1.1 Overview

The Northern Land Council (NLC), the parent entity, is a representative body with statutory authority under the Aboriginal Land Rights (Northern Territory) Act 1976. It also has responsibilities under the Native Title Act 1993 and the Pastoral Land Act 1992. It is a not-for-profit entity. The objectives of the NLC are to:

• Advocate, protect and acquire Aboriginal property rights and interest in our traditional lands, water and seas through land claims and the native title process.
• Ensure the sustainable use and management of natural and cultural resources on Aboriginal lands.
• Protect Aboriginal sacred sites, places and objects of significant cultural heritage.
• Support Aboriginal people to maintain sustainable communities, outstations and healthy lives.
• Facilitate economic opportunities that lead to viable and sustainable regional commercial activities and development in the regions.
• Advocate on behalf of Aboriginal people to raise broader community awareness of the role and vision of the NLC.
• Operate in accordance with best practice and reporting standards and obligations.

The NLC is a statutory authority formed within the provision of Section 21 of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). The NLC receives appropriations from the Aboriginals Benefit Account (ABA) pursuant to ministerially approved estimates prepared in accordance with Section 34 of the Act and made available under Section 64 of the Act.

The NLC is structured to meet the following outcomes:

Outcome 1: Access to Aboriginal Land is managed effectively and efficiently.

Outcome 2: Traditional owners are assisted to manage their land, sea and natural resources in a sustainable manner.

Outcome 3: To assist Aboriginal people to obtain or acquire property rights over their traditional land and seas.

Outcome 4: To secure economic, social and cultural benefits for traditional owners from developments taking place on Aboriginal land.

Outcome 5: Develop employment and training plans in partnership with industry and government stakeholders, and facilitate the implementation of these plans.

Outcome 6: Efficiently process exploration and mining license applications and provide accurate advice on potential environmental impacts and benefits.

Outcome 7: Empower Aboriginal people to carry out commercial activities and build sustainable enterprises.

Outcome 8: Advocate on behalf of Aboriginal people and express their views.

Outcome 9: Raise public awareness of the NLC’s work and the views of Aboriginal people.

Outcome 10: Supporting Aboriginal people to maintain and protect their sacred sites and cultural heritage.

Outcome 11: Help Aboriginal people achieve their development potential by facilitating access to leadership and governance programs, resources, infrastructure and government services.

Outcome 12: Receive and distribute statutory and other payments for Aboriginal people.

Outcome 13: Assist Land Trusts’ to act appropriately and in accordance with the ALRA.

Outcome 14: Support traditional owners to manage and resolve disputes.

The funding conditions of the NLC are laid down by the ALRA, and any special purpose grant guidelines. Accounting for monies received from the ABA is subject to conditions approved by the Minister for Indigenous Australians.

The continued existence of the NLC in its present form with its present programs is dependent on Government policy and on continuing funding by Parliament for the NLC’s administration and programs.

1.2 Basis of Preparation of the Financial Statements

The consolidated financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013. The financial statements comprise the consolidated financial statements of the Group comprising:

• Northern Land Council (the Parent Entity)
• Northern Australian Aboriginal Charitable Trust (the Subsidiary)
• North Australia Aboriginal Corporation (the Subsidiary)
• Northern Aboriginal Investment Corporation Pty Ltd (the Subsidiary).

The following subsidiaries are not consolidated as part of the Group’s financial statements as they are immaterial to the Group (refer to Note 1.4):

• Wirib Tourism Park Pty Ltd (the Subsidiary)
• Northern Australia Aboriginal Development Corporation Pty Ltd (the Subsidiary)
• Create Housing and Construction Pty Ltd (the Subsidiary)
• Aboriginal Solar Rollout Pty Ltd (the Subsidiary)

For the purposes of preparing the consolidated financial statements, the NLC and the entities controlled by the NLC (the Group) are not-for-profit entities.

The consolidated financial statements have been prepared in accordance with:

a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and

b) Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial year ended 30 June 2019 is the first year that the NLC’s financial statements have been prepared as consolidated financial statements in compliance with AASB 10 Consolidated Financial Statements. See note 1.3 Basis of Consolidation and 1.4 Critical accounting judgements in applying the Group’s accounting policies for more details.

