The State of Victoria (the State), in collaboration with the First Principles Review Committee (the Committee), are currently undertaking the First Principles Review (the Review).
The Review is set up to examine the legislative and policy underpinnings of settlement offers made by the State to Traditional Owners under the Traditional Owner Settlement Act 2010 (Vic) (the Settlement Act).
As part of the Review, the Committee and the State are examining the calculation of compensation amounts paid under Settlement Act agreements in light of the decision of Northern Territory v Mr A. Griffiths (deceased) and Lorraine Jones [2019] HCA 7 (Timber Creek decision).
The purpose of this document is for the State and the Committee to record areas where they have reached agreement about the calculation of compensation, and also where they have not reached agreement and intend to instruct an expert or experts for further advice.
This document should be read in conjunction with the Expert Terms of Reference (Appendix 7).
The Settlement Act is an alternative recognition and compensation process to the Native Title Act 1993 (Cth) (NTA).
Currently, upon entering into a Settlement Act agreement, Traditional Owners:
a) receive a lump sum payment (the Settlement Sum) in the form of a Trust payment and funding paid directly to their nominated Traditional Owner Corporation;22 and
b) are entitled to receive ‘Community Benefits’ through a process which replaces the future act regime under the NTA, and which are calculated using various formulas (Formulas), as set out in Schedule 7 of the Land Use Activity Agreement (LUAA).23The Settlement Sum is not calculated in accordance with NTA compensation entitlements, but is instead calculated on the basis of attempting to resource the Traditional Owner Corporation to undertake its contractual and statutory duties under the Settlement Act agreements, which in part facilitate the cultural and economic development and enhance the participation of Traditional Owners in public land management.
While not expressly acknowledged as compensation, the Settlement Sum and Community Benefits nevertheless have a compensatory legal effect, as in return for receiving these (along with other) benefits, Traditional Owners must accept the settlement as full and final satisfaction for any native title compensation they may otherwise be entitled to receive.
22 Traditional Owners can also receive a component of the Settlement Sum in the form of grants of freehold title (with or without conditions), the value of which is deducted from any lump sum monetary amount.
23 In addition to the Settlement Sum and an entitlement to Community Benefits, the RSA also enables the recognition of Traditional Owner rights and interests, and laying the foundation for reconciliation and partnership between the parties, which is to their mutual benefit.
The Parties acknowledge and confirm that the new compensation model will be formulated in accordance with the following Redesign Standards:
- Since at least the passage of the NTA, Traditional Owners have been entitled to compensation for the loss or impairment of their native title rights;
- The Timber Creek decision establishes guidance and principles for the calculation of native title compensation, and binds parties and the Federal Court in calculating compensation under the NTA;
- The enactment of the Settlement Act was based in part on the view that the NTA does not provide fair and just outcomes for Traditional Owners in Victoria;
- Victoria’s commitment to self-determination, UNDRIP, the Victorian Aboriginal Affairs framework, and its obligations under the Charter Act, require it to do more than simply meet its legal obligations under the NTA;
- Victoria’s approach of settling native title claims out-of-court should continue in accordance with the Redesign Standards set out a) to d) above.
In order to design a new compensation model in accordance with the Redesign Standards the FPRC recommends that:
- (Formulas) The principal method by which the Redesign Standards will be embedded in a new compensation model is through re-negotiation of the Formulas, following receipt of expert advice, to be sought in accordance with the Expert Terms of Reference;
- (Settlement Sum) Once improved Formulas are agreed following independent review, the Settlement Sum will be calculated by applying the LUAA to the agreement area as set out in paragraph 13 –15 (Retrospective LUAA Method); and
- (Minimum Settlement Sum) If the application of the Retrospective LUAA Method would result in the Settlement Sum falling below a specified minimum amount, the quantum of which is to be agreed, the State will pay the specified minimum amount.
The baseline of the Minimum Settlement Sum is adopted to ensure a standard of equity for groups that suffered extensive colonisation before 31 October 1975 and the enactment of the Racial Discrimination Act 1975 (Cth).
Upon the resolution of new Formulas through the proposed Settlement Act Forum, the Settlement Sum for a Traditional Owner Group will be calculated by applying the LUAA to the agreement area as from 31 October 197524 to the date a Settlement Act agreement is entered into, and will apply to all Land Use Activities during that period (Historical Land Use Activities) that the parties agree to use in the calculation.
In applying the Retrospective LUAA Method, the assessment of Historical Land Use Activities will be treated differently than other Land Use Activities, in at least two ways:
- interest will be payable on Historical Land Use Activities, calculated from the date the activity occurred until the date payment is made (the rate and form of interest to be agreed); and
- acts of contamination or environmental degradation that in practice extinguish or impair the ability of Traditional Owners to exercise their rights on the land will be Historical Land Use Activities.
Following the application of the Retrospective LUAA Method, the total payment due for all Historical Land Use Activities will be the Settlement Sum (provided it exceeds the agreed specified minimum amount).
24 The State has declined to examine compensation prior to the enactment of the Racial Discrimination Act 1975 as part of the Review and intends to deal with this issue through Treaty negotiations. The Committee agrees to an examination limited to the RDA Period only for the purposes of this compensation model and continues to assert that compensation prior to the RDA Period must be assessed and paid.
The application of the Retrospective LUAA Method will require access to, and analysis of, significant amounts of data held by the State, and the parties will need to develop a fair, accurate and efficient method of reviewing data.
The State and the Committee are open to examining processes that avoid exhaustive examination of Historical Land Use Activities. Exhaustive examination of State records often occurs under the NTA, in a process known as tenure analysis. Through this process the State will exhaustively analyse the tenure of each parcel of Crown land within the claim area to establish if native title rights are extinguished. This can take many years and cost the State several million dollars to complete. In addition to the State’s cost and time, Traditional Owner Groups’ negotiation teams must also review the State’s analysis and conclusions and negotiate resolution of complex legal technicalities. Funding would need to be sourced by the State to provide this work.
On that basis, an exhaustive review of all Historical Land Use Activities may not be beneficial to either the State or individual Traditional Owner groups, and expert advice will be sought to as to the most appropriate methodology or statistical modelling that may be adopted.
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