The objective of the audit was to assess the administrative effectiveness of FaHCSIA's and IBA's management of the HOIL program. In particular, the audit examined the administrative design of the program, its implementation and progress in achieving the expected results.



1. The Home Ownership on Indigenous Land (HOIL) Program, administered jointly by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and Indigenous Business Australia (IBA), seeks to increase home ownership on Indigenous community titled land. At the time the program was established in 2005, the Australian Government considered that increasing Indigenous home ownership on community titled land would be a starting point for further participation in the economy through wealth creation and business development.

2. According to 2006 Census data, the level of Indigenous home ownership is approximately half that of non-Indigenous home ownership, with 69 per cent of non-Indigenous households being home owners (with or without a mortgage) compared to
34 per cent of Indigenous households. Indigenous home ownership levels in remote and very remote areas are significantly lower than levels of Indigenous home ownership in regional and urban areas. Approximately 36 per cent of Indigenous households in major cities are home owners, compared to 25 per cent of Indigenous households in remote areas and
eight per cent of Indigenous households in very remote areas.

3. Efforts to support Indigenous home ownership have been pursued by successive Australian governments since the creation of the Home Ownership Program in 1974. This program, also administered by IBA, supports Indigenous people to access the mainstream housing market. The HOIL program differs from the Home Ownership Program in that the HOIL program is aimed at increasing home ownership on community titled land as opposed to the mainstream housing market. Indigenous community titled land is primarily located in remote and very remote areas of Australia.

4. There are a range of barriers to Indigenous home ownership, and social welfare research indicates that these barriers are more prevalent in remote and very remote areas. These barriers include: high levels of unemployment; intergenerational welfare dependency; low individual and household incomes; high construction costs; limited access to credit and poor credit histories; a lack of family savings or capital and low awareness about what actions are necessary to secure and maintain a loan. A further barrier to home ownership in remote and very remote areas is the fact that much of the land in these areas has been provided to Indigenous people through various Indigenous land rights legislation and the Native Title Act 1993 (Cth), and so is held communally rather than by individuals.

5. Improving Indigenous access to housing has been a policy priority of Australian governments since the 1970s. Under various programs, governments have sought to encourage Indigenous home ownership and increase the supply of public housing stock. The Australian Government has supported Indigenous home ownership on freehold land and Crown lease land since it established the Home Ownership Program in 1974. The Home Ownership Program provides low interest loans to Indigenous Australians, and has provided 13 540 loans since its commencement. IBA has been responsible for the management of this program since 2005.

6. Successive Australian governments have funded the provision of public housing on Indigenous community titled land since 1968. In 1979, the Australian Government established the Aboriginal Rental Housing Program. The Aboriginal Rental Housing Program later operated alongside the Community Housing and Infrastructure Program, which was introduced in 1991-92, and both operated until 2008 when they were replaced by the Australian Remote Indigenous Accommodation program, and ultimately, by the National Partnership Agreement on Remote Indigenous Housing. The Community Housing and Infrastructure Program and Australian Remote Indigenous Accommodation program provided housing which was mostly given over to community-based housing organisations. Under the National Partnership Agreement on Remote Indigenous Housing, 4200 new homes are expected to be constructed and 4876 homes are expected to be repaired or replaced. These homes will be managed by state and territory governments.

7. Underlying this policy focus on Indigenous housing, there has been in recent years a parallel policy focus on reforming land tenure to support Indigenous economic participation. In 2006, the then Minister for Families, Community Services and Indigenous Affairs announced the Australian Government's Blueprint for Action in Indigenous Affairs (the Blueprint). The aim of the Blueprint was to build an economically sustainable future for Indigenous Australians. This included the progressive introduction of land tenure changes to, as the Minister noted, ‘allow for home ownership and the normal economic activity you would expect in other Australian towns'.[1] Land tenure changes were seen as necessary because the underlying land tenure of community titled land did not provide sufficient security for potential lenders. By using long-term transferable leases, individuals would have a form of property with which to secure a loan. The Australian Government amended the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (ALRA) and funded the HOIL program in line with the principles of the Blueprint.

