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Page 22 Senate Friday, 21 October 2016 alive to the online assessment of their loan capabilities. That is happening. What I am seeing early on is that those changes are starting to make a difference in terms of the target audience. Senator SIEWERT: Besides the most recent changes as a result of the report, have there been any changes over the last, say, four years? Mr Bator: There is always an element of program change. A number of years ago there were changes around the interest policy of the board. There were policies around the level of risk that we will take in terms of home affordability. As you can imagine, the structuring of those loans is above what a bank might offer in terms of the credit risk that we will take. Senator SIEWERT: Can you outline on notice what those changes have been? Mr Bator: Of course, Senator. Senator SIEWERT: Mr Fry, when was the board aware of the situation of potentially not meeting the targets? Mr Fry: It is not that we were not aware of not meeting our targets. The board is a group of individuals who are very focused on the market space, so we are constantly questioning the executives around this. Over the last two years in particular we have noticed that there has been a quite significant surge in house prices. Given the purchasing power of Indigenous Australians, whether they be living in Sydney or in regional New South Wales, the price of housing was pretty much washing away their ability to even take out a home loan. They might be able to afford a $400,000 home. But when the average is pushing up closer to $600,000 it is not a favourable environment for them. As a board, we are constantly looking at all of this. It is a board that has moved to looking at every aspect of its business in a strategic sense, not a transactional sense. So we are very much focused on our product offerings and the markets they are operating in, specific to our clients. As you would appreciate, whether it is in business or in home loans, the market space that we are working in, which I would call the non-Indigenous sector, is quite tough. I recently read an article written on 17 August by Glenn Stevens, the former Governor of the Reserve Bank, in which he said Australians are facing a real problem around house prices for the current generation. Mums and dads are going to have to assist with mortgages and, therefore, they are going to have less of their superannuation left. When you look at that kind of statement—and the reports from CoreLogic of a downwards trend in the number of home units being sold and a growing number of homeowners being in repayment arrears in the non-Indigenous sector—the difficulty for Indigenous people is compounded even further. So the board gives really fluid and flexible consideration to all these matters. Senator SIEWERT: Minister, were you aware at the time that there were issues with not being able to meet the targets, and the very nature of the issues we have just been talking about? Senator Scullion: Not specifically, no. But, without reflecting too much on what has already been said about the matter, there are a number of factors, and we can put a target of how many we want to give away. Perhaps a question that might be of use to us all is: how many people came who met all the requirements of a loan and were refused? The organisation can do only so much. And we have indicated that yes, the market is a bit tighter. We have had all these market pressures. I am not actually sure. I think the question I would like to get the answer to is how you actually set the target. If we are going to make people come and apply for a home loan, it would be a pretty tough target to meet. I am not sure actually how you ascertain that this is the number of home loans we want to provide. I do not know how you come to that target. I think that would be something I would like to inform myself of. So, I will ask them to provide me with a brief and I will give that brief as a question on notice, because I think that will be a lot more important than some of those other matters. Senator SIEWERT: I do have other questions, but I will put them on notice, given the time. CHAIR: Thank you. Senator McCARTHY: In your opening statement you spoke about 70 per cent of Indigenous investors. Is that correct? Mr Bator: It was 17 Indigenous investors. Senator McCARTHY: Is that right across Australia? Mr Bator: It is. These are in our particular products of the Indigenous Prosperity Fund and the Indigenous Real Estate Investment Trust, and particular large assets that we own. Senator McCARTHY: What kinds of assets? Mr Bator: Vibe and Medina. Senator McCARTHY: Where? FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE
Friday, 21 October 2016 Senate Page 23 Mr Bator: In Darwin. Senator McCARTHY: Any other assets? Mr O'Neill: We have approximately 26 direct investments around Australia—the Kakadu properties, for example. The 17 co-investor figure that Mr Bator referred to in his opening statement is in regard to the asset and funds management that we have. That includes the Indigenous Real Estate Investment Trust, the Indigenous Prosperity Fund and both the cash and growth aspects of that. Senator McCARTHY: You say there are 26. Mr O'Neill: There are 26 direct. Senator McCARTHY: Could we get a list of the 26? Mr O'Neill: Certainly. Senator McCARTHY: Could you read them out, if you have them there? Mr O'Neill: Certainly. It is on page 55 of the annual report. We have specialised investments such as property holdings across Australia, ranging from the Commonwealth Centre, the Goldfields Building, [inaudible] et cetera in WA through to properties in Queensland and the Northern Territory. Senator McCARTHY: Are they business properties, in Queensland and the Northern Territory? Mr O'Neill: They are predominantly commercial office buildings. We have a couple of retail investments— Tennant Creek Food Barn and Merredin Supa IGA. And then we have an industrial portfolio. Senator McCARTHY: What do you have in the industrial portfolio? Mr O'Neill: We have six assets, or six direct investments. Senator McCARTHY: Where are they? Mr O'Neill: They range across Australia. We have Inverell in New South Wales. We have, up in the gulf, Carpentaria Shipping Services, and Carey Mining, which is in WA, and Anderleigh Quarry, in New South Wales. And then we move on to the tourism and hospitality portfolio, where we have joint ventures at Fitzroy River, Kakadu, Townsville and Cairns, and properties—the Vibe hotel that Mr Bator referred to—and Wilpena Pound Resort. Senator McCARTHY: Where is that? Mr O'Neill: Wilpena, in South Australia. So we attempt to have a national approach to our investments, on an opportunity basis but obviously to have as diversified a portfolio as possible. Senator McCARTHY: How many Indigenous people are employed in each of these 26 assets? Mr O'Neill: Approximately 27 per cent of employees in these particular investments represent as Indigenous. Without a direct figure in front of me— Mr Bator: A total of 776 jobs were supported by direct investments during 2015-16. Twenty-six per cent of the staff are Aboriginal or Torres Strait Islander people, and 73 per cent are non-Indigenous. Senator McCARTHY: For the 26 per cent, what are the positions that they hold? Can you break that down? Mr Bator: I cannot right now, but we can certainly do that on notice. Senator McCARTHY: Yes, just so we can see where those 26 per cent are employed across those 26 assets. Mr Bator: Yes. We also employ, through a leasing impact, 188 Indigenous people through the business that IBA leases to. We provided 406 instances of training. Senator McCARTHY: With your leasing, how many assets do you lease? Is that what you are saying—that you pay rent? Mr Bator: People lease yellow equipment from us and four-wheel-drive vehicles. Senator McCARTHY: So, they lease from you? Mr Bator: They do. Senator McCARTHY: So, it is 188 people who lease from IBA. Is that correct? Mr Bator: Yes, who are Indigenous. Senator McCARTHY: Out of how many overall? Mr Bator: I could find them out. Most of them are Indigenous organisations that lease from us. Senator McCARTHY: Would you be able to take that on notice? FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE
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