Assistance Program did not meet some of its targets in 2014–15, the results linked to workshop participation and the number of jobs created and supported by business loan customers well exceeded the program’s targets (see Table 2).

The program had a challenging year in 2014–15. Growth was constrained by economic conditions reducing the demand in IBA’s traditional market of small start‑up business lending. Despite this, participation in the Into Business™ workshops increased, as did the numbers of jobs created and supported.

As a result of the downturn in lending demand, IBA approved fewer loans than expected (49 rather than 80), at a total value of $18.3 million, and referred nine customers to commercial banks or joint venture partners. Growth in the portfolio was also offset by the impact of 41 loans maturing and 57 loans being written off. Of the 57 loans written off, 28 were outstanding debts for businesses which had ceased trading. This isolated action had an apparent effect on IBA’s portfolio growth and performance, as it offset new loans entering the portfolio and impacted the loan repayment rate.

IBA approved 49 business loans, worth a total of $18.3 million


PART 3: BUSINESS OWNERSHIP

TABLE 2: BUSINESS DEVELOPMENT AND ASSISTANCE PROGRAM PERFORMANCE SUMMARY, MEASURED AGAINST THE PORTFOLIO BUDGET STATEMENTS TARGETS FOR 2014–15



Percentage of loan accounts that were successfully finalised through loan repayment1

75% 42% O

Percentage of loan customers still in business one year after commencing business

85% 91% P

Percentage of loan customers still in business two years after commencing business

75% 79% P

Percentage of loan customers still in business three years after commencing business

65% 70% P


Number of new IBA loans approved 80 49 O

Number of new loans facilitated with other lenders in the broader economy, including split loans

10 9 O

Number of businesses or prospective businesses provided with business advice or support

490 365 O

Number of participants that attended Into Business™ workshops

750 1,375 P

Number of Strategic Economic Development Initiatives

15 5 O

Number of Business Development Initiatives 30 24 O

Number of jobs created/supported by IBA business loan clients

500 1,122 P

Number of Indigenous people in jobs created/supported by IBA business loan clients

300 614 P

Number of active loans in the portfolio 300 277 O

1 Calculated from the number of loan payouts made by clients during the year divided by all loan closures (including payouts, write offs, and debts waived).


The loan repayment rate has historically been presented as the ratio of loans successfully paid out relative to business exits through write‑offs in the given financial year. This calculation is easily distorted by the number of write‑offs which take effect in the year, as a business may be impaired for a number of years before write‑off criteria are satisfied. As a result, this calculation will not be a feature of the Business Development and Assistance Program key performance indicators in the future. Instead, ‘business survival’ will be the key performance indicator for portfolio performance.

Business survival rates remained steady and ahead of target, with 91 per cent of customers achieving their first year of trade, 79 per cent their second year, and 70 per cent their third. These outcomes remain ahead of those in the broader small business sector, reported by the Australian Bureau of Statistics as 76 per cent for the first year; 59 per cent the second; and 50 per cent the third (ABS Publication 8165.0, Counts of Australian Businesses, including Entries and Exits, Business

survival rates remained steady and ahead of target, with 91 per cent of customers achieving their first year of trade

June 2010 to June 2014).

The total number of Strategic Economic Development Initiatives was reduced in 2014–15, as an effect of the redirection of a share of the program’s strategic investment and general business development budget into the establishment of a new capability within the program, the Commercial Markets team.

From the start of 2015–16, the Commercial Markets team will direct more targeted strategic and business development investment into established businesses that are ready to grow through the realisation of larger commercial opportunities. This represents a sophistication of our service offering as we meet the changing expectations of the maturing Indigenous business sector.

Three new measures were introduced in the 2014–15 portfolio budget statements to demonstrate the number of businesses or prospective businesses that participated and completed an Into Business™ workshop, as well as those that participated through external partnerships. These measures each had a target of zero as a hold until the ability to track the information was fully implemented. They were not able to be tracked as a business in 2014–15, but instead as individuals, therefore have been removed. The number of participants that attended the workshops was 1,375, exceeding target by 83 per cent. From 2015–16, the measure will be a combination of other measures collectively referred to as ‘Number of entrepreneurs supported in capability development activities’.



IMPACTS AND CHALLENGESAccording to the 2011 Australian Census, of the 140,000 Indigenous Australians who were employed in 2011, 6 per cent (around 9,000) were operating businesses—a low figure compared to 15.2 per cent for non‑Indigenous Australians. The Indigenous self‑employment rate grew by only 0.3 per cent between 2001 and 2011. Indigenous businesses also tended to be located at the small and micro end of the market spectrum.

IBA realised in 2013 that relying on existing models would not be sufficient to achieve its objectives and meet the expectations of stakeholders for growth in Indigenous self‑employment. Since then, IBA’s strategies for future service delivery have emphasised innovating to find better ways to reach more customers, while providing a more effective service to meet their needs.

In 2014–15, IBA commenced a significant redevelopment of the Business Development and Assistance Program. The goal was to maximise IBA’s impact, to achieve greater success with Indigenous business growth and sustainability, and to improve our customers’ experiences and interactions with IBA.

The Australian Government’s announcement of new Indigenous procurement contract targets to commence from 2015–16 has provided further impetus for this work. In particular, it creates opportunities for IBA to provide support and engagement facilitation for Indigenous businesses wishing to access government, corporate and other supply chain or contracting opportunities.

In 2014–15, IBA launched a redevelopment project which involved establishing and recruiting for the new Commercial Markets team, to provide contract and procurement brokerage and support functions for established Indigenous businesses. This team will complement the existing IBA activity that supports new Indigenous businesses.

Other activities for the Business Development and Assistance Program in 2014–15 revolved around maintaining ongoing business lending and support functions against a backdrop of generally poorer economic conditions and a smaller pipeline of emerging Indigenous business operators. Work was also undertaken to address impaired loans within the portfolio and promote IBA’s business lending to people wishing to acquire existing businesses.


The portfolio has characteristically and historically been a lender to customers seeking to enter business with little or no business ownership experience, limited trading history, and little security to offer. While IBA’s customers achieve comparatively high levels of business success, there are also business failures which, despite interest rate relief and repayment moratoriums, can impact socially, emotionally and financially upon our customers.

Through the reorganisation of the Business Development and Assistance Program, the new direction of the program will lead to more commercial opportunities, to be developed in partnership with our customers. This is expected to lead to stronger and more commercial outcomes while supporting our less‑prepared customers to design their own pathways and providing support to ensure the best possible start to business ownership.

BUSINESS OPPORTUNITIESIn addition to providing finance and business support products, the Business Development and Assistance Program:

• identifies and supports Business Development Initiatives and Strategic Economic Development Initiatives

• assists and supports customers considering owning a small business

• provides access to expert advice for customers already in business

• assists customers to grow or modify their business.

Development initiativesBusiness Development Initiatives assist individual business owners within a region or industry, including by supporting existing business owners to build networks by participating in trade events, business conferences and industry‑specific forums.

Strategic Economic Development Initiatives aim to develop innovative, complex or collaborative projects which enable Indigenous economic development in a number of communities and in specific industry sectors.



In 2014–15, IBA funded 24 Business Development Initiatives and five Strategic Economic Development Initiatives, with a total funding expense of $1.55 million. The numbers of both types of initiative were below IBA’s targets, because funds were refocused as part of the redevelopment of the Business Development and Assistance Program. Nonetheless, these initiatives supported 108 Indigenous entrepreneurs, businesses and community organisations to expand their markets, develop their businesses and advance their economic development strategies.

The activities supported this year included:

• Indigenous Tourism Champions Program, an Indigenous tourism product development and mentoring partnership with Tourism Australia and state and territory tourism offices, with 41 businesses benefitting from this support

• Melbourne Business School MURRA Indigenous Business Master Class Program to develop high‑level business skills, business networks and partnership opportunities for selected Indigenous business owners at graduate study level, with 17 Indigenous entrepreneurs participating

• Indigenous business representation at and participation in five industry conferences and networking events, with around 50 Indigenous businesses taking part

• research into new industries, markets and commercial opportunities for the Indigenous business sector, with four studies of this nature being completed or commenced.

Into Business™ workshopsIBA offers free Into Business™ workshops for aspiring Indigenous entrepreneurs who are new to business or new to an industry. Into Business™ workshops help participants to fully investigate and research their business ideas. Even customers who have been in business for some time access the workshops to develop skills and knowledge which help their businesses.

The three one‑day, self‑paced workshops are spaced over the course of several weeks, and are held in locations around Australia, including in regional and remote areas.

Through the workshops, customers work with a business specialist to learn how to thoroughly research their business idea to determine whether it is commercially viable, and what is required to manage a business on a day‑to‑day basis. This year there were 1,375 participants, at 50 locations, in 13 regions, across all states and territories (see Figure 12).


FIGURE 12: INTO BUSINESS™ WORKSHOP PARTICIPANTS, BY REGION, 2014–15

IBA is working towards an online delivery option for Into Business™ workshops, which is expected to enhance the experience of our customers. Online delivery will enable participants to tailor their workshop content and the timing and pace of their participation to suit their individual needs, without the necessity to travel or take time out from families, studies, workplaces and businesses.

Business planning and supportIBA provides business planning and support to a range of customers, including those who are just starting out and those who are already in business. IBA can tailor its support services to meet individual business needs and provide access to expert advice, information and guidance on matters such as:

• business planning

• procedural and compliance requirements for new contracts

• tender writing and website development

• marketing and branding

• financial skills development

• cash flow management

• succession planning

• selling and/or exiting a business.



IBA also assists customers to enhance or test their business plans, through its panel of consultants. A consultant can also assist a business that may be underperforming by analysing its operations, financial information and markets, and developing strategies to resolve any issues. This year, IBA provided 483 business support services at a value of $7.1 million to 365 businesses or prospective businesses (see Figure 13).

FIGURE 13: TOTAL VALUE, NUMBER AND DISTRIBUTION OF BUSINESS SUPPORTS, BY REGIONAL OFFICE, 2014–15

INTEGRAL PART OF THE COMMUNITYIntegrity First Aid Training uses IBA’s facilities to hold its first aid courses.

This Indigenous-owned business has received various business supports from IBA, including mentoring, marketing, website design and assistance with business and sales plans.

Tim Cohen presenting to a class in IBA’s Sydney boardroom


COMPLETE CONTROLRobert Stewart established his laundry business in 1979 with the aim of achieving economic independence and creating employment opportunities for his family. Almost four decades years later, Complete Workwear Laundry Services is an award-winning company servicing the airline and manufacturing sectors, and employing more than 40 staff—including Robert’s son Jason and daughter Nicole—at its Melbourne premises.

In 2015, after 28 years working alongside her father, Nicole Stewart — a proud Taungurung woman—became a second-generation owner of Complete Workwear.

Nicole’s own tenacity and determination to achieve this was supported by IBA. In addition to pre-loan business planning support, and a loan to acquire the company, Nicole has received ongoing mentoring and advice from one of IBA’s national network of business consultants.

Nicole has already identified diversifying Complete Workwear’s client base, implementing solid business systems, and developing her staff—some of whom have been with the company for 20 years—as keys to achieving her vision for financial growth.

‘I am smart enough to realise that I can’t do everything … So I’ve appointed team leaders from amongst my staff ... people who can look after what’s happening on the factory floor … My team leaders will be going through leadership training shortly, and my staff will go through lead management training. That way I can get everyone understanding what we are trying to do as a group, not just me as the boss’.



‘It’s a challenge, and it’s about getting the business set up correctly’—Nicole Stewart, Complete Workwear Laundry Services

As a second-generation business owner, Nicole Stewart is blending tradition with a fresh vision

‘It’s a challenge, and it’s about getting the business set up correctly’—Nicole Stewart, Complete Workwear Laundry Services


Business partnershipsIBA can assist individual businesses to grow, modify and operate sustainably through assistance and partnering opportunities, both within IBA and externally.

Through our own asset and equipment leasing services, IBA assists Indigenous individuals, partnerships or organisations with the establishment, consolidation or expansion of commercially viable businesses (see Part 4 of this annual report).

Relationships with TAFE New South Wales Western Institute, Commonwealth Bank of Australia and National Australia Bank further bolster Indigenous businesses by providing access to training and banking opportunities. Discussions were advanced in 2014–15 with a few major lenders regarding the development of an overdraft product to better support our small business customers in managing their cash flows.

A services agreement with the Torres Strait Regional Authority provided support and assistance for the delivery of 12 workshops with total of 71 attendees in 2014–15. In addition, a shared agreement with the Northern Territory Government’s Department of Business facilitated five workshops in five communities across East Arnhem Land, reaching a total of 24 attendees.

During 2014–15, IBA worked with the Department of the Prime Minister and Cabinet and other central agency stakeholders to develop the Australian Government’s Indigenous Procurement Policy. The policy commenced on 1 July 2015. By 2020, the policy will allocate to Indigenous businesses 3 per cent of all Australian Government procurement contracts. This presents a substantial growth opportunity for the Indigenous business sector.

Supply Nation is a non‑profit organisation that promotes supplier diversity in Australia through the growth of the Indigenous Australian business sector. In 2014–15, IBA sponsored the Supply Nation Connect 2015 conference in Sydney and assisted 35 Indigenous Australian businesses to attend the conference in Sydney (14) or Perth (21), providing direct access to procurement experts and buyers from across the government and corporate sectors.



RESEARCH PROJECTSIBA has developed and collaborated on several research projects that seek to enhance the understanding of Indigenous economic engagement. The information collected enables IBA to better target and deliver its programs and services, resulting in better customer experiences and outcomes.

Some of the substantial projects are noted below with a particular focus on Indigenous businesses.

Understanding Indigenous businessThe Understanding Indigenous Business study was operated by IBA from 2011 to 2014. The project undertook face‑to‑face interviews of a group of first‑year IBA business loan customers in each year of the project, and re‑interviewed those customers in subsequent years.

Through this project, IBA gained an understanding of the business challenges faced by its customers, as well as their aspirations and successes. The study also sought to reveal customers’ perceptions of how being in business has made a difference to their lives, as well as the lives of their families and communities.

The project enabled IBA to improve its business lending and support services each year, to address common difficulties faced by customers.

Factors influencing Indigenous business successIn 2014–15, a study of Indigenous business success factors in urban, regional and remote areas was completed.

The study was undertaken by a group of experienced academic researchers, and substantially funded by IBA and the Australian Research Council. It commenced in 2011–12, and was the first large‑scale study using systematic analysis of the issues facing a broad range of Indigenous businesses and entrepreneurs across Australia.

The research findings highlight the diversity, complexity and vitality of the Indigenous small business sector, and improve understanding of contemporary challenges for Indigenous businesses, factors influencing their success, and potential support mechanisms.

The study was led by researchers from Charles Sturt University and the University of Technology Sydney. The report can be found at csu.edu.au/research/ilws/research/summaries/ps/determingsuccessindigenousbusiness


BUSINESS LOAN PORTFOLIOIBA offers a concessional loan product to meet Indigenous Australians’ needs for capital to start, acquire or grow businesses. Of the new loans approved in 2014–15, most were for establishing a new business or growing an existing business (see Figure 14).

FIGURE 14: NEW BUSINESS LOANS APPROVED, BY PURPOSE, 2014–15

Loan parametersIBA offers business loans of up to $2 million at concessional interest rates that are generally 2.5 per cent (per year) below the comparable rates offered by leading Australian banks. Business loans over $2 million are subject to funds availability and approval by the IBA Board. IBA responded to decreasing market interest rates by reducing its interest rates in May 2015.

Loan terms and conditions are generally consistent with private sector loans and are based on sound business principles, although IBA does not require the same level of equity holding or security cover as mainstream lenders do.

As Table 3 shows, IBA applies higher levels of interest where security coverage is lower or weaker, reflecting the additional risk that applies to lenders in less‑secure lending.



TABLE 3: BUSINESS LOAN INTEREST RATES, 30 JUNE 2015

Security type Rate

Residential property secured 3.9%

Commercial or other secured 6.0%

Partially or unsecured 6.9%

To qualify for an IBA business loan, the business must be assessed as viable and have a minimum of 50 per cent Indigenous ownership, and the current or proposed business owners must be actively involved in the management of the business operations and decision making (with the exception of family partnerships, where the management of the business may be non‑Indigenous and the beneficiary of the business Indigenous). The owner(s) must also demonstrate sufficient skill and readiness to operate the business.

Portfolio valueThe total portfolio reduced from 335 loans with a face value of $67.0 million at 30 June 2014 to 294 loans with a face value of $59.4 million at 30 June 2015 (see Figure 15). The total portfolio at 30 June 2015 is a combination of the active loan portfolio (277) and impaired loan losses (17) on which full recovery is not expected.

IBA has a provisioning for doubtful debts of $11.7 million, as shown in Figure 16. Provisioning has decreased since 2013–14, mainly due to a number of irrecoverable impaired loans being written off during 2014–15.

FIGURE 15: TOTAL BUSINESS LOAN PORTFOLIO, BY NUMBER AND VALUE, OVER FIVE YEARS TO 30 JUNE 2015


FIGURE 16: BUSINESS DEVELOPMENT AND ASSISTANCE PROGRAM PROVISION FOR DOUBTFUL DEBT, OVER FIVE YEARS TO 2015

Geographical distributionAll states and territories are represented, with businesses spread across Australia from major cities to very remote locations. The geographical distribution of the loan portfolio by state or territory, and by regional and remote classification, is shown in Figures 17 and 18 respectively.

FIGURE 17: TOTAL BUSINESS LOANS, BY STATE AND TERRITORY, NUMBER AND VALUE, 30 JUNE 2015



FIGURE 18: ACTIVE PORTFOLIO DISTRIBUTION BASED ON ABS REMOTENESS AREAS AND ARIA+ VALUES (2006), BY NUMBER AND VALUE, 30 JUNE 2015

Industry concentrationAlmost all industry groups are also represented within the portfolio. IBA’s top four industry exposures—Retail Trade; Agriculture, Forestry and Fishing; Construction; and Accommodation and Food Services—collectively make up 54 per cent of portfolio value. In comparison, mining is one of our lowest industry exposures and represents just 4 per cent of the portfolio by number of accounts (ten loans) and 5 per cent by value ($2.8 million).

FIGURE 19: ACTIVE LOAN PORTFOLIO INDUSTRY CONCENTRATION, BY NUMBER AND VALUE, 30 JUNE 2015


FRANCHISE EXPERIENCEFranchising is one of the most popular and fastest growing components of the Australian business sector. A key benefit of buying into a franchise business is that an experienced franchisor has already invested in creating and thoroughly testing the business operating model—along with marketing, supply chain and back office systems—and, through this process, developing a well-known and respected brand.

For all the benefits, however, franchising is not a ‘soft’ business option. It requires the same level of planning, time and commitment as any other business model.

IBA assisted Karen Seage to negotiate her franchise agreement for Snap Underwood, Brisbane. Along with providing her with business finance, IBA also linked Karen to an IBA business consultant for mentoring and advice.

Karen says, ‘At the end of the day if this succeeds it’s because of me and my staff, and I can pat myself on the back and say, “Wow, that’s something I wanted to achieve, and I have done that”. I love that I am an Indigenous woman who runs my own business, and I would love to see more Indigenous women in business. I want others to know that you don’t necessarily need a university education to achieve it. If you are passionate about something, good at what you do, and willing to work hard, I think that’s more important’.



‘I love that I am an Indigenous woman who runs my own business, and I would love to see more Indigenous women in business’—Karen Seage, Snap Underwood

Karen Seage is a proud Indigenous woman running her own business

‘I love that I am an Indigenous woman who runs my own business, and I would love to see more Indigenous women in business’—Karen Seage, Snap Underwood


ArrearsFigure 20 shows IBA’s total arrears discharge balance as a proportion of the total active portfolio face value, tracked against its previous four years.

An upward trend in arrears commenced in 2013, peaked in November 2014 and started to reduce by June 2015. The increasing trend was largely related to several high‑value loans which moved into arrears late in 2014 and remain unresolved. This demonstrates the effect that a small number of high‑value accounts can have on a relatively small portfolio such as IBA’s.

When considering responses to underperforming accounts as compared to major lenders, IBA chooses to carefully consider viability and turnaround solutions with the customer before seeking to act on defaults, particularly where recoverable security options are limited. This can mean that accounts take some time to work through their turnaround or recovery management strategies.

FIGURE 20: ACTIVE LOAN PORTFOLIO ARREARS, OVER FIVE YEARS TO 30 JUNE 2015



A concerted effort is made to address the underlying reasons for the occurrence of arrears. If necessary, IBA may provide business support and/or short‑term hardship relief in loan repayments to assist the customer to return the business to trading health.

IBA manages its arrears by periodic monitoring and a specialised risk management team to guide and assist strategies to address arrears or identified trading difficulties.

IBA’s debt recovery processes require reasonable effort to obtain payment and all necessary enforcement of security, provided it is cost‑effective. The principle is to ensure that the recovery process aims at full or optimum recovery of IBA’s loan. However, when a customer’s business closes, so does the income stream which IBA had supported through the provision of the loan. IBA’s ability to recover any debt from that point on can be extremely limited.

The implementation of a strategy in 2014–15 to write off or write down a number of impaired loans from failed businesses relieved several proprietors from onerous loan repayments. The strategy was also directed at reducing the number of impaired assets in the loan portfolio which were deemed irrecoverable. This resulted in a reduction in the number of impaired loan accounts and a lowering of bad debt provision levels.

RISK MANAGEMENTWhile IBA’s lending and debt recovery practices are modelled on sound commercial principles, the overall portfolio is characterised by high gearing, low security and, in many cases, customers with little experience in business operation. In addition, many accounts in IBA’s portfolio are in industry sectors which require relatively low levels of training or professional development, meaning that IBA’s customers are frequently operating in highly competitive commercial environments, such as the retail, food and construction sectors.

IBA aims to offset the risks inherent in lending to its customer base by ensuring that business proposals are commercially viable, or have the potential to become viable, and providing appropriate planning and support through the life cycle of the business. This is delivered through Into Business™ workshops; business planning and mentoring support; partnering and monitoring arrangements; hardship provisions, where difficulties arise; and support to either turn around or exit a business.


IBA also seeks to limit its exposure to losses by setting tolerances in relation to provisioning for doubtful debts, compulsory third‑party due diligence, minimum trading periods on loans greater than $1 million, and portfolio monitoring by industry. Targeted ongoing industry‑level analysis will be enhanced by IBA’s engagement of a market analyst in 2014–15.

All of these risk management activities are the subject of ongoing review and redevelopment to ensure that efficiencies are achieved and outcomes continue to minimise the potential harm arising from small business ownership risks, and the potential loss of businesses and loan capital.

OUTLOOKWhile the medium‑term economic conditions may not be generally favourable for business establishment, the next few years present a period of significant opportunity for Indigenous Australian businesses. New policies are in place to encourage the supply of goods and services by Indigenous suppliers to government—both the Australian Government and the governments of some states and territories. Indigenous businesses that are already established, or are growing or diversifying to capture these supply opportunities, will be well placed to help to meet growing demand from such purchasers.

In reflecting on its delivery of business support services and business lending, and how these products can best enhance the growth and capability of Indigenous businesses, IBA will continue to reshape and refocus the Business Development and Assistance Program. The Commercial Markets team established in 2014–15 will work with the changing needs of established and ready‑to‑grow Indigenous businesses by connecting them to larger markets and supporting them into commercial opportunities that can drive their growth.

During 2015–16, we will continue to reshape the way we work with start‑up Indigenous businesses and how we support best practice customer relationship management, business planning and design, and loan account management.

The program, particularly through the Commercial Markets team, will work proactively with the Indigenous business sector to assist customers to develop their capital and capability to respond to the best commercial opportunities for their businesses.

IBA expects this work to substantially contribute to the growth of the Indigenous business sector in coming years, helping to build the prosperity of Indigenous business owners, their employees and communities.

04INVESTMENTSOBJECTIVES 62

PERFORMANCE 62

IMPACTS 64

PROGRAM ACHIEVEMENTS 66

INVESTMENT STRATEGY 70

INVESTMENT PORTFOLIO 73

RISK MANAGEMENT 86

OUTLOOK 87


OBJECTIVESIBA’s Equity and Investments Program promotes self‑management, self‑sufficiency and economic independence for Indigenous Australians. It aims to accumulate and manage a substantial portfolio of investments which, as a whole, generates appropriate risk‑adjusted returns for IBA through income and/or capital growth.

The portfolio comprises investments which are managed or operated on a sound commercial basis and generate economic impact for Indigenous Australians via financial returns, commercial capability development, employment, training and/or procurement.

PERFORMANCEIn 2014–15, IBA actively pursued new investment opportunities, and prudently exited from existing investments in order to re‑use capital for further investments and transfer ownership to Indigenous co‑investors. The program met four out of five of its key performance indicators in 2014–15 (see Table 4).

IBA’s investment portfolio generated more than $19.6 million in distributions for IBA and its Indigenous co‑investors

The Equity and Investments Program does not receive annual budget appropriations from the Australian Government. Its operating expenses are funded entirely from returns on IBA’s investment portfolio.

IBA achieved a portfolio return of 5.7 per cent for the financial year, exceeding its target of cash plus 3 per cent (5.4 per cent). It also delivered returns to Indigenous partners of 6.1 per cent, exceeding the same target of 5.4 per cent. IBA’s average return over the previous rolling five years (5.5 per cent) was affected by underperformance in earlier years.


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TABLE 4: EQUITY AND INVESTMENTS PROGRAM PERFORMANCE SUMMARY, MEASURED AGAINST THE PORTFOLIO BUDGET STATEMENTS TARGETS FOR 2014–15



Portfolio return to IBA (budget year)1 5.4% Cash +3%

5.7% P

Portfolio return to IBA (rolling five years)2 6.5% Cash +3%

5.5% O

Number of Indigenous co‑investors supported3 25 28 P

Portfolio return to Indigenous co‑investors4 5.4% Cash +3%

6.1% P

Proportion of Indigenous jobs supported by the investment portfolio5

20% 28% P

1 This measure indicates portfolio return to IBA during the year. It is calculated as the after‑tax return generated by IBA’s share of the investment portfolio in the budget year, expressed as a percentage of the average value of IBA’s share of the investment portfolio during the budget year (‘portfolio value’). It excludes valuation increments/decrements and IBA’s financial investments and the interest earned thereon.

2 This measure indicates portfolio return to IBA over a rolling five‑year period (inclusive of the designated year). It is calculated as the average of the after‑tax returns generated by the investment portfolio (expressed as a percentage of portfolio value) in each of the past five budget years. It excludes valuation increments/decrements and IBA’s financial investments and the interest earned thereon.

3 Number of Indigenous investors supported includes current Indigenous co‑investors, Indigenous co‑investors to whom investments were sold during the budget year and Indigenous investors supported through advisory services via IBA’s Acquisitions Unit or Traditional Owner and Native Title Unit.

4 This measure indicates portfolio return to IBA’s Indigenous co‑investors during the year. It is calculated as Indigenous co‑investors share of the after‑tax return generated by the investment portfolio in the budget year, expressed as a percentage of the average value of Indigenous co‑investors share of the investment portfolio during the budget year.

5 Total number of Indigenous people employed by employing investment‑portfolio entities, expressed as a percentage of total workforce, measured quarterly and averaged across those quarters to account for fluctuations in staffing levels intra‑year.

In 2014–15, IBA’s investment program generated:

• a cash surplus of $8.85 million to IBA (after meeting program expenses). The portfolio remains well placed to deliver economic benefit for Indigenous Australians. As at 30 June 2015, IBA’s share of the investment portfolio was valued at $191.9 million across 22 direct investments, as well as four trusts.

• more than $19.6 million in distributions for IBA and its Indigenous co‑investors (including interest earned on IBA’s cash holdings). These funds will be used to pursue new investment opportunities, and to reinvest in existing investments to enable their growth and support their ongoing plans.

• broader economic outcomes, supporting 241 jobs for Indigenous Australians (who represented 28 per cent of the total workforce supported by the portfolio), with total salaries, wages and job‑relevant training costs of over $18 million. This significantly exceeds the portfolio employment target of 20 per cent. Additionally, IBA’s investments procured more than $4.8 million in goods and services from Indigenous suppliers.


IMPACTSIBA supports the creation of sustainable ventures for Indigenous Australians that provide meaningful opportunities to accumulate wealth, develop their capacity to participate in Australia’s economy, create jobs, increase training and skills development, and supply goods and services.

Economic independenceThe Equity and Investments Program aims to facilitate economic independence for Indigenous Australians by enabling their participation in a range of diverse commercial investments. When making investments, IBA:

• undertakes thorough and rigorous assessment and due diligence prior to acquiring an asset

• develops objectives in collaboration with partners

• manages the asset over the life of the investment

• adheres to strong corporate governance principles

• applies sound commercial judgment.

Employment opportunitiesMany of IBA’s investments support direct employment opportunities for Indigenous Australians because they are located in areas where many Indigenous Australians live. A total of 869 jobs were supported by IBA’s investments in 2014–15, 241 (28 per cent) for Indigenous Australians and 628 (72 per cent) for non‑Indigenous Australians.

IBA seeks to ensure that all its investments support Indigenous employees by:

• developing partnerships with Indigenous Australians and local employment service providers

• promoting inclusive and culturally aware workplaces

• implementing best‑practice Indigenous employment, retention and progression strategies

• assisting staff members who move or plan to move from Indigenous communities to pursue employment opportunities.


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Training and skills developmentIBA encourages its investee businesses and capability partners to provide job‑relevant training for their Indigenous employees. This includes formal skills development, on‑the‑job training, traineeships, apprenticeships, cadetships and mentoring. Where possible, IBA works with external partners to provide certified training that enhances the career development opportunities for employees in the long term.

Capacity developmentBy providing mentoring and training and leveraging comprehensive independent professional advice, IBA aims to ensure its Indigenous investment partners have the commercial capability to generate the best possible outcomes.

To build the investment capacity of Indigenous Australians, IBA provides a variety of targeted services, including by assisting Indigenous organisations to plan, build and manage their investments. In 2014–15, IBA took part in the development of the Indigenous Investment Principles, a new national model to assist Indigenous Australians, organisations and communities to achieve their economic potential and assist in generating intergenerational wealth.

Supply chain opportunitiesWorking with Supply Nation, Indigenous chambers of commerce, local networks and individual customers, IBA identifies Indigenous‑owned businesses that can supply the goods and services that IBA‑supported businesses need. These suppliers have proven that Indigenous businesses can provide a quality service on time at competitive prices. IBA also leverages its corporate connections to create new commercial opportunities for Indigenous businesses.

IBA’s investments procured more than $4.8 million worth of goods and services from Indigenous suppliers

Indigenous procurement will be a key priority in 2015–16, in line with the implementation of new Australian Government policies on procurement for Aboriginal and Torres Strait Islander businesses, as well as the development of IBA’s tourism and retail management companies.

IBA’s investments procured more than $4.8 million worth of goods and services from Indigenous suppliers.


PROGRAM ACHIEVEMENTSIn 2014–15, IBA’s investments delivered benefits for Indigenous Australians across the key areas of financial returns, employment, training and supply chain access. Figure 21 summarises the relationship between IBA investments and outcomes in 2014–15.

FIGURE 21: IBA INVESTMENTS, BY BENEFICIAL IMPACTS, NUMBER AND PERCENTAGE, 2014–15

Note: Does not include commercial property portfolio performance for employment, training and supply chain outcomes. Financial returns outcome only includes investments with an Indigenous partner.

Particular achievements in 2014–15 included:

• IBA’s Indigenous partners received $5.4 million in distributions from their investments in the portfolio.

• IBA’s investments provided employment for 241 Indigenous Australians, with total salaries of over $17.8 million. The proportion of employees of IBA businesses who are Indigenous was 28 per cent in 2014–15.

• Businesses backed by IBA investments procured more than $4.8 million worth of goods and services from Indigenous suppliers.


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Indigenous equityAt 30 June 2015, Indigenous partners and beneficiaries held, in aggregate, equity in the portfolio worth $88.2 million. Their proportion of total equity increased to 29.6 per cent from 26.0 per cent in 1 July 2014.

Figure 22 illustrates the long‑term trend towards increased Indigenous equity in the investment portfolio since 1 July 2010.

FIGURE 22: VALUE OF IBA EQUITY AND INDIGENOUS EQUITY IN THE INVESTMENT PORTFOLIO AND PERCENTAGE OWNED BY INDIGENOUS PARTNERS, OVER FIVE YEARS TO 30 JUNE 2015

InnovationThrough the Equity and Investments Program, IBA seeks to develop and implement new, sustainable strategies that deliver more than just direct financial returns.

IBA introduced a number of Indigenous engagement strategies in collaboration with our Indigenous partners. These strategies detail methods and accountabilities to drive Indigenous employment, training and procurement (see story on page 72).

Another innovation, the Indigenous Economic Impact Reporting tool, is used to identify strengths and weaknesses within each investment. This enhances IBA’s ability to provide targeted capacity‑building assistance, of which the impact can be measured and reported. The tool also monitors trends at an investment, sector and overall portfolio levels, informing and enhancing the overall strategic direction of the portfolio.


IBA also undertook several initiatives designed to position the investment portfolio for future growth and sustained economic impact. They included:

• developing and launching a new investment strategy, to 30 June 2018

• facilitating the development of the Indigenous Investment Principles, a community led and owned initiative that brought together more than 40 Indigenous organisations to set out a common approach to investment and governance

• launching IBA’s own tourism and retail management ventures to bring increased strategic focus, business development and Indigenous engagement capability to IBA’s tourism and supermarket assets respectively

• launching a new asset‑leasing initiative to support community development across remote Australia

• divesting its portfolio of assets that did not fit IBA’s long‑term investment strategy.

Additionally, IBA has undertaken significant work on a new pooled investment fund, to be launched in 2015–16. This will provide IBA and Indigenous co‑investors with a means of creating inter‑generational wealth via capital growth and income from a diversified investment portfolio.

Commercial capability developmentIBA has developed a structured approach to building commercial and investment capability through providing assistance in the areas of strategic planning, investment governance and investment strategy development. As well as assisting existing Indigenous investment partners to optimise their business outcomes, this builds a pipeline of investment‑ready Indigenous organisations as potential new co‑investors.

Each financial year, IBA may invest up to 5 per cent of the income (but not the capital) generated by its investment portfolio into commercial capability development initiatives. IBA has modelled its portfolio target return such that this amount can sustainably be reinvested in this way, without compromising the capital growth or liquidity needs of the portfolio.

In addition to making available its own expertise and toolkits, IBA identifies experienced professionals from the private sector and connects them with Indigenous organisations to provide mentoring, advice and other forms of support.


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In 2014–15, IBA worked with a number of organisations to deliver strategic workshops and provide structured advice regarding:

• strategy, governance and investment decision making

• building a sustainable capital base and income stream

• utilising capital and income to create investment, business and employment opportunities.

Indigenous Investment PrinciplesIn June 2015, IBA hosted a meeting in Darwin at which representatives from Traditional Owner organisations and other Indigenous organisations across Australia endorsed the first national Indigenous Investment Principles. This was the result of over 18 months’ of work and extensive consultation involving key Indigenous groups and their stakeholders and other interested parties.

More than 40 Indigenous organisations formed a working group to develop the principles. The working group received guidance from David Murray AO, who in his role as Chair of the Australian Government Future Fund had led the development of a set of similar investment principles, the international Investment Principles for Sovereign Wealth Funds (the Santiago Principles). The Santiago Principles provided a useful framework for informing the development of the Indigenous Investment Principles.

The purpose of the Indigenous Investment Principles is to facilitate greater economic resilience for Indigenous Australians, organisations and communities—empowering groups to be more active and meaningful participants in the modern Australian economy. The principles provide a critical process and framework that assists communities to:

• understand their economic circumstances

• develop a purpose and a clear investment mandate from the group

• create a robust system of governance underpinned by authority

• implement investment processes to achieve their desired outcomes.

By applying the principles, communities can meet their investment expectations and identified needs while maintaining community support for and stakeholder confidence in their investment activities.


INVESTMENT STRATEGYIn 2014–15, IBA enhanced its portfolio management model to ensure that it continues to reflect broader market conditions, the needs of current and potential Indigenous partners, and the IBA investment selection criteria.

ApproachWithin its direct investment activity IBA focuses on scalable investment structures, in which IBA can bring to bear management capability, private sector partnerships and economies of scale across larger businesses or several like businesses. IBA believes strongly that more scalable, financially viable businesses are more capable of generating economic impact via Indigenous employment, training and procurement. This reflects, for example, the approach currently being pursued in the tourism and retail sectors.

By broadening permissible asset classes to allow for investment in the listed markets, in addition to direct investments, IBA can more readily develop a portfolio with these characteristics. This in turn allows IBA to offer co‑investment in pooled and other vehicles that reflect the aspirations of many Indigenous groups to invest alongside IBA into mainstream asset classes.

FIGURE 23: IBA’S INVESTMENT LIFE CYCLE


PART 4: INVESTMENTS

Across its portfolio, IBA focuses on commerciality, rigorous investment selection and active management. Every investment is monitored closely, with the investment life cycle and exit strategy clearly articulated and reflecting economic, market, regulatory and asset specific developments.

Figure 23 illustrates the expected investment life cycle. Each stage of the investment process is underpinned by strong strategic research and economic, market, investment‑specific and demographic intelligence.

Selection processIBA’s investment selection processes ensure that capital is prudently allocated to opportunities that maximise investment returns. Table 5 sets out the key investment selection criteria.

TABLE 5: INVESTMENT SELECTION CRITERIA

Criterion Definition

Potential for financial sustainability

IBA considers the risk of capital loss from any investment activity over the short and long terms.

Potential for positive Indigenous economic impact

IBA considers the potential for the investment to deliver:• financial returns to Indigenous partners• employment opportunities• training and education outcomes• procurement of goods and services from

Indigenous‑owned businesses• corporate governance development at the

organisational level.

Promotion of portfolio diversity

The portfolio’s risk is diversified to minimise the effects of individual investment failure, industry‑specific events or regional economic downturns.

Potential to introduce specialist management

IBA considers the strength of the management arrangements, the capability of the management team and the team’s willingness to commit to Indigenous capability development and employment.

Transaction size Typically between $10 million and $25 million.

Appropriate structuring and governance

IBA seeks to protect itself against risks arising from investment activities through prudent structuring and good governance.

Potential for exit IBA’s goal is to enable Indigenous partners to acquire the capability to own and manage the investment in their own right.

Ability to leverage IBA’s unique position

IBA aims to maximise the value proposition of the service it offers.


AN ENGAGING STRATEGYIBA is implementing innovative strategies across its direct investment assets in order to drive Indigenous employment, training and procurement outcomes.

IBA and a Western Australian Indigenous organisation, Leedal, established a joint venture in 2001 to acquire the Fitzroy River Lodge in Fitzroy Crossing.

In 2012, Leedal secured the management rights to operate the lodge, creating a significant income stream to benefit its community. This coincided with a renewed focus on improving the employment and training opportunities for local Indigenous people at the business.

In 2014, Leedal invited IBA to facilitate a series of workshops with their business and community partners to develop an Indigenous Engagement Strategy.

The strategy aims to increase Indigenous employment and economic participation through attracting and retaining employees across all the Leedal businesses. As part of the strategy’s objectives, Leedal will provide training and career development, engage with local and regional Aboriginal enterprises to procure supplies and services, support community and cultural activities, and enhance the economic base of the Fitzroy Valley.

A key element of the strategy was the recruitment of an Aboriginal Liaison Officer at the Fitzroy River Lodge. This has proven to be effective way to promote employment opportunities, source new talent, provide mentoring and support to staff, and establish deeper relationships with community partners.

Leedal aims to be the largest private employer of Aboriginal people in the Fitzroy Valley


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INVESTMENT PORTFOLIOIBA’s investment portfolio comprises 22 direct investments across Australia in a range of sectors, including tourism and hotel accommodation, retail, commercial property and industrial (manufacturing, mining services and primary industries), as well as the Indigenous Real Estate Investment Trust, the Indigenous Economic Development Trust, the Asset Leasing Trust and the Dominican Indigenous Education Trust.

Geographic distributionInvestments in regional areas make up just over half of IBA’s investment portfolio, as Figure 24 shows. Figure 25 shows where IBA’s principal investments are located.

FIGURE 24: IBA’S SHARE OF INVESTMENT PORTFOLIO, BY METROPOLITAN, REGIONAL AND REMOTE AREAS, 30 JUNE 2015


FIGURE 25: PRINCIPAL INVESTMENT SITES, BY ASSET CLUSTER AND LOCATION, 30 JUNE 2015


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Market sectorsThe commercial property and tourism sectors account for a large majority of investments in IBA’s investment portfolio, as Figure 26 shows.

FIGURE 26: IBA’S SHARE INVESTMENT PORTFOLIO, BY SECTOR, 30 JUNE 2015

Commercial propertyCommercial property is a significant asset class within the portfolio. IBA uses two investment methods to support current and future Indigenous investors:

• specialised investments—for Indigenous investors with a strong desire to invest in assets that have strategic or community significance within their local area

• Indigenous Real Estate Investment Trust (I-REIT)—for wholesale Indigenous investors seeking enhanced risk‑adjusted returns via exposure to a diversified commercial property portfolio.


PART 4: INVESTMENTS

TABLE 6: COMMERCIAL PROPERTY PORTFOLIO OVERVIEW, 30 JUNE 2015

Investment Year IBA invested

Indigenous partner Highlight

Commonwealth Centre, South Hedland, WA

2000 IBN Corporation Stable income stream and capital growth from leases to local Indigenous and private‑sector organisations.

Goldfields Building, West Perth, WA

2002 Perth Noongar Foundation and the Noongar Country Economic Foundation

Stable income stream and capital growth from leases to a range of private‑sector tenants mainly associated with the resource sector.

Government Centre, Katherine, NT

2000 National Indigenous wholesale investors

Stable income stream and capital growth from a long‑term lease to an Australian Government tenant. This property formed part of the seed assets of the I‑REIT.

Hemmant, Brisbane, Qld


Stable income stream and capital growth from a long‑term lease to food distribution company RoyalCDS. This property was acquired in July 2014 and forms part of the I‑REIT.

Homestead Centre, South Hedland, WA

1993 Port Hedland Regional Aboriginal Corporation

Stable income stream and capital growth from leases to a range of private‑sector tenants.

IBA Building, Kalgoorlie, WA


Stable income stream and capital growth from a lease to the Australian Government (Kalgoorlie Indigenous Coordination Centre), which provides an important range of services to the local community. This property formed part of the seed assets of the I‑REIT.

Scarborough House, Woden, ACT


Stable income stream and capital growth from a long‑term lease to a major Australian Government department. This property formed part of the seed assets of the I‑REIT.

Stony Creek Stores, Halls Gap, Vic

2012 Victoria‑based Indigenous investor

Stable income stream and capital growth from leases to hotel and retail tenants. Also offers the opportunity to develop local Indigenous property maintenance and management expertise, providing further opportunities for revenue, employment and training.

Townsville Central, Qld


Stable income stream and capital growth from leases to private sector and government tenants. This property formed part of the seed assets of the I‑REIT.


IndustrialThe IBA industrial portfolio provides financial and non‑financial returns to Indigenous Australians through exposure to a broad range of sectors in the Australian economy. The portfolio provides significant employment and training opportunities in the mining and manufacturing sectors.

TABLE 7: INDUSTRIAL PORTFOLIO OVERVIEW, 30 JUNE 2015



Manufacturing

Consolidated Manufacturing Enterprise Pty Ltd, Inverell, NSW

2008 Nil Following a repositioning of the business, it expanded its offer to include aqua feed. It remains a substantial contributor to employment of Indigenous Australians in Inverell.

Mining and mine services

Carey Mining, Perth, WA

2013 Daniel Tucker One of the most successful 100% Indigenous–owned businesses, focused on delivering excellence for its clients and providing opportunities for Indigenous Australians through training, employment and enterprise.

Carpentaria Shipping Services Pty Ltd, Bing Bong port, NT

1995 Mawa Riinbi Pty Ltd A relatively low‑risk and profitable investment for shareholders, currently exploring growth opportunities linked to an increase in mining activity in the region.

Ngarda Civil & Mining Limited, Perth, WA

2001 Ngarda Ngarli Yarndu Foundation

Provides training and employment opportunities to Indigenous Australians in Western Australia and the Northern Territory.

Telecommunications

Message Stick Communications Pty Ltd, Sydney, NSW

2012 Michael McLeod An opportunity for IBA to support a pioneering Indigenous business in its next phase of growth, while also generating a strong commercial return on its investment.


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RetailIn December 2014, the IBA Board endorsed a new grocery retail investment strategy which focuses on acquiring a portfolio of retail assets with the potential to deliver strong economic returns to investors while providing significant opportunities for Indigenous economic development through supply chain, employment and training outcomes.

A key part of this strategy was the establishment of a subsidiary management capability to ensure that IBA has the skills and expertise required to closely control these businesses. This control is essential to enable the successful operation of these businesses in the challenging environment of commercial retail operations.

TABLE 8: RETAIL PORTFOLIO OVERVIEW, 30 JUNE 2015



Laverton Motors and Supermarket, WA

2013 Nil Laverton Motors and Supermarket has concluded its second full year trading under IBA ownership. The reopening of this vital community service provides Laverton residents with local access to fresh food and other necessities. IBA is reviewing options to exit this investment.

Leonora Supermarket and Hardware, WA

2007 Nil A key provider of local services, this business enables locals to access quality goods without having to travel more than two hours to the nearest regional centre, Kalgoorlie. IBA is reviewing options to exit this investment.

Merredin Supa IGA, WA

2015 Nil The newest addition to the retail portfolio is the Merredin Supa IGA. Located along one of Western Australia’s main highways, this business is one of the major providers and hub for the south‑west wheat belt. It will seek to provide many employment and training opportunities to local Aboriginal people.

Tennant Food Barn, Tennant Creek, NT

2008 Julalikari Council Aboriginal Corporation

IBA has partnered in this strongly performing commercial enterprise with the local Indigenous organisation Julalikari Council Aboriginal Corporation. The Tennant Food Barn continues to provide employment and training opportunities to Tennant Creek locals.


Tourism and hospitalityIn 2014–15, IBA reviewed its involvement in the tourism and hospitality sector and embarked on a significant change program aimed at creating a stronger, more efficient portfolio. Central to this new approach is the establishment of a subsidiary company to provide management, financial and other services with the aim of creating economies of scale, synergies and access to dedicated specialist resources for the benefit of our portfolio businesses.

A key part of this strategy is the creation of an Indigenous tourism brand based on the unique experiences available to travellers visiting the iconic locations that make up IBA and its partners’ tourism portfolio. Through its investment in the tourism and hospitality sector, IBA wants to change the way travellers think about and experience Indigenous Australian people and their cultures.

TABLE 9: TOURISM AND HOSPITALITY PORTFOLIO OVERVIEW, 30 JUNE 2015



Cicada Lodge, Nitmiluk National Park, NT

2013 The Jawoyn people (traditional owners of Nitmiluk Gorge)

The lodge caters for travellers looking for an experience of authentic Indigenous culture and natural Australian wilderness. The lodge complements the local Jawoyn tour business.

Cooinda Lodge, Kakadu National Park, NT

1999 Gagudju Association The Gagudju Association represents ten local clans and actively participates in governing the asset, ensuring that decisions focus on outcomes for Indigenous Australians. The asset generates income from tours, accommodation, a retail outlet and a petrol station. With peak employment numbers at approximately 100, the lodge consistently employs around 20 local Aboriginal people. It also significantly improves economic outcomes for Indigenous Australians through a 48 per cent Indigenous partner shareholding and active Indigenous board participants, and by supporting the southern region of Kakadu National Park.

Fitzroy River Lodge, Fitzroy Crossing, WA

1989 Leedal Pty Ltd Leedal uses the income from its investment in the lodge to subsidise social programs for its community members. It has developed and is currently reviewing an Indigenous Engagement Strategy which has resulted in improved employment outcomes for local Aboriginal people.

Holiday Inn Townsville, Townsville, Qld

2008 Nil The hotel is managed by InterContinental Hotels Group, which works with IBA to increase Indigenous employment and training opportunities. IBA is reviewing options to exit this investment.


PART 4: INVESTMENTS



Kakadu Crocodile Hotel, Jabiru, Kakadu National Park, NT

1999 Gagudju Association The Gagudju Association represents ten local clans and actively participates in governing the asset, ensuring that decisions focus on outcomes for Indigenous Australians. The asset has a 30 per cent Indigenous partner shareholding and active Indigenous board participants. It also supports the Jabiru region of the Kakadu National Park.

Minjerribah Camping Pty Limited, North Stradbroke Island, Qld

2012 Quandamooka Yoolooburrabee Aboriginal Corporation

IBA and the Traditional Owners have created an enterprise with strong growth potential where 50 per cent of employees are Quandamooka people.

Tjapukai Aboriginal Cultural Park, Cairns, Qld

1996 Nil Tjapukai is the largest employer of Indigenous Australians in North Queensland and has showcased the culture of the Djabugay rainforest people to more than three million visitors during the past 25 years, injecting more than $35 million into the local Indigenous community in wages, royalties, and the purchase and commissioning of art and artefacts. A redevelopment of Tjapukai was completed in April 2015.

Vibe Hotel Darwin and Adina Apartment Hotel Darwin Waterfront, Darwin, NT

2009 Wunan Foundation These hotels have strategies to attract and retain Indigenous staff members, including cultural competency training, employment targets and training programs that fast‑track talented Indigenous employees to become managers. The Wunan Foundation, based in the East Kimberley, purchased equity in the properties during 2014–15.

Wilpena Pound Resort, Wilpena Pound, SA

2012 Adnyamathanha Traditional Lands Association Inc.

IBA and the Traditional Owners are working closely with management to provide training and employment opportunities for local Indigenous Australians as part of the facility’s Indigenous Engagement Strategy. This has resulted in an average Indigenous Australian employment rate of 20 per cent (from nil at acquisition).


TrustsIndigenous Economic Development TrustThe Indigenous Economic Development Trust (IEDT) was established in September 2007 through an agreement between the Australian Government and IBA. Under the agreement, the IEDT receives property or funds for future acquisition projects that assist the Commonwealth to deliver Indigenous programs through contracted service providers. The IEDT manages these assets through sustainable lease agreements and gives priority to Indigenous individuals or organisations. It also leases assets (vehicles and equipment) to support community development programs in remote communities.

Asset Leasing TrustThe Asset Leasing Trust (ALT) was established in 2010 to provide leasing services to Indigenous businesses. It works with and supports the objectives of the IEDT. Like the IEDT, the ALT provides leasing solutions for Indigenous individuals, partnerships and organisations. The leases offer competitive terms on a range of assets (usually vehicles and equipment) to help people establish, consolidate or expand commercially viable businesses.

Remote asset leasingThrough the IEDT and ALT, IBA provides asset‑leasing solutions to Australian Government departments, Indigenous businesses and other providers of services to Indigenous communities. The IEDT provides management, construction, refurbishment and project management services to departments that require a professionally managed solution to ensure the funding they provide will be used as intended for the benefit of Indigenous Australians.

In early June 2015, IBA (through the IEDT) entered into a funding agreement with the Department of the Prime Minister and Cabinet to provide leased assets to service providers contracted to deliver the Remote Jobs and Communities Program. The program, now known as the Community Development Program, has 50 contracted service providers who are responsible for 60 identified regions in New South Wales, the Northern Territory, Queensland, South Australia and Western Australia. The funding agreement totals $19.5 million and runs for the three years to 30 June 2018.


PART 4: INVESTMENTS

Indigenous Real Estate Investment TrustThe Indigenous Real Estate Investment Trust (I‑REIT) was launched in October 2013 to give Indigenous investors the opportunity to invest in an actively managed commercial property fund alongside Indigenous Business Australia and other Indigenous organisations.

The I‑REIT aims to generate financial returns from a combination of income and capital growth by investing primarily in a portfolio of Australian commercial property in three key subsectors: office, industrial and retail. In addition to financial returns, the I‑REIT aims to generate sustainable social and economic outcomes through partnering with external stakeholders to achieve employment, training and procurement outcomes through management and operational arrangements.

As at 30 June 2015, the I‑REIT comprised five commercial property assets collectively valued in excess of $83 million, jointly owned by nine Indigenous investors and IBA.

Dominican Indigenous Education TrustThe Dominican Indigenous Education Trust supports Indigenous education through grants and scholarships. The proceeds of the sale of the All Hallows property (an old Catholic convent and school) in Bathurst are managed in a fund, and the interest is available to provide scholarships to Indigenous students in the Bathurst region of New South Wales.

IBA is the trustee and assists in administrating the trust and identifying eligible students. Since 2009, more than 150 students have been supported by the trust.


GROWTH THROUGH INNOVATIONWarialda Engineering and Welding Pty Ltd commenced trading in 1997, in the garage of its owner, Mick Davis.

Mick set his sights on inventing a cost-effective agricultural implement that would not only deliver safer working practices but also save the user considerable time and energy. The result was the Davis Starlifter—a dual-purpose tool that has revolutionised the way people work with logs and steel pickets.

Today, Warialda Engineering is recognised for a range of products and services that include design, repair, metal fabrication and steel products for agricultural and related industries. IBA provides leasing solutions for Warialda Engineering.

Located in the township of Warialda in north-west New South Wales, the company employs a team of eighteen staff, including eight Indigenous employees. The team takes pride in its workmanship and aims to ensure that every product leaving the premises meets the company’s high standards.

On behalf of Warialda Engineering, Mick Davis has received accolades at both state and national levels. The company was the first Aboriginal business admitted to the Australian Technology Showcase (in 1998) and one of the finalists in the Ethnic Business of the Year Awards in 2014.


PART 4: INVESTMENTS

‘I believe that our impressive growth was due to the business having been built on the old‑fashioned values of honesty, integrity and professionalism’—Mick Davis, Warialda Engineering

IBA leases equipment to Warialda Engineering, including the concrete truck pictured here

‘I believe that our impressive growth was due to the business having been built on the old‑fashioned values of honesty, integrity and professionalism’—Mick Davis, Warialda Engineering


RISK MANAGEMENTThe Equity and Investments Program uses a number of risk management approaches, including prudent investment selection and structuring, monitoring, and risk reporting. These approaches take into account the latest developments in risk management and governance, and were developed in conjunction with external industry specialists.

Key risk management measures include:

• clear, comprehensive investment strategies dealing with portfolio construction and risk limits

• a thorough approach to investment selection and due diligence

• regular monitoring, reporting and review

• external and internal audit in line with a detailed audit cycle

• robust valuation, financial reporting and impact measures.

The performance of each individual investment is monitored using indicators appropriate to the specific investment and may include (among others measures) return on equity, internal rate of return, debt to total capital (gearing) and, where relevant, appropriate metrics regarding employment, training and/or procurement.

The program monitors performance through a range of processes applied annually (annual reviews, valuations, budgeting and planning) and quarterly (whole‑of‑portfolio reviews), as well as monthly and weekly management reporting and analysis.


PART 4: INVESTMENTS

OUTLOOKIBA operates in a dynamic environment which is influenced not only by the investment aspirations of its current and potential Indigenous co‑investors, but also by economic, market and regulatory conditions, and developments within the investment industry.

The proportion of lands subject to agreements and determinations continues to grow, and demand for longer term, intergenerational investment from Indigenous Australian communities and organisations grows with it. As IBA has broadened and deepened its engagement with such groups around Australia, we have also observed a shift in thinking in many Indigenous communities, towards longer term, intergenerational investment.

Many organisations are looking to build more diversified investment portfolios, and are increasingly prepared to invest off‑country and through pooled investment structures (such as the I‑REIT), in addition to pursuing local direct or impact‑generating investments. This marks a significant change from prior eras, in which many groups focused solely on ‘on‑country’ investing. That focus largely resulted from a lack of capital, market access or investment experience, and saw such groups not gain the benefit of having a strong and diversified overall portfolio position within which to make allocations to local direct investments.

The Equity and Investments Program has historically had a limited client base, reflecting its focus on bespoke joint ventures. However, over the past two years we have broadened our engagement considerably, through initiatives such as participation in the Indigenous Investment Principles working group, engagement by IBA’s Traditional Owner and Sustainability Unit, and the launch of pooled investment vehicles such as the I‑REIT. IBA will continue to develop this focus in 2015–16.

Research and market commentary indicate that overall economic conditions are expected to remain subdued in 2015–16, with a continued low‑interest rate environment, and volatility in equity markets affected by ongoing economic duress in parts of Europe and an ongoing slowdown in China. Against this background, we expect competition for quality assets to remain high as investors seek higher yields relative to cash and fixed income. While we do not expect a high level of acquisition activity by IBA in the coming year, IBA will continue to seek prudent opportunities to allocate capital in 2015–16.

IBA will also continue to pursue initiatives to reposition its portfolio through diversification (via pooled fund structures), implementing better management structures for its tourism and retail portfolios, and divesting non‑core assets.


Wilpena Pound Resort in South Australia provides training and employment opportunities for local Indigenous Australians as part of the facility’s Indigenous Engagement Strategy

05CORPORATE GOVERNANCEGOVERNANCE FRAMEWORK 90

IBA BOARD 92

INTERNAL GOVERNANCE 103

EXTERNAL SCRUTINY AND REPORTING 117

REPORTS AGAINST STATUTORY REQUIREMENTS 118


GOVERNANCE FRAMEWORKIBA’s corporate governance framework (shown in Figure 27) is designed to ensure that IBA achieves its organisational objectives in a transparent, accountable and efficient way.

FIGURE 27: CORPORATE GOVERNANCE FRAMEWORK, 30 JUNE 2015

Legislative and policy framework ATSI Act and PGPA Act, other statutes and government policies

Board governance

instructions/policies

Minister

IBA objectives detailed in corporate plan

CEO and Executive Management Team manage the daily operations of IBA

Board (supported by Board Committees) sets the strategic direction for IBA

Plans/strategies CEIs Procedures

Note: ATSI Act = Aboriginal and Torres Strait Islander Act 2005, CEIs = Chief Executive Instructions, CEO = Chief Executive Officer, PGPA Act = Public Governance, Performance and Accountability Act 2013.