8. The amendments made in 2006 to the ALRA were to provide for land tenure security in the form of township leases, the rationale being that such leases would normalise arrangements in communities by providing mainstream style tenure in the form of long-term individually transferable leases. It was also envisaged that township leases would provide the government with greater security of, and control over, government funded housing and infrastructure in Indigenous communities, and would enable people to own their own homes, and develop businesses in what were previously closed communities.

9. More recently, the Council of Australian Governments (COAG) has renewed emphasis on the importance of housing to achieve the targets aimed at Closing the Gap on Indigenous disadvantage. COAG has endorsed seven strategic platforms or ‘building blocks' to support reforms aimed at closing the gap, and one of these building blocks is Healthy Homes. A key outcome sought by COAG in the National Indigenous Reform Agreement is that ‘Indigenous people have the same housing opportunities as other people'.[2]

10. COAG's National Affordable Housing Agreement has a more specific outcome, which is that ‘Indigenous people have the same housing opportunities (in relation to homelessness services, housing rental, housing purchase and access to housing through an efficient and responsive housing market) as other Australians'.[3] In addition, COAG's National Partnership Agreement on Remote Indigenous Housing seeks ‘progressive resolution of land tenure on remote community-titled land in order to secure government and commercial investment, economic development opportunities and home ownership possibilities in economically sustainable communities'.[4] Taken together, these various COAG commitments indicate a policy focus on Indigenous housing that has continued to build since the HOIL program commenced in 2005.

The HOIL program

11. The HOIL program is the only Australian Government program that provides support for Indigenous people to achieve home ownership on Indigenous community titled land. The program operates alongside a number of programs aimed at providing social housing to Indigenous people in urban, regional and remote communities, and there are also mainstream and Indigenous specific programs which provide support for Indigenous people to achieve home ownership on freehold land and Crown lease land.

12. The HOIL program was established to complement and give substance to amendments to land tenure arrangements proposed by the Australian Government to take effect from 2006. Amendments to the ALRA provided for whole-of-township leases over Indigenous communities in the Northern Territory for a maximum of 99 years. These leases are held by the Executive Director of Township Leasing, from whom individuals can obtain a sublease. IBA and FaHCSIA intended that other states, particularly Queensland, Western Australia and New South Wales, would also participate in the program under relevant land tenure legislation existing in those states. These states were encouraged to make amendments to their relevant legislation to more readily provide for home ownership.

13. The HOIL program was first allocated funding in October 2005 to provide subsidised loan and grant packages secured by a mortgage over a long-term lease on community titled land. In 2006–07 the HOIL program was allocated a budget of $107.4 million over four years. Of the $107.4 million budget, $15.6 million was allocated for the administrative costs of FaHCSIA and IBA. FaHCSIA is the lead agency for the HOIL program. The program is made up of three main components: low interest loans and home purchase incentives, money management education for prospective home owners, and construction of additional houses specifically for purchase.

14. To implement the HOIL program, IBA was funded $78.2 million to deliver:

  • 460 home loans at commencing interest rates that, depending on the borrower's income, ranged from interest free to a maximum rate currently equal to the Reserve Bank of Australia's cash rate plus one per cent;
  • establishment cost grants of up to $13 000 for the purpose of meeting up-front loan establishment and support costs; and
  • loan co-payments of up to $25 000, designed to improve loan affordability for eligible borrowers.

15. Complementing IBA's role, FaHCSIA was funded $29.2 million to provide:

  • Good Renters Discount grants for 20 per cent of the value of homes purchased up to a maximum of $50 000;
  • Matched Savings Scheme grants (worth $1000), intended to aid borrowers in saving the $2000 minimum deposit needed to secure a HOIL loan;
  • 45 additional houses, to be constructed specifically for sale to Indigenous people; and
  • money management education, to enable potential borrowers to be fully aware of the benefits, risks and obligations of home ownership and to build financial skills.

16. Eight sites (usually a single community or a group of communities) were to be selected to participate in the program. Each community and relevant state/territory governments were to enter into an agreement for the program to be established. Following the signing of such agreements, houses were to be constructed and money management education delivered. After completing money management education, saving a deposit and being approved for a home loan, borrowers would be able to purchase a house (under a lease or sublease arrangement) with a low interest loan and various other home ownership incentives.

Audit objective and scope

17. The objective of the audit was to assess the administrative effectiveness of FaHCSIA's and IBA's management of the HOIL program. In particular, the audit examined the administrative design of the program, its implementation and progress in achieving the expected results.

Overall conclusion

18. Increasing the level of home ownership on Indigenous land has proven to be a significant challenge for Indigenous Business Australia (IBA) and the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA). The two agencies have been faced with a range of barriers affecting their ability to provide loans and home ownership incentives to Indigenous people on community titled land. These barriers have restricted the number of potential clients, with consequential effects on the number of loans, other financial incentives and training packages delivered to Indigenous people. This is reflected in the actual performance of the program.

19. The initial four-year funding period for the HOIL program concluded on 30 June 2010. Against a target of providing 460 loans across eight communities, IBA has been able to provide only 15 loans. All of the 15 loans provided were for homes on the Tiwi Islands in the Northern Territory, with 14 provided in the community of Nguiu.

20. FaHCSIA met its target of constructing, under the HOIL program, 45 new houses for sale. Of these houses, 25 were located at a HOIL site in Nguiu with the remaining 20 located at the non-HOIL sites of Wudapuli and Nama, which are small outstations located near the Indigenous community of Wadeye in the Northern Territory. The 45 homes have not been sold to Indigenous people, and were transferred to the Northern Territory Government as social housing stock, following Ministerial endorsement. Further, plans to use Community Development Employment Projects participants to provide training and employment opportunities were not implemented in the construction of these houses due to priority being given to constructing the houses in a timely manner.

21. The implementation of activities under the HOIL program has been slow due largely to delays in planned amendments to land rights legislation to provide suitable leasing options, delays by authorities in establishing land leasing processes following legislative changes, the hesitancy of communities to use new leasing options and the existence of native title over much Indigenous land. Further constraints on the program's effectiveness include the high cost of building and lack of employment opportunities in remote areas, as well as long-standing tenancy arrangements in Indigenous communities that potentially act as a disincentive to home ownership. While these constraints are largely external to the program, FaHCSIA and IBA have tried to overcome some of these constraints and developed alternative approaches in an effort to make further progress.

22. Start-up and ongoing program activity has incurred a high level of expenditure over the four-year funding period in order to deliver on the program's primary objective of providing home loans. Resources were required to develop policy guidelines, establish loan systems, develop and deliver money management education material, and undertake community consultations, before loans could be provided. This expenditure took place against a background of uncertainty surrounding the actual demand for HOIL loans. While it is necessary that costs will be incurred for the establishment of a program of this nature, the administrative costs of $9.9 million for the HOIL program were high compared to the low level of loan activity that ultimately resulted. As at 30 June 2010, other expenditure on the HOIL program was approximately $32.8 million, which consisted of approximately $2.7 million for the provision of 15 loans; $25.5 million for construction; $1.1 million in home ownership incentives; and $3.5 million for the provision of money management education.

Key findings by chapter

Program planning (Chapter 2)

23. The HOIL program is supported by a comprehensive Implementation Plan and an accompanying suite of policy guidelines and procedural instructions. Together with the establishment of a joint agency steering committee and working group, FaHCSIA and IBA placed the program in a sound position to give effect to proposed land tenure reforms in the Northern Territory and other states.

