IBA_AR1415_WCAG2AA_02_FINAL accessible_single pg 8mb

Our vision is for a nation in
which the First Australians are
economically independent and
an integral part of the economy.
Economic independence for Aboriginal and Torres Strait Islander peoples is at the
heart of IBA’s vision and programs.
We want Indigenous Australians to have the same financial opportunities as
other Australians. Through IBA’s programs, we attempt to remove some of the
obstacles that may prevent our customers from creating wealth, accumulating
assets and fulfilling their aspirations.
These programs assist Indigenous Australians to buy their own homes, own
their own businesses and invest in commercial ventures that provide strong
financial returns.

Cover image and internal art:
photographs of John Mangu’s
Tree of Knowledge
The artist identifies himself as a Garawirritja man and
lives on Elcho Island, off the coast of Arnhem Land.
As noted by the Elcho Island Arts Centre, the Tree of
Knowledge is a ceremonial pole that represents the
sacred fig tree that grows at Dhudupu, near First Creek
on Elcho Island. Traditionally, clans would gather at the
sacred fig tree for bungul (ceremony). The ceremony
awakens and enlivens the spirits, guiding them home.
It is a symbolic ceremony of remembrance and of the
passing of traditional knowledge to younger generations.
The original artwork resides in IBA’s national office
in Canberra. It was presented to CEO Chris Fry by
CareerTrackers, in recognition of IBA’s commitment to
the 10x10 Program, a 10‑year partnership to provide
internship placements for Indigenous students.

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Indigenous Business Australia
PO Box 7516, Canberra BC ACT 2610
Email iba_corporate@iba.gov.au | Phone 1800 107 107
ISSN 1833–945X
This report can be accessed online at iba.gov.au.
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IBA has taken all reasonable steps to ensure that the contents of this publication do not offend
Aboriginal or Torres Strait Islander peoples.
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ANNUAL REPORT 2014–15 iii
CONTENTS
This report describes the operations and performance of IBA in the
financial year ending 30 June 2015.
1—Overview01
Highlights of 2014–15, key information about IBA, our history, reviews
from the Chair and the CEO, and a snapshot of IBA’s performance
2—Home ownership 15
Performance of the Indigenous Home Ownership Program
3—Business ownership 39
Performance of the Business Development and Assistance Program
4—Investments61
Performance of the Equity and Investments Program
5—Corporate governance 89
IBA’s governance framework and processes, including profiles of
the IBA Board and Executive Management Team, as well as IBA’s
organisational chart
6—People management 121
IBA’s workforce profile and human resources management initiatives
and processes
7—Financial performance 135
Summary of IBA’s financial performance, and IBA’s audited Financial
Statements for 2014–15
8—Appendices and References 195
Additional information about consultancies and outreach activities as
well as a glossary and list of abbreviations, a compliance and better
practice index, lists of figures and tables, and an alphabetical index

INDIGENOUS BUSINESS AUSTRALIAiv

01
OVERVIEW
HIGHLIGHTS02
ABOUT IBA 04
CHAIR’S REVIEW 06
CEO’S REVIEW 08
PERFORMANCE OVERVIEW 11

INDIGENOUS BUSINESS AUSTRALIA02
HIGHLIGHTS
Events
JUL 2014 IBA hosted its seventh annual breakfast event
for NAIDOC Week, on the Gold Coast (page 128)
SEP 2014 The ‘Galambany’ name was gifted to the IBA Aboriginal and
Torres Strait Islander Staff Network (pages 132–133)
OCT 2014 IBA settled its first loan in Queensland for a social housing
tenant on community-held land to buy the home they lived in
by way of a 99-year lease (page 24)
DEC 2014 The IBA Board welcomed a new Chair and three new
members (pages 93–98)
JAN 2015 CareerTrackers honoured IBA for its commitment
to the 10x10 program (pages 124–125)
MAR 2015 IBA implemented policy changes to assist more Indigenous
buyers to enter the housing market (pages 19, 22, 28)
MAY 2015 IBA celebrated the 40th anniversary of the first loan granted
to assist the Barratt family to buy their own home (page 37)
JUN 2015 IBA hosted a forum where Indigenous organisations came
together to endorse the Indigenous Investment Principles
(page 69)

ANNUAL REPORT 2014–15
PART 1: OVERVIEW
03
Achievements
517NEW HOME LOANS
WERE APPROVED
91%OF IBA HOME LOANS
WERE MADE TO FIRST
HOME BUYERS
79%OF HOME LOANS WERE IN
REGIONAL AND REMOTE AREAS
49NEW BUSINESS
LOANS WERE
APPROVED
365BUSINESSES WERE PROVIDED
WITH BUSINESS ADVICE OR
SUPPORT
1,375PARTICIPANTS ATTENDED
INTO BUSINESS™
WORKSHOPS
885 JOBS
FOR INDIGENOUS AUSTRALIANS WERE
SUPPORTED BY IBA BUSINESS LOAN
CUSTOMERS AND IBA’S INVESTMENTS
70%OF IBA LOAN CUSTOMERS WERE STILL
IN BUSINESS AFTER THREE YEARS
24%OF IBA STAFF MEMBERS
WERE INDIGENOUS
$18mWAS PROVIDED IN SALARIES, WAGES AND
JOB-RELEVANT TRAINING FOR INDIGENOUS
AUSTRALIANS THROUGH IBA’S INVESTMENTS
$4.8mWAS PAID FOR GOODS AND SERVICES PROCURED FROM
INDIGENOUS SUPPLIERS THROUGH IBA’S INVESTMENTS

ABOUT IBA
IBA is a commercially focused organisation that promotes and
encourages self‑management, self‑sufficiency and economic
independence for Aboriginal and Torres Strait Islander peoples.
Our vision is
for a nation in
which the First
Australians are
economically
independent
and an integral
part of the
economy.
We achieve our vision through three core programs—focusing on
housing, business development, and investment—that aim to remove
obstacles that may prevent Indigenous Australians from accumulating
assets, creating wealth and fulfilling their aspirations.
Objectives
To stimulate the economic advancement of Indigenous Australians,
IBA pursued three key objectives in 2014–15:
• facilitate Indigenous Australians into home ownership by
providing affordable housing loans to Indigenous Australians
who would generally not qualify for housing finance, including by
addressing barriers such as lower incomes and savings, credit
impairment and limited experience with loan repayments
• assist eligible Indigenous Australians to start up, acquire, grow
or exit a successful business
• assist Indigenous Australians to achieve economic independence
through direct investment and participation in commercial
and joint‑venture business enterprises that produce increased
financial returns and employment, training and supply
chain opportunities.
Stakeholders
Effective engagement with both our customers and external
stakeholders fosters valuable relationships that help us deliver
benefits to Indigenous Australians. IBA’s Stakeholder Engagement
Strategy assists us to better direct and orient our services, gain access
to new opportunities, and explore new directions and innovation while
improving service to customers.
Through outreach activities, such as conference sponsorships and
public appearances by IBA executives, IBA encourages actions and
shares ideas that contribute to economic advancement for Indigenous
Australians. The key outreach activities in 2014–15 are summarised in
the appendix on page 199.

PART 1: OVERVIEW
05
Legal framework
IBA is established under the Aboriginal and Torres Strait Islander
Act 2005 (ATSI Act) and is a corporate Commonwealth entity for the
purposes of the Public Governance, Performance and Accountability
Act 2013 (PGPA Act).
IBA resides in the portfolio of the Prime Minister and Cabinet, and
is accountable to the Australian Parliament through the Minister for
Indigenous Affairs, Senator the Hon. Nigel Scullion.
History
IBA is one of the longest standing Indigenous‑specific commercial
organisations, and arguably the most successful. Originally known as
the Aboriginal and Torres Strait Islander Commercial Development
Corporation (CDC), it was established in March 1990 following the
proclamation of the Aboriginal and Torres Strait Islander Commission
Act 1989 (ATSIC Act).
In 2001, the CDC was renamed as Indigenous Business Australia
through an amendment to the ATSIC Act. At that time the organisation
was engaged in 19 business ventures with Indigenous organisations
holding equity interests in 15 of them.
Following the abolition of the Aboriginal and Torres Strait Islander
Commission in 2005, IBA’s role was expanded under the ATSI Act, to
include managing the Indigenous Home Ownership Program and the
Business Development and Assistance Program.
By 2009, IBA’s total asset value reached $1 billion. As of 30 June 2015,
IBA’s total asset value has increased to $1.2 billion. In 2014–15, IBA
delivered 517 home loans and 49 business loans and had 26 active
investments, including four trusts.
CEO Chris Fry, Senator the Hon. Nigel Scullion and Chair Eddie Fry

CHAIR’S REVIEW
Change, vision, future
The drive and commitment to achieve the
IBA vision requires constant attention.
On joining the Board in December 2014,
I challenged the organisation to think
differently about how IBA can increase
its impact, effectiveness, and reach—in
particular, how IBA can build and leverage
its asset base to dramatically increase
the number and volume of loans and
investments it makes for the benefit of
Indigenous Australians now and into
the future.
I have been pleased to see the Board, Executive Management Team
and staff embrace that challenge. During the year, IBA started to put
integral plans in place including:
• Indigenous Home Ownership Program reviewed its policies
and amended interest rates and loan requirements to meet the
changing environment
• Business Development and Assistance Program began to
reorganise to better support Indigenous businesses to take
advantage of the Australian Government’s new Indigenous
Procurement Policy
• Equity and Investments Program examined its portfolio of
investments and made responsible divestments across the
range of assets in order to maximise returns. Another key focus
was the move from an approach of direct to pooled (shared)
investment vehicles to benefit more Indigenous Australians.
Working towards growth
To keep in step with the trend that the Indigenous population is
growing at a faster rate than the non‑Indigenous population, we need
a plan that aligns to this changing demographic. IBA’s functions will
affect generations to come, not just the immediate one to five years,
so our strategies cover both short- and long-term solutions.
In 2015, we celebrated 40 years of the home loan program. It is an
achievement to be proud of. The challenge now is to create a future
of growth through all our programs. We need to be doing more
to allow wealth to be created and passed down to generations of
Indigenous Australians.

PART 1: OVERVIEW
07
As the planning process continues, with a new strategy to be presented
next financial year, the guiding concept is to be more proactive in our
work. This will include tapping into more home ownership markets,
particularly in remote Australia, and partnerships with corporate
businesses to generate a broader awareness of Indigenous home
ownership and create procurement opportunities for Indigenous
businesses. The shift in investments will deliver a set of products that
enable more groups to benefit from IBA’s balance sheet.
Part of documenting our view towards the future was the development
of the IBA 2015–16 Corporate Plan under the PGPA Act. We see
this plan as a fluid document to be updated each year with specific
actions. The IBA Board also had training on the PGPA Act, presented
by Minter Ellison, to ensure that we continue to comply with our
legislative requirements.
Effective 20 October 2015, I take on an additional role as Chair of
the Indigenous Land Corporation (ILC) for a three‑year period. I
look forward to forging even stronger links between ILC and IBA to
further drive a strong economic development agenda for the benefit of
Acknowledgments
The year held its share of change among the board members.
I particularly thank our Deputy Chair, Anthony Ashby, for stepping up
to the Acting Chair role from June to November 2014. Anthony was
first appointed to the Board in 2012 and is a valued director. I look
forward to continuing to benefit from his experience and insight into
the organisation’s goals and directions.
The challenge
now is to
create a future
of growth
through all our
programs
The Board said farewell to directors Jason Eades, Judy Hardy and
Gail Reynolds‑Adamson. Their contribution and service to IBA has
set the stage for our future and is appreciated.
We welcomed three new directors: Rick Allert, Glen Brennan
and Shirley McPherson. Each brings diverse expertise to round
out our growth strategy and direction for better outcomes for
On behalf of the Board, I would also like to acknowledge the continued
support of Senator the Hon. Nigel Scullion, Minister for Indigenous
Affairs, and the Australian Government, as well as the valued
members of our advisory committees.
Finally, my appreciation extends to the IBA staff members and
Executive Management Team members, led by CEO Chris Fry, who
passionately serve our communities around the country. I commend
the hard work of all to date, and look forward to the growth and
benefits IBA can provide for Australia’s future.
Eddie Fry
Chair

CEO’S REVIEW
Achieving results in a
challenging environment
A mix of environmental and economic
conditions created a vulnerable climate
for home, business and investment
opportunities in 2014–15.
Rising house prices hit our home loan
market in terms of affordability yet we
still approved 517 home loans totalling
$149.6 million. Since its inception, the
Indigenous Home Ownership Program has
created an additional $2 billion in personal
asset value for Indigenous Australians. I am particularly pleased with
the marketing efforts of our frontline staff who work one‑on‑one
with Indigenous Australians to assist them to overcome barriers to
home ownership.
Reflecting a difficult market, our Business Development and
Assistance Program provided fewer loans—49 loans, worth a total of
$18.3 million. However, the program supported 1,122 jobs through its
loan customers, 614 of which were held by Indigenous Australians. We
are working hard to implement strategies that can assist Indigenous
Australian businesses to maximise opportunities arising from the
Australian Government’s new Indigenous Procurement Policy.
Our Equity and Investments Program delivered a return on equity of
5.7 per cent in 2014–15 and 5.5 per cent per annum over the five years
to 30 June 2015, and generated cash distributions of $19.6 million to
IBA and its Indigenous partners, through its investments.
I have been pleased to see the positive response to, and performance
of, the Indigenous Real Estate Investment Trust (I‑REIT) since its
inception in 2013. The I‑REIT has increased in value and delivered
strong returns to investors. It currently holds five commercial
properties, is valued in excess of $87 million and seeks to provide
returns to investors from a combination of income and capital growth.
Also as a result of over 18 months’ work and consultation involving
key Indigenous groups and stakeholders, the Indigenous Investment
Principles were endorsed. The principles lay a good foundation to
empower Indigenous Australians, organisations and communities in
the modern Australian economy.

PART 1: OVERVIEW
09
Overall, IBA returned to surplus with a total comprehensive surplus
of $6.9 million in 2014–15 (from a previous year deficit of $16 million)
and we remain well placed to meet operating commitments (see pages
136–139). In 2014–15, IBA had a cash operating surplus of $2.3 million.
As part of our adherence to the PGPA Act and focus on maintaining
systems relating to risk management and fraud control, IBA established
a cross‑program project to prepare an overarching credit policy (see
page 113).
Focusing on our people
Our accomplishments for the year are many. I am proud of what staff
have done, and recognise our achievements in a year of transition. We
continue to mature as an organisation and improve our engagement
with customers through innovative means.
Fostering both new and current staff members in a supportive
environment is important at IBA. Programs such as Harvard
ManageMentor and Frontline Management Certificate IV, and the
Galambany Staff Network, offer opportunities for staff to learn and
develop through their careers.
Indigenous
Australians are
at the centre
of what we do
every day
In January, in recognition of IBA’s commitment to provide internship
placements for Indigenous Australians, I was honoured with the gift of
the artwork Tree of Knowledge by CareerTrackers (see pages 124–125).
I commend the hard work of all our interns, and look forward to
advancing our commitment to them over the coming years.
Looking ahead
Indigenous Australians are at the centre of what we do every day.
We deal with people’s dreams.
As we respond to the changing needs of our customers, variations in
government policy settings and a shifting economic climate, it is vital
that IBA continues to offer innovative products and focused service
delivery, and to embrace a business model based on growth and
commercial sustainability.
With a change in board membership midyear, including a new Chair,
we are creating a new vision and strategy for IBA’s future. We have
already seen results from the work done this year and we are looking
forward to advancing the strategies further.

The next financial year will be another of challenge and opportunity.
The Board has set a number of bold directives and we have a range of
strategies under development in response to those challenges. I am
confident that the impact of those strategies will be quite profound for
Indigenous Australians and for IBA—better commercial loans, better
investments, and better engagement with the corporate world.
The Executive Management Team and staff have been working hard
on a growth plan set out by the new Board. We have recognised
the challenges in demographic growth and our business trading
environment—and we are responding.
Chris Fry
Chief Executive Officer
IBA staff at the gala dinner for the CareerTrackers 10x10 Program in February 2015
Photo credit: Tomasz Machnik, Photographer, Flashpoint Labs—Changemaking Photography

PART 1: OVERVIEW
11
PERFORMANCE
OVERVIEW
IBA’s budget is managed through the annual portfolio budget
statements of the Prime Minister and Cabinet portfolio. IBA’s
outcomes and outputs, and corresponding key performance indicators,
are described in the portfolio budget statements.
The portfolio budget statements identified one outcome for IBA
in 2014–15: improved wealth acquisition to support the economic
independence of Aboriginal and Torres Strait Islander peoples through
commercial enterprise, asset acquisition, construction and access to
concessional home and business loans.
The total appropriation (revenue from Government) for Outcome 1
in 2014–15 was $34 million, and the total price (operating costs) of
Outcome 1 was $179 million.
Outcome 1 was delivered through three programs: Indigenous Home
Ownership Program, Business Development and Assistance Program,
and Equities and Investments Program.
Figure 1: HOW IBA’S PROGRAMS ACHIEVE ITS VISION

Indigenous Home Ownership Program
Objective: This program aims to facilitate Indigenous Australians
into home ownership by addressing barriers such as lower incomes
and savings, credit impairment and limited experience with
loan repayments.
The table below shows IBA’s achievements against the targets set
out for the Indigenous Home Ownership Program in the 2014–15
portfolio budget statements. Notwithstanding increased house prices
nationally, IBA was still able to assist Indigenous Australian families
into home ownership with 517 new loans approved. (See Part 2 for
more information.)
Measure Target Result Achieved
Key performance indicators
Number of loans to applicants who have an
adjusted combined gross annual income of
not more than 125% of IBA’s Income Amount1
80% 80% P
Number of loans to applicants who are first
home buyers
90% 91% P
Number of remote Indigenous communities
in which IBA is actively facilitating home
ownership opportunities
12 12 P
Key program deliverables
Number of new home loans 560 517 O
Aggregate loans in the portfolio 4,505 4,471 O
Total price $29.1m $34.3m
Appropriation $10.9m $10.9m
1 The IBA Income Amount is equivalent to 100 per cent of the national average weekly
male earnings, as calculated by the Australian Bureau of Statistics.
The Indigenous
population
is growing at
a faster rate
than the non-
Indigenous
population and
is relatively
youthful, with
56 per cent
of Indigenous
Australians
aged less than
25 years

PART 1: OVERVIEW
13
Business Development and
Assistance Program
Objective: This program aims to assist eligible Indigenous Australians
to successfully start up, acquire, grow or exit a business.
The table below shows IBA’s achievements against the targets
set out for the Business Development and Assistance Program in
the 2014–15 portfolio budget statements. IBA commenced a significant
redevelopment of the program to achieve greater success for
Indigenous Australian businesses in the future. Results for 2014–15
represented positive growth in workshop participation and jobs
created, although a drop in loans approved reflected a constrained
economic market. (See Part 3 for more information.)
Percentage of loan accounts that were
successfully finalised through loan
repayment1
75% 42% O
Percentage of loan customers still in business
one year after commencing business
85% 91% P
two years after commencing business
75% 79% P
three years after commencing business
65% 70% P
Number of new IBA loans approved 80 49 O
Number of new loans facilitated with other
lenders in the broader economy, including
split loans
10 9 O
Number of businesses or prospective
businesses provided with business advice or
support
490 365 O
Number of participants that attended Into
Business™ workshops
750 1,375 P
Number of Strategic Economic Development
Initiatives
15 5 O
Number of Business Development Initiatives 30 24 O
Number of jobs created/supported by IBA
business loan clients
500 1,122 P
Number of Indigenous people in jobs created/
supported by IBA business loan clients
300 614 P
Number of active loans in the portfolio 300 277 O
Appropriation $23.4m $23.4m
1 Calculated from the number of loan payouts made by clients during the year divided by
all loan closures (including payouts, write‑offs and debts waived).

