The federal government says it has made "adjustments" to the funding arrangements with the Northern Territory government after the latter acted against the "values" of the Closing the Gap agreement.
The Albanese government has been under increasing pressure from advocates nationwide to hold the NT Government accountable for legislation they say has negatively impacted First Peoples in the Territory — the worst-performing jurisdiction in the country on the Closing the Gap Agreement (the Agreement).
Whilst there is no measure for the Commonwealth to enforce the Agreement, withholding federal funds or diverting them to community organisations on the ground has been raised by Indigenous and legal groups.
Appearing at Senate Estimates on Monday, federal Minister for Indigenous Australians Malarndirri McCarthy said she had "concerns about the fact that state and territory parliaments are not adhering to Closing the Gap, and the best way to try and enforce it is through the financial arrangements".
"So I have made adjustments to the Northern Territory Remote Area Investment (NTRAI) as a result of it," she said.
"That's the first federal funding agreement which — I've incorporated changes in that through NIAA's [National Indigenous Australians Agency] negotiations."
The $840 million NTRAI is a six-year national partnership between the Commonwealth, the Northern Territory Government and Aboriginal Peak Organisations Northern Territory (APONT). It aims to give people living in remote communities equitable access to mainstream services.
Under the adjusted agreement, only $723.71 million will go to the NT Government directly.
The NIAA's Bridgette Bellenger said money had been taken out of the NTRAI and would now be paid "directly to the partners," including APONT, who will receive "about" $80 million to "build the capacity" of ACCOs.
The Northern Territory is more than 70 per cent funded by the Commonwealth and receives 4.8 times its population share in GST, with the latter due in part to the high levels of social disadvantage the Territory faces.
The NTRAI changes took place before the hugely controversial closure of the YiSSA homeless shelter — run by the Yilli Rreung Housing Aboriginal Corporation — by the CLP Government in the NT, which rejected an offer by the Commonwealth to jointly buy the facility.
Asked if this decision was a "breach of obligations under the Closing the Gap agreement," Senator McCarthy said: "This is the conundrum with Closing the Gap."
"It is an agreement, but it's not," she said.
"There are no penalties surrounding whether parliaments can be penalised for not doing the right thing according to the agreement. So the simple answer is they certainly went against the values of what the Closing the Gap agreement is all about, yes."
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Last month, Senator McCarthy and Finance Minister Katy Gallagher told reporters organisations on the ground in the Territory "don't feel like they're actually being included in the conversation".
If the CLP government continued to act against the Agreement, further changes to funding agreements could be forthcoming, they flagged.
At the time, Senator Gallagher said that if progress wasn't going to be made with the NT Government, the Commonwealth "will look to increase the amount of direct funding relationships we have with other organisations".
"We do that in health already," she said. "But in the future, if we are going to be frustrated or not see the money getting to where it's needed, that we would look to direct funds [to] those organisations.
"Now, the Northern Territory Government put to us...that that's not ideal from their point of view because they question whether those organisations are delivering what they want."
On Monday, Senator McCarthy said both she and Senator Gallagher "expressed very clearly" to the NT Government "the financial concerns and the funding arrangements that were troubling the Commonwealth".
"Also that we would start to seriously look at other avenues of funding, in particular direct funding, to Aboriginal organisations and/or local governments."
However, she noted that the Commonwealth needed to be "very cognisant" of the ability of Indigenous organisations to take on these roles.
"We do not want our organisations to fail either," Senator McCarthy said.
"So the capability factor is really critical whilst having these very solid, direct conversations with the Northern Territory government."
Despite Priority Reform One of the Agreement calling for shared decision-making and formal partnerships between Aboriginal people and governments, numerous organisations and individuals have told this masthead they feel Aboriginal Territorians have been shut out of conversations or their views disregarded.
In July, two leading Aboriginal figures — Rob McPhee, the independent Aboriginal chair of the NT's Children and Families Tripartite Forum, and Children's Commissioner Shahleena Musk — separately stood down from their roles, arguing there was no longer transparent and good-faith dialogue from the CLP Government.
Last month, Opposition Leader Selena Uibo told National Indigenous Times the divide between the CLP and Aboriginal communities would only grow if decisions continued to be made "without genuinely listening to Aboriginal Territorians".
"It also takes the Northern Territory further away from shared decision-making and self-determination," she said.