The comparative financial information has been restated in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. Refer to Note 1.7 for details of the restatement of 2018 comparative information.

The consolidated financial statements have been prepared on an accrual basis and 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 policies on the results or the financial position of the Group.

The consolidated financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities along with income and expenses, are recognised in the statement of financial position and comprehensive income, when and only when it is probable that future economic benefits will flow to the Group 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 executory contracts are not recognised unless required by an accounting standard.

1.3 Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the NLC and entities controlled by the NLC (the Group). Control is achieved when the NLC:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The NLC reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the NLC has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The NLC considers all relevant facts and circumstances in assessing whether or not the NLC’s voting rights in an investee are sufficient to give it power, including:

• the size of the NLC’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• potential voting rights held by the NLC, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the NLC has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings of North Australia Aboriginal Corporation (NAAC) and Northern Aboriginal Investment Corporation Pty Ltd (NAIC) as trustee for Northern Australian Aboriginal Charitable Trust (NAACT) .

Consolidation of a subsidiary begins when the NLC obtains control over the subsidiary and ceases when the NLC loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the NLC gains control until the date when the NLC ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the NLC’s accounting policies.

Changes in the NLC’s ownership interests in existing subsidiaries

Changes in the NLC’s ownership interests in subsidiaries that do not result in the NLC losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the NLC’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the NLC.

When the NLC loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the NLC had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 9, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Consolidation reflects 100% of the assets, liabilities, revenue, expenses and cash flows of the material subsidiaries controlled by the Group. Note 1.4 states other subsidiaries which are considered immaterial to the Group and hence not consolidated.

1.4 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in note 1.5, the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Groups’ accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in financial statements.

Control over North Australia Aboriginal Corporation

Note 11 describes that NAAC is a subsidiary of the NLC and that NLC has control over NAAC in accordance with AASB 10 Consolidated Financial Statements. NAAC was incorporated in 1991 under the Corporations (Aboriginal and Torres Strait Islander) Act 2006.

NAAC’s Rule Book (2018) only allows Director appointments from members of the NLC’s Executive Council. Whilst the NLC does not directly appoint the Directors of NAAC, it appoints its own Executive Council members who then become qualified to become members and directors of NAAC. The substance of the arrangement is that NLC has the right to effectively fill the entire board of NAAC, which indicates ‘power’ over NAAC for the purposes of AASB 10 Consolidated Financial Statements.

The NLC has made the assessment that NLC has ‘power’ over NAAC (arising from its right to effectively fill the entire board of NAAC using its Executive Council members). This assessment also considers NLC’s ability to use its power over NAAC to affect the extent to which broader social policy objectives are achieved (‘returns’).

Control over Northern Aboriginal Investment Corporation Pty Ltd

Note 11 describes that Northern Aboriginal Investment Corporation Pty Ltd (NAIC) is a subsidiary of the NLC, and NLC has 75% of the ownership interest and voting rights of the company. The company is the corporate trustee of the Northern Australian Aboriginal Charitable Trust (NAACT), and acting as trustee is its sole function. The trustee company has no other assets or liabilities and has no operations other than in its capacity as trustee.

The NLC holds 75% ownership of NAIC and the company which holds the remaining 25% shareholding was deregistered in 2002 and has no control on NAIC. The NAIC is in the process of cancelling the 25% shareholding and NLC will effectively hold 100% of the shares in NAIC, therefore in preparing this financial statements, NLC has taken a view to consolidate 100% of NAIC. Given NLC’s control of NAIC, it has been historic practice to appoint members of the NLC Executive Council to be Directors of NAIC. 7 out of 9 current NAIC Directors are from NLC’s Executive Council. The Executive Council members are on the Board of NAIC only by virtue of their role in the Executive Council. Additionally, NAIC was established by the NLC in 1987.

The NLC has made the assessment that NLC has ‘power’ over NAIC. This assessment also considers NLC’s ability to use its power over NAIC to affect the extent to which broader social policy objectives are achieved (‘returns’).