LegislationIBA is established under the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act), which sets out the functions and powers of IBA. IBA’s legislated purpose is to:

• assist and enhance Aboriginal and Torres Strait Islander self‑management and economic self‑sufficiency

• advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples by accumulating and using a substantial capital asset for their benefit.


PART 5: CORPORATE GOVERNANCE

IBA is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). IBA has established effective controls to ensure compliance with the PGPA Act, which regulates the governance, performance and accountability of, and the use and management of public resources by, Commonwealth entities. The IBA Board is the accountable authority of IBA under the PGPA Act.

This annual report complies with a rule made under the PGPA Act which directs corporate Commonwealth entities to address the requirements of the Commonwealth Authorities (Annual Reporting) Orders 2011. The Finance Minister did not grant an exemption to IBA from any requirements of those orders in 2014–15.

Budget frameworkIBA’s budget is managed through the annual portfolio budget statements of the Prime Minister and Cabinet portfolio. IBA’s budget obligation is to deliver one outcome: improved wealth acquisition to support the economic independence of Aboriginal and Torres Strait Islander peoples through commercial enterprise, asset acquisition, construction, and access to concessional home and business loans.

The portfolio budget statements set out targets and other measures to assess IBA’s performance in delivering that outcome. For details of performance measures in 2014–15, see the performance overview in Part 1 and the program performance summaries in parts 2, 3 and 4 of this annual report.

Ministerial directionsThe minister responsible for IBA in 2014–15 was Senator the Hon. Nigel Scullion, Minister for Indigenous Affairs. Under section 151 of the ATSI Act, the responsible Minister is empowered to make directions with which IBA must comply. No ministerial directions were made during the reporting period.

Australian Government policy ordersIBA must comply with general government policies, unless exempted. In 2014–15, there were no general government policy orders issued to IBA under the PGPA Act.

Accountable Authority InstructionsDuring 2014–15, the IBA Board approved Accountable Authority Instructions (referred to by IBA as Board Governance Instructions) which give effect to the Board’s responsibilities under the PGPA Act and related legislation.


Corporate planThe Public Governance, Performance and Accountability Act 2013 (PGPA Act) requires Commonwealth entities to prepare a corporate plan. The corporate plan is the principal planning document of the organisation, and sits alongside the portfolio budget statements as a key mechanism for accountability to the parliament and the public. The corporate plan must include appropriate measures, targets and assessments to measure performance.

The IBA 2015–16 Corporate Plan, for the period 2015–16 to 2018–19, is published at iba.gov.au. It replaces the IBA 2014–16 Corporate Plan.

IBA BOARDRoleIt is the responsibility of the IBA Board, subject to any direction from the Minister under section 151 of the ATSI Act, to ensure the proper and efficient performance of the functions of IBA and to determine the policy of IBA with respect to any matter. The Board must also prepare a corporate plan and appoint the Chief Executive Officer (CEO).

The Board is accountable to the Minister for IBA’s performance, and strives to maintain a strong, positive relationship with the Minister. The Board is responsible for keeping the Minister informed of IBA’s activities and consulting the Minister about significant decisions, consistent with longstanding government practice. As required by section 158 of the ATSI Act, the Minister also consults IBA about board appointees when there is, or is expected to be, a vacancy.



The Board has adopted a governance charter with the following four objectives:

• establish and disclose the respective roles and responsibilities of the Board and IBA management

• efficiently and effectively exercise key functions, including ethical and responsible decision making

• exercise sound governance processes to facilitate achievement of IBA objectives

• always strive for continuous improvement in the Board’s processes.

In 2014–15, the Board held six scheduled meetings and six out‑of‑session meetings. Details of attendance at meetings of the Board and its committees are in Table 11.

CompositionIn accordance with section 157 of the ATSI Act, the Minister must appoint the Board, which consists of a Chair, a Deputy Chair and seven directors. The Act also details the following requirements for directors:

• the Chair may be either part‑time or full‑time; other directors are to be part‑time

• the Chair and at least four other board members must be of Aboriginal or Torres Strait Islander descent

• each director has experience in either

– industry, commerce or finance; or

– Aboriginal or Torres Strait Islander community life or enterprises.

The Board comprises members with extensive and varied expertise. All board members are non‑executive directors.

During 2014–15, the terms of three board members expired and four new members, including a new Chair, joined the Board. At 30 June 2015, six of the nine board members identified themselves as being of Aboriginal or Torres Strait Islander descent, and four of the board members were women.


Board profiles

Directors at 30 June 2015

EDWARD (EDDIE) FRYChair

Appointed 1 December 2014 to 30 November 2017

Eddie Fry has extensive experience within the Australian resource sector and is a specialist in Indigenous and native title issues. He holds a Diploma in Business Management from the University of South Australia and is a graduate of the International Lead and Zinc Study Group.

Based in Adelaide, Eddie is a former director and a retained consultant of TNG Ltd, an Australian resource company focused on the exploration, evaluation and development of a multicommodity resource portfolio in the Northern Territory and Western Australia. He is a member of the development team for the TNG Ltd Mount Peake project.

Eddie is an executive director of Gimbulki Ltd, a native title land access company he established in 2002; Chair of the Indigenous Advisory Board at Transfield Services (Australia) Pty Ltd; and Deputy Chair of the Aboriginal Foundation of South Australia Inc.

Eddie held senior executive roles with Normandy Mining Ltd, where he established the company’s Traditional Owner policy. He was also involved with the Aboriginal and Torres Strait Islander Commission, Aboriginal Development Commission and Department of Aviation.

Eddie is a Dagoman‑Wardaman man from the Katherine region in the Northern Territory.

ANTHONY ASHBYDeputy Chair

Appointed 22 October 2012 to 21 October 2015; appointed Deputy Chair 1 December 2013 to 30 November 2016

Finance and Investment Committee member

Remuneration and Nomination Committee member

Anthony is a Chartered Accountant and Registered Company Auditor. He holds a Bachelor of Commerce from the University of New South Wales and a Certificate of Public Practice from Chartered Accountants Australia and New Zealand.

Anthony’s other current board roles include directorships of the National Centre of Indigenous Excellence Ltd and the NSW Aboriginal Housing Office. Anthony is also an ex‑officio member of the Supply Nation Audit and Risk Committee.

Anthony and his wife Vanessa have operated their own public accounting practice since 2004, providing a mix of taxation, assurance, accounting and consultancy services to their client base.

Anthony is a Gamilaraay‑Yuwaalaraay man from north‑western New South Wales.



RICHARD (RICK) ALLERT AODirector


Audit Committee member


Rick Allert is a chartered accountant with many years of experience in the corporate sector. He is a director of Genesee and Wyoming Inc. and its Australian subsidiary, Genesee and Wyoming Australia Pty Ltd; and a director of Kakadu Tourism (GLC) Pty Ltd and Kakadu Tourism (GCH) Pty Ltd, as well as Chair of the James Morrison Academy of Music Pty Ltd.

Rick’s previous appointments include chairing of AXA Asia Pacific Holdings Limited, Tourism Australia, Coles Myer Ltd and Coles Group Limited, Southcorp Limited, AustralAsia Railway Corporation, Voyages Hotels and Resorts Pty Ltd, and the Aboriginal Foundation of South Australia Inc.

In 2011, Rick was the recipient of the Ernst & Young Champion of Entrepreneurship Award, Central Region, for his long record of outstanding entrepreneurial achievement and contribution to the community.

PATRICIA (TRISH) ANGUS PSMDirector




Trish Angus is a Jawoyn woman from Katherine in the Northern Territory. She has experience and specialist knowledge in strategic policy, legislation, reporting and program and project development, along with operational and customer support in housing.

Trish held senior executive public sector positions in the human services areas of health, housing, local government and community services for more than 20 years. She has experience of working in the Australian Defence Force and community‑controlled organisations, and extensive governance experience, including board and committee memberships across a range of sectors.

Trish holds a Masters of Tropical/Public Health and has completed a public sector Executive Development Program and the Executive Fellows Program of the Australia and New Zealand School of Government.

She is a director of CareFlight and a member of the Top End Hospital Network Governing Council, the Charles Darwin University Vice‑Chancellor’s Indigenous Advisory Council, and the Northern Territory Medicare Local Community Health Committee.


GLEN BRENNAN PSMDirector



Glen Brennan is a Gomeroi man from Narrabri in north‑western New South Wales and has a diverse background incorporating the banking and government sectors, as well as private enterprise. Glen holds a Master of Business Administration from Melbourne Business School and has a passion for supporting Indigenous entrepreneurs.

Glen brings to the Board his corporate experience in Indigenous engagement, finance and governance as well as his practical experience as an Indigenous business owner. Glen has won many accolades, including a Queen’s Birthday Public Service Medal and a National Australia Day Council Medal, and was named in the top 100 Smartest and Most Innovative Australians by The Bulletin magazine in 2003.

Based in Melbourne, Glen is currently Co‑Chair of the Aboriginal Employment Strategy; a director of the Australian Indigenous Chamber of Commerce; and Chairman of 4 Mile Ventures Pty Ltd, a privately owned and operated Indigenous agricultural company.

SHIRLEY MCPHERSONDirector



Shirley McPherson is a Yamatji and Nyoongar woman from the Perth and Murchison regions of Western Australia. She has experience in program delivery and business development at the regional, national and international levels of government.

Shirley is a chartered accountant and has held senior positions in the private, government and university sectors. She is currently Western Australia State Manager of AFL SportsReady.

Shirley has been a consultant to the mining industry in negotiating land use agreements in Western Australia and held roles as Group Manager of Indigenous Strategy and Business with Leighton Contractors Pty Ltd and a member of the Australian Government delegation to the United Nations Permanent Forum on Indigenous Issues.

Her previous board appointments included Chair of Ngarda Civil and Mining Pty Ltd (2011–2013) and the Indigenous Land Corporation (2001–2011), and board member of McArthur River Mining Community Benefits Trust (2009–2014).



PETER THOMASDirector

First appointed 24 September 2007; reappointed 5 October 2013 to 4 October 2016

Finance and Investment Committee Chair

Remuneration and Nomination Committee member

Peter Thomas brings years of commercial experience to the Board, together with a commitment to advancing Indigenous business and economic self‑sufficiency.

Based in Sydney, Peter is a director of TFG International Pty Ltd, a consulting and advisory firm offering high‑level strategic advice to the public and private sectors. Peter has a Bachelor of Commerce degree and is a Fellow of the Institute of Chartered Accountants. He was a partner at KPMG, one of Australia’s four largest accounting firms, for almost 25 years.

Peter is a director of Voyages Indigenous Tourism Australia, the Foundation for Alcohol Research and Education and the Australian Solar Institute, as well as a number of private sector companies. He serves as director on a pro bono basis for three not‑for‑profit organisations.

CLAIRE WOODLEYDirector

Appointed 22 October 2012 to 21 October 2015

Audit Committee member (to December 2014)


Claire Woodley’s diverse background includes experience in the banking sector, as well as clinical and managerial experience in the delivery of public mental health services. She has a passion for driving equal access to opportunity across the community, with a specific interest in providing opportunities for enablement for Indigenous people.

Claire brings to the Board her broad business banking experience and her corporate experience in governance, risk management, strategic planning, policy development, business re‑engineering, and project and program management. She also has experience in project portfolio governance, including risk and quality oversight of the delivery of global change programs.

Claire has formal qualifications in occupational therapy, psychology and project management. She is also a Graduate Member of the Australian Institute of Company Directors.


NAREEN YOUNGDirector

Appointed 21 June 2013 to 20 June 2016

Audit Committee member (to December 2014)


Nareen Young is a descendant of Aboriginal people of New South Wales. She has worked in leadership positions within the area of employment diversity for nearly fifteen years and is widely credited with identifying many new concepts of workplace and business diversity thought and practice in Australia.

Nareen has presented and published widely on employment diversity matters and has qualifications in education and employment law.

In 2012, Nareen was named by the Australian Financial Review and Westpac Group as one of Australia’s 100 Women of Influence and the most influential Australian woman in the diversity category. She was also named one of the Twenty Most Influential Female Voices of 2012 by Daily Life.

Nareen is Chairperson of Groundswell Arts NSW and a non‑executive director of the Institute of Cultural Diversity.

Outgoing directors

JASON EADESDirector

First appointed 19 July 2011 to 18 July 2014; Acting appointment 19 July to 18 October 2014

JUDY HARDYDirector

First appointed 9 August 2004 to 31 August 2014; Acting appointment 1 September to 30 November 2014

GAIL REYNOLDS- ADAMSONDirector

First appointed 10 May 2006 to 31 August 2014; Acting appointment 1 September to 30 November 2014



Ethical standardsThe Board Governance Charter includes the Code of Conduct for Directors, and guidelines for dealing with directors’ conflicts of interest and material personal interests as required.

Development and reviewIBA provides formal induction for new board members, including a meeting with the Chair, CEO and Executive Management Team. New members are provided with the Director’s Induction Manual, which includes the Board Governance Charter.

The Board also conducted two training sessions during the year, covering:

• the PGPA Act and directors’ duties, presented by Minter Ellison in July 2014

• board governance, presented by a consultant from the Australian Institute of Company Directors in December 2014.

An independent review of the Board’s performance was conducted in December 2014. The Board considered the review report and implemented a number of recommendations to improve the operation and management of the Board.

Related entity transactionsUnder section 15 of the Commonwealth Authorities (Annual Reporting) Orders 2011, IBA is required to report any related entity transactions. Note 16 of the Financial Statements details loans and other transactions involving directors or director‑related entities. This part of the annual report provides details of transactions from which a director received a benefit during the year, and the decision‑making process of the Board.

Related entity transactions in 2014–15 are shown in Table 10. In all cases, the decision‑making process was independent of the Board. It was delegated to an IBA staff member in accordance with specified policies and procedures.


TABLE 10: VALUE OF SERVICES AND NUMBER OF TRANSACTIONS PROVIDED TO DIRECTORS, 2014–15

Director name and interest Type of transaction Total value Transactions

Glen Brennan, 50% shareholder and director of 4 Mile Ventures Pty Ltd

Business support consulting advice

$23,868 3

Jason Eades, Chief Executive Officer of Pricewaterhouse Coopers Indigenous Consulting Pty Ltd

Professional services

$10,000 1

Gail Reynolds‑Adamson Business support consulting advice

$26,383 1

In addition, two loans were provided to 4 Mile Ventures Pty Ltd from within the Business Development and Assistance Program on our standard commercial terms.

RemunerationIBA’s directors are entitled to remuneration and allowances. Details of directors’ remuneration and allowances are set out in the Remuneration Tribunal Determinations 2013/16 and 2014/08 as amended from time to time.

Access to information and outside adviceDirectors have access to all information necessary—including previous agenda papers—to help them perform their duties. Directors can obtain independent professional advice if they believe it is necessary to fulfil their due diligence responsibilities, subject to the Chair’s authorisation. Where the Chair wishes to obtain independent advice, two other directors must approve the request.

Indemnity and insuranceIBA’s directors’ and officers’ liability insurance cover is provided through Comcover, the Australian Government’s self‑managed fund. IBA renewed its insurance coverage in 2014–15 to a level appropriate for its operations.



CommitteesThree committees assist the Board to effectively exercise its functions: the Audit Committee, the Finance and Investment Committee, and the Remuneration and Nomination Committee. A charter details each committee’s constitution, responsibilities, functions, and reporting and administrative arrangements. Other committees may be formed as required, with specific terms of reference.

Audit CommitteeThe Board established the IBA Audit Committee in compliance with section 45 of the PGPA Act. In accordance with section 17 of the Public Governance, Performance and Accountability Rule 2014, the Audit Committee provides independent assurance and advice to the Board on IBA’s risk, control and compliance framework, and its financial statement and performance reporting responsibilities.

The committee’s key activities during 2014–15 included:

• reviewing the Audit Committee Charter and work plan to align to the PGPA Act

• advising the Board on the methodology for investment valuations, financial statements for IBA and its subsidiaries, Commonwealth Authorities (Annual Reporting) Orders 2011 compliance, PGPA Act compliance and fraud control

• considering the IBA risk management policy and framework, risk management plan and approach for developing a risk appetite statement and tolerance measures, informed by a review by Deloitte

• considering the draft 2015–16 Corporate Plan

• managing the internal audit program—including internal audit, external audit and audits of IBA subsidiaries—and oversighting progress against review and audit findings.

Jenny Morison was appointed as an independent member of the Audit Committee on 11 May 2008 and became its Chair on 4 May 2010. Jenny ceased as Chair on 30 June 2015. She is an independent member and chair of a number of Australian Government audit committees, a Fellow of Chartered Accountants Australia and New Zealand, and a Fellow of the Australian Institute of Management, with 34 years of broad experience in governance, accounting and commerce. Jenny attended five scheduled and three out‑of‑session Audit Committee meetings during 2014–15.


Maria Storti was appointed as independent member of the Audit Committee from September 2014. Maria is an experienced senior executive and has held senior management and consulting roles across the private and public sectors. Maria is a Fellow of the Institute of Chartered Accountants, a Fellow of the Australian Institute of Company Directors and a Fellow of the Australian Institute of Management. Maria attended four scheduled and three out‑of‑session Audit Committee meetings during 2014–15.

Other members of the Audit Committee are identified in the board members’ profiles.

Finance and Investment CommitteeThe Finance and Investment Committee Charter sets out the committee’s objectives, authority, composition and tenure, roles and responsibilities, reporting and administrative arrangements. The purpose of the committee is to add value to the operations of IBA by providing assurance and assistance to the IBA Board on IBA’s financial performance and investment and credit risk decision making.

The committee is chaired by Peter Thomas, who is a director of TFG International, a consulting and advisory firm that provides high‑level strategic advice to the public and private sectors. Other members of the committee are identified in the board members’ profiles.

Remuneration and Nomination CommitteeThe Board has a Remuneration and Nomination Committee which, in accordance with relevant policies, aims to:

• monitor and evaluate the CEO’s performance

• consider, review and recommend any variation to the CEO’s salary and/or performance bonus

• assess the skills of people nominated for board membership against the Board’s existing skills and the range of criteria mentioned above

• develop a shortlist of nominations for board membership, conduct interviews, undertake reference checks and make recommendations to the Board.



TABLE 11: DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS, 2014–15

Directors Board Audit Committee

Finance and Investment Committee

Remuneration and

Nomination Committee

Curr

ent

Eddie Fry1 7/7 ‑‑‑ ‑‑‑ ‑‑‑

Anthony Ashby 12/12 ‑‑‑ 10/10 2/2

Rick Allert1 7/7 2/2 4/6 ‑‑‑

Trish Angus 9/12 2/2 1/3 ‑‑‑

Glen Brennan1 6/7 2/2 ‑‑‑ ‑‑‑

Shirley McPherson1 6/7 2/2 ‑‑‑ ‑‑‑

Peter Thomas 10/12 ‑‑‑ 9/10 2/2

Claire Woodley 12/12 6/6 5/6 ‑‑‑

Nareen Young 10/12 6/6 3/6 ‑‑‑

Out

goin

g Jason Eades1 2/3 ‑‑‑ 1/3 ‑‑‑

Judy Hardy1 3/4 4/6 ‑‑‑ ‑‑‑

Gail Reynolds‑Adamson1 4/4 4/6 4/4 ‑‑‑

Note: Figures represent number of meetings attended out of total possible meetings while director was in the role or a member of the committee.1 Director commenced or completed term during the financial year

INTERNAL GOVERNANCEThe CEO oversees the day‑to‑day administration of IBA and is supported by the Executive Management Team (see pages 106–110), internal management committees, IBA employees, and consultants and contractors.

Internal governance arrangements include the Chief Executive Instructions (CEIs), the risk management policy and framework, fraud control, compliance assurance, business continuity and audit. The CEIs cover a range of issues including risk management, human resources, finance and procurement.

The organisational structure of IBA at 30 June 2015 is set out in Figure 28.


FIGURE 28: IBA ORGANISATIONAL CHART, 30 JUNE 2015

Records Management

and Office Administration

General Manager

CorporatePeter O’Neill

Human Resources

Communications

Information Technology

Property and Security Management

General Manager

PolicyGraeme Boulton

Policy and Strategic Planning

Strategic Engagement

Strategic Projects

Research and Development

General Manager

InvestmentsRajiv

Viswanathan

Direct Investments

Commercial Property Solutions

Leasing Solutions

Traditional Owner and

Sustainability Unit

Transaction Assessment Structuring

and Execution Services

General Manager Homes

Colin Clements

Network

Policy and Business

Services

Credit Management

and Assurance

Regional Offices

Business Response

and Quality Assurance

General Manager

EnterprisesWally Tallis

Credit and Support Services

Network and Customer

Care

Business Improvement

Commercial Markets

General Manager Change

ManagementKirsti McQueen

Minister for Indigenous Affairs Senator the Hon. Nigel Scullion

IBA Board Chair, Eddie Fry

Chief Executive Officer Chris Fry

Chief Operating Officer Leo Bator

Corporate Policy HomesInvestmentsEnterprises

Change Management

Enterprises



Governance

Legal

General Counsel

Kirsty Gowans

Chief Financial Officer

Satish Kumar

Budgeting

Reporting

Treasury

Financial Policy and Reporting

Financial System Support

Audit Committee

Remuneration and Nomination

Committee

Finance and Investment

Committee

Board Committees

FinanceLegal and

Governance Services


Executive Management Team

CHRIS FRY BAgEcon, MAppFin, Fellow Fin, MAICD

Chief Executive Officer

Chris joined IBA in 2011 after building an extensive working history with the National Australia Bank (NAB), in roles including National Manager of Agribusiness Wealth Solutions, National Manager of Corporate Super, Regional Agribusiness Manager, Business Manager and Branch Manager. During 25 years with NAB, he worked and lived in regional, urban, and country towns around Australia.

Chris has a longstanding involvement in Indigenous affairs. He was Chair of the Indigenous Land Corporation’s Mossman Gorge Development Steering Committee and an inaugural board member of the Indigenous Tourism Leadership Group. He also completed a secondment with the Miriuwung Gajerrong Corporation in Kununurra, Western Australia.

Chris is a graduate of the Australian Rural Leadership Program and a Fellow of the Australian Rural Leadership Foundation.

As CEO of IBA, Chris is responsible for managing IBA’s day‑to‑day administration in line with policies determined by the Board. He is assisted by an experienced executive team, with which he works to ensure that IBA meets its corporate objectives.

LEO BATOR DipAcc, GAICD

Chief Operating Officer

Leo joined IBA in 2012. He has more than eighteen years of senior management experience in the Australian public sector, including as Deputy Commissioner of Taxation and CEO of ComSuper.

During his career, Leo has been responsible for effecting significant change and improving customer engagement processes. He was Chair of the Defence Force Retirement and Death Benefits Authority for a number of years.

As Chief Operating Officer of IBA, Leo is responsible for ensuring that IBA’s business and corporate functions perform efficiently and effectively, and meet the needs of customers.



GRAEME BOULTON BAppSc, BSocSc (Psych)(Hons), GradDipEd

General Manager Policy

Graeme joined IBA in 2005, bringing with him extensive experience in the retail banking industry. He previously held several senior management positions in product development and loan portfolio management, including home lending, operational governance, strategic projects and mortgage operations.

Graeme has a strong background in research and analysis, having worked in strategy and research functions in financial institutions before joining IBA.

Graeme is head of the Policy branch, which provides high‑quality policy advice and research and development of policy options, while ensuring effective engagement with key stakeholders. He is also responsible for the development, implementation and coordination of strategic projects and processes across IBA.

COLIN CLEMENTS GAICD

General Manager Homes

Colin joined IBA in 2005, with more than fifteen years’ experience in the public sector, primarily with Indigenous programs and initiatives. He also has specific experience in lending products and the management of lending operations, gained from an extensive career in the commercial banking sector.

In 2008, Colin received an Australia Day Award for Excellence in Public Administration for his contribution to the ongoing success of the IBA Indigenous Home Ownership Program.

Colin is head of the Homes branch, which provides tailored home loans and other assistance measures to assist Indigenous Australians to own their own homes.


KIRSTY GOWANS BA, LLB

General Counsel Legal and Governance Services

Kirsty joined IBA in 2009. She specialises in resolving and managing disputes through alternative dispute resolution and litigation. She provides advice on commercial matters, including co‑investment and incentive structures, company law, contracts and finance arrangements. Her work for Indigenous Australians has included representing claimants in land and native title claims, mining and land use negotiations, administrative law, discrimination and human rights matters.

Prior to commencing work with IBA, Kirsty worked with the Northern Land Council, New South Wales Native Title Service, North Australian Aboriginal Legal Service, New South Wales Legal Aid Commission, NSW Ombudsman, Human Rights and Equal Opportunity Commission and NSW Attorney General’s Department.

In addition to her legal qualifications Kirsty has postgraduate qualifications in Aboriginal and Torres Strait Islander studies. She is currently completing a Master of Laws at the University of Melbourne.

As the head of Legal and Governance Services, Kirsty is responsible for providing legal support and services to IBA, and plays a key role in overseeing IBA’s governance, compliance and legal risk management.

SATISH KUMAR FCA, FCPA, GAICD

Chief Financial Officer

Satish joined IBA in 2007 and has more than 27 years of financial management and consulting experience in the retail and investment banking industries.

Prior to joining IBA, Satish led the finance and analysis team for mortgages, mergers and acquisitions at Macquarie Bank. He was earlier General Manager for the mortgage operation at Sundaram BNPParibas.

As head of the Finance team, Satish is responsible for budgeting, financial reporting and management accounting for IBA’s program delivery areas, subsidiaries and associated investment entities. He ensures the entity is compliant with the Australian Government’s financial framework.



KIRSTI MCQUEEN LLB, BCom, MAAPD

General Manager Change Management

Kirsti joined IBA in 2006, in a strategic policy role working primarily on business development projects and products, and initiatives to increase Indigenous home ownership.

She spent a year on secondment with the Department of Education, Employment and Workplace Relations working on the Australian Government’s Indigenous Economic Development Strategy and establishing the Australian Indigenous Minority Supplier Council (now Supply Nation).

Prior to joining IBA, Kirsti worked as a solicitor in private law firms in Victoria.

After managing the Business Development and Assistance Program for almost three years, Kirsti now heads up the Change Management branch where she is responsible for the reorganisation of the Enterprises branch. Her main priority is to focus on strategic, proactive Indigenous business development through connections to supply chains and economic opportunity.

PETER O’NEILL MBA

General Manager Corporate

Peter joined IBA in 2005 to establish the Corporate branch, following roles with CRS Australia in strategic management and business strategies.

Between 2007 and 2009, Peter headed up the Equity and Investments Program, during which time there was a renewed focus on improving the acquisition process and developing a portfolio‑based investment strategy and reporting framework.

Peter brings with him the experience he gained from 20 years of service with the Royal Australian Air Force, in areas including engineering, technical training, leadership development, personnel management and business process improvement.

As head of Corporate, Peter oversees IBA’s communications; media and marketing; ministerial liaison processes; human resources; information and communications technology; and records, property and security management.


WALLY TALLISGeneral Manager Enterprises

Wally joined IBA in 2015 after 20 years in Aboriginal and Torres Strait Islander affairs in roles delivering social and economic programs in remote, rural and urban settings.

As a senior executive of the Queensland Government, he led an innovative economic initiative to increase employment, and to encourage growth in Indigenous businesses through maximising a wide range of market opportunities.

Wally is of South Sea and Torres Strait Islander descent, with family connections to the Birri–Gubba peoples of North Queensland. He has a passion to ensure that Indigenous Australians participate in and contribute to the broader Australian economy, and that this participation is embedded in our country’s culture to ensure that future generations enjoy the strength, diversity and untapped opportunity that First Australians offer.

As head of Enterprises, Wally leads the Business Development and Assistance Program, which provides a range of assistance to Indigenous customers to acquire, establish, grow or exit their businesses. This support includes the Into Business™ workshops, and access to expertise and finance for viable businesses.

RAJIV VISWANATHAN BA, LLB (Hons)

General Manager Investments

Rajiv joined IBA in 2012, after holding various senior roles in business development and risk management with Macquarie Group, most recently in New York.

Before joining Macquarie Group, Rajiv worked as a corporate lawyer in London and Sydney. He has experience in a range of commercial transactions, including new business establishments, acquisitions, joint ventures, investment funds and capital raising.

Rajiv has a longstanding interest in working for better outcomes for Indigenous Australians, and has performed pro bono policy and advocacy work with community organisations. He is a non‑executive director of Bangarra Dance Theatre.

Rajiv is head of the Investments team, which makes strategic investments with a view to creating wealth, employment and other opportunities for Indigenous Australians.



Management committeesThe following internal management committees support the CEO in the daily administration of IBA:

• Executive Committee—is the key internal governance committee for information sharing and decision making

• Workplace Health and Safety Committee—develops and promotes initiatives to protect the health and safety of employees, contractors and visitors

• Workplace Consultative Committee—provides a forum for employee representatives and management to discuss matters that have a broad impact on the effective functioning of IBA

• Strategic Economic Development Initiative Committee—makes recommendations to the relevant delegate on whether to approve Strategic Economic Development Initiative projects

• Scholarships Committee—oversees and manages the IBA Scholarship Fund and selects scholarship recipients. The committee conducts an annual review of the IBA Scholarship Fund operations, and the application and selection processes. Committee members include the IBA Board and representatives from IBA’s Executive Committee

• Valuation Committee—reviews valuations and makes recommendations to the relevant delegate on the approval of investment projects

• Portfolio Review Committee—regularly reviews the performance of IBA’s investment portfolio against IBA’s Investment Strategy

• Senior Executive Staff (SES) Remuneration Committee—oversees the implementation of the SES Remuneration Policy, and reviews and recommends any change to it and to SES employment conditions every two years

• Remuneration Committee—oversees the non‑SES remuneration policy

• Information Communications and Technology (ICT) Committee—provides overall governance and ongoing strategic review of the IBA ICT environment.

Risk managementIn the pursuit of its purposes and functions, IBA operates in a commercial environment that exposes it to higher levels of risk than are faced by many other government entities and financing organisations. Appropriate management of risk is essential for IBA to achieve its objectives and meet its obligations to its customers and the Australian Government.


IBA staff actively manage risk in their day‑to‑day work to ensure that we meet our objectives. Individually, managing risk is the responsibility of each staff member. At an organisational level, risk is embedded into business processes (such as strategic planning, project management and decision making by the Board and delegates).

In order to achieve its objectives, IBA is mandated to accept some level of risk in delivering its equity and lending programs. The guiding principles are that risk must be identified at an early stage, assessed and appropriately treated.

The benefits of risk management to IBA include:

• increased likelihood of achieving objectives

• improved identification of opportunities and threats

• improved stakeholder confidence and trust

• improved organisational resilience, operational effectiveness and efficiency

• reduced regulatory burden on customers.

During 2014–15, the Board approved the IBA Risk Management Policy and Framework, following advice by the Audit Committee. The policy and framework are designed to provide IBA with an integrated and structured process to identify risk exposures across all of its activities, and to provide an assurance that these exposures are adequately controlled and addressed. The Audit Committee considered a review conducted by Deloitte to assess the alignment of the IBA Risk Management Policy and Framework with the Commonwealth Risk Management Policy.

The policy and framework include:

• effective articulation of organisational risk appetite and a series of risk‑tolerance indicators that assess whether IBA is operating within its defined risk appetite tolerance

• effective understanding of responsibilities for risk management

• active application of risk management in the day‑to‑day work of staff

• evidence of risk management across organisational decision making and planning (risk analysis is conducted on all programs, projects and board agenda papers, to inform decision making)

• a risk register (including key strategies for addressing strategic and business risks), which is regularly reviewed by the Board

• a business continuity plan that ensures that where some event occurs to disrupt operations, those operations are not interrupted beyond acceptable limits.



Results of the Comcover Risk Management Benchmarking Survey 2015 show that IBA has a sound approach to risk management and business continuity. The survey found that IBA had an ‘advanced’ risk maturity (the second highest rating, and above the average across all entities). Further enhancement is planned in relation to risk culture, shared risk and risk capability (including risk training).

Credit policyHistorically, IBA has managed credit risk through its program lending policies. In response to the implementation of the PGPA Act, and in particular its focus on the duty of directors to establish and maintain systems relating to risk and control, IBA examined its approach to the management of credit risk.

IBA established a cross‑program project to prepare an overarching credit policy. KPMG was engaged to provide expert advice and assistance. IBA directors and senior managers responded to a credit risk belief survey and participated in a facilitated credit risk discussion as part of the Board’s development of a credit policy strategy.

The credit policy as approved by the Board includes:

• policy governance that outlines three lines of defence (as detailed in guidelines from the Australian Prudential Regulation Authority and widely adopted by the Australian banking industry)

• credit risk appetite statements

• credit risk tolerance levels (which will be reported regularly to the Board)

• risk management principles to identify and assess risk, control and mitigate risk, monitor and report risk, and manage recovery and enforcement.

Ethical behaviour and fraud controlThe standards of behaviour for IBA are specified in the Chief Executive Instruction Code of Conduct, which includes managing conflicts of interest. The IBA Enterprise Agreement commits staff to complying with the instruction.

The IBA Fraud Control Plan is in accord with section 10 of the Public Governance, Performance and Accountability Rule 2014 and relevant guidelines. It includes a fraud risk assessment system and appropriate fraud prevention, detection, investigation and reporting procedures. The Audit Committee reviews the Fraud Control Plan every two years. The last review was in November 2014.

On 15 January 2014, the Public Interest Disclosure Act 2013 came into force. The Act provides public officers with indemnity to liability where they make a public interest disclosure, within certain requirements.


The term ‘public officer’ includes a wide range of people, such as former staff and contractors. IBA has put in place the required systems and processes to ensure that IBA public officers can make public interest disclosures.

There was one reported incidence of serious fraud during 2014–15. The incident is the subject of an Australian Federal Police investigation and civil recovery proceedings.

AuditIBA’s external auditor is the Auditor‑General (through the Australian National Audit Office). The audit of IBA’s financial statements is conducted in accordance with an audit strategy as agreed to by the Auditor‑General and IBA.

IBA’s internal auditor is Synergy who are responsible for conducting IBA’s internal audit program. This program aims to provide assurance that key risks are being managed effectively and efficiently, in compliance with regulatory requirements and policies.

During the year, IBA conducted the following internal audits:

• work, health and safety review of IBA’s national office, regional offices and Indigenous Coordination Centres

• compliance audit on fraud control, credit card and Cabcharge

• integrity of investment financial reporting processes for IBA subsidiaries

• effectiveness of project governance on the development of a new investment fund

• information communications technology governance review

• management of trustee arrangements in respect of the Asset Leasing Trust (ALT) and Indigenous Economic Development Trust (IEDT)

• monitoring and reporting implementation of prior audit and review recommendations.

Reducing red tapeIBA has an ongoing program of continuous improvement to reduce red tape and optimise its performance. As detailed in the IBA 2015–16 Corporate Plan, IBA has strategies to optimise internal resources to meet IBA’s purpose and functions and to improve service delivery for its customers. IBA has a sound maturity framework and is responsive to stakeholder and customer needs. Policies that may affect customers are reviewed regularly by the IBA Board.



Compliance assuranceTo ensure that IBA complies with legislative requirements, IBA has a control framework that consists of:

• board policies, CEIs and procedures

• effective relationship management systems for interacting with customers and stakeholders

• a program for training and development, monitoring and compliance assurance (both internal and external)

• a specific compliance project to respond to the PGPA Act.

In 2014–15, IBA reviewed its policies and procedures concerning the procurement of goods and services, and updated the CEIs and procedural manuals. The review process was undertaken to manage procurement risks and ensure sound accountability.

Complaints handlingThe IBA Customer Service Charter outlines IBA’s commitment to quality service and details processes for receiving and handling complaints.

The complaint management process ensures that any concerns that customers may have in relation to IBA’s services or decisions or IBA‑funded service providers are taken seriously and dealt with promptly. The standards of response are consistent with the recommended timeframes outlined in the Better Practice Guide published by the Commonwealth Ombudsman. By adhering to these processes, IBA can learn from mistakes and continuously improve its practices, ultimately improving its customers’ experiences.

Purchasing and procurementIBA engages a range of suppliers and service providers to assist in the delivery of program outcomes for Aboriginal and Torres Strait Islander peoples. We encourage Indigenous businesses to undertake work for IBA. Our procurement activity is conducted in accordance with the PGPA Act, Board Governance Instructions and CEIs on procurement.

IBA aims to ensure all procurement activity:

• achieves a value for money outcome

• achieves open and effective competition

• maximises Indigenous participation

• represents a proper use of public resources.


Staff are encouraged to directly support the growth of Indigenous businesses by sourcing goods and services from known Indigenous suppliers when purchasing the everyday goods and services IBA needs. The IBA procurement policy includes a requirement to assess the potential for Indigenous participation arising from the procurement activity. In 2014–15, IBA procured approximately $1.34 million worth of goods and services from Indigenous suppliers.

IBA procured approximately $1.34 million worth of goods and services from Indigenous suppliers in 2014–15

IBA supports small business participation in the Australian Government procurement market. Statistics on the participation of small and medium enterprises in whole‑of‑government procurement are available on the Department of Finance’s website: finance.gov.au/procurement/statistics‑on‑commonwealth‑purchasing‑contracts/.

ConsultanciesConsultants are distinguished from other contractors by the nature of the work they perform. A consultant is an individual, a partnership or a corporation engaged to provide professional, independent and expert advice or services.

Section 178 of the ATSI Act enables IBA to engage specialist consultancy services when skilled expertise is unavailable within IBA or when independent advice is required.

The terms and conditions on which consultants are engaged are determined by the Board in writing. IBA is not subject to the Commonwealth Procurement Rules, but engages its consultants in accordance with the requirements of the CEIs.

During 2014–15, 60 new consultancy contracts were entered into involving a total actual expenditure of $635,433. In addition, 40 ongoing consultancy contracts were active during 2014–15, involving total actual expenditure of $557,241.

Details of consultancies in 2014–15 are in Appendix A.

Policy contributionsAs part of a commitment to work closely with the Australian Government to develop policies that support Indigenous economic development, IBA made formal submissions to the:

• Expert Indigenous Working Group advising the Council of Australian Governments’ Investigation into Indigenous Land Use and Administration

• House of Representatives Standing Committee on Economics Inquiry into Home Ownership.



EXTERNAL SCRUTINY AND REPORTINGExternal scrutiny of IBA includes scrutiny by the Australian National Audit Office, the Commonwealth Ombudsman, courts or administrative tribunals; and parliamentary and ministerial oversight.

IBA is also required to report on a number of obligations, including compliance with legislation including the PGPA Act, the Freedom of Information Act 1982, and the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006.

Judicial decisions and reviews by external bodiesThere were no judicial decisions or decisions of parliamentary committees, the Auditor‑General, administrative tribunals or the Australian Information Commissioner that had a significant effect on IBA’s operations during 2014–15.

At 30 June 2015, the Auditor‑General was conducting a performance audit of the Indigenous Home Ownership Program.

The Commonwealth Ombudsman received one complaint regarding IBA during 2014–15; at 30 June 2015, the complaint was under investigation. The complaint has subsequently been resolved and withdrawn.

Parliamentary and ministerial oversightAs a statutory authority of the Australian Government, and as a part of the Prime Minister and Cabinet portfolio, IBA is accountable to the Australian Parliament and the Minister for Indigenous Affairs. Information about the portfolio can be found at pmc.gov.au. Information about IBA and how it approaches its functions can be found in this annual report and the 2015–16 Corporate Plan, and online at iba.gov.au.

Under section 19 of the PGPA Act, IBA is required to inform the Minister of any significant decisions or issues. In 2014–15, IBA provided five board meeting summaries to the Minister and advised the Minister on a range of significant decisions or issues. There are no current developments that may significantly affect IBA’s operations in future financial years, the results of IBA’s operations in future years, or IBA’s state of affairs in future financial years.


REPORTS AGAINST STATUTORY REQUIREMENTSAs a corporate Commonwealth entity, IBA addresses the following annual reporting requirements to comply with legislative requirements and whole‑of‑government best practice.

Freedom of informationUnder Part II of the Freedom of Information Act 1982 (FOI Act), IBA is required to publish information for the public as part of the Information Publication Scheme. IBA’s Information Publication Scheme Plan is available on the IBA website (iba.gov.au), and shows what information IBA has published in accordance with the scheme’s requirements.

IBA did not receive any requests for information under the FOI Act in 2014–15.

Disability reportingSince 1994, Commonwealth departments and agencies have reported on their performance as policy advisor, purchaser, employer, regulator and provider under the Commonwealth Disability Strategy. In 2007–08, reporting on the employer role was transferred to the Australian Public Service Commission’s State of the Service Report and the APS Statistical Bulletin. These reports are available at apsc.gov.au. Since 2010–11, departments and agencies have not been required to report on these functions.

The Commonwealth Disability Strategy has been superseded by the National Disability Strategy 2010–20, which sets out a ten‑year national policy framework to improve the lives of people with a disability, promote participation and create a more inclusive society. A high‑level biennial report will track progress against each of the six outcome areas of the Commonwealth Disability Strategy and present a picture of how people with disabilities are faring. These reports will be available from dss.gov.au.

Environmental performanceUnder section 516A of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), IBA is required to include a section in its annual report detailing its environmental performance and contribution to ecologically sustainable development (ESD). IBA is committed to the principles of ESD as outlined in section 3A of the EPBC Act. Table 12 details IBA’s ESD performance in 2014–15.



TABLE 12: PERFORMANCE AGAINST THE PRINCIPLES OF ECOLOGICALLY SUSTAINABLE DEVELOPMENT (ESD), 2014–15

ESD reporting requirement IBA response

How IBA’s activities accorded with the principles of ESD

IBA’s single appropriations outcome—improving the economic independence of Indigenous Australians—focuses on economic and social outcomes rather than environmental outcomes and, as such, has no direct ESD implications. However, IBA has a zero risk appetite or tolerance for environmental contamination, and manages the risk of environmental contamination in accordance with the IBA risk management policy and framework.

Activities that affect the environment

IBA implemented programs at its national and regional offices to reduce environmental impacts in accordance with its Environmental Strategy.

Measures taken to minimise the effect of activities on the environment

IBA has implemented a range of measures across its national and regional offices.

The most significant measure is that IBA has relocated its national office to a 5‑star tri‑generation rated building. IBA complied with the Energy Efficiency in Government Operations (EEGO) policy by including a Commonwealth Green Lease Schedule (GLS) in the lease for its national office, at 15 Lancaster Place, Majura Park ACT. The EEGO policy contains minimum energy performance standards for government office buildings, which are designed to ensure that agencies progressively improve their energy performance.

IBA appointed Jones Lang LaSalle to manage its GLS obligations, which include ongoing monitoring and measurement of energy consumption through quarterly reporting and meetings of Building Management Committee. An Energy Management Plan and National Built Environment Rating System (NABERS) rating will be developed when the first year’s worth of energy data has been compiled.

As part of the EEGO policy, government agencies are required to achieve an energy efficiency target of 7,500 megajoules per person per annum for tenant light and power. Between April 2014 and March 2015 (the most recent data available), IBA achieved approximately 2,365 megajoules per person per annum at its national office.

Other measures implemented by IBA included:• introducing a recycling plan in the national office• promoting awareness of sustainability initiatives by participating in

Earth Hour in March 2015• providing awareness training for staff on ways to reduce IBA’s carbon

footprint.

Mechanisms to review and increase the effectiveness of measures to minimise the environmental effect of activities

The Environmental Strategy has identified a number of metrics for monitoring IBA’s carbon footprint and environmental improvements in the workplace (such as reductions in electricity and paper usage, consumables and staff travel). IBA is committed to continually improving its environmental performance management. Quarterly reports for the national office analyse the performance of the base building and tenancy energy consumption in relation to the NABERS targets. Performance and improvement measures are discussed at meetings of the Building Management Committee.


As part of National Reconciliation Week, IBA staff at the national office put their cultural support into paint with signed handprints

06PEOPLE MANAGEMENTOUR PEOPLE 122

WORKFORCE PROFILE 123

WORKPLACE DIVERSITY 126

CAPABILITY DEVELOPMENT 127

NAIDOC WEEK 128

RECONCILIATION ACTION PLAN 128

EMPLOYEE RELATIONS 130

EMPLOYEE WELLBEING, WORK HEALTH AND SAFETY 131

OUTLOOK 134


OUR PEOPLEA defining characteristic of IBA staff is their willingness to put in extra effort to assist our customers to achieve their goals of self‑management, self‑sufficiency and economic independence. We harness the skills, abilities, motivation and commitment of all our staff—including those in areas that deliver services to customers indirectly, such as finance and legal staff—to facilitate home and business ownership and joint‑venture opportunities for our customers.

As a geographically dispersed organisation with significant representation of employees from diverse backgrounds, including Indigenous Australians, we are well placed to be responsive to the needs of our customers.

IBA commissioned artwork from business customer, Aboriginal Steel Art, for a long-service award to staff who have served for 10 and 20 years. A total of 12 staff members received one of these awards in 2014–15


PART 6: PEOPLE MANAGEMENT

WORKFORCE PROFILEAt 30 June 2015, IBA had a workforce of 227 people. This was slightly less than the workforce of 30 June 2014, but the same size as the workforce of 30 June 2013.

Table 13 shows the classifications and locations of our staff, while Table 14 provides more information about who they are and where they work.

TABLE 13: STAFF NUMBERS BY CLASSIFICATION AND LOCATION, 30 JUNE 2015

Classification ACT NSW NT Qld SA Tas Vic WA Total

CEO 1 0 0 0 0 0 0 0 1

COO 1 0 0 0 0 0 0 0 1

GM/CFO/GC 6 1 0 1 0 0 0 0 8

IBA Level 7 14 6 0 3 0 0 1 1 25

IBA Level 6 19 10 1 6 0 0 0 1 37

IBA Level 5 26 6 2 17 1 0 2 2 56

IBA Level 4 17 8 2 12 4 0 3 5 51

IBA Level 3 11 6 1 4 1 1 2 2 28

IBA Level 2 4 5 1 2 1 0 1 0 14

IBA Level 1 3 0 0 3 0 0 0 0 6

Cadet 0 0 0 0 0 0 0 0 0

Total 102 42 7 48 7 1 9 11 227

Note: CEO = Chief Executive Officer, COO = Chief Operating Officer, CFO = Chief Financial Officer, GC = General Counsel, GM = General Manager

TABLE 14: IBA STAFF CHARACTERISTICS, OVER FIVE YEARS TO 30 JUNE 2015

30 June 2011

30 June 2012

30 June 2013

30 June 2014

30 June 2015

Total staff 227 210 227 229 227

Indigenous staff 51 48 48 58 54

Female staff 125 115 122 126 125

Male staff 102 95 105 103 102

National office staff 119 108 116 109 102

Regional office staff 108 102 111 120 125

Continuing staff 203 189 188 194 193

Temporary staff 24 21 29 35 34

Average age 43 43 43 42 43

Average duration of IBA service (years) 3.7 4.3 4.6 5 5


GROWING THE TREE OF KNOWLEDGEThe design theme of this annual report is based around the ceremonial pole, Tree of Knowledge, presented to IBA by CareerTrackers as part of the 10x10 Program. IBA was one of ten companies that signed a ten-year contract to provide internship positions for Indigenous students under the program.

2015 was the second year that IBA hosted CareerTrackers interns during their semester study breaks. Phil Obah, one of the interns at IBA, presented the ceremonial pole to IBA’s CEO Chris Fry at a gala dinner for CareerTrackers in January 2015.

The Tree of Knowledge pole was created by John Mangu, from Elcho Island, off the coast of Arnhem Land. It signifies a ceremony whereby traditional knowledge is passed to younger generations. The variety of feathers, binding and bark, all hand spun and gathered, symbolise the artist’s clan and totems.

With each year, the talent of IBA’s Indigenous staff grows and benefits the organisation. This is an important part of our commitments to support diversity in the workplace and promote and encourage economic independence for Indigenous Australians.

George Brown, a CareerTrackers alumni and Into Business™ Support Officer at IBA, says, ‘Every year I walk away inspired by the next generation of young Aboriginal and Torres Strait Islanders coming through university and working in corporate Australia’.



‘What it means for me is what you give, you get back … It assists us to keep connected to community and identity; and develop our leadership skills from these opportunities’ — Phil Obah, CareerTrackers intern

CareerTrackers intern Phil Obah presenting Tree of Knowledge to IBA CEO Chris Fry

‘What it means for me is what you give, you get back … It assists us to keep connected to community and identity; and develop our leadership skills from these opportunities’ — Phil Obah, CareerTrackers intern

Photo credit: Tomasz Machnik, Photographer, Flashpoint Labs—Changemaking Photography


WORKPLACE DIVERSITYIBA is committed to strong representation of Indigenous staff at all levels of the organisation. In 2014–15, Indigenous Australians made up 24 per cent of our workforce.

IBA’s Reconciliation Action Plan helps to strengthen our relationships with our customers, and emphasises the importance of building and maintaining strong relationships with our Indigenous employees. For more information on our plan, see page 128.

A significant initiative signalling IBA’s intent to build such relationships was the adoption in late 2014 of a new Indigenous Employment Strategy. In addition to increasing entry level employment through engagement of graduates, interns and trainees, the strategy promotes the retention of Indigenous staff through targeted development and support initiatives such as mentoring and buddy programs and leadership training.

24 per cent of our staff identify themselves as being of Aboriginal or Torres Strait Islander descent

The Indigenous Employment Strategy is complemented by IBA’s Cultural Engagement and Education Framework, which is aimed at building and maintaining an inclusive workplace that attracts a diversity of staff to join, perform, develop and stay with IBA. Under the Cultural Engagement and Education Framework in 2014–15:

• all new staff received cultural awareness training• 28 staff participated in volunteering activities• a delegation of senior leaders and other staff attended Garma

Festival, Australia’s most significant Indigenous event• a growing number of staff participated in secondments to other

organisations to build their capabilities, including cultural capabilities

• one staff member was sponsored to participate in the Jawun program, which provides an intensive six‑week cultural immersion experience with an Indigenous community‑based organisation.

The Galambany Staff Network (formerly the Aboriginal and Torres Strait Islander Staff Network) gives Indigenous staff mutual support and a collective voice on important organisational issues. The network held its fourth annual conference in May 2015 (see page 132). Very constructive conversations were held on topics such as cultural capability and career development.



CAPABILITY DEVELOPMENTIBA is committed to and invests strongly in the professional development of its employees, with an objective of improving retention and performance within the organisation, and an ultimate goal of enhancing the customer experience.

Our planning around learning and development is based on needs identified by staff through their performance management agreements, discussions with senior managers, and feedback from a cross‑program learning and development reference group.

During 2014–15, IBA delivered a number of initiatives within its Learning and Development Framework. Significant programs offered during the year included:

• core skills—face‑to‑face learning on topics such as professional writing, performance management, customer service, problem solving and decision making was delivered in a number of locations

• leadership—the Frontline Management Certificate IV program was offered for aspiring leaders

• Harvard ManageMentor—all staff in all locations could access this online learning tool, covering more than 40 management and leadership topics, from their desktops and at a time of their choosing

• mentoring program—IBA staff were supported by senior mentors of their choosing, who assisted them to identify and work towards career goals; seventeen staff participated as mentees, and fifteen others were mentors

• career planning—a workshop was offered to Indigenous staff at the Galambany Staff Network’s annual conference, and some individual Indigenous employees were offered one‑on‑one assistance by Human Resources staff

• induction—all new starters were offered induction to assist with their smooth transition to working with IBA; 23 staff participated

• study assistance—staff had access to financial assistance and/or study leave to complete approved tertiary or vocational study

• cultural capability initiatives—staff took part in activities including cultural appreciation training for all new staff, access to cultural immersion through the Australian Public Service Commission Jawun Indigenous secondments program, and an Indigenous speaker series.

As well as helping staff to perform in their current roles and be competitive in pursuing other career opportunities, learning and development opportunities are an important factor in retaining valued employees.


NAIDOC WEEKNAIDOC Week celebrates the history, culture and achievements of Aboriginal and Torres Strait Islander peoples.

Every year since 2008, IBA has hosted a business breakfast as part of NAIDOC Week. The IBA NAIDOC Week breakfast takes place in whichever city is hosting the NAIDOC Ball, and provides a forum for IBA to deliver key messages on Indigenous economic development, and to network with stakeholders.

In July 2014, IBA held its seventh NAIDOC Week breakfast, at the Gold Coast Convention and Exhibition Centre. As in previous years, the private and public sectors were both strongly represented, showing their support for Indigenous economic development. Key speakers included former IBA director Bob Blair, who currently manages the Dreamtime Cultural Centre in Rockhampton, and Charles Prouse, who was then CEO of Supply Nation.

IBA staff members also celebrated NAIDOC Week by participating in various events in their local communities.

RECONCILIATION ACTION PLANThe IBA Reconciliation Action Plan (RAP) 2014–16 is a ‘Stretch’ RAP as defined by Reconciliation Australia. This means that the plan is focused on expanding and embedding tested and proven strategies to meet realistic targets.

Our RAP has over 50 initiatives aimed at further improving IBA’s cultural capability. The initiative actions are grouped into three focus areas:

• strengthening our relationships

• moving from cultural awareness to cultural capability

• using our influence to create more opportunities.



By 30 June 2015, almost all of the planned actions had been completed or were on track for successful completion. For example, one of IBA’s planned actions is to have 50 staff members contribute a day of free service to Indigenous communities, groups or organisations. Details of these Indigenous Community Volunteer Days have been negotiated into the IBA Enterprise Agreement.

Effective implementation of the RAP improves the quality of our service delivery, through collaboration with our customers and partners that is built on respect and culturally competent relationships.

MAKING A DIFFERENCEIn September, IBA staff assisted at the 2014 Murri Rugby League Carnival held in Redcliffe, Queensland. Over the four day event, staff had a range of tasks including time keeping, organising team sheets, and confirming health checks.

The carnival’s rules—limiting tobacco, alcohol and sugar from the venue—create positive health and education impacts. All adult players are required to undergo a health check and be enrolled to vote, and all junior (under 15) players must have a health check and have a 90 per cent school attendance from 1 July to the date of the carnival.


EMPLOYEE RELATIONSA positive climate is reinforced through a variety of means, including open communications, consultation, flexible working arrangements and other better practice people management initiatives, under the guidance of IBA’s 2015–17 People Plan. Commitment to constructive performance feedback, learning and development opportunities, and recognition of staff are also key aspects.

IBA strongly encourages appropriate workplace behaviours through its performance management arrangements and development programs, and looks for appropriate attributes at the point of recruitment. Volunteer leave further promotes positive behaviours of contributing to our communities. The Rewards and Recognition Framework, which includes CEO’s Awards and Australia Day Achievement Awards, recognises outstanding performance and achievements, and places strong emphasis on modelling appropriate behaviours.

IBA’s peak employee consultative body, the Workplace Consultative Committee, met twice in 2014–15 to discuss significant organisational issues. This was complemented by regular meetings of the Health and Safety Committee. Consultation was also facilitated through the Galambany Staff Network (see pages 132–133), which has input into the development and delivery of significant people initiatives such as the Indigenous Employment Strategy.

The IBA Enterprise Agreement nominally expired at the end of 2014 but continues in force until rescinded or replaced by a new agreement. Preparation for the negotiation of a new agreement commenced in the first half of 2015, and IBA hopes to reach a new agreement as soon as practicable in the second half of 2015. The aim is to maintain a flexible employment agreement that helps to attract and retain staff by assisting employees to balance work and non‑work or personal responsibilities.



EMPLOYEE WELLBEING, WORK HEALTH AND SAFETYIBA’s strong commitment to employee health, safety and wellbeing has been rewarded by a 40 per cent decrease in its workers’ compensation premiums for 2015–16.

Only eleven minor incidents were reported during 2014–15; two of those led to claims for compensation for minor physical injuries. Both claims have been accepted. The work‑related injuries resulted in only short periods of absence and minimal medical costs.

Staff and their families continued to have access to an Employee Assistance Program to seek assistance with personal or work‑related problems. Managers also accessed the service to seek guidance on dealing with difficult staffing problems.

The Health and Safety Committee met on four occasions in 2014–15, and was active in the promotion of safe work practices in all IBA locations. A new agreement was developed with the Department of the Prime Minister and Cabinet covering arrangements for IBA staff in shared office space, with particular emphasis on their work health and safety rights and responsibilities. IBA continued to conduct regular safety inspections of the offices it leases.

An external audit of IBA’s work health and safety system was conducted in the second half of 2014. The system was found to be sound, but a number of recommendations for improvement were made. These are being progressively addressed and will all be implemented by September 2015.


WE INCLUDING YOUOn 4 September 2014, IBA celebrated a culturally significant and special occasion for our Aboriginal and Torres Strait Islander staff network. The word Galambany, pronounced ‘Jul-um-baa-ni’, was gifted to the network from the United Ngunnawal Elders Council.

The council is a significant Aboriginal body that provides advice to the Australian Capital Territory Government in relation to heritage and connection to land matters for the Ngunnawal people. Galambany is a traditional Ngunnawal word which means ‘we including you’.

Each year, the Galambany Staff Network gathers together to contribute to the advancement of IBA through the lens of Indigenous Australians. This year’s conference held in May, was the fourth and, arguably, the most successful.

The conference resulted in a number of small working groups being formed to assist the two-way sharing of knowledge between Indigenous staff and the wider IBA network. Developing a cultural capability framework was the focus of one working group, which discussed the importance and benefits for an organisation of being culturally capable, as opposed to just culturally aware. A second group was organised to discuss an overarching development strategy for the network and how that would integrate with enriching the overall diversity of staff.



‘The sharing of knowledge and ideas of the network members has definitely enhanced my understanding of IBA and the direction in which we are striving’—Jess Maggs, IBA Graduate

Staff gathering at the 2015 Galambany Staff Network Conference in Sydney

‘The sharing of knowledge and ideas of the network members has definitely enhanced my understanding of IBA and the direction in which we are striving’—Jess Maggs, IBA Graduate


OUTLOOKIBA will enter 2015–16 well placed to meet and exceed its purpose and strategic directions.

People initiatives to support the organisation will continue to be guided by the People Plan, recently reviewed and updated to span the period 2015–17. The plan is framed around the themes of attracting, developing and retaining staff within the employee life cycle.

The following initiatives from the plan will be priorities in 2015–16:

• offer new core skills workshops and Indigenous leadership development opportunities

• develop and implement a cultural capability framework

• implement better practice change management

• review and refresh recruitment and selection procedures

• review, refresh and relaunch IBA’s performance feedback and development system

• promote health and wellbeing

• continue to support the Galambany Staff Network, mentoring, buddies and career development guidance.

IBA will continue to build individual and organisational capability, and a culture of cultural appreciation and competence.

A focus on IBA’s preferred behaviours, volunteering, health and wellbeing initiatives and a new IBA Enterprise Agreement, among other things, will continue to support a positive work environment. Building on our core, leadership and cultural capabilities enables IBA to deliver even more effective and efficient services. In future, this will include a focus on managing and coping with change.

This combination of a collaborative approach, cultural capability development and skills development, underpinned by consultation and open communication, will complement and support the achievement of IBA’s objectives and broader strategic directions.

‘I feel privileged to have the opportunity to work and develop my skills in an organisation that values Indigenous heritage’ —Lisa Rapley, IBA Graduate

07FINANCIAL PERFORMANCEFINANCIAL SNAPSHOT 136

INDEPENDENT AUDITOR’S REPORT 140

STATEMENT BY DIRECTORS, CEO AND CFO 142

STATEMENT OF COMPREHENSIVE INCOME 143

STATEMENT OF FINANCIAL POSITION 144

STATEMENT OF CHANGES IN EQUITY 145

CASH FLOW STATEMENT 146

SCHEDULE OF COMMITMENTS 147

NOTES TO THE FINANCIAL STATEMENTS 149


FINANCIAL SNAPSHOTEconomic backgroundInterest rates continued to trend down during 2014–15, with the Reserve Bank of Australia cutting the benchmark cash rate by 25 basis points (bps) in February 2015 to 2.25 per cent, and another 25 bps in May 2015 to the current 2 per cent level. The soft rates have impacted interest incomes from the loan and business portfolio but have generally had a positive impact on IBA’s concessional rate loan valuations discounts. IBA’s investment portfolio has trended down marginally with tourism continuing to decline, property values holding steady, and industrial and retail portfolios improving.

Financial resultsIBA’s investments include 38 active subsidiaries and eight associate entities with businesses spread across tourism, mining, retail and investment property. The financial statements are presented on a consolidated basis with its subsidiaries.

The 2014–15 consolidated operating result for IBA is a surplus of $12.1 million against the previous year’s deficit of $9.7 million. Valuation losses forming part of other comprehensive income amount to $5.3 million (2013–14: $7.2 million), bringing the final total comprehensive income result to a surplus of $6.9 million (2013–14: $16 million deficit). Total income has increased marginally from $190 million in 2013–14 to $191 million in 2014–15. Total expenses have decreased from $200 million in 2013–14 to $179 million in the current year, mainly due to the abnormal property valuation losses in the previous year.

IBA’s total assets as at 30 June 2015 are valued at $1.231 billion, an increase of $76 million over the previous year. Net assets as at that date are valued at $1.185 billion. The increase is mainly represented by an increase in the value of the home loan portfolio and injection of additional funds for the Remote Jobs and Communities Program.

Figure 29 shows the growth in consolidated net assets over the past eight years and Figure 30 shows the composition of total assets.


PART 7: FINANCIAL PERFORMANCE

FIGURE 29: NET ASSET GROWTH, 30 JUNE 2015

FIGURE 30: CONSOLIDATED TOTAL ASSETS, 30 JUNE 2015


FundingThe income base of the consolidated IBA entity is a mix of departmental receipts from the Australian Government and self‑generated revenue. In 2014–15, IBA received $34 million in departmental receipts and $157 million in self‑generated revenue. The self‑generated revenue is largely from interest earnings on the loan portfolio, rental receipts, and sale of goods and services within IBA’s subsidiary investments. IBA also received a $57.2 million equity infusion from the Australian Government to fund its lending and leasing operations (see Figure 31 below for the detailed composition of IBA’s consolidated income).

FIGURE 31: CONSOLIDATED INCOME, 2014–15



Legal and financial frameworkIBA’s financial performance and balance sheet must be read in the context of its enabling legislation, the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act), and the impact of accounting standards on the valuation of financial assets.

The ATSI Act requires that funds available under the New Housing Fund, including interest earnings, are to be used exclusively for housing loans. Consequently, income earned on the New Housing Fund is not available for operational expenses but is directed back into new loans. A separate set of financial statements is provided for the New Housing Fund (see Note 21).

Accounting standards require IBA’s financial assets to be valued at their fair market value. The housing and business loans portfolio is issued at concessional interest rates. A market valuation of the portfolio requires discounting portfolio value to equate interest earned to market yield for comparable risk. The annual incremental discount is taken as a non‑cash charge to the income statement.

For the investment portfolio, valuation at fair market value results in cyclical movements in property and business valuations impacting the comprehensive income statement.

OutlookIBA expects stability in its lending and investment operations in 2015–16. However, any volatility in economic parameters and interest rates would impact IBA’s asset valuations and operating results. IBA will continue to invest in cost‑effective information management systems to improve its customer support activities and document management systems.

IBA’s net asset base is expected to continue its steady growth during 2015–16 with total assets budgeted at $1.249 billion as at 30 June 2015. Total consolidated revenue is budgeted at $208 million, including departmental receipts from the Australian Government of $34 million.


Independent Auditor’s Report




Statement by Directors, CEO and CFO



Statement of Comprehensive Income

for the period ended 30 June 2015

2015 2014NET COST OF SERVICES $’000 $’000ExpensesEmployee benefits 3A 53,326 51,599Supplier expenses 3B 77,019 73,935Grants 3C 7,718 11,928Depreciation and amortisation 3D 3,632 5,573Finance costs 3E 805 846Write-down and impairment of assets 3F 33,793 53,529Losses from asset sales 1,689 1,260Other expenses 3G 1,154 889Total expenses 179,136 199,559

Own-source incomeOwn-source revenueSale of goods and rendering of services 4A 79,806 72,440 Interest 4B 53,384 52,592 Dividends 4C 884 365 Rental income 4D 16,349 15,764 Other revenue 4E 1,454 5,841 Total own-source revenue 151,877 147,002

GainsSale of assets 642 828 Other 4F 4,626 8,191 Total gains 5,268 9,019 Total own-source income 157,145 156,021

Net cost of services 21,991 43,538

Revenue from Government 4G 34,328 34,012 Income tax expense 5 199 130 Surplus (deficit) after income tax on continuing operations 12,138 (9,656)

Surplus (deficit) attributable to non-controlling interests 4,164 1,205

Surplus (deficit) attributable to the Australian Government 7,974 (10,861)

Items not subject to subsequent reclassification to net cost of services

- (4,393)

Items subject to subsequent reclassification to net cost of services

(5,263) (2,839)

(5,263) (7,232)

6,875 (16,888)

4,164 (648)

2,711 (16,240)

The above statement should be read in conjunction with the accompanying notes.

STATEMENT OF COMPREHENSIVE INCOME

Total other comprehensive income / (loss) after income tax

Consolidated

Notes

Other comprehensive income

Changes in asset revaluation reserves

Gains/(Losses) on available-for-sale financial assets

Total comprehensive income / (loss) attributable to non-controlling interestsTotal comprehensive income / (loss) attributable to Australian Government

Total comprehensive income / (loss)


Statement of Financial Position

as at 30 June 2015

2015 2014$’000 $’000

AssetsFinancial assetsCash and cash equivalents 8A 156,088 140,765 Trade, loans and other receivables 8B 687,407 647,208 Investments 8C , 8D, 8E 178,414 174,674 Deferred tax assets 8F 1,231 606 Total financial assets 1,023,140 963,253

Non-financial assetsLand and buildings 9A, 9C 44,677 42,611 Property, plant and equipment 9B, 9C 13,896 12,453 Investment property 9D 133,512 129,439 Intangibles 9E, 9F 8,503 3,164 Inventories 9G 4,440 3,512 Other 9H 2,876 1,085 Total non-financial assets 207,904 192,264 Total assets 1,231,044 1,155,517

LiabilitiesPayablesSuppliers 10A 13,837 11,760 Tax liabilities 10B 50 104 Other 10C 9,043 6,839 Total payables 22,930 18,703

Interest bearing liabilitiesLoans 11 12,761 12,077 Total interest bearing liabilities 12,761 12,077

ProvisionsEmployee provisions 12A 7,281 7,017 Other 12B 2,613 1,474 Total provisions 9,894 8,491 Total liabilities 45,585 39,271 Net assets 1,185,459 1,116,246

.EquityParent entity interestContributed equity 932,512 874,413 Reserves 7,043 14,114 Retained earnings 207,800 195,503 Total parent entity interest 1,147,355 1,084,030

Attributed to non-controlling interestsContributed equity 35,073 27,672 Reserves 1,384 1,277 Retained earnings 1,647 3,267 Total non-controlling interests 38,104 32,216 Total equity 1,185,459 1,116,246


STATEMENT OF FINANCIAL POSITION

Consolidated

Notes



Statement of Changes in Equity


2015 2014 2015 2014 2015 2014 2015 2014$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balanceBalance carried forward from previous period 198,770 208,822 15,391 34,035 902,085 849,688 1,116,246 1,092,545

Reclassification 80 (385) (645) (322) 870 - 305 (707)Adjusted opening balance 198,850 208,437 14,746 33,713 902,955 849,688 1,116,551 1,091,838

Comprehensive income

Other comprehensive income - asset revaluations

- - - (4,393) - - - (4,393)

Other comprehensive income - available for sale financial assets

- - (5,263) (2,839) - - (5,263) (2,839)

Surplus (deficit) 12,138 (9,656) - - - - 12,138 (9,656)Total comprehensive income 12,138 (9,656) (5,263) (7,232) - - 6,875 (16,888)

of which is:

Attributable to the Australian Government

7,974 (10,861) (5,263) (5,379) - - 2,711 (16,240)

Attributable to non-controlling interests

4,164 1,205 - (1,853) - - 4,164 (648)

Transactions with ownersDistributions to ownersReturn on capital:Transfer 1,056 5,564 (1,056) (5,564) - - - - Dividends (2,597) (5,575) - - - - (2,597) (5,575)Other movement: - Attributable to the Australian Government

- - - - - - - -

Attributable to non-controlling interests

- - - - - - - -

Contributions by owners - Equity injection - - - - 57,228 42,805 57,228 42,805 Other (equity contribution from non-controlling interests)

- - - (5,526) 7,402 9,592 7,402 4,066

Total transactions with owners (1,541) (11) (1,056) (11,090) 64,630 52,397 62,033 41,296

Closing balance as at 30 June 209,447 198,770 8,427 15,391 967,585 902,085 1,185,459 1,116,246

Less: non-controlling interests (1,647) (3,267) (1,384) (1,277) (35,073) (27,672) (38,104) (32,216)

Closing balance attributable to the Australian Government

207,800 195,503 7,043 14,114 932,512 874,413 1,147,355 1,084,030


STATEMENT OF CHANGES IN EQUITY

Consolidated

equity/capitalReserves

ContributedTotal equityRetained earnings


Cash Flow Statement


Notes 2015 2014$’000 $’000

Operating ActivitiesCash receivedReceipts from Government 34,328 34,012 Goods and services 76,107 73,465 Interest 52,823 51,483 Dividends 884 365 GST received 2,520 3,085 Other 17,601 22,940 Total cash received 184,263 185,350 Cash usedEmployees 53,062 51,255 Suppliers 79,051 77,243 Borrowing costs 805 846 Other - grants 7,718 11,928 Total cash used 140,636 141,272 Net cash from operating activities 13 43,627 44,078

Investing ActivitiesCash received

14,622 15,507 Investments redeemed 52,142 26,496 Other - repayment of loans receivable 104,879 92,393

Total cash received 171,643 134,396

Cash usedPurchase of property, plant and equipment 34,128 11,046

Purchase of other non-financial assets 5,919 1,241

Investments purchased 62,050 13,876 Other - loans and advances made 161,550 176,634

Total cash used 263,647 202,797

Net cash used by investing activities (92,004) (68,403)

Financing ActivitiesCash receivedContributed equity 64,630 43,161 New borrowing 684 Total cash received 65,314 43,161 Cash usedRepayment of borrowings - 34 Dividends paid 1,614 5,557 Total cash used 1,614 5,591 Net cash from financing activities 63,700 37,570

Net increase in cash held 15,323 13,245

140,765 127,521

8A 156,088 140,765


CASH FLOW STATEMENT

Proceeds from sales of property, plant and equipment

Cash and cash equivalents at the beginning of the reporting period

Cash and cash equivalents at the end of the reporting period

Consolidated



Schedule of Commitments

SCHEDULE OF COMMITMENTSas at 30 June 2015

2015 2014$’000 $’000

By TypeCommitments receivable

Lease rental income1 66,480 26,378Loans2 39,470 39,560

Total commitments receivable 105,950 65,938

Commitments payableOther commitmentsOperating leases³ 15,122 17,015

Loans2 39,470 39,560 Others4 12,776 4,714

Total other commitments 67,368 61,289

Net commitments by type 38,582 4,649

By MaturityCommitments receivable

Operating lease incomeOne year or less 12,769 12,558 From one to five years 44,254 12,195 Over five years 9,457 1,625

Total operating lease income 66,480 26,378

Loan commitments receivable One year or less 1,284 1,886 From one to five years 5,494 5,876 Over five years 32,692 31,798

Total loan commitments receivable 39,470 39,560

Consolidated

Notes


SCHEDULE OF COMMITMENTS (continued)as at 30 June 2015

2015 2014$’000 $’000

Commitments payableOperating lease commitments

One year or less 2,551 2,269 From one to five years 6,946 7,753 Over five years 5,625 6,993

Total operating lease commitments payable 15,122 17,015

Loan commitments payable One year or less 39,470 39,560 Total loan commitments payable 39,470 39,560Other commitments payable

One year or less 3,521 2,374 From one to five years 6,795 1,155 Over five years 2,460 1,185

Total other commitments payable 12,776 4,714

Net commitments by maturity 38,582 4,649

NB: Commitments are GST inclusive where relevant.

1 Operating leases receivable included are effectively non-cancellable and comprise:

Nature of lease General description of leasing arrangement

4 Other commitments payable include a range of contracts such as fees for provision of services and net GST on commitments.

Consolidated

Motor vehicle leasing

3 Operating leases payable included are effectively non-cancellable and comprise:

Leases for commercial accommodation There are 10 commercial accommodation leases across 10 buildings current at 30 June 2015 of which 3 will end by 30 June 2016.Initial lease terms range from 1 to 10 years (average 5 years) with renewal options ranging from 0 to 5 years (average 2.5 years).Lease terms remaining at 30 June 2015 range up to 10 years (average 4.5 years).The majority of lease payments are subject to annual fixed rental increases, the balance being indexed increases or a combination of both. Market increases are usually applicable on exercising lease renewals.

There are 50 equipment leases current at 30 June 2015. Lease terms range from 2 to 5 years (average 3.5 years).

Nature of lease General description of leasing arrangementLeases for commercial accommodation There are 40 commercial accommodation leases current at 30 June 2015,

of which 22 will end by 30 June 2016.Initial lease terms range from 2 to 12 years (average 6 years) with renewal options ranging from 0 to 16 years (average 8 years).Lease terms remaining at 30 June 2015 range from 1 to 11 years (average 5.5 years).Lease payments are subject to either annual fixed rental increases and/or indexed increases, some with market increases in the initial lease term as well as on exercising lease renewals.

2 Loans commitments pertain to various IBA loans payable (approved but not advanced) and the related repayments, which are receivable once the loans are advanced.



Notes to the financial statements

Note 1: Summary of Significant Accounting Policies 150

Note 2: Events After the Reporting Period 162

Note 3: Expenses 163

Note 4: Income 165

Note 5: Income Tax Expense 166

Note 6: Other Comprehensive Income 166

Note 7: Fair Value Measurements 167

Note 8: Financial Assets 168

Note 9: Non‑Financial Assets 172

Note 10: Payables 176

Note 11: Interest Bearing Liabilities 176

Note 12: Provisions 177

Note 13: Cash Flow Reconciliation 178

Note 14: Contingent Liabilities and Assets 179

Note 15: Senior Management Personnel Remuneration 180

Note 16: Related Party Disclosure 181

Note 17: Financial Instruments 182

Note 18: Financial Assets Reconciliation 188

Note 19: Assets Held in Trust 188

Note 20: Reporting of Outcomes 189

Note 21: New Housing Fund 190

Note 22: Parent Entity – Indigenous Business Australia 193


1.1 Objectives of Indigenous Business Australia

(b) to promote and encourage Aboriginal and Torres Strait Islander self-management and economic self-sufficiency

(c) such other functions as are conferred on it by this Act.

(a) the Minister has authorised IBA to perform as an agent of the Commonwealth; or

(b) the Minister has delegated to IBA.

that apply for the reporting period.

Indigenous Business Australia (IBA) is an Australian Government controlled entity, which was established on 5 March 1990, when the Aboriginal and Torres Strait Islander Commission Act 1989 came into operation. On 23 March 2005, this Act was repealed and replaced by the Aboriginal and Torres Strait Islander Act 2005 (the Act). IBA’s purpose, set out at section 147 of the Act, is as follows:

1. (a) to engage in commercial activities

Note 1: Summary of Significant Accounting Policies

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 .

The financial statement have been prepared in accordance with:

The continued existence of IBA in its present form and with its present programs is dependent on Government policy and on continuing appropriations by Parliament for IBA’s administration and programs.

1.2 Basis of preparation of the financial report

b) Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB)

2. Without limiting by implication the meaning of commercial activities in paragraph 1(a), those activities include the performance of functions that:

a) Financial Reporting Rule (FRR) for reporting periods ending on or after 1 July 2014; and

IBA is structured to meet one outcome: improved wealth acquisition to support the economic independence of Aboriginal and Torres Strait Islander peoples through commercial enterprise, asset acquisition, construction, and access to concessional home and business loans.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executor contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

The financial statements have been prepared on an accrual basis and are in accordance with historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.



NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

Adoption of new Australian Accounting Standards requirements

• AASB 3 Business Combinations - June 2014 (Compilation) • AASB 7 Financial Instruments: Disclosures - December 2013 (Compilation)• AASB 10 Consolidated Financial Statements - September 2014 (Compilation)• AASB 13 Fair Value Measurement - June 2014 (Compilation)• AASB 1031 Materiality - December 2013 (Principal)

Future Australian Accounting Standards requirements

• AASB 9 Financial Instruments - December 2014 (Principal)• AASB 128 Investments in Associates and Joint Ventures – January 2015 (Compilation)• AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

• The fair value of property, plant and equipment and other investments is based upon market inputs, backed by periodic external valuations.

1.3 Significant accounting judgements and estimates

1.4 Changes in Australian Accounting Standards

• The fair value of the loans portfolio is based on market-derived inputs.

Other new standards that were issued prior to the signing of the statements by the Chief Executive Officer and Chief Financial Officer and are applicable to the future reporting period are not expected to have a future financial impact on IBA.

No accounting standard has been adopted earlier than the application date stated in the standard. The following new standards and amendments to standards were issued prior to the sign-off date and had a financial impact on IBA:

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

The following new standards, amendments to standards or interpretations were issued by the AASB prior to the signing of these statements by the Chief Executive Officer and Chief Financial Officer and are expected to have a financial impact on IBA for future periods:

Other standards, amendments to standards or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a financial impact on IBA.

In the process of applying the accounting policies listed in this note, IBA has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.



1.5 Revenue

Revenue from the sale of goods is recognised when:

• the risks and rewards of ownership have been transferred to the buyer• IBA retains no managerial involvement or effective control over the goods• the revenue and transaction costs incurred can be reliably measured• it is probable that the economic benefits associated with the transaction will flow to IBA.

• the amount of revenue, stage of completion and transaction costs incurred can be reliably measured• the probable economic benefits associated with the transaction will flow to IBA.

Resources received free of charge

Revenues from Government

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another non-corporate or corporate Commonwealth entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Receivables for goods and services, which have 30-day terms, are recognised at the nominal amounts due, less any impairment allowance account. Collectability of debts is reviewed at balance date. Allowances are made when collectability of the debt is no longer probable.

Interest revenue is recognised using the effective interest method as set out in AASB139 Financial Instruments: Recognition and measurement.

The stage of completion of contracts at the reporting date is determined by reference to the proportion of costs incurred to date in relation to the estimated total costs of the transaction.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

Funding received or receivable from non-corporate Commonwealth entities (appropriated to the non-corporate Commonwealth entity as a corporate Commonwealth entity payment item for payment of this entity) is recognised as Revenue from Government unless they are in the nature of an equity injection or a loan.

Resources received free of charge are recognised as revenue or gains when and only when a fair value can be reliably determined, and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains, depending on their nature.




1.6 Gains

Resources received free of charge

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Sale of assets

Equity injections

Restructuring of administrative arrangements

Other Distributions to Owners

Leave

1.7 Transactions with the Government as owner

1.8 Employee benefits

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Gains from disposal of non-current assets are recognised when the control of the asset has passed to the buyer.

Resources received free of charge are recognised as gains when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Amounts appropriated which are designated as 'equity injections' for a year are recognised directly in contributed equity in that year.

Leave liabilities are calculated on the basis of employee remuneration at the estimated salary rates that applied at the time the leave is taken, including IBA’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the Australian Government shorthand method.

Liabilities for short-term employee benefits (as defined in AASB 119 Employee Benefits ) and termination benefits due within 12 months of balance date are measured at their nominal amounts.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period, minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of IBA is estimated to be less than the annual entitlement for sick leave.

The FRR require that distributions to owners be debited to contributed equity unless it is in the nature of a dividend.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.



Separation and redundancy

Superannuation

1.9 Leases

All borrowing costs are expensed as incurred.

IBA did not have any transfers between the fair value hierarchy during 2014-15 nor 2013-14.

1.12 Cash

Cash is recognised at its nominal amount. Cash and cash equivalents include:

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance's schedules and notes.

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

• cash on hand

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

Provision is made for separation and redundancy benefit payments. IBA recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Staff of IBA are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other scheme they nominate.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

IBA makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. IBA accounts for the contributions as if they were contributions to defined contribution plans.

• demand deposits in bank accounts with an original maturity of three months or less that are readily

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract; a liability is recognised at the same time and for the same amount.

convertible to known amounts of cash and subject to insignificant risk of changes in value.

1.11 Fair Value Measurements

1.10 Borrowing costs

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.




• Credit risk: the possibility that a debtor or borrower will not repay or will delay repayment of all or part of a loan, causing a loss to IBA and the consolidated entity.• Interest rate risk: a risk that the value of a financial asset such as home and business loans would fluctuate in terms of fair value or future cash flows as a result of changes in market interest rates.• Liquidity risk: a risk that the consolidated entity may not have or may not be able to raise the funds to meet the obligations obligations associated with financial liabilities. These risks are regularly monitored through a detailed internal management and Board reporting framework.

These risks are managed in the following ways:

• IBA manages credit risk on its loans portfolio by undertaking background and credit checks prior to allowing a debtor relationship. In addition, IBA has policies and procedures that guide employees' debt-recovery techniques.

• IBA's liquidity risk arises from the borrowings of its subsidiaries and these are monitored regularly to ensure availability of funding resources to meet these obligations.

IBA is not exposed to currency risk or other price risk.

IBA classifies financial assets in the following categories:

The operating, investing and financing activities coupled with the guiding policy framework exposes the consolidated entity to credit, liquidity and interest rate risks. Theses risks are defined as:

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

1.15 Financial assets

• IBA also holds collateral against certain loans to mitigate against credit risk.• IBA's risk management focuses on monitoring, measuring and reporting the impact of interest rate changes.

• financial assets at fair value through profit and loss• held-to-maturity investments• available-for-sale financial assets• loans and receivables.

1.13 Principles of consolidation

1.14 Financial risk management

The consolidated financial statements are those of the economic entity, comprising IBA and all the entities it controls from time to time during the year and at balance date. These include trusts, where IBA is a beneficiary, and where IBA controls the trustee. The financial statements of the controlled entities are prepared for the period 1 July 2014 to 30 June 2015 using accounting policies consistent with those of IBA. The effects of transactions and balances between the entities, including any unrealised profits or losses, have been eliminated in full.

IBA's investment in associates and joint venture entities is accounted for as 'Available for Sale' financial instruments under AASB 139. These assets are fair valued as at reporting date and distribution income received from them recognised as dividend. Associates' carrying values and income are detailed in Notes 8C and 8D respectively.



Effective interest method

Financial assets at fair value through profit or lossFinancial assets are classified as 'financial assets at fair value through profit or loss' where they:

• are a part of an identified portfolio of financial instruments that IBA manages together and have a recent actual pattern of short-term profit taking

Assets in this category are classified as current assets.

Available-for-sale financial assets

Held-to-maturity investments

Loans and receivables

• include loans that have an embedded derivative and the derivative cannot be separated from the main instrument.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or, where appropriate, a shorter period.Income is recognised on an effective interest rate basis except for financial assets which are recognised at fair value through profit or loss.

'Financial assets at fair value through profit or loss' are stated at fair value, with any resulting gain or loss recognised through profit or loss. The net gain or loss recognised in the profit or loss does not incorporate any interest earned on the financial asset.

'Available-for-sale financial assets' are non-derivatives that are either designated in this category or not classified in any of the other categories. 'Available-for-sale financial assets' are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity), with the exception of impairment losses. Interest is calculated using the effective interest method, and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of or is determined to be impaired, part of the cumulative gain or loss previously recognised in the reserve is included in surplus and deficit for the period.

• are derivatives that are not designated and effective as hedging instruments

• have been acquired principally for the purpose of being sold in the near future

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Where a reliable fair value cannot be established for unlisted investments in equity instruments, these instruments are valued at cost.

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates, and which the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.




Categorisation of financial assetsIBA's financial assets have been categorised as follows:

• Cash and cash equivalents include notes and coins held, and any deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and are subject to insignificant risk. Cash and cash equivalents are classified as loans and other receivables.

• Investments in subsidiaries, associates, joint ventures and other business undertakings have been categorised as 'available-for-sale assets'.

Valuation of financial assets• Business and home loans are measured at 'fair value through profit and loss'. These loans, issued at lower than market rates, are fair valued against market interest rates benchmarked on commercial bank rates. The quantum of interest rate differential determines the variance of the fair value from the face value of the loans. Business and home loan receivables which are impaired / inactive are not carried at fair value. They are reclassified and carried at nominal value less impairment allowance.

• Investments in subsidiaries, associates, joint ventures and other business undertakings are valued based on market inputs. This is done annually through a directors desktop valuation, supported by an external valuation once every three years. The methodology adopted in relation to valuation by the directors of subsidiaries and associates uses techniques consistent with those of the most recent independent valuation. The fair value of subsidiary business is also used to test the value of assets within for impairment.

• When measuring fair value, IBA is required to maximise the use of observable inputs. IBA has used the Level 2 fair value hierarchy - Inputs other than quoted price that are observable either directly or indirectly.

Impairment of financial assets• Financial assets held at amortised cost: A loan is impaired when there is objective evidence that events occurring since the loan was recognised have affected expected cash flows from the loan. Impairment is recognised as the difference between the carrying value of the loan and the discounted value of the management's best estimate of future cash repayments and proceeds from any security held (discounted at the loan's original effective interest rate). This loss is recognised in the statement of comprehensive income.

• Available for sale financial assets: If there is objective evidence that an impairment loss on available-for-sale financial assets has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the statement of comprehensive income.

• Financial assets held at cost: If there is objective evidence that an impairment loss has been incurred, the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows, discounted at the current market rate for similar assets.

• Deposits with banks with an original maturity greater than three months have been categorised as 'held-to-maturity investments'.

• Trade receivables, other receivables and other financial assets have been categorised under 'loans and receivables'.

• Business and home loan receivables have been categorised as 'financial assets at fair value through profit and loss'.



Financial liabilities are recognised and derecognised upon trade date.

Financial liabilities at fair value through profit or loss

Other financial liabilities

IBA classifies all its financial liabilities under this category.

Interest bearing loans and borrowings

Financial liabilities are classified as either 'financial liabilities at fair value through profit and loss', or other financial liabilities.

1.19 Financial guarantee contracts

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or may represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain; contingent liabilities are disclosed when the likelihood of settlement is better than remote.

Loans are classified under other financial liabilities and the carrying value is calculated based on the balance yet to be repaid. Interest is expensed as it accrues.

Financial guarantee contracts are accounted for in accordance with AASB 139 Financial Instruments: Recognition and Measurement. They are not treated as a contingent liability, as they are regarded as financial instruments outside the scope of AASB 137 Provisions, Contingent Liabilities and Contingent Assets .

1.18 Contingent liabilities and contingent assets

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods and services have been received, regardless of whether they have been invoiced.

The effective interest method is a method of calculating the amortised cost of a financial liability and allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period.

'Financial liabilities at fair value through profit or loss' are initially measured at fair value. Subsequent fair value adjustments are recognised in the profit or loss. The net gain or loss recognised in the profit or loss does not incorporate any interest paid on the financial liability. IBA currently has no financial liabilities classified under this category.

1.16 Investments in associates

1.17 Financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

IBA's investment in associates and joint venture entities is accounted for as 'Available for Sale' financial instruments under AASB 139. These assets are fair valued as at reporting date and distribution income received from them recognised as dividend.




Asset recognition threshold

Make good

Revaluations

ValuationsFair value less cost to sell for each class of asset are tested for impairment as follows:

Property, plant and equipment

LandBuildings, excluding leasehold improvementsLeasehold improvements

1.21 Land and building, property, plant and equipment

1.20 Acquisition of assets

Market selling priceDepreciated replacement costMarket selling priceMarket selling price

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to make good provisions in property leases taken up by IBA where there exists an obligation to restore the property to original condition. These costs are included in the value of IBA's leasehold improvements with a corresponding provision for make good recognised.

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $1,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Assets acquired at no cost or for nominal consideration are initially recognised as assets and revenue at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor's accounts immediately prior to the restructuring.

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange, and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Following initial recognition at cost, property, plant and equipment are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends on the volatility of movements in market values for the relevant assets.

Revaluation adjustments are based on an asset class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through profit and loss. Revaluation decrements for a class of assets are recognised directly through profit and loss except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

Asset class Fair value measured at:

When measuring fair value, IBA is required to maximise the use of observable inputs. IBA has used the Level 2 fair value hierarchy - Inputs other than quoted price that are observable either directly or indirectly. IBA has used a market based valuation techniques incorporating recently observed market data for similar properties and future earnings discounted at market capitalised rates.



Depreciation

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Asset class 2015 2014Leasehold improvements Lease term Lease termPlant and equipment 3 to 5 years 3 to 5 years

Impairment

Derecognition

Investment properties are tested for impairment based on market selling price.

All software assets and goodwill were assessed for indications of impairment as at 30 June 2015.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current or current and future reporting periods, as appropriate.

All assets were assessed for impairment at 30 June 2015. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if IBA was deprived of the asset, its value in use is taken to be its depreciated replacement cost.

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which is based on active market prices, adjusted if necessary for any difference in the nature, location or condition of the specific asset at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

When measuring fair value, IBA is required to maximise the use of observable inputs. IBA has used the Level 2 fair value hierarchy - Inputs other than quoted price that are observable either directly or indirectly. IBA has used a market based valuation technique incorporating recently observed market data for similar properties and future earnings discounted at market capitalisation rates.

IBA's intangibles comprise internally developed software for internal use and goodwill. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful life of IBA’s software is three years (2013-14 three years).

Where an investment property is acquired at no cost or for nominal cost, its cost is deemed to be its fair value as at the date of acquisition.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on disposal of an investment property is recognised in profit or loss in the year of disposal.

1.22 Investment properties

1.23 Intangibles

Depreciable property, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to IBA using the straight-line method of depreciation in all cases.




Inventories held for sale are valued at the lower of cost and net realisable value.

Inventories held for distribution are valued at cost, adjusted for any loss of service potential.

• Finished goods and work in progress: cost of direct materials and labour plus attributable costs that are capable of being allocated on a reasonable basis.

Revenues, expenses, and assets and liabilities are recognised net of GST except:

Competitive neutralityIBA does not have any competitive neutrality obligations.

The amount of benefits brought to account or that may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation, and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and to comply with the conditions of deductibility imposed by the law.

1.24 Inventories

1.25 Taxation

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

Inventories acquired at no cost or for a nominal consideration are initially measured at current replacement cost at the date of acquisition.

IBA is exempt from all forms of taxation except fringe benefits tax (FBT) and the goods and services tax (GST).

Current income tax charged to statement of comprehensive income is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant authority.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities, and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited to the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

• Raw materials and stores: purchase cost on a first-in, first-out basis

• where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO)• for receivables and payables.

However, the exemption does not apply to controlled entities and therefore incorporated controlled entities are subject to taxation. For these entities, the economic entity adopts the liability method of tax-effect accounting, whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available, against which deductible temporary differences can be utilised.



There are no potential significant events that will affect the ongoing structure and financial activities of IBA after 30 June 2015.

Note 2: Events After the Reporting Period




Note 3: Expenses

2015 2014$’000 $’000

Note 3A: Employee benefitsWages and salaries 44,659 43,178 Superannuation: Defined contribution plans 4,246 4,007 Defined benefit plans 1,124 1,375 Leave and other entitlements 3,297 3,039 Total employee benefits 53,326 51,599

Note 3B: Supplier expensesCost of goods sold 35,505 32,397 Consultants 3,986 3,664 Investment property management expenses 9,691 10,052 IT expenses 4,121 3,809 Legal expenses 1,958 2,548 Office related expenses 7,898 6,705 Travel expenses 2,312 2,457 Other suppliers 8,015 8,398 Total goods and services - supplied or rendered 73,486 70,030

Goods supplied in connection with:Related parties - -External parties 33,312 33,635

Total goods supplied: 33,312 33,635 Services rendered in connection with:

Related parties 2,086 2,324 External parties 38,087 34,071

Total services rendered 40,174 36,395 Total goods and services - supplied or rendered 73,486 70,030

Other supplier expensesOperating lease rentals - related entities:

Minimum lease payments 545 417 Operating lease rentals - external entities:

Minimum lease payments 2,110 2,609 Workers compensation expenses 878 879 Total other supplier expenses 3,533 3,905

Total supplier expenses 77,019 73,935

Note 3C: Grants

Private sector:Other - business development grants 7,718 11,928

Total grants 7,718 11,928

Consolidated



Note 3: Expenses (continued)

2015 2014$’000 $’000

Note 3D: Depreciation and amortisationDepreciation:

Property, plant and equipment 2,128 3,266 Land and buildings 923 1,662

Total depreciation 3,051 4,928

Amortisation:Intangibles 581 645 Total amortisation 581 645 Total depreciation and amortisation 3,632 5,573

Note 3E: Finance costsLoans 805 846 Total finance costs 805 846

Note 3F: Write-down and impairment of assetsAsset write-downs and impairments from:

Write-down on non-financial assets 9,502 28,303 Impairment on loans 6,773 7,236 Valuation decrements on financial instruments 17,363 17,561 Other 155 429

Total write-down and impairment of assets 33,793 53,529

Note 3G: Other expensesOther 1,154 889 Total other expenses 1,154 889

Consolidated




Note 4: Income

2015 2014$’000 $’000

Own-source revenue

Note 4A: Sale of goods and rendering of servicesSale of goods in connection with:

Related entities 60 7 External parties 79,623 72,321

Total sales of goods 79,683 72,328 Rendering of services in connection with:

Related entities - -External parties 123 112

Total rendering of services 123 112 Total sale of goods and rendering of services 79,806 72,440

Note 4B: InterestLoans 46,886 44,267 Deposits 6,498 8,325 Total interest 53,384 52,592

Note 4C: Dividends

Associate companies 884 365 Total dividends 884 365

Note 4D: Rental income

Operating lease:Investment properties 15,120 15,703 Other 1,229 61

Total rental income 16,349 15,764

Note 4E: Other revenue

Other non-operating income 1,454 5,841 Total other revenue 1,454 5,841

Note 4F: Other gainsChange in fair value of non-financial assets 1,638 7,603 Other 2,988 588 Total other gains 4,626 8,191

Note 4G: Revenue from Government

Corporate Commonwealth Entity payment item 34,328 34,012 Total revenue from Government 34,328 34,012

Consolidated

Department of Prime Minister and Cabinet:


Note 5: Income Tax Expense

2015 2014$’000 $’000

Income tax expense 199 130 Total income tax expense 199 130

Note 6: Other Comprehensive Income

2015 2014$’000 $’000

Note 6A: Reclassification Adjustments

Noongar Property Trust 1,056 -

1,056 -


Note: Ownership Interest in Noongar Property Trust was diluted from 47% to 37% through a sale to the partner. Revaluation gain corresponding to the units sold, previously recorded in equity, has now been transferred to retained earnings.

Consolidated

Consolidated

Total reclassification adjustments of other comprehensive income

The following amounts previously recognised in other comprehensive income have been reclassified to profit or loss.



Note 7: Fair Value Measurements

Note 7A: Fair Value Measurements, Valuation Techniques and Inputs UsedFair value measurements at the end of the reporting period by hierarchy for assets and liabilities for 2015

Fair value measurements at the end of the reporting period

2015 2014 Category Valuation Inputs $’000 $’000 Level 2 Technique(s) Used

Financial assets:

Designated at fair value through profit and loss

Loan receivables - Home 634,922 597,525 Level 2

Loan receivables - Business Loans 38,287 41,121 Level 2

Bonds and Fund investments 45,951 - Level 1

Available for sale

Associates 28,333 37,109 Level 2

Total financial assets: 747,493 675,755

Non-financial assets:

Land & Buildings 44,677 42,611 Level 2

Investment Property 133,512 129,439 Level 2

Property, Plant & Equipment 13,896 12,453 Level 2

Total non-financial assets: 192,085 184,503

Note 7B: Level 1 and Level 2 Transfers for Recurring Fair Value Measurements

Note 7C: Reconciliation for Recurring Level 3 Fair Value Measurements


Market approach using recently observed market data for similar properties and discounted earnings method

Market sales data, future earnings and market capitalisation rate

Future earnings discounted at risk adjusted market rates

Earnings forecast, rates of return on capital

There are no Recurring Level 3 assets measured at fair value during the reporting period.





Fund quoted market values

There are no transfers between Level 1 and Level 2 for assets measured at fair value on a recurring basis during the reporting period.

Fund quoted market values

Cashflows discounted at the risk adjusted market rate of interest

Yield curve, Loan to Value ratio, expected life and benchmark rates

Yield curve, Loan to Value ratio, expected life and benchmark rates

Cashflows discounted at the risk adjusted market rate of interest



Note 8: Financial Assets

2015 2014$’000 $’000

Note 8A: Cash and cash equivalentsCash on hand or on deposit 130,901 111,357

25,187 29,408156,088 140,765

Note 8B: Trade, loans and other receivablesGoods and services receivables in connection with:

Related entities 1,426 -External entities 8,463 7,127

Total receivables for goods and services 9,889 7,127

Reconciliations of movements of loans receivable

Loans - Home Ownership ProgramAt fair value - opening balance as at 1 July 597,525 542,631Add: net loans movement at cost 54,901 73,126Less: net movement on remeasurement at fair value through profit or loss

(17,363) (16,746)

Less: impairment movement through profit and loss(141) (1,486)

At fair value - closing balance as at 30 June 634,922 597,525

Loans - Business Development and Assistance ProgramAt fair value - opening balance as at 1 July 41,121 36,306Add: net loans movement at cost 2,320 11,379

1,477 (814)

Less: impairment movement through profit and loss(6,632) (5,750)

At fair value - closing balance as at 30 June 38,286 41,121 Total home and business loans and other receivables 673,208 638,646

Other receivables:Other 4,310 1,435

Total other receivables 4,310 1,435

Total trade, loans and other receivables 687,407 647,208

Trade and other receivables (net) expected to be recoveredNo more than 12 months 45,042 14,608More than 12 months 642,365 632,600Total trade, loans and other receivables (net) 687,407 647,208

Cash on hand or on deposit - New Housing FundFund

Consolidated

Add/(Less): net movement on remeasurement at fair value through profit or loss




Note 8: Financial Assets (continued)

2015 2014$’000 $’000

Note 8B: Trade, loans and other receivables (continued)Trade and other receivables (gross) aged as follows Not overdue 604,011 566,319 Overdue by: 0 to 30 days 35,541 24,745 31 to 60 days 23,106 20,704 61 to 90 days 6,790 11,551 More than 90 days 17,959 23,889Total receivables 687,407 647,208

Reconciliation of loans carrying valueLoans - Home Ownership Program (as shown above)Face value as at 30 June 930,315 875,828

291,888 274,524

Less: Impairment allowance 3,505 3,779 Carrying value as at 30 June 634,922 597,525

Loans - Business Development and Assistance Program (as shown above)

Face value as at 30 June 59,777 67,060

9,750 11,226

Less: Impairment Allowance 11,741 14,713 Carrying Value as at 30 June 38,286 41,121 Total home and business loans and other receivables 673,208 638,646

Loans - Home Ownership Program3,779 2,452

Allowance resolved (2,304) (342)Allowance pertaining to loans written off (303) (148)

1,172 1,962

New accounts 2,255 1,808Change in impairment allowance for accounts existing at 1 July 78 9

2,333 1,817Closing balance as at 30 June 3,505 3,779

Less: Discount on concessional loans on remeasurement at fair value through profit or loss

Less: Discount on concessional loans on remeasurement at fair value through profit or loss

Reconciliation of movement in impairment allowance account

Opening balance as at 1 July

Consolidated



Note 8: Financial Assets (continued)

2015 2014$’000 $’000

Note 8B: Trade, loans and other receivables (continued)Loans - Business Development and Assistance Program

14,713 11,417Allowance resolved (1,117) (1,179)Allowance pertaining to loans written off (6,068) (2,265)

7,528 7,973New allowances 4,521 7,335Change in impairment allowance for accounts existing at 1 July (308) (595)Closing balance as at 30 June 11,741 14,713

Total impairment allowance account 15,246 18,492

The impairment allowances are aged as follows Not overdue - - Overdue by: 0 to 30 days 5,772 6,654 31 to 60 days 912 700 61 to 90 days 701 448 More than 90 days 7,861 10,690Total impairment allowance account 15,246 18,492

Note 8C: Investments in associates

Investments in associates 28,333 37,109 Total investments in associates 28,333 37,109

Investments in associates that are expected to be recovered in:More than 12 months 28,333 37,109 Total investments in associates 28,333 37,109

Summarised financial information of associates:Balance sheet:Assets 89,542 103,508 Liabilities (54,029) (65,635)Net assets 35,513 37,873 Statement of comprehensive income:Revenue 92,706 96,775 Expenses 87,363 101,220 Net surplus 5,343 (4,445)

Consolidated

Opening balance as at 1 July




Note 8: Financial Assets (continued)Note 8D: Interests in associates

Table A: Interests in associatesInterests are held in the following associated companies

Associated company Principal activities

2015 2014 2015 2014 2015 2014% % % % $'000 $'000

Carpentaria Shipping Services Pty Ltd

Transportation 18 18 25 25 1,370 1,425

Fitzroy River Lodge Partnership

Accommodation provider

26 26 25 25 1,850 1,879

Message Stick Communications Pty Ltd

Communication service provider

31 31 31 31 8,148 10,394

Nitmiluk (Cicada Lodge) Unit Trust


50 50 50 50 1,200 4,454

Nitmiluk (Cicada Lodge) Pty Ltd


50 50 50 50 150 16

Ngarda Civil & Mining Pty Ltd

Civil engineering & mining services

25 25 25 25 3,040 3,475

Noongar Property Trust

Property 37 47 7 22 10,175 12,890

Port Hedland Investment Trust

Property 70 70 50 50 2,400 2,576

28,333 37,109

2015 2014$’000 $’000

Note 8D: Interests in associates (continued)

Movements during the year in associated companies:Opening balance as at 1 July 37,109 40,865 Add: Additional investments during the year 100 2,081 Less: Disposals and redemptions during the year (3,613) (3,000) Fair value decrement (5,263) (2,837)

Closing balance as at 30 June 28,333 37,109

Note 8E: Other investmentsDeposits 94,730 128,065 Other - Bonds and interest in business undertakings 55,351 9,500 Total other investments 150,081 137,565

Investments expected to be recovered in No more than 12 months 150,081 128,865 More than 12 months - 8,700 Total other investments 150,081 137,565

Total Investments 178,414 174,674

Note 8F: Deferred tax assetsDeferred tax assets 1,233 606

Total deferred tax assets 1,233 606

All deferred tax assets are non-current assets.

Ownership interest Voting power

Consolidated

Carrying amount of investment



Note 9: Non-Financial Assets

2015 2014$’000 $’000

Note 9A: Land and buildings

Leasehold improvements Fair value 8,469 6,841 Accumulated depreciation (2,605) (2,205)Total leasehold improvements 5,864 4,636

Land and buildings: Fair value 41,947 41,108 Accumulated depreciation (3,134) (3,133)Subtotal land and buildings 38,813 37,975 Total land and buildings 44,677 42,611

Note 9B: Property, plant and equipment

Other property, plant and equipment: Fair value 18,943 18,550 Accumulated depreciation (5,047) (6,097)Total other property, plant and equipment 13,896 12,453

Consolidated

Land and buildings were valued during the year in accordance with the revaluation policy stated in Note 1.21. No revaluation increment was recorded during the year (2014: $0.250 million). No revaluation decrement was recorded during the year (2014: $10.568 million).

No land or buildings are expected to be sold or disposed of within the next 12 months.

Property, plant and equipment were revalued during the year in accordance with the revaluation policy stated in Note 1.21. A revaluation decrement of $8.178 million was recorded for three entities (2014: $11.331 million) in the statement of comprehensive income.




Note 9: Non-Financial Assets (continued)Note 9C: Reconciliation of the opening and closing balances of property, plant and equipment (PP&E)

2015 2014

Land and buildings

OtherPP & E Total

Land and buildings

Other PP & E Total

$’000 $’000 $’000 $’000 $’000 $’000

Opening balance

Gross book value 47,949 18,550 66,499 63,051 37,711 100,762 Accumulated depreciation and impairment (5,338) (6,097) (11,435) (12,009) (16,716) (28,725)

Total as at 1 July 42,611 12,453 55,064 51,042 20,995 72,037

Additions:By purchase 5,057 13,743 18,800 5,531 9,690 15,221 Accumulated depreciation - (1,160) (1,160) - - -Revaluations and impairments through equity - - - (4,393) - (4,393)Impairment recognised in the operating result - cost - (11,400) (11,400) (18,897) (23,831) (42,728)Impairment recognised in the operating result - accumulated depreciation - 3,222 3,222 8,311 12,497 20,808 Reclassification - at cost (1,161) 4 (1,157) 1,644 (1,811) (167)Reclassification - accumulated depreciation - (4) (4) (5) 266 261 Depreciation expense (923) (2,128) (3,051) (1,662) (3,266) (4,928)

Other movements: -Opening balance adjustment - cost 288 (308) (20) 1,083 (1,508) (425)Opening balance adjustment - accumulated depreciation - 35 35 - 15 15

Disposals: -Other disposals - cost (1,717) (1,646) (3,363) (70) (1,700) (1,770)Other disposals - accumulated depreciation 522 1,085 1,607 27 1,108 1,135

Total as at 30 June 44,677 13,896 58,573 42,611 12,453 55,064

Net book value as at 30 June represented by:Gross book value 50,416 18,943 69,359 47,949 18,550 66,499 Accumulated depreciation and impairment (5,739) (5,047) (10,786) (5,338) (6,097) (11,435)

Total as at 30 June 44,677 13,896 58,573 42,611 12,453 55,064

Consolidated



Note 9: Non-Financial Assets (continued)

2015 2014$’000 $’000

Note 9D: Investment propertyOpening balance as at 1 JulyGross book value 129,439 137,904 Opening balance adjustments (728) (57)Disposals (13,897) (15,990)Additions:

By acquisition 16,295 1,716 Net gain/(loss) from fair value adjustments 1,242 5,947 Reclassification 1,161 (81)

Total as at 30 June 133,512 129,439

Note 9E: IntangiblesComputer softwareComputer software purchased or developed - at cost 5,266 3,537 Accumulated amortisation (2,343) (1,765)Total Computer software: 2,923 1,772

Other intangiblesOther 10,558 6,370 Accumulated impairment losses (4,978) (4,978)Total other intangibles 5,580 1,392

Total intangibles 8,503 3,164 No intangibles are expected to be sold or disposed of within the next 12 months.

Investment property owned by IBA subsidiaries were revalued during the year in accordance with the revaluation policy stated in Note 1.22. The revaluation resulted in a decrease in value of $0.342 million (2014: Decrement of $1.403 million) for one property and an increase in value of $1.583 million (2014: Increment of $7.350 million) for three properties and are included in the statement of comprehensive income.

Consolidated




Note 9: Non-Financial Assets (continued)

2015 2014$’000 $’000

Opening Balance as at 1 JulyGross book value 9,907 14,935 Accumulated amortisation and impairment (6,743) (7,152)Total as at 1 July 3,164 7,783

Additions:By acquisition 6,201 1,405

- - Reclassification - (13)Amortisation (581) (645)Other movements (275) (115)Impairments recognised in the operating result - (4,737)Disposals:

Other disposals - cost (9) (514)Other disposals - accumulated depreciation 3 -

Total as at 30 June 8,503 3,164

Total value as at 30 June represented by:Gross book value 15,824 9,907 Accumulated amortisation and impairment - other (7,321) (6,743)Total value at 30 June 8,503 3,164

Note 9G: InventoriesInventories held for sale

Raw materials 4,440 3,512 Total inventories 4,440 3,512

All inventory is expected to be sold or distributed in the next 12 months.

Note 9H: Other non-financial assetsPrepayments 2,876 1,085Total other non-financial assets 2,876 1,085 All other non-financial assets are expected to be recovered in no more than 12 months.

Note 9F: Reconciliation of the opening and closing balances of intangibles

From acquisition of entities or operations (including restructuring)

Consolidated



Note 10: Payables

2015 2014$’000 $’000

Note 10A: SuppliersTrade creditors 13,837 11,760 Total suppliers 13,837 11,760

Suppliers in connection with:Related entities 225 300 External parties 13,612 11,460

Total suppliers 13,837 11,760

Settlement is usually made within 30 days.

Note 10B: Tax liabilitiesTax liabilities equivalent 50 104 Total tax liabilities 50 104 All deferred tax liabilities are non-current.

Note 10C: Other payablesSalaries and wages 2,244 2,087 Superannuation 32 108 Separations and Redundancies - 47 Unearned income 3,460 3,561 GST payable to ATO 3,307 1,036 Total other payables 9,043 6,839

Total other payables expected to be settled in:No more than 12 months 9,043 6,839 Total other payables 9,043 6,839

Note 11: Interest Bearing Liabilities

2015 2014$’000 $’000

Note 11: LoansSecured loan facility 12,761 12,077 Total loans 12,761 12,077 Maturity schedule for loans payable:

Less than one year 1,261 -In one to five years 11,500 12,077

Total loans 12,761 12,077

As at 30 June 2015, $11.5 million (30 June 2014: $11.5 million) relates to amounts borrowed against security of land and buildings.

Consolidated

Consolidated

Supplier payables expected to be settled within 12 months:




Note 12: Provisions Consolidated

2015 2014$’000 $’000

Note 12A: Employee provisionsLeave 7,281 7,017 Total employee provisions 7,281 7,017

Employee provisions expected to be settled in:No more than 12 months 4,942 4,132 More than 12 months 2,339 2,885

Total employee provisions 7,281 7,017

Note 12B: Other provisionsRestoration obligations 586 540 Distribution to Non Controlling Interests 1,986 890 Other 41 44

Total other provisions 2,613 1,474

Other provisions expected to be settled in:No more than 12 months 2,129 1,049 More than 12 months 484 425

Total other provisions 2,613 1,474

Consolidated2015 2014

Restoration obligations

Distribution/ other provisions

TotalRestoration obligations

Distribution/ other provisions

Total

$’000 $’000 $’000 $’000 $’000 $’000Opening balance as at 1 July

540 934 1,474 624 875 1,499

Additional provisions made

46 2,039 2,085 293 1,225 1,518

Amounts used - (946) (946) (377) (1,166) ( 1,543)

Total as at 30 June 586 2,027 2,613 540 934 1,474

The classification of current employee provisions includes amounts for which there is not an unconditional right to defer settlement by one year, so in the case of employee provisions the above classification does not represent the amount expected to be settled within one year of the reporting date.

IBA currently has nine agreements for leasing premises with provisions requiring restoration of the premises to their original condition at the conclusion of the lease. IBA has made a provision of $586,000 to reflect the present value of this obligation.



Note 13: Cash Flow Reconciliation

2015 2014$’000 $’000

Reported cash and cash equivalents as per:Cash Flow Statement 156,088 140,765 Statement of Financial Position 156,088 140,765

Discrepancy - -

Net cost of services (21,990) (43,538)Add: revenue from Government 34,328 34,012 Less: income tax expense (199) (130)

Adjustments for non-cash itemsDepreciation and amortisation 3,632 5,573 Net write down of assets 29,167 45,337 Net loss on disposal of assets 1,047 432

Changes in assets/liabilities

(Increase)/decrease in net receivables (4,399) 244 (Increase)/decrease in inventories (928) (541)(Increase)/decrease in GST payable (2,716) 657 Increase/(decrease) in employee provisions 264 345 Increase/(decrease) in supplier payables 5,328 1,583 Increase/(decrease) in other provisions 148 53 Increase/(decrease) in tax liabilities (55) 51 Net cash from operating activities 43,627 44,078

Reconciliation of net cost of services to net cash from operating activities:

Consolidated

Reconciliation of cash and cash equivalents as per financial position to Cash Flow Statement




Note 14: Contingent Liabilities and AssetsConsolidated

2015 2014 2015 2014 2015 2014 2015 2014$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Contingent assetsOpening balance as at 1 July - - - - 2,335 3,459 2,335 3,459 New - - - - 763 2,154 763 2,154 Remeasurement - - - - 150 (731) 150 (731)Assets recognised (1,855) (200) (1,855) (200)Expired - - - - (379) (2,347) (379) (2,347)

Total as at 30 June - - - - 1,014 2,335 1,014 2,335

Contingent liabilities

Opening balance as at 1 July - - 1,000 1,000 540 - 1,540 1,000 New - - - - - 540 - 540 Obligations expired - - - - (540) - (540)Total as at 30 June - - 1,000 1,000 - 540 1,000 1,540

Net contingent assets (liabilities) as at 30 June

- - (1,000) (1,000) 1,014 1,795 14 795

Quantifiable contingencies

Significant remote contingencies

IBA has no significant remote contingencies as at 30 June 2014 or 2015.

Unquantifiable contingenciesIBA has no significant unquantifiable contingencies as at 30 June 2014 or 2015.

It is considered possible that Indigenous Business Australia will succeed in a number of legal matters, although the cases are continuing.

Guarantees and indemnities

Guarantees

IBA has a cross-indemnity agreement with P&O Maritime Services whereby IBA will warrant to meet up to one half of any liability (subject to a maximum of Indigenous Business Australia’s exposure, being $1,000,000) arising from a performance guarantee provided by P&O Maritime Services to Mount Isa Mines Limited.

Guarantee and indemnity undertakings were made only to satisfy normal commercial funding conditions imposed by financiers and, at balance date, there are no grounds to believe that a liability will arise.

Indemnities Claims for damages or costs Total

Claims for damages/costs (contingent asset)

IBA has no outstanding guarantees as at 30 June 2014 or 2015.



Note 15: Senior Management Personnel Remuneration2015 2014

$’000 $’000

Short-term employee benefitsSalary and other allowances 2,679 2,486 Performance bonuses 50 50 Total short-term employee benefits 2,729 2,536

Post-employment benefitsSuperannuation 409 352 Total post-employment benefits 409 352

Other long-term employee benefitsAnnual Leave 166 162Long-service leave 54 65 Total other long-term employee benefits 220 227

Termination benefitsVoluntary redundancy payments - -Total termination benefits - -

Total Senior Management personnel remuneration expenses 3,358 3,115

The total number of senior management personnel that are included in the above table are 23 (2013-14: 19)

Senior management personnel expenses for the reporting period




Note 16: Related Party DisclosureLoans to directors and director-related entities

2015 2014$’000 $’000

264 295- 80

Loan repayments during the year 31 28 19 22

Loans were made to the following director-related entities:

- 4 Mile Ventures Pty Ltd

Other transactions with directors or director-related entities

• Mr Jason Eades (owner, Eades Consulting Group Pty Ltd) - $10,000 • Ms Gail Reynolds-Adamson (owner, Kaata Tidje Pty Ltd) - $26,383 • Mr Glen Brennan (owner, 4 Mile Ventures Pty Ltd) - $23,868The directors involved took no part in the relevant decisions.

Mr Glen Brennan is the 50% shareholder and director of 4 Mile Ventures Pty Ltd. 4 Mile Ventures Pty Ltd has received a loan from the Business Development and Assistance Program, disbursed on 15 March 2012 for $315,000 and on 25 June 2013 for $80,000. The transactions between 4 Mile Ventures Pty Ltd and IBA are on a normal commercial arm's length basis. Mr Glen Brennan became a director of IBA on 1 December 2014. Mr Glen Brennan took no part in the relevant loan approval decision of the IBA Board. The comparative number for 2013-14 has been restated for the above transactions.

Loans to director-related entities outstanding at year-end

Business support consulting advice was provided to the following directors. The value of the services provided was:

Loans to director-related entities during the year:

Interest revenue included in operating result from loans to



Note 17: Financial Instruments

2015 2014$’000 $’000

Note 17A: Categories of financial instruments

Financial assets

Held-to-maturity financial assetsTerm deposits & Bonds 8E 102,430 137,565 Total held-to-maturity financial assets 102,430 137,565

Loans and receivables financial assets Cash and cash equivalents 8A 156,088 140,765 Goods and services 8B 9,889 7,127 Other receivables 8B 2,274 362 Total loans and receivables financial assets 168,251 148,254

Fair value through profit and loss - designatedInvestments in market funds 8E 45,951 -Business and home loans 8B 673,208 638,646 Total fair value through profit and loss - designated 719,159 638,646

Available-for-sale financial assetsAssociates 8D 28,333 37,109 Total available-for-sale financial assets 28,333 37,109

Carrying amount of financial assets 1,018,173 961,574

Financial liabilities

Other financial liabilities - at amortised costTrade creditors 10A 13,839 11,760 Other payables 10C 2,276 2,242 Total other financial liabilities - at amortised cost 16,115 14,002

Borrowings secured by a floating charge 11 12,761 12,077 Total borrowings secured by a floating charge 12,761 12,077

Carrying amount of financial liabilities 28,876 26,079

Consolidated

Notes

There is no material difference between the fair value and carrying value of financial assets and liabilities.




Note 17: Financial Instruments (continued)

2015 2014$’000 $’000

Held-to-maturity assetsInterest revenue 4,293 3,657

Net gain - held-to-maturity assets 4,293 3,657

Loans and receivablesInterest revenue 2,911 4,668

Net gain - loans and receivables 2,911 4,668

Fair value through profit and lossInterest revenue 46,886 44,267 Changes in fair value (21,148) (17,561)

25,738 26,706

Available-for-sale assetsInterest revenue 820 368 Dividend revenue 884 365 Gain recognised in equity 5,263 (2,839)Net gain on disposal 419 -

Net gain/(loss) - available-for-sale assets 7,386 (2,106)

Net gain on financial assets 40,328 32,925

Financial liabilities - at amortised costInterest expense 805 846

805 846

Net losses from financial liabilities 805 846

Notes

17B: Net Gains or Losses from financial assets

Net gains/(loss) - fair value through profit and loss

17C: Net Gains or Losses from financial liabilities

Net losses - financial liabilities - at amortised cost

Consolidated



Note 17: Financial Instruments (continued)17D: Fair value of financial instruments

Loan receivables designated at fair value through profit and loss

2015 2014$’000 $’000

Maximum exposure to credit risk 673,209 638,646 Fair value changes due to credit risk: During the period 35,605 24,458 Prior to the period 271,810 247,352 Cumulative change 307,415 271,810

• IBA Home and Business loans, issued at lower than market rates, are fair valued against market interest rates benchmarked on commercial bank rates. The interest rate differential against which the discount is applied, is split is split into market discount and credit discount differentials. Movement in fair value is dependent on new loans settled, loans repaid and interest rate changes during the period. The credit risk impact measured below gives the fair value discount arising on the credit interest differential only.

Fair value measurements categorised by fair value hierarchyIBA uses the following techniques for measuring fair value of assets and liabilities:

• Investments are assessed for fair value against market-related inputs every year and an external valuation is performed once every three years.• Loans receivables are assessed for fair value against market-related benchmarks on an ongoing basis.

17E: Credit risk - maximum exposure

2015 2014$’000 $’000

Financial assetsTrade, other receivables and other financial assets 12,161 7,489

Loans receivables - Home 634,922 597,525 Loans receivables - Business loans 38,287 41,121 Investments in market funds 45,951 -Investments in associates treated as available-for-sale 28,333 37,109 Term deposits and bonds 102,430 137,565

Total 862,084 820,809

Consolidated

When measuring fair value, IBA is required to maximise the use of observable inputs. IBA has used the Level 2 fair value hierarchy - Inputs other than quoted price that are observable either directly or indirectly.

• IBA has not utilised any instruments such as credit derivatives to mitigate its credit risk.

• Trade receivables are valued at realisable value, which in the absence of impairment is the same as carrying value.

IBA manages credit risk on its loans portfolio by undertaking background and credit checks prior to allowing a debtor relationship. In addition, IBA has policies and procedures that guide employees' debt recovery techniques. IBA also holds collateral against certain loans to mitigate against credit risk.

The following table illustrates IBA's gross exposure to credit risk, excluding any collateral or credit enhancements. Consolidated

• Trade and other payables and provisions are valued at their carrying values adjusted for any impairment.

Changes in the fair value of loans designated at fair value through profit and loss, that arose due to credit risk (method used AASB7.9(i) or 9c(ii)).




Note 17: Financial Instruments (continued)17E: Credit risk - maximum exposure (continued)

Impairment and ageing analysis of IBA's Home and Business loan receivables

ConsolidatedNot past due nor

impairedNot past due nor

impairedPast due or

impairedPast due or

impaired2015 2014 2015 2014

$’000 $’000 $’000 $’000Financial assets:

Loans receivables - Home 549,701 532,874 86,662 70,484 Loans receivables - Business Loans 30,654 33,128 18,159 25,612

Total 580,355 566,002 104,822 96,096

Ageing analysis of financial assets and loan receivables that are past due but not impaired

Consolidated 20150 to 30 31 to 60 61 to 90 90+

days days days days Total$'000 $'000 $'000 $'000 $'000

Financial assets:34,578 21,611 6,477 16,088 78,754

963 1,495 313 1,371 4,142

Total 35,541 23,106 6,790 17,458 82,895

Consolidated 20140 to 30 31 to 60 61 to 90 90+

days days days days Total$'000 $'000 $'000 $'000 $'000

Financial assets:24,133 16,325 7,844 10,500 58,802

137 1,430 1,059 1,961 4,587 Total 24,270 17,755 8,903 12,461 63,389

Loans receivables considered impaired

2015 2014$’000 $’000

Financial assets:

Loans receivables - Home 7,909 11,683Loans receivables - Business Loans 14,018 21,024

Total 21,926 32,707

In relation to financial assets, deposits, trade receivables and investments are considered not past due and not impaired. The details of past due and impaired assets pertain to Home and Business loans only.

Loans receivables - Home

Loans receivables - Home

Consolidated

Loans receivables - Business Loans

Loans receivables - Business Loans



Note 17: Financial Instruments (continued)17F: Liquidity risk

Consolidated 2015On Within 1 1 to 5 > 5

demand year years years Total$'000 $'000 $'000 $'000 $'000

- 13,839 - 13,839 - 2,276 - 2,276

- 1,261 11,500 - 12,761 Total - 17,376 11,500 - 28,876

Consolidated 2014On Within 1 1 to 5 > 5

demand year years years Total$'000 $'000 $'000 $'000 $'000

- 11,760 - - 11,760 - 1,677 - - 1,677

- - 12,077 - 12,077 Total - 13,437 12,077 - 25,514

The financial liabilities of IBA are trade payables, other payables and secured loans. The exposure to liquidity risk is analysed with a maturity analysis of all liabilities.

Financial liabilities:

Financial liabilities:

Other payables

Trade creditors

Trade creditors

Borrowings secured by a floating charge

Other payables

Borrowings secured by a floating charge




Note 17: Financial Instruments (continued)17G: Market risk

Consolidated 2015

Risk Change in Effect on Change in Effect onvariable risk income risk income

variable statement variable statement% $'000 % $'000

Financial assets: loan receivablesInterest rate risk Interest rate +0.6 145 -0.6 (2,168)

Consolidated 2014Risk Change in Effect on Change in Effect on

variable risk income risk incomevariable statement variable statement

% $'000 % $'000Financial assets: loan receivablesInterest rate risk Interest rate +0.6 107 -0.6 (1,705)

Note 17H: Assets pledged/or held as collateralIn relation to the borrowings by subsidiaries of IBA, the following collateral is pledged.

2015 2014$’000 $’000

Assets pledged as collateralFinancial liabilities Borrowings secured by floating charge 11,500 11,500 Total assets held as collateral 11,500 11,500

The assets held as collateral comprise the following:• As at 30 June 2015, $11.500 million (30 June 2014: $11.500 million) relates to the amount borrowed against security of land and buildings.

Loans receivables - Home 1,284,800 1,257,422 Loans receivables - Business Loans 118,477 112,403

Total assets held as collateral 1,403,277 1,369,825

Interest rate risk refers to the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. IBA is exposed to interest rate risk primarily on its Home and Business Loan receivables.

A positive number indicates an increase in surplus in the statement of comprehensive income and a negative number indicates a decrease in surplus.

IBA home and business loans, issued at lower than market rates, are fair valued against market interest rates benchmarked on commercial bank rates. The quantum of interest rate differential determines the variance of the fair value from the face value.

Consolidated

Non-financial assetsAssets held as collateral



Note 18: Financial Assets ReconciliationFinancial assets

2015 2014$’000 $’000

Total financial assets as per financial position 1,023,141 963,198 Less: non-financial instrument components

Deferred tax assets (1,231) (606)GST receivable from the Australian Taxation Office (3,735) (1,018)

Total non-financial instrument components (4,966) (1,624)

Total financial assets as per financial instruments note 1,018,175 961,574

Note 19: Assets Held in TrustAboriginal and Torres Strait Islander Commission Funds

2015 2014$’000 $’000

Opening balance as at 1 July 4,250 4,148Interest received 93 102Payments (962) -Total amount at 30 June 3,381 4,250

Downs Aboriginal and Islander Company Funds

Opening balance as at 1 July 1 335Interest received 0 2Payments 0 (336)Total amount at 30 June 1 1

Consolidated

IBA established the Aboriginal and Torres Strait Islander Commission Funds held in trust account. Funds held in the trust were received from the Aboriginal and Torres Strait Islander Commission under formal trust arrangements.

Consolidated

Moneys received are placed in a separate bank account and are granted to parties in accordance with the Grant Agreement. These moneys are not available for any other purpose of the Corporation and are not recognised in the financial statements.

IBA is a trustee of Downs Aboriginal and Islander Company Funds, a trust set up exclusively for charitable purposes. Its beneficiaries are the Aboriginal and Torres Strait Islander residents of the Darling Downs District of Queensland.




Note 20: Reporting of OutcomesNet cost of outcome delivery

2015 2014$’000 $’000

Expenses 179,136 199,559

Income from non-government sectorCommercial revenue 157,145 156,021

Net cost of outcome delivery 21,991 43,538

Statement of financial positionTotal assets 1,231,044 1,155,462 Total liabilities 45,585 39,216

Net assets 1,185,459 1,116,246

Statement of equityRetained earnings 209,447 198,770 Asset revaluation reserves 8,427 15,391 Contributed equity/capital 967,585 902,085 Total equity 1,185,459 1,116,246

Consolidated Outcome 1

As IBA has only one outcome, the above figures correspond to the Statement of Comprehensive Income and Balance Sheet.



Note 21: New Housing Fund

New Housing FundStatement of Comprehensive Incomefor the year ended 30 June 2015

2015 2014$’000 $’000

ExpensesWrite-down of assets 21A 11,756 5,813 Other 74 1,482 Total expenses 11,830 7,295

RevenueInterest 21B 30,847 30,152 Other 336 390 Total revenue 31,183 30,542

Total own-sourced income 31,183 30,542

Net contribution by services 19,353 23,247

New Housing FundStatement of Financial Positionas at 30 June 2015AssetsFinancial assetsCash 21C 25,187 29,409 Receivables 21D 471,555 447,405 Total financial assets 496,742 476,814

Total assets 496,742 476,814

LiabilitiesPayables 607 31 Total liabilities 607 31

Net assets 496,135 476,783

As per section 189(3) of the Aboriginal and Torres Strait Islander Act 2005 money held in the New Housing Fund may only be applied to make housing loans. Specific information on the New Housing Fund's operations and financial position, which has been included in the preceding statement and notes, is disclosed as follows:

Notes

Less: Own-source income




Note 21: New Housing Fund (continued)New Housing FundStatement of Financial Position (continued)as at 30 June 2015

2015 2014$’000 $’000

EquityParent entity interestCapital 429,397 429,397 Accumulated surplus/(deficit) 66,738 47,386 Total parent entity interest 496,135 476,783 Total equity 496,135 476,783

New Housing FundCash flow statementfor the period ended 30 June 2015

Operating activitiesCash receivedInterest 30,847 30,152 Other 336 420 Total cash received 31,183 30,572

Net cash from operating activities 21E 31,183 30,572

Investing activitiesCash receivedRepayments of loans 74,420 74,712 Total cash received 74,420 74,712 Cash usedLoans made 109,825 108,929 Total cash used 109,825 108,929

Net cash from investing activities (35,405) (34,217)

Net increase or (decrease) in cash held (4,222) (3,645) Cash at beginning of reporting period 29,409 33,054 Cash at the end of the reporting period 25,187 29,409

The above statements should be read with the accompanying notes.

Notes



Note 21: New Housing Fund (continued)2015 2014

$’000 $’000Note 21A: Write-down and impairment of assetsValue decrement 11,756 5,813 Total write-down and impairment of assets 11,756 5,813

Note 21B: Interest revenueInterest on bank account 666 624 Interest on housing loans 30,182 29,528 Total interest revenue 30,847 30,152

Note 21C: CashCash at bank and on hand 20,157 27,006 Cash at agents 5,030 2,403 Total cash 25,187 29,409

Note 21D: ReceivablesTrade debtors - -Other debtors - -Total other receivables - -

New Housing Fund onlyAt fair value - opening balance as at 1 July 447,405 420,484 Add: net loans movement at cost 35,984 34,216

(11,756) (5,813)

(78) (1,482) At fair value/cost closing balance 471,555 447,405

New Housing Funds loans (net) expected to be recoveredCurrent loans receivable 10,789 6,651 Non-current loans receivable 460,766 440,754 Total receivables 471,555 447,405

Note 21E: Cash flow reconciliationReconciliation of net surplus to net cash from operating activities

Net contribution by services 19,353 23,247 Loans fair value adjustment 11,830 7,295 (Increase)/Decrease in receivables - 30 Net cash from operating activities 31,183 30,572

Add/(Less): net gain/(loss) onre-measurement at fair value through profit and loss

Less: impairment movement through profit and loss




Note 22: Parent Entity - Indigenous Business Australia

2015 2014$’000 $’000

Note 22A: Statement of comprehensive income

Surplus after income tax on continuing operations 23,001 30,378 Total comprehensive income/(loss) 2,648 6,069

Note 22B: Statement of Financial PositionCurrent assets 348,156 301,586 Total assets 1,135,735 1,096,084 Current liabilities 11,526 11,746 Total liabilities 13,737 13,617Net assets 1,121,998 1,082,467

Note 22C: Statement of EquityRetained earnings 276,487 256,075 Reserves (51,133) (33,372)Contributed equity 896,644 859,764 Total equity 1,121,998 1,082,467



Note 22: Parent Entity - Indigenous Business Australia (continued)Note 22D: Statement of IBA's holding in subsidiaries

Country of incorporation

2015 2014

% %

Anderleigh Quarry Australia 63 63

Asset Leasing Trust Australia 100 100

Bowen Basin Holdings Pty Limited* Australia 100 100

Bowen Basin Investments Pty Limited* Australia 100 100

Cape Don Pty Limited Australia 90 90

Carpentaria Shipping Trust Australia 100 100

CDC Nominees (McArthur River Shipping) Pty Limited* Australia 100 100

CDC Nominees (TCTP) Pty Limited* Australia 100 100

Consolidated Manufacturing Enterprises Pty Limited Australia 75 75

Darwin Hotel Holdings Pty Limited Australia 100 100

Darwin Hotel Holdings Trust Australia 100 100

Darwin Hotel Holdings Trust #2 Australia 100 100

Darwin Hotel Holdings #2 Pty Ltd Australia 100 100

Dominician Indigenous Education Trust Australia 100 100

Fitzroy Lodge Investments Pty Limited Australia 100 100

Gagudju Crocodile Hotel Trust Australia 70 70

Gagudju Lodge Cooinda Trust Australia 52 52

Hotel Enterprises Pty Limited Australia 100 100

Hotel Holdings Trust Australia 100 100

Ikara Wilpena Enterprises Pty Ltd Australia 87 87

Ikara Wilpena Holdings Trust Australia 87 87

IBA Asset Management Pty Ltd Australia 100 100

IBA Insurance Holdings Pty Limited Australia 100 100

IBA (Property Holdings) Pty Limited Australia 100 100

IBA Property Investments Pty Limited* Australia 100 100

IBA Retail Asset Management Pty Ltd Australia 100 -

IBA Retail Property Trust Australia 100 -

IBA Tourism Asset Management Pty Ltd Australia 100 -

Indigenous Fishing Pty Limited* Australia 100 100

Indigenous Fishing Trust Australia 100 100

Indigenous Investment Participation Trust Australia 100 100

Indigenous Real Estate Investment Trust - Head Trust Australia 73 80

Kakadu Tourism (GCH) Pty Limited Australia 70 70

Kakadu Tourism (GLC) Pty Limited Australia 52 52

Leonora Investments Trust Australia 100 100

Leonora Investments Pty Limited* Australia 100 100

Li Ar Yalug Holding Trust Australia 89 91

Mungo Lodge Pty Limited Australia 100 100

Mungo Lodge Holdings Pty Limited* Australia 100 100

Mungo Lodge Trust Australia 100 100

North Stradbroke Enterprises Trust Australia 100 100

North Stradbroke Enterprises Pty Ltd Australia 89 89

Port Botany Transfer Station Trust** Australia 90 90

South Hedland Indigenous Property Trust Australia 100 100

Swanbrook Road Holding Trust Australia 75 75

Tennant Creek Enterprises Pty Limited Australia 100 100

Tennant Creek Enterprises Trust Australia 100 100

Tennant Creek Land Holding Trust Australia 90 90

Tennant Creek Supermarket Pty Limited Australia 90 90

Tjapukai Pty Limited Australia 100 100

Wildman Wilderness Lodge Pty Ltd** Australia 100 100

Wildman River Lodge Trust** Australia 100 100

Wilpena Pound Aerodrome Services Pty Ltd Australia 87 87

*Non-trading

**Entities sold before end of financial year

NamePercentage of equity interest held

by consolidated entity

08APPENDICES AND REFERENCESAPPENDIX A: CONSULTANTS 196

APPENDIX B: KEY OUTREACH ACTIVITIES 199

COMPLIANCE AND BETTER PRACTICE INDEX 202

FIGURES AND TABLES 207

GLOSSARY AND ABBREVIATIONS 209

ALPHABETICAL INDEX 210


APPENDIX A: CONSULTANTSTABLE A1: CONSULTANCIES, 2014–15

Name of Consultant Description of services

Selection Process1

Justification2 Sum of contract price $ (ex GST)

ACIL Allen Consulting (VIC) Business research

Limited tender B 14,680

AGS Fees Barton Professional services

Limited quotation C 9,177

Analytics Group Pty Ltd Professional services

Limited quotation B 31,855

Ashurst Australia Professional services


AVAIL Information Management Services



Beacon Consulting (Cairns) Professional services

Open tender B 2,400

BoardRoom Pty Ltd Secretarial Services


Bowchung Consulting Pty Ltd Professional services

Open tender C 129,216

Chartsmart Pty Ltd Professional services

Limited quotation A 35,420

Credit Wise PTY LTD Professional services


David Jess and Associates Professional services


Deloitte Touche Tohmatsu (Darwin)



Dransfield & Co Pty Ltd Business review Limited quotation C 327,385

Ernst & Young (WA) Professional services


Gongan Consultancy Pty Ltd Business review Open tender B 1,435

Hays Personnel Services (Aust) P/L

Recruitment Service


Inside Policy Pty Ltd Business review Limited quotation A 12,000

Ken Matthews AO Professional services


Knight Frank Australia Pty Ltd Professional services


PART 8: APPENDICES AND REFERENCES



Selection Process1


KPMG Financial Advisory Services (Australia) Pty Ltd

Business research


KPMG Financial Advisory Services (Australia) Pty Ltd



Macroplan Australia Investments Pty Ltd



Maria Storti Professional services


Morison Consulting Professional services


Mort Consultants Pty Ltd Professional services


Napier and Blakeley Professional services


Pacific Road Corporate Finance Pty Ltd



Parker and Partners Pty Ltd Professional services

Limited quotation A 900

PricewaterhouseCoopers Business process review


PricewaterhouseCoopers Business research


PricewaterhouseCoopers Professional services


Rob Gander Financial Planning Pty Ltd



RSM Bird Cameron Partners (Canberra)

Audit services Limited quotation A 14,720

RSM Bird Cameron Partners (Canberra)



Seymour Legal Professional services

Limited quotation B 390

Strategic Governance Group Business research


Taylor Byrne PTY LTD (Lismore)



Technology One Limited Professional services


Third Horizon Consulting Professional services


Thotana Consulting Pty Ltd Professional services


Thring Pastoral Company Business research




Selection Process1


Urbis Pty Ltd Professional services


Veda Advantage Professional services

Limited quotation B 439

Victory Concepts Business review Limited quotation B 1,100

WSP Environmental Pty Ltd Professional services


Total 1,192,673

1 Explanation of selection process terms drawn from the Commonwealth Procurement Rules (July 2012).Open tender: A procurement procedure in which a request for tender is published, inviting all businesses that satisfy the conditions for participation to submit tenders.Limited tender: A procurement procedure in which the procuring agency selects which potential suppliers are invited to submit tenders. This procurement process may only be used under certain defined circumstances.Limited quotation: Refers to a procurement process in which IBA invites a potential supplier to quote.Prequalified: An arrangement by which a number of suppliers, initially selected through an open tender process, may each supply property or services to an agency as specified in the panel arrangements.Quotes are sought from suppliers that have prequalified on the agency panels to supply to the government. This category includes standing offers and supplier panels where the supply of goods and services may be provided for a predetermined length of time, usually at a pre‑arranged price.

2 Justification for the decision to engage a consultant:• A: skills currently unavailable within IBA• B: need for specialised or professional skills• C: need for independent research or assessment.



APPENDIX B: KEY OUTREACH ACTIVITIESTABLE B1: KEYNOTE SPEECHES AND SIGNIFICANT PRESENTATIONS, 2014–15

Date Event Details

15 Oct 2014 Aboriginal Enterprises in Mining, Exploration and Energy Ltd Conference

Darwin, NT

Chris Fry, IBA CEO, presented ‘Growing your Business’.

4–5 Dec 2014 North Queensland Land Council PBC Workshop—Developing Business Opportunities

Cairns, Qld

Beau Hodge, Manager Traditional Owner and Sustainability Unit, presented an information session on IBA to prescribed body corporates and claim groups.

5 Dec 2014 Indigenous Investment Principles Working Group Forum

Sydney, NSW

IBA brought together over 20 Traditional Owner groups from across Australia to present the draft Indigenous Investment Principles. The principles provide a framework for communities to understand their economic circumstances; develop a purpose and a clear investment mandate from the group; create a robust system of governance which has authority; and implement their investment process to ultimately achieve the desired outcomes.

26 Jan 2015 Saltwater Freshwater Festival

Coffs Harbour, NSW

IBA reached 3,500 attendees through brand awareness activities, staff participation at a stall and a panel discussion facilitated by IBA’s CEO, a home loan customer, Lloyd and Bridgett Lynwood, and a business loan customer, Clayton Donovan.

11 May 2015 Official opening of Tjapukai

Caravonica, Qld

Leo Bator, IBA Chief Operating Officer (COO), participated in the official opening of Tjapukai Aboriginal Cultural Park.

26–27 May 2015 IBA’s Independent Directors and Committee Members Workshop

Sydney, NSW

The workshop provided nominee directors of IBA’s investment subsidiaries, committee members and senior IBA staff with the opportunity to discuss and learn from common experiences and examples of best practice. This first time event assisted IBA to improve our outcomes in Indigenous engagement, corporate governance, financial and risk management including workplace health and safety, and fraud control.

5 Jun 2015 Indigenous Investment Principles Working Group Forum

Darwin, NT

IBA hosted the forum, where Indigenous organisations came together and endorsed the Indigenous Investment Principles.


Date Event Details

17–19 Jun 2015 National Native Title Conference

Port Douglas, Qld

CEO Chris Fry, COO Leo Bator and four other IBA representatives attended the conference. IBA facilitated a presentation on the Indigenous Investment Principles by representatives of the drafting group, which was well received by conference participants.

24–25 Jun 2015 Working in Partnership workshop, Australian Government Department of Industry and Science

Broken Hill, NSW

David Brudenall, Acting General Manager Enterprises, gave a presentation on Indigenous Business Development. The Working in Partnership program brings together mining, supplier and community interests.

Note: IBA also held numerous Indigenous Home Information Sessions across various regions of Australia.

TABLE B2: SPONSORSHIP ACTIVITIES, 2014–15

Date Conference, event or award

IBA’s involvement

6 Jul 2014 NAIDOC on the Peninsula

Canberra, ACT

Organised by the Australian Institute of Aboriginal and Torres Strait Islander Studies, this event is the largest Indigenous event in the Australian Capital Territory, attracting approximately 4,000 people. IBA sponsored this event and provided staff to work at the IBA stall on the day.

11 Jul 2014 Aboriginal Hostels Limited annual NAIDOC Week luncheon

Canberra, ACT

This annual event is considered the marquee NAIDOC Week event in the Australian Capital Territory. It provides Indigenous stakeholders with the opportunity to celebrate Indigenous achievement.

14–15 Oct 2014 Aboriginal Enterprises in Mining, Exploration and Energy Ltd Conference

Darwin, NT

IBA’s sponsorship of this event provided the organisation with a keynote speaking address and the opportunity to participate in a panel discussion, and supported an organisation that encourages Indigenous economic development in the resources industry.

15 Nov 2014 Northern Territory Tourism Awards

Darwin, NT

IBA has sponsored the Indigenous Tourism Award category at this event for a number of years as it recognises the achievements of Indigenous tourism businesses in the Northern Territory. The award was presented by IBA’s CEO.

26 Jan 2015 Saltwater Freshwater Festival

Coffs Harbour, New South Wales

This was IBA’s fourth year sponsoring this event, which is organised by the Saltwater Freshwater Arts Alliance Aboriginal Corporation. IBA reached 3,500 attendees through brand awareness activities, staff participation at a stall and a panel discussion facilitated by IBA’s CEO, a home loan customer and a business loan customer.

10 Apr 2015 National Tourism Awards

Adelaide, SA

This is the fourth time IBA has sponsored the Indigenous Tourism Award category at this event, which is considered the pinnacle of achievement for the tourism industry across Australia. The award was presented by IBA’s Senior Tourism Portfolio Manager.



Date Conference, event or award

IBA’s involvement

27 May 2015 Supply Nation Connect 2015—Supplier of the Year Award

Sydney, NSW

IBA sponsored the Supplier of the Year category of the Supply Nation Connect 2015 Supplier Diversity Awards. IBA’s CEO made a keynote address and staff members managed a stall at the Indigenous Business Tradeshow.

27 May 2015 Queensland Reconciliation Awards

Brisbane, Qld

IBA sponsors the Business category of this award, which encourages and rewards businesses and individuals who strive to actively promote reconciliation in Queensland.

Continuous AFL–National Indigenous Radio Service broadcast partnership

IBA’s sponsorship of this partnership provides a range of promotional benefits for its programs through numerous interview and advertising opportunities for IBA and its customers.

TABLE B3: MEDIA RELEASES, 2014–15

Date Title of media release

17 Jul 2014 IBA accepts challenge to further Indigenous Australians’ business aspirations

18 Sep 2014 Dr Calma speaks on overcoming adversity

17 Oct 2014 New houses to build better health outcomes in remote Indigenous communities

22 Oct 2014 Home ownership on Indigenous land now a reality in Yarrabah

31 Oct 2014 Indigenous venture wins Gold Plate Award for excellence

7 Nov 2014 Solid outcomes for IBA highlight Indigenous customer focus

3 Mar 2015 IBA discounts its home loan rates for a limited time

30 Mar 2015 Minister congratulates IBA on progress of Indigenous property investment fund

25 May 2015 IBA receives awards for excellence and good governance

26 Jun 2015 Back to back awards for IBA’s reporting excellence

Note: IBA also distributed numerous media releases throughout the year regarding Into Business™ workshop dates and Indigenous Home Ownership Information Sessions across various regions of Australia.


COMPLIANCE AND BETTER PRACTICE INDEXIBA is bound by various legislative requirements to disclose certain information in its annual report. The main requirements are detailed in the Commonwealth Authorities (Annual Reporting) Orders 2011 (CA Orders 2011) and the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act).

IBA’s commitment to better practice in its annual reporting is demonstrated through its compliance, while not mandatory, with some additional principles from the:

• Requirements for Annual Reports for Departments, Executive Agencies and Other Non‑corporate Commonwealth Entities (RARD), June 2015, Department of the Prime Minister and Cabinet

• Corporate Governance Principles and Recommendations (CGPR) with 2014 Amendment, 3rd edition, Australian Securities Exchange Corporate Governance Council.

Requirement Reference Page location

Mandatory as per the CA Orders 2011 and the ATSI Act

New Housing Fund financial statements ATSI Act, subsection 189(2) 190

Consultants engaged ATSI Act, subsection 189(1)(b) 196–198

Approval by directors CA Orders 2011, clause 6 iv

Details of exemptions granted by Finance Minister in regard to reporting requirements

CA Orders 2011, clause 7 91

Parliamentary standards of presentation CA Orders 2011, clause 8 Throughout

Plain English and clear design CA Orders 2011, clause 9 Throughout

Enabling legislation, functions and objectives CA Orders 2011, clause 10 90

Responsible Minister CA Orders 2011, clause 11 91

Ministerial directions CA Orders 2011, clause 12, ref ATSI Act, sections 151 and 189

91

Government policy orders CA Orders 2011, clause 12 91

Work health and safety CA Orders 2011, clause 12, ref Work Health and Safety Act 2011, Schedule 2, Part 4

131

Ecologically sustainable development and environmental performance

CA Orders 2011, clause 12, ref Environment Protection and Biodiversity Conservation Act 1999, section 516A

118–119

Information Publication Scheme statement CA Orders 2011, clause 12, ref Freedom of Information Act 1982, Part II

118




Information about directors CA Orders 2011, clause 13 92–98, 103

Organisational structure (for IBA and subsidiaries) CA Orders 2011, clause 14 104–105, 194

Location of major activities and facilities CA Orders 2011, clause 14 123, inside back cover

Board committees and their responsibilities CA Orders 2011, clause 14 101–102

Education and performance review processes for directors

CA Orders 2011, clause 14 99

Ethics and risk management policies CA Orders 2011, clause 14 111–114

Statement on governance CA Orders 2011, clause 14 90–116

Related entity transactions CA Orders 2011, clause 15 99–100

Significant decisions or issues under section 19 of PGPA Act

CA Orders 2011, subclause 16(a)

117

Operational and financial results CA Orders 2011, subclause 16(b)

6–10, 11–14, 136–138

Key changes to IBA’s state of affairs or principal activities

CA Orders 2011, subclause 16(c)

None, 117

Amendments to IBA’s enabling legislation and to any other legislation directly relevant to its operation

CA Orders 2011, subclause 16(d)

None

Significant judicial or administrative tribunal decisions

CA Orders 2011, clause 17(a) 117

Reports made about IBA CA Orders 2011, clause 17(b) 117

Obtaining information from subsidiaries CA Orders 2011, clause 18 All relevant material provided by subsidiaries

Indemnities and insurance premiums for officers CA Orders 2011, clause 19 100

Compliance index CA Orders 2011, clause 21 202–206

Fraud risk assessment and control Public Governance, Performance and Accountability Rule 2014, section 10

113–114

Financial statements Public Governance, Performance and Accountability Act 2013 (PGPA Act) , section 42 and PGPA (Financial Reporting) Rule 2015

140–194

Financial statements certification: Auditor‑General’s Report

PGPA Act, section 43 140–141

Financial statements certification: a statement signed by the directors

PGPA Act, section 42 142



Better practice as per the RARD

Table of contents RARD 8(3) iii

Index RARD 8(3) 210–220

Glossary RARD 8(3) 209

Contact officers RARD 8(3) ii

Internet home page and internet address for report

RARD 8(3) inside back cover

Review by CEO RARD 9(1) 8–10

Outlook for following year RARD 9(2) 6–7, 9, 38, 60, 87, 134

Roles and functions RARD 10(1) 4

Where outcome and program structures differ from Portfolio Budget Statements/Portfolio Additional Estimates Statements or other portfolio statements accompanying any other additional appropriation bills (other portfolio statements), details of variation and reasons for change

RARD 10(2) Not applicable

Review of performance RARD 11(1) 11–14, 16–38, 40–60, 62–87

Actual performance in relation to deliverables and KPIs set out in Portfolio Budget Statements/Portfolio Additional Estimates Statements or other portfolio statements

RARD 11(2) 11–14

Where performance targets differ from the Portfolio Budget Statements/Portfolio Additional Estimates Statements, details of both former and new targets, and reasons for the change

RARD 11(2) 42

Contribution of risk management in achieving objectives

RARD 11(3) 38, 59–60, 86, 111–114

Performance against service charter customer service standards, complaints data, and response to complaints

RARD 11(4) 115




Discussion and analysis of financial performance RARD 11(5) 8–9, 136–139

Agency resource statement and summary resource tables by outcomes

RARD 11(7) 11–14

Names of the senior executives and their responsibilities

RARD 12(3) 104–110

Senior management committees and their roles RARD 12(3) 111

Corporate and operational planning and associated performance reporting and review

RARD 12(3) 92

Policy and practices on the establishment and maintenance of appropriate ethical standards

RARD 12(3) 99, 113–114

How nature and amount of remuneration for Senior Executive Service officers is determined

RARD 12(3) 111

Significant developments in external scrutiny RARD 12(4) 117

Management of human resources RARD 12(5) 122–134

Training and development undertaken and its impact

RARD 12(6) 127

Impact and features of enterprise or collective agreements, individual flexibility arrangements, determinations, common law contracts and Australian Workplace Agreements

RARD 12(6) 130

Statistics on staffing RARD 12(7) 123, 126

Number of ongoing and non‑ongoing employees for the current and preceding year who identify as Indigenous

RARD 12(8) 123, 126

Assessment of effectiveness of assets management

RARD 12(12)–(13) 31, 34–35, 36, 52–55, 58–60, 73–83

Assessment of purchasing against core policies and principles

RARD 12(13) 115–116

Procurement initiatives to support small business RARD 12(26 ) 42, 50, 116

Disability reporting mechanisms RARD 14(3) 118



Better practice as per the CGPR

Lay solid foundations for management and oversight: A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated.

Principle 1 92, 99, 101–102, 103

Structure the board to add value: A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.

Principle 2 92–98

Act ethically and responsibly: A listed entity should act ethically and responsibly.

Principle 3 99, 113–114

Safeguard integrity in corporate reporting: A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.

Principle 4 101–102, 114, 140–141

Make timely and balanced disclosure: A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities.

Principle 5 117

Respect the rights of security holders: A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.

Principle 6 Not applicable

Recognise and manage risk: A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.

Principle 7 111–113

Remunerate fairly and responsibly: A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders.

Principle 8 100, 102, 130



FIGURES AND TABLESList of figuresFigure 1: How IBA’s programs achieve its vision 11

Figure 2: Distribution of new housing loans, by geographical area, 2014–15 20

Figure 3: New housing loans, by customer income, 2014–15 22

Figure 4: New housing loans, by Accessibility/Remoteness Index of Australia classifications, 2014–15 23

Figure 5: Indigenous Home Ownership Program enquiries, by source, 2014–15 25

Figure 6: New housing loans, by commencing interest rate, 2014–15 29

Figure 7: New housing loans, by loan term, 2014–15 30

Figure 8: Total value of housing loans in portfolio over ten years to 2014–15 31

Figure 9: Total housing loans, by state or territory, 30 June 2015 34

Figure 10: Total housing loans, by Accessibility/Remoteness Index of Australia classifications, 30 June 2015 34

Figure 11: Comparison of arrears loan balances of IBA and mainstream lenders, March 2015 36

Figure 12: Into Business™ workshop participants, by region, 2014–15 46

Figure 13: Total value, number and distribution of business supports, by regional office, 2014–15 47

Figure 14: New business loans approved, by purpose, 2014–15 52

Figure 15: Total business loan portfolio, by number and value, over five years to 30 June 2015 53

Figure 16: Business Development and Assistance Program provision for doubtful debt, over five years to 2015 54

Figure 17: Total business loans, by state and territory, number and value, 30 June 2015 54

Figure 18: Active portfolio distribution based on ABS Remoteness Areas and ARIA+ values (2006), by number and value, 30 June 2015 55

Figure 19: Active loan portfolio industry concentration, by number and value, 30 June 2015 55

Figure 20: Active loan portfolio arrears, over five years to 30 June 2015 58

Figure 21: IBA investments, by beneficial impacts, number and percentage, 2014–15 66

Figure 22: Value of IBA equity and Indigenous equity in the investment portfolio and percentage owned by Indigenous partners, over five years to 30 June 2015 67

Figure 23: IBA’s investment life cycle 70


Figure 24: IBA’s share of investment portfolio, by metropolitan, regional and remote areas, 30 June 2015 73

Figure 25: Principal investment sites, by asset cluster and location, 30 June 2015 74

Figure 26: IBA’s share investment portfolio, by sector, 30 June 2015 76

Figure 27: Corporate governance framework, 30 June 2015 90

Figure 28: IBA organisational chart, 30 June 2015 104

Figure 29: Net asset growth, 30 June 2015 137

Figure 30: Consolidated total assets, 30 June 2015 137

Figure 31: Consolidated income, 2014–15 138

List of tablesTable 1: Indigenous Home Ownership Program performance summary,

measured against the portfolio budget statements targets for 2014–15 17

Table 2: Business Development and Assistance Program performance summary, measured against the portfolio budget statements targets for 2014–15 41

Table 3: Business loan interest rates, 30 June 2015 53

Table 4: Equity and Investments Program performance summary, measured against the portfolio budget statements targets for 2014–15 63

Table 5: Investment selection criteria 71

Table 6: Commercial property portfolio overview, 30 June 2015 77

Table 7: Industrial portfolio overview, 30 June 2015 78

Table 8: Retail portfolio overview, 30 June 2015 79

Table 9: Tourism and hospitality portfolio overview, 30 June 2015 80

Table 10: Value of services and number of transactions provided to directors, 2014–15 100

Table 11: Directors’ attendance at board and committee meetings, 2014–15 103

Table 12: Performance against the principles of ecologically sustainable development, 2014–15 119

Table 13: Staff numbers by classification and location, 30 June 2015 123

Table 14: IBA staff characteristics, over five years to 30 June 2015 123

Table A1: Consultancies, 2014–15 196

Table B1: Keynote speeches and significant presentations, 2014–15 199

Table B2: Sponsorship activities, 2014–15 200

Table B3: Media releases, 2014–15 201



GLOSSARY AND ABBREVIATIONS

Term Meaning

ABS Australian Bureau of Statistics

ALT Asset Leasing Trust

ARIA Accessibility/Remoteness Index of Australia, defined as the measure of remoteness and determined by the road distances to the nearest ABS‑defined Urban Centres.

ATSI Act Aboriginal and Torres Strait Islander Act 2005

ATSIC Act Aboriginal and Torres Strait Islander Commission Act 1989

CDC Aboriginal and Torres Strait Islander Commercial Development Corporation

CEIs Chief Executive Instructions

CEO Chief Executive Officer

CFO Chief Financial Officer

COO Chief Operating Officer

Enterprise Agreement Details IBA’s employment conditions and is approved by the Workplace Authority.

EPBC Act Environmental Protection and Biodiversity Conservation Act 1999

ESD ecologically sustainable development

FOI Act Freedom of Information Act 1982

IBA Home Loan Rate The variable housing loan interest rate for owner‑occupied properties set by IBA from time to time. At 30 June 2015, the IBA Home Loan Rate was 5.25 per cent.

IBA Income Amount Equivalent to 100 per cent of the national average weekly male earnings, as calculated by the ABS. At 30 June 2015, the IBA Income Amount was $79, 664.

IEDT Indigenous Economic Development Trust

I‑REIT Indigenous Real Estate Investment Trade

LVR loan‑to‑valuation ratio; this ratio is calculated by dividing the housing loan amount by the value of the property. For example, a $50,000 loan against a home that is worth $100,000 has an LVR of 50 per cent. The closer the LVR is to 100 per cent, the riskier it is viewed by lenders.

PBS portfolio budget statements

PGPA Act Public Governance, Performance and Accountability Act 2013

RAP Reconciliation Action Plan

SES Senior Executive Service


ALPHABETICAL INDEXAabbreviations and glossary, 209Aboriginal and Torres Strait Islander Act 2005, 5, 90, 116, 139Aboriginal and Torres Strait Islander Commercial Development Corporation, 5Aboriginal and Torres Strait Islander Commission, 5Aboriginal and Torres Strait Islander Commission Act 1989, 5Aboriginal and Torres Strait Islander people employees, IBA, 123, 126Accessibility/Remoteness Index, 23accountability and management, 103–117Accountable Authority Instructions, 91achievements, 3, 18–25, 66–70affordable housing loans see Indigenous Home Ownership Programafter‑care arrangements, loans, 35–36Angurugu, Northern Territory, 24Anti‑Money Laundering and Counter Terrorist Financing Act 2006, 117APS Statistical Bulletin, 118arrears management

Business Development and Assistance Program, 58–59Indigenous Home Ownership Program, 35–36

assessment criteria, home loans, 28asset leasing initiatives, 50, 68 see also Asset Leasing Trust; remote asset

leasing solutionsAsset Leasing Trust, 73, 82

trustee arrangements audit, 114asset management, Indigenous Home Ownership Program, 31, 34–36Audit Committee, 101–102Auditor‑General see Australian National Audit Officeaudits

ANAO financial, 140–141Asset Leasing Trust trustee arrangements, 114Indigenous Economic Development trustee arrangements, 114Indigenous Home Ownership Program, 38, 117information communications technology governance, 114investment financial reporting, 114project governance, 114work health and safety system, 131

Australia Day Awards, 130Australian Bureau of Statistics, 22, 23, 24, 42



Australian Federal Police investigation, 114Australian National Audit Office, 114

audit of Indigenous Home Ownership Program, 38, 117independent audit report, 140–141

Australian Research Council, 51awards, 130

BBoard, 2, 92–103

committees, 101–103member profiles, 94–98role and responsibility, 92

Board Governance Directions, 91business continuity plan, 112Business Development and Assistance Program, 5, 8, 11

business loan portfolio, 52–55, 58–59business opportunities, 44–47, 50–51impacts and challenges, 43–44objectives, 13, 40outlook, 60performance review, 40–42redevelopment and reorganisation, 43–44, 45risk management, 59–60

Business Development Initiatives, 44–45business loan portfolio, 52–55, 58–59business opportunities, 44–47, 50–51business partnerships, 50business planning and support services, 46–47business skills development programs, 45

Ccapability development

commercial, 60, 62, 65, 68–69staff cultural, 126, 127, 134see also learning and development programs, staff; training and skills opportunities

career planning workshop, 127CareerTrackers, 2, 9, 124Chair

certification of financial statements, 142review, 6–7

Charles Sturt University, 51Chief Executive Instructions, 113, 115, 116


Chief Executive Officercertification of financial statements, 142review, 8–10

Chief Executive Officer Awards, 130Chief Finance Officer, certification of financial statements, 142classifications, staff, 123Code of Conduct, 99, 113Comcover, 100Comcover Risk Management Benchmarking Survey 2015, 113commercial capability development, 60, 62, 65, 68–69Commercial Markets team, 42, 43, 60commercial property investments, 76–77committees

Board, 101–103management, 111

Commonwealth Authorities (Annual Reporting) Orders 2011, 91, 99, 101Commonwealth Bank of Australia, 50Commonwealth Disability Strategy, 118Commonwealth Ombudsman complaint, 117Community Development Program, remote asset leasing to, 82Community Volunteer Days, 129complaints handling, 115compliance assurance measures, 115compliance audits, 114compliance index, 202–206comprehensive income, 136, 139 see also financial statementsconference participation program, 45consultancies, 116, 196–198consultative forums, 111, 130contact details, inside back covercontinuing employees, 123credit policy, 9, 113cultural capability initiatives, 126, 127, 134Cultural Engagement and Education Framework, 126customer profiles, Indigenous Home Ownership Program, 22Customer Service Charter, 115

Ddebt recovery and management see arrears management; risk managementdeliverables see key program deliverablesdeposits, home loans, 30 see also loan‑to‑valuation ratiodisability reporting, 118diversity, workplace, 126divestment of assets, 6, 68Dominican Indigenous Education Trust, 73, 83



Eecologically sustainable development performance, 118–119education grants and scholarships, 83emerging markets, 24, 29employee relations, 130employment opportunities, 64, 66, 67, 71engagement strategies, 67, 72enquiries, home ownership, 25Environment Protection and Biodiversity Conservation Act 1999, 118environmental reporting, 118Equity and Investments Program, 8, 11

divestment of assets, 6, 68impacts, 64–65investment strategy, 70–72investments portfolio, 73–83objectives, 14, 62outlook, 87performance review, 62–63program achievements, 66–70risk management, 86

ethical standards, 99, 113–114Executive Committee, 111Executive Management Team, 103, 106–110Expert Indigenous Working Group, submission to, 116external scrutiny and reporting, 117

Ffeature stories

Business Development and Assistance Program, 48–49, 56–57Equity and Investments Program, 72, 84–85Indigenous Home Ownership Program, 26–27, 32–33, 37

Fee Finance loan, 19, 27female employees, 123figures and tables, 207–208Finance and Investment Committee, 102financial snapshot, 136–139 see also financial statementsfinancial statements, 143–194first home buyer loans, 3, 16, 19, 29Fraud Control Plan, 113fraud control systems, 9, 113fraud investigation, 114Freedom of Information Act 1982, 117, 118freedom of information requests, 118Frontline Management Certificate IV, 9, 127funding, 18, 138 see also financial snapshot; financial statementsfunding agreement, with PM&C, 82


GGalambany Network’s Annual Conference, 127Galambany Staff Network, 2, 9, 126, 130, 134Garma Festival, 126geographical distribution

business loans, 54–55housing loans, 20–21, 34investments portfolio, 73–75

glossary and abbreviations, 209governance charter, 93, 99governance framework, 90–92 see also internal governancegovernment policy orders, 91

HHarvard ManageMentor, 9, 127health, employee, 131, 134Health and Safety Committee, 130, 131highlights 2014–15, 2–3history, organisational, 5Home Loan Rate, 28, 29home loan requirements, 6, 28–30home ownership participation rate, 17Hope Vale, Queensland, 24House of Representatives Standing Committee on Economics Inquiry into

Home Ownership, submission to, 116housing loans, geographical distribution, 20–21, 34human resource management, 122–134

IIBA Enterprise Agreement, 113, 129, 130impacts and challenges

Business Development and Assistance Program, 43–44Equity and Investments Program, 64–65Indigenous Home Ownership Program, 17–18

Income Amount, 22, 29indemnity and insurance, 100independent review, Board performance, 99 see also auditsIndigenous Community Volunteer Days, 129Indigenous Economic Development Trust, 73, 82

trustee arrangements audit, 114Indigenous Economic Impact Reporting tool, 67Indigenous employees, 123, 126Indigenous Employment Strategy, 126, 130Indigenous equity, 67



Indigenous Home Ownership Program, 2, 5, 8, 11, 12ANAO performance audit, 38, 117asset management, 31, 34–36impacts and challenges, 17–18loan products and parameters, 28–30objectives, 12, 16outlook, 38performance review, 16–17program achievements, 18–25review of policies, 6, 16risk management, 38

Indigenous Investment Principles, 2, 68, 69, 87Indigenous Land Council, 7Indigenous Procurement Policy, 6, 8, 50Indigenous Real Estate Investment Trust, 8, 73, 76, 83, 87Indigenous Tourism Champions Program, 45induction courses, 127industrial investments, 78industry exposures, Business Development and Assistance Program, 55Information Communications and Technology Committee, 111information communications technology governance audit, 114Information Publication Scheme Plan, 118information sessions, Indigenous Home Ownership Program, 25, 26injuries, staff, 131innovations, 67–68Inquiry into Home Ownership, submission to, 116interest rates

business loans, 52–53home loans, 6, 28–29, 35

internal audits, 114internal governance, 103–117Into Business™ workshops, 40, 42, 45–46, 59investment capacity development, 65investment financial reporting audit, 114investment life cycle, 70investment strategy, Equity and Investments Program, 70–72investments portfolio, Equity and Investments Program, 73–83

JJarwun program, 126, 127judicial decisions, 117

Kkey performance indicators, 12, 13, 14, 17, 41, 63key program deliverables, 12, 13, 17, 41


Llearning and development programs, staff, 9, 126, 127, 134legislative framework, 5, 90–91lending commitment target, 16letter of transmittal, ivloan portfolio balances, 31loan products and parameters

Business Assistance and Development Program, 52–53Indigenous Home Ownership Program, 19, 28–30

loan repaymentsBusiness Development and Assistance Program, 40, 42Indigenous Home Ownership Program, 18, 35

loan‑to‑valuation ratio, 35loans, written off, 40, 42, 53, 59low‑income customers, assistance, 22

Mmale employees, 123management committees, 111management of trustee arrangements audit, 114market sectors, investments, 76–81marketing and promotion, 25 see also outreach activitiesmeetings, Board, 93, 103Melbourne Business School MURRA Indigenous Business Master Class

Program, 45mentoring program, 127, 134Milikapiti, Northern Territory, 24Milyakburra, Northern Territory, 24ministerial directions, 91mortgagee‑in‑possession arrangements, 36MURRA Indigenous Business Master Class Program, 45

NNAIDOC Week breakfast, 2, 128National Australia Bank, 50National Disability Strategy 2010–20, 118New Housing Fund, 139New South Wales Department of Family and Community Services, 23New South Wales Remote Aboriginal Home Ownership Scheme, 23non‑ongoing employees, 123Northern Territory Department of Business, 50



Oobjectives

Business Development and Assistance Program, 13, 40Equity and Investments Program, 14, 62Indigenous Home Ownership Program, 12, 16organisational, 4

ongoing employees, 123online learning tools, 127operating results, 136, 139 see also financial statementsorganisational structure, 104–105outcome and program structure, 11outlook, 134, 139

Business Development and Assistance Program, 60Equity and Investments Program, 87Indigenous Home Ownership Program, 38

outreach activities, 4, 199–201Indigenous Home Ownership Program, 25

overview, 2–14

PPalm Island, Queensland, 24participation rate, home ownership, 17partnerships, business, 50people management, 122–134People Plan, 130, 134performance indicators see key performance indicatorsperformance management agreements, 127performance overviews, 11–14

Business Development and Assistance Program, 40–42Equity and Investments Program, 62–63Indigenous Home Ownership Program, 16–17

pooled investment opportunities, 6, 68, 70, 87portfolio budget statements, 12, 13, 14, 42, 91portfolio growth, housing loans, 25portfolio management model, 70–71Portfolio Review Committee, 111portfolio value, Business Development and Assistance Program, 53–54Prime Minister and Cabinet portfolio, 5, 91, 117prioritised applications, 24procurement policies, government, 6, 43, 65, 116 see also Indigenous

Procurement Policyprogram achievements

Equity and Investments Program, 66–70Indigenous Home Ownership Program, 18–25

program deliverables see key program deliverables


project governance audit, 114promotional activities see marketing and promotion; outreach activitiesproperty investments, commercial, 76–77Public Governance, Performance and Accountability Act 2013, 5, 91Public Interest Disclosure Act 2013, 113public interest disclosures, 113–114purchasing and procurement, 115–116

RReconciliation Action Plan, 126, 128–129red tape reduction initiatives, 114regional and remote areas, services in, 19, 23, 24 see also emerging

markets; geographical distributionrelated entity transactions, 99–100remote and regional areas see regional and remote areas, services inremote asset leasing solutions, 82Remote Jobs and Communities Program, remote asset leasing to, 82remuneration

Board members, 100Senior Executive Officers, 180

Remuneration and Nomination Committee, 102Remuneration Committee, 111research programs (new business sectors), 45, 51responsible minister, 91retail investments, 79Rewards and Recognition Framework, 130risk management

Business Development and Assistance Program, 59–60Equity and Investments Program, 86Indigenous Home Ownership Program, 38organisational, 9, 111–113

Risk Management Policy and Framework, 112role, organisational, 4–5

Ssafety, employee, 131Scholarships Committee, 111secondments, staff, 126selection processes, investments, 71Senior Executive Staff Remuneration Committee, 111services agreement, 50skills development programs, 45, 65, 67, 71social housing tenants, home loans for, 2, 23, 24staff statistics, 123Stakeholder Engagement Strategy, 4



Strategic Economic Development Initiative Committee, 111Strategic Economic Development Initiatives, 42, 44–45study assistance, 127submissions, 116subsidiaries, 101, 114, 136, 194, 199, see also financial statementssupply chain opportunities, 65, 66Supply Nation, 65Supply Nation Connect 2015 conference, 50surplus, 9, 63, 136 see also financial statements

Ttables and figures, 207‑208TAFE New South Wales Western Institute, 50temporary employees, 123Torres Strait Regional Authority

services agreement with, 50total assets, 5, 136–137, 139 see also financial statementstourism and hospitality investments, 80–81tourism business opportunities, 68 see also Indigenous Tourism

Champions Program; tourism and hospitality investmentstraining and skills opportunities, 45, 65, 67, 71 see also learning and

development programs, stafftransmittal letter, ivTree of Knowledge (artwork), 9, 124trustee arrangements audit, 114trusts, Equity and Investments Program, 82–832014–15 highlights, 2–32014–15 portfolio budget statements, 12, 13, 14, 422015–16 Corporate Plan, 7, 92, 1142015–17 People Plan, 130, 134

UUmbakumba, Northern Territory, 24Understanding Indigenous Business study, 51University of Technology Sydney, 51

VValuation Committee, 111vision, organisational, 4, 11


Wwellbeing, employee, 131, 134work health and safety system, audit, 131work‑related injuries, 131workers’ compensation premiums, 131Workplace Consultative Committee, 111, 130workplace diversity, 126Workplace Health and Safety Committee, 111write‑offs, Business Development and Assistance Program loans, 40,

42, 53, 59Wujal Wujal, Queensland, 24Wurrumiyanga, Northern Territory, 24

YYarrabah, Queensland, 24

year ahead, 9–10 see also outlook

Contact informationIBA staff are located in 17 offices across Australia, either in an IBA office or co‑located in a local Indigenous Coordination Centre. Co‑located offices are marked with an asterisk below.

For more information, visit IBA’s website at iba.gov.au or call 1800 107 107.

AUSTRALIAN CAPITAL TERRITORY

National OfficeL2/15 Lancaster PlaceMajura Park ACT 2609Ph: 02 6110 2700 Fx: 02 6246 6391

NEW SOUTH WALES

SydneyL9/300 Elizabeth StreetSurry Hills NSW 2010Ph: 02 9207 6350 Fx: 02 9212 4398

Coffs Harbour*17 Duke StreetCoffs Harbour NSW 2450Ph: 02 5622 8890 Fx: 02 6246 6589

GraftonKing ArcadeShop 9/22–26 King StreetGrafton NSW 2460Ph: 02 6649 1902 Fx: 02 6643 5077

Tamworth*U2/180 Peel StreetNorth Tamworth NSW 2340Ph: 02 5712 9090 Fx: 02 6246 6290

Wagga Wagga70 Baylis StreetWagga Wagga NSW 2650Ph: 02 6932 3330 Fx: 02 6932 3339

NORTHERN TERRITORY

Darwin*Jacana HouseL4/39–41 Woods StreetDarwin NT 0800Ph: 08 8936 1080 Fx: 08 8941 2085

Alice Springs*Jock Nelson BuildingL2/16 Hartley StreetAlice Springs NT 0870Ph: 08 8958 4290 Fx: 02 6246 6300

QUEENSLAND

BrisbaneL14/300 Queen StreetBrisbane QLD 4000Ph: 07 3008 8300Fx: 07 3211 0399

Cairns59 McLeod StreetCairns QLD 4870Ph: 07 4048 8480 Fx: 07 4031 0766

Rockhampton*L1/36 East StreetRockhampton QLD 4700Ph: 07 4837 0090 Fx: 02 6246 6594

Townsville*L4/235 Stanley StreetTownsville QLD 4810Ph: 07 4417 1090 Fx: 02 6246 6296

SOUTH AUSTRALIA

AdelaideL7/44 Waymouth StreetAdelaide SA 5000Ph: 08 8307 8900 Fx: 02 6246 6277

TASMANIA

HobartHobart Corporate CentreL3/85 Macquarie StreetHobart TAS 7000Ph: 03 6270 2252 Fx: 03 6270 2223

VICTORIA

MelbourneL10/460 Bourke StreetMelbourne VIC 3000Ph: 03 9920 6009 Fx: 02 6246 2641

WESTERN AUSTRALIA

Broome*1 Short StreetBroome WA 6725Ph: 08 9138 7890 Fx: 02 6246 6302

PerthL7/140 St Georges Terrace Perth WA 6000Ph: 08 9229 1400 Fx: 08 9481 3815

1800 107 107 | iba.gov.au |

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