24. In hindsight, the program's performance targets have been overly ambitious. IBA and FaHCSIA were faced with the difficulty of establishing strategies to meet a target of 460 loans where there had been little opportunity to assess actual demand in the selected communities. FaHCSIA and IBA were unaware how many people living at selected HOIL sites were willing and able to purchase their own home, and legislative reforms had not yet been delivered.

25. The program's Implementation Plan sets out a range of success criteria for the program. However, these have not been followed up with the planned development of a monitoring strategy, evaluation strategy and quality assurance strategy. Given the program's low level of output to date and the oversight of a range of interdepartmental governance arrangements, the absence of these arrangements has not resulted in any significant consequences. Looking forward, the development of such strategies would support objective assessments of the program's performance, barriers to success and better practice, which will benefit future program reforms.

Program implementation (Chapter 3)

26. The HOIL program's implementation was predicated on successful reforms to land tenure arrangements in the Northern Territory and other states; on state and territory governments implementing effective administrative arrangements to give effect to these reforms; and on communities taking advantage of new leasing arrangements. The planned reforms have taken longer than expected to be realised, with corresponding delays in the development of administrative arrangements and reluctance by some communities in the Northern Territory to commit to township leasing arrangements. This has greatly limited the number of communities in which the HOIL program could be applied, and accordingly also limited the number of potential clients for HOIL loans and other financial and training incentives.

27. FaHCSIA and IBA have endeavoured to counter these barriers by securing Ministerial approval to try new implementation approaches, including seeking opportunities in Indigenous communities under a broader range of land tenure arrangements and at sites beyond those selected at the commencement of the program. As it became clear that legislative delays and other implementation issues would result in a significant underspend of the program budget, IBA sought the temporary reallocation of these funds to IBA's Home Ownership Program, obtaining Ministerial approval for this solution to be implemented through the 2010–11 Budget. As a result, IBA intends to relieve pressure on the Home Ownership Program's waiting list, and so continue to contribute to Indigenous home ownership objectives. The 2010–11 Indigenous Budget Statement indicated that the transferred funds will be made available to the HOIL program once demand accelerates.

28. While the HOIL program was limited by external constraints, a departure from some planned activities has affected the delivery of program outcomes. For example, the possible need for Indigenous Land Use Agreements to address native title issues was recognised during the program's initial planning, but was not acted upon until late in the program. Approximately half of the houses constructed by FaHCSIA were built outside designated HOIL sites and all 45 houses constructed are currently held by the Northern Territory Government for social housing purposes and have yet to be sold to Indigenous people as was intended. Further, Community Development Employment Projects participant labour was not used in the construction of these homes as planned, leaving the program's employment and training objective largely unmet.

Program performance (Chapter 4)

29. The HOIL program was to achieve a number of immediate and long-term targets as set out in its Implementation Plan and IBA's Portfolio Budget Statements and Portfolio Additional Estimates Statements. Only a limited number of these targets have been achieved and the number of loans issued falls well short of the target of 460.

30. The process of implementing various precursor activities under the program and the attempts made by FaHCSIA and IBA to develop alternative strategies to implement the program has resulted in the need for ongoing commitment of resources to administer the program. The actual progress made by the program has come at an overall cost of approximately $42.7 million (including loan capital) as at 30 June 2010. Most of this cost is related to the construction of homes for sale, money management education and the administrative costs of FaHCSIA and IBA.

31. The program faced a number of barriers during implementation, which IBA and FaHCSIA are seeking to address. IBA and FaHCSIA accurately identified these main barriers as risks to the program's progress early and developed mitigation strategies, some of which were pursued in a timely manner while others were not pursued or were overtaken by changes in policy. Overall, however, the actual performance of the program indicates that the mitigation strategies developed were not able to overcome the identified barriers as key risks were outside of the program's control.

32. HOIL will be an ongoing program from 2010–11. It is important that the program's future efforts are supported by a realistic assessment of the extent to which it can contribute to the Council of Australian Governments' (COAG) Indigenous home ownership objectives. Given the program's performance to date, and the significance and number of the ongoing barriers to its success, the ANAO has recommended that both agencies review the HOIL program's strategic direction to establish how the program might be better aligned with, and contribute to, the COAG objectives for improving rates of Indigenous home ownership as well as for improving the efficiency of program delivery.

Summary of agency responses

Department of Families, Housing, Community Services and Indigenous Affairs

33. FaHCSIA agrees with the recommendation in the Section 19 report for Home Ownership on Indigenous Land and will work with Indigenous Business Australia to clarify the program's strategic direction. When the HOIL program was first announced individual home ownership for Indigenous Australians was a new and untested concept in Indigenous communities. To facilitate home ownership fundamental major reform in regard to land tenure was required. Significant work was needed to promote a new paradigm in Indigenous communities including attitudinal change to home ownership. FaHCSIA does not agree with the attribution of administrative costs as outlined in this report. Activities relating to broader community education, program planning or construction of new homes potentially available for home ownership in an area of such significant reform should not be directly attributed to a cost per loan.[5] The foundations have now been laid to support home ownership, and it is expected that costs will reduce over time as ongoing land tenure changes see home ownership possibilities available to more communities.

34. In May 2010, the Hon Jenny Macklin MP, Minister for Families, Housing, Community Services and Indigenous Affairs released an Issues Paper on Indigenous home ownership. Public submissions are currently being received which canvass approaches aimed at increasing home ownership amongst Indigenous Australians. The submissions will inform a way forward to increasing Indigenous home ownership in Australia, which is a key priority in the Australian Government's Indigenous Economic Development Strategy.

Indigenous Business Australia

35. IBA believes that the audit presents a balanced view of the performance of the HOIL program and fully explains the context and significant challenges that have been faced in implementation.

36. The audit report acknowledges that the major impediment to implementation was the lower than anticipated pace of land tenure reform, and the subsequent complexity and lengthy time-frame of establishing workable land administration processes – largely a responsibility of state and territory governments. Although directly outside the scope of the HOIL program, as the audit report acknowledges, these fundamental prerequisite environmental factors have been slow to evolve and indeed remain significant challenges today, although progress is being made in some jurisdictions.

37. The audit report acknowledges that IBA had adequate program management and sound processes. The audit report also acknowledges the significant work that IBA has invested in trying to make the program work in several jurisdictions, particularly in the area of community education on home ownership and consultation with communities.

38. Although demand recorded for the HOIL program has been low, the audit report documents the IBA recommended and very well received Commonwealth Government's decision to temporarily utilise the unspent HOIL loan capital on IBA's Home Ownership Program, targeted to Indigenous families who cannot afford a mainstream bank loan in cities and towns. This initiative preserves the capital for the HOIL program until demand increases, while still utilising the funds for the benefit of Indigenous home ownership in the meantime, albeit not on Indigenous land in the short term. These funds will still be available for future use of the HOIL program and so those with an interest in home ownership on Indigenous land in the future will be able to do so.

39. IBA will continue and strengthen its work with FaHCSIA on new strategies to deliver the HOIL program. Sixteen loans have been written in the last two years, and this demonstrates that where conditions are right, Indigenous people living in communities do want home ownership as a choice. With further work by governments at all levels, IBA believe that demand for the HOIL program will grow as land tenure and administration practices are developed and evolve over the coming years. Further, that the establishment costs of this program, which at the moment are high on a per loan basis, will reap benefit as further loan possibilities materialise.


[1] The then Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP, speech to the National Institute of Governance, Blueprint for Action in Indigenous Affairs, 5 December 2006.

[2] National Indigenous Reform Agreement, p.C-73.

[3] National Affordable Housing Agreement, p.4.

[4] National Partnership Agreement on Remote Indigenous Housing, p.5.

[5] ANAO comment: as explained in paragraph 4.14 and summarised in paragraph 22, administrative costs excluding money management education, incentive payments and construction costs, averaged $660 000 per loan. The average HOIL loan written was approximately $178 000.