Control over Northern Australian Aboriginal Charitable Trust (NAACT)

Note 11 describes that Northern Australian Aboriginal Charitable Trust (NAACT) is a subsidiary of the Group, by virtue of its trustee, NAIC, being controlled by NLC. Under the Deed of Settlement of Trust, NAIC has full powers to manage the activities of NAACT at its discretion. Accordingly, NAIC does have ‘power’ over the NAACT.

The NLC has made the assessment that NLC has ‘power’ over NAACT (arising from its control over the trustee). This assessment also considers NLC’s ability to use its power over NAACT to affect the extent to which broader social policy objectives are achieved (‘returns’).

NAACT also holds shares in the following companies that have not been considered separately as subsidiaries as they are immaterial to the Group, and hence are not consolidated as part of the Group:

• Wirib Tourism Park Pty Ltd (90% shares and voting rights)
• Northern Australia Aboriginal Development Corporation Pty Ltd (100% shares and voting rights)
• Create Housing and Construction Pty Ltd (100% shares and voting rights)
• Aboriginal Solar Rollout Pty Ltd (100% shares and voting rights)

Northern Australian Aboriginal Charitable Trust (NAACT) Qualification Disclosure

Northern Australian Aboriginal Charitable Trust (NAACT) was first established as a charitable trust on 13 May 1988 with a vesting date of 13 May 2009, despite the fact that at law, a charitable trust need not have a vesting date. Subsequently, a new deed of settlement was entered into on 7 March 2018 to re-establish the trust. This action formalised that the trust property would continue to be used charitably for the Aboriginal people of Northern Australia (for whose benefit the original trust was established).

Following the 2014-15 audit of NAACT, Merit Partners, the auditors, qualified the NAACT financial report for the years ended 30 June 2015, 30 June 2017 and 30 June 2018 as a result of the vesting on 13 May 2009. That qualification applies for the current financial year, 30 June 2019 which was signed on 31 October 2019, on the basis that in the opinion of Merit Partners, the legal status of the transactions that occurred in the period between 13 May 2009 and 7 March 2018 could not be determined.

The NLC has obtained a written opinion from Sturt Glacken SC on 20 November 2019 that the original 1988 trust did not vest or cease to exist in 2009 – such that it had to be re-established in 2018. In fact the original 1988 trust continued to exist right up to 2018 when, pursuant to power in the original trust deed, the trust property was transferred into a new trust which is on similar terms. Hence, the transactions entered into by the trustee during the period 13 May 2009 and 7 March 2018 are legally binding.

Based on the legal opinion received by the NLC, the NLC’s assessment is that the qualification on NAACT’s financial statements has no impact on the NLC’s consolidated financial statements.

1.5 Significant Accounting Judgements and Estimates

The Group has made the following judgements and estimates that has the most significant impact on the amounts recorded in the financial statements:

• Impairment loss allowance of $144,989 has been recorded for doubtful debts in the current year.

No other accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

Refer to Note 7A Accounting Policy for the critical accounting judgements in relation to prior year changes in useful lives for property plant and equipment for the NLC.

1.6 New Accounting Standards

New Accounting Standards and Interpretations not yet mandatory or early adopted

No accounting standard has been adopted earlier than the application date as stated in the standard.

All new/revised/amending standards and/ or interpretations that were issued prior to sign-off date and are applicable to the current reporting period did not have a material effect on the Group’s financial statements.

1.7 Restatement of Prior Year Comparatives

The following entities’ financial information was consolidated for the first time in the 2019 financial reporting year, as each entity’s financial results are material to the Group:

• North Australia Aboriginal Corporation
• Northern Aboriginal Investment Corporation Pty Ltd
• Northern Australian Aboriginal Charitable Trust

Refer to Note 1.4 for the list of subsidiaries that are not consolidated as part of the Group’s financial statements as they are immaterial to the Group.

During the 2019 financial year, the NLC obtained independent accounting technical advice relating to the application of AASB 10 Consolidated Financial Statements to the subsidiaries listed in Note 1.4. The NLC adopted the advice to consolidate the subsidiaries and prepare consolidated financial statements in 2019. As the NLC held control as defined by Note 1.4 at 1 July 2017, (beginning of comparative period), the adoption of AASB 10 is applicable and subsequently the 2018 comparative figures have been restated under AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. This restatement is due to an error. The following illustrates the change in the financial statements as a result of the restatement: