The announcement by the NT government late on Friday afternoon that it would immediately shut down the Indigenous Employment Provisional Sum (IEPS) program because of “potential widespread fraud” was unsurprising and long overdue.
Information is sketchy at present, but NT Deputy Chief Minister Nicole Manison’s media release, soon followed by another from the NT Department of Infrastructure — responsible for administration of the IEPS program — give us brief glimpses of the latest on a growing list of scandals emerging from the Country Liberal Party’s administration of the NT from 2012 to August 2016.
The Northern Myth understands that there are now parallel investigations by both the NT Auditor-General and the NT Police. Allegations include that companies using the scheme were claiming payments for non-indigenous employees in order to meet the qualifications for NT government tenders and contracts and that one case of alleged fraud of the scheme had been referred to NT Police as long ago as March this year. The NT News reported on Saturday that $42.5 million had been paid out through the program from late 2014 to end of June 2017.
Why is this important? Firstly, it lifts the lid on a program that has been the subject of concern — particularly among the CLP’s own conservative business base in Alice Springs — for some time, and secondly because the Auditor-General and police inquiries might lead to criminal charges being laid for fraudulent activities from two industry sectors (Aboriginal employment and the construction sector) that are key elements of the NT economy. A third factor is less clear at present, but for mine, these inquiries could provide references for the coming NT Independent Commission Against Corruption, the legislation for which will be introduced into the NT Legislative Assembly in the August sittings and which will be operational by mid-2018.
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“Black-cladding” — a term apparently coined by Warren Mundine in 2015 with reference to a similarly controversial Commonwealth scheme — was described by Stephen Easton at The Mandarin as little more than a scam where joint ventures are “designed to put a veneer of indigenous ownership on a large established business that gets most of the financial benefit and has few indigenous employees”.
Easton reports Mundine as saying he was aware of larger companies forming partnerships “with a couple of elders or a smaller indigenous group” just so they could list indigenous names as directors and that he was fearful that this was happening because the policy has created a skewed demand for suppliers that fit the policy rather than promoting indigenous employment.
The IEPS was rolled out in October 2014 but hit its straps in August 2015, around the time that a complementary program, the Remote Contracting Policy (RCP), was introduced. Speaking at the Garma Festival in 2015, then-NT chief Minister Adam Giles trumpeted the merits of the IEPS and other employment policies developed and implemented by the CLP, saying that his government’s policies could result in:
“A doubling [of] public sector indigenous employment from 1800 to 3600 employees by 2020; requiring each contractor to achieve 30% Aboriginal employment for all Government infrastructure contracts above $500,000; a new remote contracting policy aimed at ensuring 70% of small contracts for construction, repairs and maintenance in remote Aboriginal communities go to local Aboriginal businesses by 2017; and ensuring a minimum of five civil and construction contracts per year valued at over $5 million are awarded to joint venture proposals with Aboriginal businesses.”
According to the four-page policy document produced by the NT Department of Infrastructure and released in August 2015, indigenous participation in NT construction projects would be a mandatory requirement for all tenders for government construction projects over $500,000. The compliance requirements could be described as modest at best:
The Contractor is to provide monthly Indigenous Employment Reports to support progress for payment against the Indigenous Employment Provisional Sum.
The Representative of the Principal may conduct audits on compliance of tender and contract.
The Contractor will be required to provide a report on compliance (achievements against the contract requirements) with the Indigenous Development Plan within thirty (30) days of the completion of the Contract. Contract performance outcomes may be taken into consideration for future construction project tender evaluations.
It didn’t take long for locals with skin in the construction game to react to the new policy, with the strongest resistance coming from a group of builders and contractors in Alice Springs. In early February 2016 the online Alice Springs News — which covered this issue better than more well-resourced print and electronic media outlets — ran the comments of an anonymous local builder, who said Giles’ policy made assumptions about an Aboriginal construction industry that “didn’t exist” and that had “a skill base that is still largely absent; there will be a blow-out in pay for the few indigenous people who do have skills and that will in turn escalate what non-indigenous people will charge”.
— Read the rest at The Northern Myth