Equity and Investments Program
Objective: This program aims to assist and develop Indigenous
Australians to achieve economic independence through direct
investment and participation in commercial enterprises.
The table below shows IBA’s achievements against the targets set
out for the Equity and Investments Program in the 2014–15 portfolio
budget statements. IBA achieved its target portfolio return for the
financial year and delivered returns to Indigenous partners in excess
of the stated target. IBA actively pursued new investment opportunities
and exited from existing investments in order to re‑use capital for
further growth. (See Part 4 for more information.)
Portfolio return to IBA (budget year)1
5.4%
Cash +3%
5.7% P
Portfolio return to IBA (rolling five years)2
6.5%
Cash +3%
5.5% O
Number of Indigenous co‑investors
supported3
25 28 P
Portfolio return to Indigenous co‑investors4
5.4%
Cash +3%
6.1% P
Proportion of Indigenous jobs supported by
the investment portfolio5
20% 28% P
Appropriation6
– –
1 This measure indicates portfolio return to IBA during the year. It is calculated as the
after‑tax return generated by IBA’s share of the investment portfolio in the budget
year, expressed as a percentage of the average value of IBA’s share of the investment
portfolio during the budget year (‘portfolio value’). It excludes valuation increments/
decrements and IBA’s financial investments and the interest earned thereon.
2 This measure indicates portfolio return to IBA over a rolling five‑year period (inclusive
of the designated year). It is calculated as the average of the after‑tax returns
generated by the investment portfolio (expressed as a percentage of portfolio value) in
each of the past five budget years. It excludes valuation increments/decrements and
IBA’s financial investments and the interest earned thereon.
3 Number of Indigenous investors supported includes current Indigenous co‑investors,
Indigenous co‑investors to whom investments were sold during the budget year and
Indigenous investors supported through advisory services via IBA’s Acquisitions Unit or
Traditional Owner and Native Title Unit.
4 This measure indicates portfolio return to IBA’s Indigenous co‑investors during the
year. It is calculated as Indigenous co‑investors share of the after‑tax return generated
by the investment portfolio in the budget year, expressed as a percentage of the
average value of Indigenous co‑investors share of the investment portfolio during the
budget year.
5 Total number of Indigenous people employed by employing investment‑portfolio
entities, expressed as a percentage of total workforce, measured quarterly and
averaged across those quarters to account for fluctuations in staffing levels intra‑year.
6 This program does not receive government funding, but covers its operating expenses
by prudently managing the investment portfolio.

02
HOME
OWNERSHIP
OBJECTIVES16
PERFORMANCE16
IMPACTS AND CHALLENGES 17
PROGRAM ACHIEVEMENTS 18
LOAN PRODUCTS AND
PARAMETERS28
ASSET MANAGEMENT 31
RISK MANAGEMENT 38
OUTLOOK38

OBJECTIVES
IBA’s Indigenous Home Ownership Program facilitates increased
levels of home ownership among Indigenous Australians by providing
affordable home loans.
The program is targeted at first home buyers and aims to address
barriers such as loan affordability, low savings, impaired credit
histories and limited experience with long‑term loan commitments.
The program sets interest rates, deposit requirements and other
support arrangements at appropriate levels that will assist people who
may otherwise not be able to enjoy home ownership.
PERFORMANCE
IBA achieved all of its home ownership key performance indicators
for 2014–15 yet fell just below target for its two key program
deliverables (see Table 1).
IBA exceeded its lending commitment target by $3.9 million with a
total commitment valued at $183.9 million for the year. However, a
higher average loan amount meant that the number of loans approved
was slightly under the projected target. This is consistent with
performance in the previous two years.
Policy changes were implemented in March 2015 to adjust for market
conditions and assist more Indigenous home buyers to enter the
housing market. These changes proved to be effective in increasing
interest in the home ownership market, and IBA expects their positive
impacts to continue in 2015–16.
IBA approved
517 new loans
enabling 1,249
Indigenous
Australians
to enjoy the
benefits
of home
ownership

ANNUAL REPORT 2014–15 17
PART 2: HOME OWNERSHIP
Table 1: INDIGENOUS HOME OWNERSHIP PROGRAM PERFORMANCE
SUMMARY, MEASURED AGAINST THE PORTFOLIO BUDGET STATEMENTS
TARGETS FOR 2014–15
Number of loans to applicants who have an
adjusted combined gross annual income of
not more than 125% of IBA’s Income Amount1
80% 80% P
Number of loans to applicants who are first
home buyers
90% 91% P
Number of remote Indigenous communities
in which IBA is actively facilitating home
ownership opportunities
12 12 P
Number of new home loans 560 517 O
Aggregate loans in the portfolio 4,505 4,471 O
1 The IBA Income Amount is equivalent to 100 per cent of the national average weekly
male earnings, as calculated by the Australian Bureau of Statistics.
IMPACTS AND
CHALLENGES
According to the 2011 Australian Census, the Indigenous Australian
home ownership participation rate rose from 26 per cent in 1971
to reach 37 per cent in 2011, but remained significantly below
the participation rate of other Australian households, which was
70 per cent.
In the 40 years since the first Australian government‑financed home
loan to assist an Indigenous Australian to purchase their home was
approved, more than 16,000 loans have been provided. Since taking
responsibility for the Indigenous Home Ownership Program in 2005,
IBA has made an important contribution to increasing Indigenous
Australian home ownership.
The value of home ownership to IBA’s customers is considerable.
It includes both direct economic benefits, such as increases in
personal wealth, and broader indirect benefits, including stability
in employment, better education outcomes for children, improved
health, and reduced costs to government. IBA estimates that the home

ownership program has created an additional $2 billion in personal
asset value for its customers.
In the 2011 Census, there were 209,000 Indigenous households,
with only 74,000 households in home ownership. To bridge the gap
between Indigenous home ownership and that of the wider Australian
population, approximately 65,000 Indigenous households would need
to move into home ownership.
However, the Indigenous population is growing at a faster rate than the
non‑Indigenous population and is relatively youthful, with 56 per cent
of Indigenous Australians aged less than 25 years compared to
32 per cent of the non‑Indigenous population. This provides both
opportunities and challenges.
A growing, youthful population has the potential to contribute to
the productivity of the nation through participation in the workforce,
which would make home ownership more achievable. A challenge
for those living in remote communities is the additional barriers they
experience, such as financial institutions’ lack of readiness to accept
restrictive land tenure arrangements, higher construction costs and
the absence of established residential property markets.
PROGRAM
ACHIEVEMENTS
Funding
The level of funding for new housing loans is limited to the capital
available. The capital pool depends on the amount of customer
repayments received by IBA, the value of loans that are discharged
early, and additional capital injections.
In 2014–15, IBA received $158.9 million in revenue, comprising
$134.6 million from loan repayments and early loan discharges,
$23.2 million in new appropriations and $1.1 million from bank interest
on funds held by IBA.
The total amount of funds committed in 2014–15 was $183.9 million,
including carried‑forward commitments of $34.4 million. The
total expenditure for the year was $148.7 million. An amount of
$35.2 million in outstanding commitments will be carried forward
to 2015–16.

Lending
IBA’s target was to approve 560 new loans in 2014–15. IBA approved
517 new loans with a total value of $149.6 million. The average
property purchase price was $354,100 and the average loan amount
was $290,200; an increase from $340,000 and $256,150, respectively,
in 2013–14. This new lending will enable 1,249 Indigenous Australians
(including dependants) to enjoy the social and economic benefits of
home ownership.
Depending on the customer’s circumstances, particularly where
they have a higher income, IBA may provide funds under a split loan
arrangement. In this case, IBA lends part of the funds needed to buy
a home and the customer borrows the remaining funds from another
lender. In 2014–15, 105 loans (20 per cent of the total number of loans
approved by IBA) were funded under split loan arrangements. Through
these arrangements, IBA effectively leveraged $26.2 million in external
funding, enabling more Indigenous Australians to purchase their own
homes than otherwise would have been the case.
Figure 2 shows the distribution of new loans across geographical
areas, demonstrating that the majority of loans were provided in
regional Australia.
First home buyers
IBA’s housing loans are targeted towards Indigenous first home
buyers who would not generally qualify for housing finance from other
sources. In 2014–15, IBA’s performance target was to make at least
90 per cent of loans to first home buyers. IBA met this target, achieving
91 per cent of loans to first home buyers.
91 per cent of
new housing
loans were
approved to
first home
buyers
Many first home buyers, particularly those living in major towns
and cities with good education and employment opportunities, have
sufficient income to service a mortgage. However, they may not have
sufficient savings for the up‑front capital costs of purchasing a home,
including a deposit, stamp duty, conveyancing and other fees.
In March 2015, IBA introduced a new loan product, Fee Finance, to
assist first home buyer customers who have the earning capacity to
meet housing loan repayments but do not have sufficient savings to
pay all the costs associated with purchasing a home. These costs
may include government stamp duty; the costs of property valuations
and building and pest inspections; conveyancing costs; and mortgage
registration fees. A Fee Finance loan is in addition to the customer’s
property purchase loan and has different terms, including a shorter
loan term (maximum ten years).

Figure 2: DISTRIBUTION OF NEW HOUSING LOANS, BY GEOGRAPHICAL AREA, 2014–15
Geographical area Major city Regional Remote Total
ACT
Canberra 3 1 - 4
NSW
Sydney region 14 9 - 23
Bourke - 1 7 8
Central Coast 18 7 - 25
Coffs Harbour 1 35 - 36
Dubbo - 21 - 21
Queanbeyan 3 17 - 20
Tamworth - 7 - 7
Wagga Wagga - 25 - 25
NT
Darwin region - 17 - 17
Alice Springs/Apatula - - 16 16
Katherine - - 2 2
Tennant Creek - - 2 2
QLD
Brisbane region 31 25 - 56
Cairns/Cape York - 24 4 28
Mount Isa - - 2 2
Rockhampton - 25 - 25
Roma - 6 1 7
Townsville - 14 - 14
SA
Adelaide region 17 7 - 24
Ceduna - 1 1 2
Port Augusta - 4 - 4
TAS
Tasmania - 28 - 28
VIC
Melbourne/Victoria 5 50 - 55
WA
Perth region 16 34 - 50
Broome - - 9 9
Derby - - 1 1
Geraldton - 4 - 4
Kununurra - - 2 2
Total 108 362 47 517
21% 70% 9%
Note: Geographical areas are based on the Australian Bureau of Statistics Australian
Indigenous Geographic Classification and Accessibility/Remoteness Index of Australia.

Customer profiles
The typical IBA housing loan customer in 2014–15 was a couple with
dependants, on a combined annual income of $83,000. They were
most likely to purchase their first home in a non‑metropolitan area.
Approximately 44 per cent of IBA’s housing loan customers were
couples with dependent children. Other customers were single parents
(14 per cent), couples with no dependants (24 per cent) or single
people (18 per cent). The median age of customers was 31.
The IBA Income Amount is equivalent to 100 per cent of the national
average weekly male earnings, as calculated by the Australian Bureau
of Statistics: at 30 June 2015, the Income Amount was $79,664.
In 2014–15, IBA met its performance target to provide 80 per cent
of loans to applicants who have an adjusted combined gross annual
income of not more than 125 per cent of the IBA Income Amount.
To further assist low‑income customers, in March 2015 IBA increased
the income threshold from $35,000 to 70 per cent of the Income
Amount ($55,765 at 30 June 2015) for customers accessing IBA’s
reduced commencing interest rate loan of 3.0 per cent.
Figure 3: NEW HOUSING LOANS, BY CUSTOMER INCOME, 2014–15

Regional and remote areas
IBA’s Indigenous Home Ownership Program provides Indigenous
Australians in regional and remote areas access to home loan finance
where they would not normally have the opportunity to borrow money
to buy their own homes.
More than
79 per cent
of customers
purchased
homes in
regional and
remote areas
In 2014–15, more than 79 per cent of new loans (409 loans) were
approved for customers purchasing homes in regional and remote
areas, while 9 per cent (47 loans) were approved for areas classified as
remote or very remote.
Figure 4 shows the breakdown of housing loans approved based on
the Accessibility/Remoteness Index of Australia (ARIA) classifications.
ARIA is an Australian Bureau of Statistics (ABS) endorsed measure of
remoteness and is determined by the road distances to the nearest
ABS-defined Urban Centres. The map in Figure 2 demonstrates the
distribution across Australia.
Figure 4: NEW HOUSING LOANS, BY ACCESSIBILITY/REMOTENESS INDEX
OF AUSTRALIA CLASSIFICATIONS, 2014–15
In 2014–15, IBA provided five housing loans and other support to
assist Indigenous tenants living in remote New South Wales locations
to move from rental housing, including social housing, to home
ownership. These loans were the final ones to be provided through
the New South Wales Remote Aboriginal Home Ownership Scheme,
funded by the New South Wales Department of Family and Community
Services, which will be superseded by other arrangements in 2015–16.

Emerging markets
IBA’s Indigenous Home Ownership Program prioritises applications
from customers living in ‘emerging market’ communities where there
are good prospects for them to achieve successful home ownership
outcomes. This generally means that land tenure is suitable security
for a loan, a 99‑year leasing administration system is in place, and the
local community has a history of good governance and social stability.
The targeted assistance is designed to overcome barriers such as a
lack of access to financial institutions and services, lower incomes,
lack of access to housing loan finance, substantially elevated
construction costs and an absence of residential property markets. In
addition to its standard loan finance support, the assistance measures
that IBA offers to emerging market applicants can include paying
up‑front loan establishment and support costs, and providing grants to
eligible borrowers.
In 2014–15, IBA made 25 visits to nine emerging market communities:
Angurugu, Milikapiti, Milyakburra, Umbakumba and Wurrumiyanga
in the Northern Territory and Hope Vale, Palm Island, Wujal Wujal
and Yarrabah in Queensland. The combination of these nine emerging
market communities and the three remote communities noted in the
following paragraph makes up the twelve communities in which IBA
facilitated home ownership opportunities in 2014–15. IBA settled its
first loan in
Queensland for
a social housing
tenant on
community‑held
land to buy the
home they lived
in by way of a
99‑year lease
It was expected that a number of home loan applications in Yarrabah
and Palm Island would have been approved in 2014–15. However,
due to delays in the issue of 99‑year leases by the respective leasing
entities, these were not able to be finalised. It is anticipated that they
will proceed early next financial year. In 2014–15, IBA did approve
three housing loans in remote Indigenous communities in Queensland
classified as emerging markets. One of those loans, settled in
October 2014, was the first in Queensland (Yarrabah) to enable a social
housing tenant on community‑held land to buy the home they lived in
by way of a 99‑year lease.
Customers transitioning to other lenders
The term of an IBA home loan is typically 32 years, although most
home loan customers discharge their loans early—on average,
after approximately ten years. Having established adequate equity
in their homes, IBA customers often turn to other lenders when
they want to trade up to a larger home to accommodate changing
family circumstances.
In 2014–15, 376 customers discharged their IBA loans, up from the 349
customers in 2013–14. The majority of these customers transitioned to
the mainstream finance sector to either refinance their existing home
loan or upgrade to a new home.

Marketing and promotion
On a trial basis from November 2014 to 30 June 2015, IBA assigned
two full‑time staff to conduct outreach activities for the Indigenous
Home Ownership Program. In addition to undertaking routine
promotional activities and one‑on‑one interviews, these staff members
worked extensively with a range of private and public sector employers
with large numbers of Indigenous employees to promote the home
ownership assistance available from IBA.
The trial was very successful: 19 per cent (1,078) of all new home
lending enquiries were directly attributable to outreach activities, as
detailed in Figure 5. Over 800 Indigenous Australians attended these
home information sessions.
The increased promotional activity resulted in IBA being featured in a
number of regional radio interviews, which further raised awareness
of home ownership opportunities available through IBA.
Options are currently being developed to build on the success
of the initiative to date in both improving and extending the
outreach activities. Total home loan enquiries grew by 5.3 per cent,
demonstrating a growing interest among Indigenous Australians in
home ownership.
Figure 5: INDIGENOUS HOME OWNERSHIP PROGRAM ENQUIRIES, BY
SOURCE, 2014–15
Portfolio growth
IBA’s target was to grow its housing loan portfolio to 4,505 loans. At
30 June 2015, the portfolio consisted of 4,471 active loans. However, the
value of the portfolio grew by 6.5 per cent, increasing to $928.3 million.

SEE CHANGE
For many years, Kacey and Richard Leach struggled to find
affordable long‑term rental accommodation for their large family.
They were desperate to put an end to constant moving and cramped
living conditions.
The couple had approached a mainstream lender about applying
for a housing loan, but ‘on paper’ their financial situation looked
unappealing. After they picked up a leaflet advertising IBA’s
Indigenous Home Ownership Information Sessions, the tide began to
turn for their family.
Kacey says, ‘We went in [to the IBA office] … and I said “I don’t think
I’m eligible for this but can you have a look?”’ Testing out their
assumptions about their eligibility meant Kacey and Richard were
able to secure a loan from IBA.
In 2015, the family moved into a new, seaside home. The surfboards,
bikes and sports gear scattered across the yard suggest that the
children love their family’s new stability and active outdoor lifestyle.
Encouraging other Indigenous Australians to test out their
eligibility assumptions by attending an Indigenous Home Ownership
Information Session, Kacey says: ‘Don’t sit around ruling yourself
out or thinking about why it won’t work. Just have a go and talk to
someone—you never know where it might lead’.

‘An IBA loan was the best thing to happen to our family’
—Kacey Leach, NSW
The Leach family enjoying their seaside access in NSW
‘An IBA loan was the best thing to happen to our family’
—Kacey Leach, NSW

LOAN PRODUCTS
AND PARAMETERS
IBA provides loans to Indigenous Australians so they can purchase an
established residential property, construct a new home, buy land or
make essential improvements to an existing home.
IBA also offers eligible customers loans for other housing‑related
purposes, including home improvements or repairs, changing family
circumstances, loan refinancing where the customer otherwise would
likely lose their home, and property settlements.
In 2014–15, the new Fee Finance loan was introduced to assist
customers who do not have sufficient savings to fund certain costs
associated with purchasing their first home.
Assessment
IBA uses industry‑based loan assessment practices when considering
housing loans, including factors such as the customer’s income,
servicing capacity and credit history, and the value of the property
being purchased. All loans are secured by a registered mortgage,
protecting IBA’s substantial investment in housing loans.
Interest rates
IBA’s housing loans have varying commencing interest rates,
depending on the individual customer’s circumstances and loan
requirements. Interest rate settings are adjusted from time to time
to assist customers enter the home ownership market while still
balancing the need to preserve and grow IBA’s capital base for
future home lending. The IBA Home Loan Rate is benchmarked
against a range of other lenders’ standard variable interest rates for
owner‑occupied properties.
In response to continuing pressure on loan affordability, historically
low interest rates and heightened competition for entry‑level housing
in 2014–15, IBA discounted its standard introductory interest rate
by 0.5 per cent. The discount commenced on 1 March 2015 and was
ongoing at 30 June 2015.

In 2014–15, 85 per cent of new IBA customers received loans at starting
interest rates of 4.0 per cent or 4.5 per cent; a further 8 per cent of
customers received loans at a starting interest rate of 3.0 per cent.
The interest rate is capped for a minimum period of 12 months then
increases by 0.5 per cent on 1 January each year until it reaches the
IBA Home Loan Rate. At 30 June 2015, the IBA Home Loan Rate was
5.25 per cent, which was lower than the rates of all of the major banks.
First home buyers who obtain part of their funds from an external
lending institution generally receive a starting interest rate of
4.0 per cent on their IBA loan, capped for three years. At the end of this
period, the rate increases by 0.5 per cent on 1 January each year until
it reaches the IBA Home Loan Rate. Customers on lower incomes (up
to 70 per cent of the IBA Income Amount—$55,765 at 30 June 2015)
may have a starting interest rate as low as 3.0 per cent. Figure 6 shows
the number of loans approved by commencing interest rates.
At 30 June 2015,
the IBA Home
Loan Rate was
5.25 per cent,
which was
lower than all
of the major
banks’ loan
rates
Customers purchasing homes in Indigenous communities classified
as emerging markets (see page 24) receive a commencing interest
rate appropriate to their income level. Customers with a family income
above $35,000 and below $80,000 start at a commencing interest
rate of 4.5 per cent. Customers on lower incomes start at a lower
commencing interest rate, while those on incomes of $80,000 or more
receive the IBA Home Loan Rate.
Figure 6: NEW HOUSING LOANS, BY COMMENCING INTEREST
RATE, 2014–15

Loan terms
Housing loan terms are usually 32 years, but may vary depending on
the customer’s circumstances. Where practical, IBA sets loan terms
so that a customer’s monthly loan repayment will be the maximum
they can afford, taking into account their overall living expenses.
As their loan progresses, many customers can make additional
repayments or maintain their repayments at a higher level, enabling
them to repay their loans sooner. Figure 7 shows the distribution of
loan approvals for different loan terms.
Figure 7: NEW HOUSING LOANS, BY LOAN TERM, 2014–15
Deposits
IBA removes two significant barriers to home ownership for
Indigenous Australians by having lower deposit requirements
than other lenders do, and not requiring customers to take out
mortgage insurance.
IBA expects customers to provide the highest amounts of deposit
they can reasonably afford, including any first home owner assistance
they receive from their state or territory government. In 2014–15, IBA
customers still borrowed, on average, 93 per cent of the funds required
to purchase their home.

ASSET
MANAGEMENT
Through rigorous asset management, IBA preserves its asset base
which provides funds for future lending and assists customers to
retain ownership of their homes. The following sections highlight some
of the characteristics of IBA’s housing loan portfolio and its portfolio
management practices.
Loan portfolio balances
IBA’s housing loan portfolio grew by a net amount of $56.6 million
in 2014–15, bringing the total value of the portfolio to $928.3 million.
Interest charged on loans during the year was $41.5 million. The value
of the portfolio after accounting adjustments for recognising assets
at their fair value was $636.4 million. The fair value assessment is an
accounting adjustment made to reflect the value of the portfolio based
on market expectations of risk and return. Figure 8 shows the growth
in the portfolio value over the past ten years.
Figure 8: TOTAL VALUE OF HOUSING LOANS IN PORTFOLIO OVER TEN
YEARS TO 2014–15

A FIRM GRIP
By their own admission, Daniel Rennie and Alex Burbury wouldn’t
have described themselves as ‘financially savvy’ four years ago,
when they were newly engaged. Since then, pursuing and achieving
home ownership has changed that—and much more.
After a few years of planning and saving, Daniel and Alex began
making enquiries into securing a housing loan. A family friend
suggested the couple look into IBA’s Indigenous Home Ownership
Program, which they did.
When their mortgage agreement was finalised, in 2014, the couple
realised just how much buying their own home had come to mean to
them. ‘We just cried and cried and cried, and we bought a bottle of
champagne and cried some more’, said Alex.
‘I hope Alex and I can inspire other people to give it a crack, not to
give up, and to push to create the future they want’, said Daniel.
‘There’s a lot of pride and self‑respect issues amongst our mob,
worrying about, “Am I asking for a handout?” But I know many
Indigenous people do need that help and advice because there are
cultural barriers in dealing with banks and asking for money’.
After initially looking at houses in the inner city, Daniel and Alex
changed tack and decided to buy land and build a home further
afield. They moved into their new home in February 2015.
‘As a side effect of this I have been able to set other goals for myself,
too, like losing weight, training more and quitting smoking. And Alex
is doing the same’, said Daniel.

‘So we’re building health as well as a house’—Daniel Rennie
Daniel Rennie and Alex Burbury moving into their
new home in February 2015
‘So we’re building health as well as a house’—Daniel Rennie

Geographical distribution of loans
The geographical distribution of the loan portfolio by state or territory,
and by regional and remote classification, is shown in Figures 9 and
10 respectively.
Figure 9: TOTAL HOUSING LOANS, BY STATE OR TERRITORY, 30 JUNE 2015
Figure 10: TOTAL HOUSING LOANS, BY ACCESSIBILITY/REMOTENESS
INDEX OF AUSTRALIA CLASSIFICATIONS, 30 JUNE 2015

Loan‑to‑valuation ratio
The majority of IBA’s new customers can only contribute minimum
deposits, which means that their loans have a high loan‑to‑valuation
ratio (LVR).
A high percentage (86 per cent) of loans in IBA’s housing loan portfolio
have a LVR of 75 per cent or more, in sharp contrast to the broader
lending market which has only 32 per cent of loans in that category
(a proportion of which may be investment property purchases).
The weighted‑average LVR for IBA’s loan portfolio in 2014–15 was
87 per cent compared to an industry average of 61 per cent. (Industry
comparisons are sourced from the Standard Poor’s Residential
Mortgage‑Backed Securities Performance Watch Report, March 2015.)
Arrears
IBA supports its customers at all stages of the process of applying
for, committing to, and managing the financial impact of buying their
first home.
The Indigenous Home Ownership Program has appropriate arrears
management and loan after‑care arrangements that allow for early
intervention and management of arrears cases. Where a customer
is unable to maintain loan repayments due to unemployment, illness
or other genuine financial hardship, IBA may assist by varying loan
repayments, adjusting the loan term or interest rate, or agreeing to a
short‑term deferment of loan repayments.
The relationship between the loan officers and the customers is
maintained throughout the course of a loan. IBA’s personalised
ongoing support for customers operates beyond the normal mandate
of a bank or other financial institution. However, the rate of arrears in
IBA’s housing loan portfolio is higher than that of other lenders, which
is to be expected given the higher risk profile of IBA’s loan portfolio and
IBA’s focus on low‑income first home buyers who are more susceptible
to economic downturns. Figure 11 shows the comparison of IBA
arrears rates to those of the broader housing loan industry.

Figure 11: COMPARISON OF ARREARS LOAN BALANCES OF IBA AND
MAINSTREAM LENDERS, MARCH 2015
Note: Industry comparisons are sourced from the Standard Poor’s Residential
Mortgage‑Backed Securities Performance Watch Report, March 2015.
At 30 June 2015, IBA loans that were more than 30 days in arrears
comprised 8.2 per cent of the total value of the loan portfolio. This
compares to an industry average benchmark figure of 1.1 per cent.
Loans that were more than 90 days in arrears at 30 June 2015
comprised 3.6 per cent of the total value of the loan portfolio,
compared to an industry average benchmark of 0.5 per cent.
IBA’s arrears rate compares favourably to the industry benchmark for
non‑conforming loans (high‑risk, non‑standard loans). The industry
average of non‑conforming loans more than 90 days in arrears was
2.7 per cent, compared to 3.6 per cent of IBA loans in this category.
While IBA takes every possible step to ensure that customers have
the capacity and intent to service loans, some arrears and losses
are inevitable. At 30 June 2015, 123 loans (2.8 per cent) were subject
to repayment arrangements, and IBA had taken possession of eight
properties under mortgagee‑in‑possession arrangements. Before
exercising its mortgagee powers, IBA worked extensively with each
customer to ensure that they were given every possible opportunity to
retain their home.
In 2014–15, IBA sold 32 properties under its mortgagee‑in‑possession
powers, for a net loss of $1.8 million. This loss reflected depressed
markets in the areas where the sales occurred. IBA continued to
pursue repayment arrangements to recover its losses.

CELEBRATING 40 YEARS
In 1974, Len Barratt was a fireman with the Canberra Fire
Brigade, earning a regular wage, and striving for a better
future for his family. Len heard about the Aboriginal Loans
Commission, an authority established in November 1974 to
provide finance for Indigenous Australians wanting to buy
their own homes.
On 27 May 1975, the Barratts became the first recipients of
an Aboriginal Loans Commission loan. They used the loan
to purchase their home in the Canberra suburb of Kambah.
In their Kambah home, the Barratts
raised 12 children in a stable, secure
environment with positive role models.
Their daughter, Niki Donnelly, is now
working for IBA, and raising her own
family, to continue the positive cycle
of asset and wealth creation for future
generations.
After going through several
restructures, the commission’s
loan program became the Indigenous
Home Ownership Program, which is
now administered by IBA.
‘IBA staff are dedicated to home
lending. They deal with the home loan
process from start to finish’—Niki
Donnelly, Canberra, ACT
Photograph that appeared in the
Canberra Times, 27 May 1975

RISK MANAGEMENT
IBA accepts a greater level of risk than other home lenders do, in
providing loans to a high‑risk market segment. However, IBA is
conscious of its fiscal obligations to maintain and grow a capital base
to support future home lending and achieve the organisation’s core
objective of increasing Indigenous home ownership. IBA manages
risk by having prudent lending policies and processes, and employing
experienced staff members to oversee lending activities. IBA adopts a
flexible approach whereby each case is considered on its merits.
From a financial perspective, IBA’s loan receivables are considered
riskier than those of mainstream lenders. IBA accepts a lower rate of
return than mainstream lenders would accept given the same level of
risk. The risk and return characteristics that IBA accepts are reflected
in the fair valuation of its loan portfolio, detailed in the accompanying
financial statements (see Part 7 of this annual report).
IBA’s approach to managing external risks, including changes in
market conditions, involves conducting ongoing risk identification and
assessment, and developing and implementing appropriate measures
to minimise the occurrence and impact of risk.
OUTLOOK
The projected revenue and new appropriations will allow IBA to
support an estimated 560 new home loans in 2015–16. The total home
loan portfolio is expected to increase to 4,675 loans.
By providing housing loans to eligible applicants, IBA will give
priority to the Australian Government’s initiatives to give Indigenous
Australians in remote areas strong incentives to take up work by
being mobile and relocating to stronger labour markets. IBA will also
continue to give priority to applicants seeking to purchase or construct
homes in remote communities.
The Australian National Audit Office is undertaking a performance
audit of the Indigenous Home Ownership Program. When the report
is released, IBA will consider the report’s findings and respond
accordingly to the audit.

03
BUSINESS
OWNERSHIP
OBJECTIVES40
PERFORMANCE40
IMPACTS AND CHALLENGES 43
BUSINESS OPPORTUNITIES 44
BUSINESS LOAN PORTFOLIO 52
RISK MANAGEMENT 59
OUTLOOK60

OBJECTIVES
The Business Development and Assistance Program supports the
development and growth of sustainable businesses to assist Indigenous
Australians achieve self‑employment, job opportunities and commercial
success, and provide employment opportunities for others.
As part of the program, IBA creates flexible pathways into business
ownership through its Into Business™ workshops, concessional
finance, pre‑ and post‑loan business support, and access to
commercial banking connections.
PERFORMANCE
While the Business Development and Assistance Program did not
meet some of its targets in 2014–15, the results linked to workshop
participation and the number of jobs created and supported by
business loan customers well exceeded the program’s targets
(see Table 2).
The program had a challenging year in 2014–15. Growth was
constrained by economic conditions reducing the demand in IBA’s
traditional market of small start‑up business lending. Despite this,
participation in the Into Business™ workshops increased, as did the
numbers of jobs created and supported.
As a result of the downturn in lending demand, IBA approved
fewer loans than expected (49 rather than 80), at a total value of
$18.3 million, and referred nine customers to commercial banks or
joint venture partners. Growth in the portfolio was also offset by the
impact of 41 loans maturing and 57 loans being written off. Of the
57 loans written off, 28 were outstanding debts for businesses which
had ceased trading. This isolated action had an apparent effect on
IBA’s portfolio growth and performance, as it offset new loans entering
the portfolio and impacted the loan repayment rate.
IBA approved 49
business loans,
worth a total of
$18.3 million

PART 3: BUSINESS OWNERSHIP
Table 2: BUSINESS DEVELOPMENT AND ASSISTANCE PROGRAM
PERFORMANCE SUMMARY, MEASURED AGAINST THE PORTFOLIO
BUDGET STATEMENTS TARGETS FOR 2014–15
Percentage of loan accounts that were
successfully finalised through loan
repayment1
75% 42% O
one year after commencing business
85% 91% P
two years after commencing business
75% 79% P
three years after commencing business
65% 70% P
Number of new IBA loans approved 80 49 O
Number of new loans facilitated with other
lenders in the broader economy, including
split loans
10 9 O
Number of businesses or prospective
businesses provided with business advice or
support
490 365 O
Number of participants that attended Into
Business™ workshops
750 1,375 P
Number of Strategic Economic Development
Initiatives
15 5 O
Number of Business Development Initiatives 30 24 O
Number of jobs created/supported by IBA
business loan clients
500 1,122 P
Number of Indigenous people in jobs created/
supported by IBA business loan clients
300 614 P
Number of active loans in the portfolio 300 277 O
1 Calculated from the number of loan payouts made by clients during the year divided by
all loan closures (including payouts, write offs, and debts waived).

The loan repayment rate has historically been presented as the ratio of
loans successfully paid out relative to business exits through write‑offs
in the given financial year. This calculation is easily distorted by the
number of write‑offs which take effect in the year, as a business
may be impaired for a number of years before write‑off criteria are
satisfied. As a result, this calculation will not be a feature of the
Business Development and Assistance Program key performance
indicators in the future. Instead, ‘business survival’ will be the key
performance indicator for portfolio performance.
Business survival rates remained steady and ahead of target, with
91 per cent of customers achieving their first year of trade, 79 per cent
their second year, and 70 per cent their third. These outcomes remain
ahead of those in the broader small business sector, reported by
the Australian Bureau of Statistics as 76 per cent for the first year;
59 per cent the second; and 50 per cent the third (ABS Publication
8165.0, Counts of Australian Businesses, including Entries and Exits,
Business
survival rates
remained
steady and
ahead of target,
with 91 per cent
of customers
achieving their
first year of
trade
June 2010 to June 2014).
The total number of Strategic Economic Development Initiatives was
reduced in 2014–15, as an effect of the redirection of a share of the
program’s strategic investment and general business development
budget into the establishment of a new capability within the program,
the Commercial Markets team.
From the start of 2015–16, the Commercial Markets team will direct
more targeted strategic and business development investment into
established businesses that are ready to grow through the realisation
of larger commercial opportunities. This represents a sophistication
of our service offering as we meet the changing expectations of the
maturing Indigenous business sector.
Three new measures were introduced in the 2014–15 portfolio
budget statements to demonstrate the number of businesses or
prospective businesses that participated and completed an Into
Business™ workshop, as well as those that participated through
external partnerships. These measures each had a target of zero as a
hold until the ability to track the information was fully implemented.
They were not able to be tracked as a business in 2014–15, but
instead as individuals, therefore have been removed. The number of
participants that attended the workshops was 1,375, exceeding target
by 83 per cent. From 2015–16, the measure will be a combination of
other measures collectively referred to as ‘Number of entrepreneurs
supported in capability development activities’.

IMPACTS AND
CHALLENGES
According to the 2011 Australian Census, of the 140,000 Indigenous
Australians who were employed in 2011, 6 per cent (around 9,000)
were operating businesses—a low figure compared to 15.2 per cent
for non‑Indigenous Australians. The Indigenous self‑employment
rate grew by only 0.3 per cent between 2001 and 2011. Indigenous
businesses also tended to be located at the small and micro end of the
market spectrum.
IBA realised in 2013 that relying on existing models would not be
sufficient to achieve its objectives and meet the expectations of
stakeholders for growth in Indigenous self‑employment. Since then,
IBA’s strategies for future service delivery have emphasised innovating
to find better ways to reach more customers, while providing a more
effective service to meet their needs.
In 2014–15, IBA commenced a significant redevelopment of the
Business Development and Assistance Program. The goal was to
maximise IBA’s impact, to achieve greater success with Indigenous
business growth and sustainability, and to improve our customers’
experiences and interactions with IBA.
The Australian Government’s announcement of new Indigenous
procurement contract targets to commence from 2015–16 has
provided further impetus for this work. In particular, it creates
opportunities for IBA to provide support and engagement facilitation
for Indigenous businesses wishing to access government, corporate
and other supply chain or contracting opportunities.
In 2014–15, IBA launched a redevelopment project which involved
establishing and recruiting for the new Commercial Markets team, to
provide contract and procurement brokerage and support functions
for established Indigenous businesses. This team will complement the
existing IBA activity that supports new Indigenous businesses.
Other activities for the Business Development and Assistance Program
in 2014–15 revolved around maintaining ongoing business lending and
support functions against a backdrop of generally poorer economic
conditions and a smaller pipeline of emerging Indigenous business
operators. Work was also undertaken to address impaired loans within
the portfolio and promote IBA’s business lending to people wishing to
acquire existing businesses.

The portfolio has characteristically and historically been a lender
to customers seeking to enter business with little or no business
ownership experience, limited trading history, and little security to
offer. While IBA’s customers achieve comparatively high levels of
business success, there are also business failures which, despite
interest rate relief and repayment moratoriums, can impact socially,
emotionally and financially upon our customers.
Through the reorganisation of the Business Development and
Assistance Program, the new direction of the program will lead to
more commercial opportunities, to be developed in partnership
with our customers. This is expected to lead to stronger and more
commercial outcomes while supporting our less‑prepared customers
to design their own pathways and providing support to ensure the best
possible start to business ownership.
BUSINESS
OPPORTUNITIES
In addition to providing finance and business support products, the
Business Development and Assistance Program:
• identifies and supports Business Development Initiatives and
Strategic Economic Development Initiatives
• assists and supports customers considering owning a small
business
• provides access to expert advice for customers already in
business
• assists customers to grow or modify their business.
Development initiatives
Business Development Initiatives assist individual business owners
within a region or industry, including by supporting existing business
owners to build networks by participating in trade events, business
conferences and industry‑specific forums.
Strategic Economic Development Initiatives aim to develop innovative,
complex or collaborative projects which enable Indigenous
economic development in a number of communities and in specific
industry sectors.

In 2014–15, IBA funded 24 Business Development Initiatives and
five Strategic Economic Development Initiatives, with a total funding
expense of $1.55 million. The numbers of both types of initiative
were below IBA’s targets, because funds were refocused as part of
the redevelopment of the Business Development and Assistance
Program. Nonetheless, these initiatives supported 108 Indigenous
entrepreneurs, businesses and community organisations to expand
their markets, develop their businesses and advance their economic
development strategies.
The activities supported this year included:
• Indigenous Tourism Champions Program, an Indigenous
tourism product development and mentoring partnership with
Tourism Australia and state and territory tourism offices, with 41
businesses benefitting from this support
• Melbourne Business School MURRA Indigenous Business
Master Class Program to develop high‑level business skills,
business networks and partnership opportunities for selected
Indigenous business owners at graduate study level, with 17
Indigenous entrepreneurs participating
• Indigenous business representation at and participation in five
industry conferences and networking events, with around 50
Indigenous businesses taking part
• research into new industries, markets and commercial
opportunities for the Indigenous business sector, with four
studies of this nature being completed or commenced.
Into Business™ workshops
IBA offers free Into Business™ workshops for aspiring Indigenous
entrepreneurs who are new to business or new to an industry. Into
Business™ workshops help participants to fully investigate and
research their business ideas. Even customers who have been in
business for some time access the workshops to develop skills and
knowledge which help their businesses.
The three one‑day, self‑paced workshops are spaced over the course
of several weeks, and are held in locations around Australia, including
in regional and remote areas.
Through the workshops, customers work with a business specialist
to learn how to thoroughly research their business idea to determine
whether it is commercially viable, and what is required to manage
a business on a day‑to‑day basis. This year there were 1,375
participants, at 50 locations, in 13 regions, across all states and
territories (see Figure 12).

Figure 12: INTO BUSINESS™ WORKSHOP PARTICIPANTS,
BY REGION, 2014–15
IBA is working towards an online delivery option for Into Business™
workshops, which is expected to enhance the experience of our
customers. Online delivery will enable participants to tailor their
workshop content and the timing and pace of their participation to suit
their individual needs, without the necessity to travel or take time out
from families, studies, workplaces and businesses.
Business planning and support
IBA provides business planning and support to a range of customers,
including those who are just starting out and those who are already
in business. IBA can tailor its support services to meet individual
business needs and provide access to expert advice, information and
guidance on matters such as:
• business planning
• procedural and compliance requirements for new contracts
• tender writing and website development
• marketing and branding
• financial skills development
• cash flow management
• succession planning
• selling and/or exiting a business.

IBA also assists customers to enhance or test their business plans,
through its panel of consultants. A consultant can also assist a business
that may be underperforming by analysing its operations, financial
information and markets, and developing strategies to resolve any issues.
This year, IBA provided 483 business support services at a value of
$7.1 million to 365 businesses or prospective businesses (see Figure 13).
Figure 13: TOTAL VALUE, NUMBER AND DISTRIBUTION OF BUSINESS
SUPPORTS, BY REGIONAL OFFICE, 2014–15
INTEGRAL
PART OF THE
COMMUNITY
Integrity First Aid Training uses IBA’s facilities
to hold its first aid courses.
This Indigenous-owned business has received
various business supports from IBA, including
mentoring, marketing, website design and
assistance with business and sales plans.
Tim Cohen presenting to a class in IBA’s Sydney boardroom

COMPLETE CONTROL
Robert Stewart established his laundry business in 1979 with the
aim of achieving economic independence and creating employment
opportunities for his family. Almost four decades years later,
Complete Workwear Laundry Services is an award-winning company
servicing the airline and manufacturing sectors, and employing
more than 40 staff—including Robert’s son Jason and daughter
Nicole—at its Melbourne premises.
In 2015, after 28 years working alongside her father, Nicole Stewart
— a proud Taungurung woman—became a second‑generation owner
of Complete Workwear.
Nicole’s own tenacity and determination to achieve this was supported
by IBA. In addition to pre‑loan business planning support, and a loan
to acquire the company, Nicole has received ongoing mentoring and
advice from one of IBA’s national network of business consultants.
Nicole has already identified diversifying Complete Workwear’s
client base, implementing solid business systems, and developing
her staff—some of whom have been with the company for 20 years—
as keys to achieving her vision for financial growth.
‘I am smart enough to realise that I can’t do everything … So I’ve
appointed team leaders from amongst my staff ... people who can look
after what’s happening on the factory floor … My team leaders will be
going through leadership training shortly, and my staff will go through
lead management training. That way I can get everyone understanding
what we are trying to do as a group, not just me as the boss’.

‘It’s a challenge, and it’s about getting the business set up
correctly’—Nicole Stewart, Complete Workwear Laundry Services
As a second-generation business owner, Nicole Stewart
is blending tradition with a fresh vision
‘It’s a challenge, and it’s about getting the business set up
correctly’—Nicole Stewart, Complete Workwear Laundry Services

Business partnerships
IBA can assist individual businesses to grow, modify and operate
sustainably through assistance and partnering opportunities, both
within IBA and externally.
Through our own asset and equipment leasing services, IBA assists
Indigenous individuals, partnerships or organisations with the
establishment, consolidation or expansion of commercially viable
businesses (see Part 4 of this annual report).
Relationships with TAFE New South Wales Western Institute,
Commonwealth Bank of Australia and National Australia Bank further
bolster Indigenous businesses by providing access to training and
banking opportunities. Discussions were advanced in 2014–15 with a
few major lenders regarding the development of an overdraft product
to better support our small business customers in managing their
cash flows.
A services agreement with the Torres Strait Regional Authority
provided support and assistance for the delivery of 12 workshops
with total of 71 attendees in 2014–15. In addition, a shared agreement
with the Northern Territory Government’s Department of Business
facilitated five workshops in five communities across East Arnhem
Land, reaching a total of 24 attendees.
During 2014–15, IBA worked with the Department of the Prime
Minister and Cabinet and other central agency stakeholders to develop
the Australian Government’s Indigenous Procurement Policy. The
policy commenced on 1 July 2015. By 2020, the policy will allocate
to Indigenous businesses 3 per cent of all Australian Government
procurement contracts. This presents a substantial growth opportunity
for the Indigenous business sector.
Supply Nation is a non‑profit organisation that promotes supplier
diversity in Australia through the growth of the Indigenous Australian
business sector. In 2014–15, IBA sponsored the Supply Nation
Connect 2015 conference in Sydney and assisted 35 Indigenous
Australian businesses to attend the conference in Sydney (14) or Perth
(21), providing direct access to procurement experts and buyers from
across the government and corporate sectors.

RESEARCH PROJECTS
IBA has developed and collaborated on several research projects that seek
to enhance the understanding of Indigenous economic engagement. The
information collected enables IBA to better target and deliver its programs and
services, resulting in better customer experiences and outcomes.
Some of the substantial projects are noted below with a particular focus on
Indigenous businesses.
Understanding Indigenous business
The Understanding Indigenous Business study was operated by IBA from 2011
to 2014. The project undertook face‑to‑face interviews of a group of first‑year IBA
business loan customers in each year of the project, and re‑interviewed those
customers in subsequent years.
Through this project, IBA gained an understanding of the business challenges
faced by its customers, as well as their aspirations and successes. The study also
sought to reveal customers’ perceptions of how being in business has made a
difference to their lives, as well as the lives of their families and communities.
The project enabled IBA to improve its business lending and support services
each year, to address common difficulties faced by customers.
Factors influencing Indigenous business success
In 2014–15, a study of Indigenous business success factors in urban, regional and
remote areas was completed.
The study was undertaken by a group of experienced academic researchers, and
substantially funded by IBA and the Australian Research Council. It commenced
in 2011–12, and was the first large‑scale study using systematic analysis of
the issues facing a broad range of Indigenous businesses and entrepreneurs
across Australia.
The research findings highlight the diversity, complexity and vitality of the
Indigenous small business sector, and improve understanding of contemporary
challenges for Indigenous businesses, factors influencing their success, and
potential support mechanisms.
The study was led by researchers from Charles Sturt University and the University
of Technology Sydney. The report can be found at csu.edu.au/research/ilws/
research/summaries/ps/determingsuccessindigenousbusiness

BUSINESS LOAN
PORTFOLIO
IBA offers a concessional loan product to meet Indigenous Australians’
needs for capital to start, acquire or grow businesses. Of the new
loans approved in 2014–15, most were for establishing a new business
or growing an existing business (see Figure 14).
Figure 14: NEW BUSINESS LOANS APPROVED, BY PURPOSE, 2014–15
Loan parameters
IBA offers business loans of up to $2 million at concessional interest
rates that are generally 2.5 per cent (per year) below the comparable
rates offered by leading Australian banks. Business loans over
$2 million are subject to funds availability and approval by the IBA
Board. IBA responded to decreasing market interest rates by reducing
its interest rates in May 2015.
Loan terms and conditions are generally consistent with private sector
loans and are based on sound business principles, although IBA
does not require the same level of equity holding or security cover as
mainstream lenders do.
As Table 3 shows, IBA applies higher levels of interest where security
coverage is lower or weaker, reflecting the additional risk that applies
to lenders in less‑secure lending.

Table 3: BUSINESS LOAN INTEREST RATES, 30 JUNE 2015
Security type Rate
Residential property secured 3.9%
Commercial or other secured 6.0%
Partially or unsecured 6.9%
To qualify for an IBA business loan, the business must be assessed as
viable and have a minimum of 50 per cent Indigenous ownership, and
the current or proposed business owners must be actively involved in
the management of the business operations and decision making (with
the exception of family partnerships, where the management of the
business may be non‑Indigenous and the beneficiary of the business
Indigenous). The owner(s) must also demonstrate sufficient skill and
readiness to operate the business.
Portfolio value
The total portfolio reduced from 335 loans with a face value of
$67.0 million at 30 June 2014 to 294 loans with a face value of
$59.4 million at 30 June 2015 (see Figure 15). The total portfolio at
30 June 2015 is a combination of the active loan portfolio (277) and
impaired loan losses (17) on which full recovery is not expected.
IBA has a provisioning for doubtful debts of $11.7 million, as shown
in Figure 16. Provisioning has decreased since 2013–14, mainly
due to a number of irrecoverable impaired loans being written off
during 2014–15.
Figure 15: TOTAL BUSINESS LOAN PORTFOLIO, BY NUMBER AND VALUE,
OVER FIVE YEARS TO 30 JUNE 2015

Figure 16: BUSINESS DEVELOPMENT AND ASSISTANCE PROGRAM
PROVISION FOR DOUBTFUL DEBT, OVER FIVE YEARS TO 2015
Geographical distribution
All states and territories are represented, with businesses spread
across Australia from major cities to very remote locations. The
geographical distribution of the loan portfolio by state or territory,
and by regional and remote classification, is shown in Figures 17 and
18 respectively.
Figure 17: TOTAL BUSINESS LOANS, BY STATE AND TERRITORY,
NUMBER AND VALUE, 30 JUNE 2015

Figure 18: ACTIVE PORTFOLIO DISTRIBUTION BASED ON ABS
REMOTENESS AREAS AND ARIA+ VALUES (2006), BY NUMBER AND VALUE,
30 JUNE 2015
Industry concentration
Almost all industry groups are also represented within the portfolio.
IBA’s top four industry exposures—Retail Trade; Agriculture, Forestry
and Fishing; Construction; and Accommodation and Food Services—
collectively make up 54 per cent of portfolio value. In comparison,
mining is one of our lowest industry exposures and represents just
4 per cent of the portfolio by number of accounts (ten loans) and
5 per cent by value ($2.8 million).
Figure 19: ACTIVE LOAN PORTFOLIO INDUSTRY CONCENTRATION, BY
NUMBER AND VALUE, 30 JUNE 2015

FRANCHISE EXPERIENCE
Franchising is one of the most popular and fastest growing
components of the Australian business sector. A key benefit of
buying into a franchise business is that an experienced franchisor
has already invested in creating and thoroughly testing the business
operating model—along with marketing, supply chain and back
office systems—and, through this process, developing a well‑known
and respected brand.
For all the benefits, however, franchising is not a ‘soft’ business
option. It requires the same level of planning, time and commitment
as any other business model.
IBA assisted Karen Seage to negotiate her franchise agreement for
Snap Underwood, Brisbane. Along with providing her with business
finance, IBA also linked Karen to an IBA business consultant for
mentoring and advice.
Karen says, ‘At the end of the day if this succeeds it’s because of me
and my staff, and I can pat myself on the back and say, “Wow, that’s
something I wanted to achieve, and I have done that”. I love that I am
an Indigenous woman who runs my own business, and I would love
to see more Indigenous women in business. I want others to know
that you don’t necessarily need a university education to achieve
it. If you are passionate about something, good at what you do,
and willing to work hard, I think that’s more important’.

‘I love that I am an Indigenous woman who runs my own
business, and I would love to see more Indigenous women
in business’—Karen Seage, Snap Underwood
Karen Seage is a proud Indigenous woman
running her own business
‘I love that I am an Indigenous woman who runs my own
business, and I would love to see more Indigenous women
in business’—Karen Seage, Snap Underwood

Arrears
Figure 20 shows IBA’s total arrears discharge balance as a proportion
of the total active portfolio face value, tracked against its previous
four years.
An upward trend in arrears commenced in 2013, peaked in
November 2014 and started to reduce by June 2015. The increasing
trend was largely related to several high‑value loans which moved
into arrears late in 2014 and remain unresolved. This demonstrates
the effect that a small number of high‑value accounts can have on a
relatively small portfolio such as IBA’s.
When considering responses to underperforming accounts as
compared to major lenders, IBA chooses to carefully consider viability
and turnaround solutions with the customer before seeking to act on
defaults, particularly where recoverable security options are limited.
This can mean that accounts take some time to work through their
turnaround or recovery management strategies.
Figure 20: ACTIVE LOAN PORTFOLIO ARREARS, OVER FIVE YEARS TO
30 JUNE 2015

A concerted effort is made to address the underlying reasons for the
occurrence of arrears. If necessary, IBA may provide business support
and/or short‑term hardship relief in loan repayments to assist the
customer to return the business to trading health.
IBA manages its arrears by periodic monitoring and a specialised risk
management team to guide and assist strategies to address arrears or
identified trading difficulties.
IBA’s debt recovery processes require reasonable effort to obtain
payment and all necessary enforcement of security, provided it is
cost‑effective. The principle is to ensure that the recovery process
aims at full or optimum recovery of IBA’s loan. However, when a
customer’s business closes, so does the income stream which IBA had
supported through the provision of the loan. IBA’s ability to recover any
debt from that point on can be extremely limited.
The implementation of a strategy in 2014–15 to write off or write
down a number of impaired loans from failed businesses relieved
several proprietors from onerous loan repayments. The strategy
was also directed at reducing the number of impaired assets in the
loan portfolio which were deemed irrecoverable. This resulted in a
reduction in the number of impaired loan accounts and a lowering of
bad debt provision levels.
RISK MANAGEMENT
While IBA’s lending and debt recovery practices are modelled on
sound commercial principles, the overall portfolio is characterised
by high gearing, low security and, in many cases, customers with
little experience in business operation. In addition, many accounts
in IBA’s portfolio are in industry sectors which require relatively low
levels of training or professional development, meaning that IBA’s
customers are frequently operating in highly competitive commercial
environments, such as the retail, food and construction sectors.
IBA aims to offset the risks inherent in lending to its customer base
by ensuring that business proposals are commercially viable, or have
the potential to become viable, and providing appropriate planning and
support through the life cycle of the business. This is delivered through
Into Business™ workshops; business planning and mentoring support;
partnering and monitoring arrangements; hardship provisions, where
difficulties arise; and support to either turn around or exit a business.

IBA also seeks to limit its exposure to losses by setting tolerances in
relation to provisioning for doubtful debts, compulsory third‑party due
diligence, minimum trading periods on loans greater than $1 million,
and portfolio monitoring by industry. Targeted ongoing industry‑level
analysis will be enhanced by IBA’s engagement of a market analyst
in 2014–15.
All of these risk management activities are the subject of ongoing
review and redevelopment to ensure that efficiencies are achieved and
outcomes continue to minimise the potential harm arising from small
business ownership risks, and the potential loss of businesses and
loan capital.
OUTLOOK
While the medium‑term economic conditions may not be generally
favourable for business establishment, the next few years present a
period of significant opportunity for Indigenous Australian businesses.
New policies are in place to encourage the supply of goods and
services by Indigenous suppliers to government—both the Australian
Government and the governments of some states and territories.
Indigenous businesses that are already established, or are growing or
diversifying to capture these supply opportunities, will be well placed
to help to meet growing demand from such purchasers.
In reflecting on its delivery of business support services and business
lending, and how these products can best enhance the growth and
capability of Indigenous businesses, IBA will continue to reshape and
refocus the Business Development and Assistance Program. The
Commercial Markets team established in 2014–15 will work with
the changing needs of established and ready‑to‑grow Indigenous
businesses by connecting them to larger markets and supporting
them into commercial opportunities that can drive their growth.
During 2015–16, we will continue to reshape the way we work with
start‑up Indigenous businesses and how we support best practice
customer relationship management, business planning and design,
and loan account management.
The program, particularly through the Commercial Markets team,
will work proactively with the Indigenous business sector to assist
customers to develop their capital and capability to respond to the best
commercial opportunities for their businesses.
IBA expects this work to substantially contribute to the growth of
the Indigenous business sector in coming years, helping to build
the prosperity of Indigenous business owners, their employees
and communities.

04
INVESTMENTS
OBJECTIVES62
PERFORMANCE62
IMPACTS64
PROGRAM ACHIEVEMENTS 66
INVESTMENT STRATEGY 70
INVESTMENT PORTFOLIO 73
RISK MANAGEMENT 86
OUTLOOK87

OBJECTIVES
IBA’s Equity and Investments Program promotes self‑management,
self‑sufficiency and economic independence for Indigenous
Australians. It aims to accumulate and manage a substantial portfolio
of investments which, as a whole, generates appropriate risk‑adjusted
returns for IBA through income and/or capital growth.
The portfolio comprises investments which are managed or operated
on a sound commercial basis and generate economic impact for
Indigenous Australians via financial returns, commercial capability
development, employment, training and/or procurement.
PERFORMANCE
In 2014–15, IBA actively pursued new investment opportunities,
and prudently exited from existing investments in order to re‑use
capital for further investments and transfer ownership to Indigenous
co‑investors. The program met four out of five of its key performance
indicators in 2014–15 (see Table 4).
IBA’s
investment
portfolio
generated
more than
$19.6 million
in distributions
for IBA and
its Indigenous
co‑investors
The Equity and Investments Program does not receive annual budget
appropriations from the Australian Government. Its operating expenses
are funded entirely from returns on IBA’s investment portfolio.
IBA achieved a portfolio return of 5.7 per cent for the financial year,
exceeding its target of cash plus 3 per cent (5.4 per cent). It also
delivered returns to Indigenous partners of 6.1 per cent, exceeding
the same target of 5.4 per cent. IBA’s average return over the previous
rolling five years (5.5 per cent) was affected by underperformance in
earlier years.

PART 4: INVESTMENTS
Table 4: EQUITY AND INVESTMENTS PROGRAM PERFORMANCE SUMMARY, MEASURED
AGAINST THE PORTFOLIO BUDGET STATEMENTS TARGETS FOR 2014–15
Portfolio return to IBA (budget year)1
5.4%
Cash +3%
5.7% P
Portfolio return to IBA (rolling five years)2
6.5%
Cash +3%
5.5% O
Number of Indigenous co‑investors supported3
25 28 P
Portfolio return to Indigenous co‑investors4
5.4%
Cash +3%
6.1% P
Proportion of Indigenous jobs supported by the
investment portfolio5
20% 28% P
1 This measure indicates portfolio return to IBA during the year. It is calculated as the after‑tax return
generated by IBA’s share of the investment portfolio in the budget year, expressed as a percentage of the
average value of IBA’s share of the investment portfolio during the budget year (‘portfolio value’). It excludes
valuation increments/decrements and IBA’s financial investments and the interest earned thereon.
2 This measure indicates portfolio return to IBA over a rolling five‑year period (inclusive of the designated year).
It is calculated as the average of the after‑tax returns generated by the investment portfolio (expressed as a
percentage of portfolio value) in each of the past five budget years. It excludes valuation increments/decrements
and IBA’s financial investments and the interest earned thereon.
3 Number of Indigenous investors supported includes current Indigenous co‑investors, Indigenous co‑investors
to whom investments were sold during the budget year and Indigenous investors supported through advisory
services via IBA’s Acquisitions Unit or Traditional Owner and Native Title Unit.
4 This measure indicates portfolio return to IBA’s Indigenous co‑investors during the year. It is calculated as
Indigenous co‑investors share of the after‑tax return generated by the investment portfolio in the budget year,
expressed as a percentage of the average value of Indigenous co‑investors share of the investment portfolio
during the budget year.
5 Total number of Indigenous people employed by employing investment‑portfolio entities, expressed as
a percentage of total workforce, measured quarterly and averaged across those quarters to account for
fluctuations in staffing levels intra‑year.
In 2014–15, IBA’s investment program generated:
• a cash surplus of $8.85 million to IBA (after meeting program expenses).
The portfolio remains well placed to deliver economic benefit for Indigenous
Australians. As at 30 June 2015, IBA’s share of the investment portfolio was valued
at $191.9 million across 22 direct investments, as well as four trusts.
• more than $19.6 million in distributions for IBA and its Indigenous co‑investors
(including interest earned on IBA’s cash holdings). These funds will be used to
pursue new investment opportunities, and to reinvest in existing investments to
enable their growth and support their ongoing plans.
• broader economic outcomes, supporting 241 jobs for Indigenous Australians
(who represented 28 per cent of the total workforce supported by the portfolio),
with total salaries, wages and job‑relevant training costs of over $18 million. This
significantly exceeds the portfolio employment target of 20 per cent. Additionally,
IBA’s investments procured more than $4.8 million in goods and services from
Indigenous suppliers.

IMPACTS
IBA supports the creation of sustainable ventures for Indigenous
Australians that provide meaningful opportunities to accumulate
wealth, develop their capacity to participate in Australia’s economy,
create jobs, increase training and skills development, and supply
goods and services.
Economic independence
The Equity and Investments Program aims to facilitate economic
independence for Indigenous Australians by enabling their
participation in a range of diverse commercial investments. When
making investments, IBA:
• undertakes thorough and rigorous assessment and due diligence
prior to acquiring an asset
• develops objectives in collaboration with partners
• manages the asset over the life of the investment
• adheres to strong corporate governance principles
• applies sound commercial judgment.
Employment opportunities
Many of IBA’s investments support direct employment opportunities
for Indigenous Australians because they are located in areas where
many Indigenous Australians live. A total of 869 jobs were supported
by IBA’s investments in 2014–15, 241 (28 per cent) for Indigenous
Australians and 628 (72 per cent) for non‑Indigenous Australians.
IBA seeks to ensure that all its investments support Indigenous
employees by:
• developing partnerships with Indigenous Australians and local
employment service providers
• promoting inclusive and culturally aware workplaces
• implementing best‑practice Indigenous employment, retention
and progression strategies
• assisting staff members who move or plan to move from
Indigenous communities to pursue employment opportunities.

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