Indigenous Business Australia believes the burden of carrying bad business debts and having high levels of home loans in arrears is worth it if it can help indigenous Australians buy their own homes.
IBA, a federal body set up to boost home and business ownership, has provided for doubtful debts of $14.7 million in its business loans.
It’s also carrying a much higher than industry average proportion of housing loans which are up to three months in arrears, its annual report says.
The National Commission of Audit earlier this year called for the IBA and other federal indigenous programs, which in total came to $1.8 billion in 2014/15, to provide better value for money for taxpayers.
IBA’s annual report says its business loan portfolio has grown to $67 million as of June 30, but it has made conservative provisioning for doubtful debts of $14.7 million.
“IBA is taking actions … to identify solutions to account issues and to improve arrears management reporting by regional offices,” the report tabled on Tuesday said.
The IBA has a housing loan portfolio valued at $872 million.
Of the loans, almost seven per cent are in arrears for more than 30 days compared to an industry average benchmark of 1.25 per cent.
Loans of more than 90 days in arrears comprised 2.45 per cent of the portfolio, compared to 0.49 per cent across the industry.
IBA takes every possible step to ensure borrowers have the capacity and intent to service loans but some arrears and losses are inevitable, it says.
“However, the overall benefits that flow from encouraging and assisting indigenous Australians to participate in home ownership are considerable and clearly outweigh any negatives.”
The government received an independent review of IBA and the Indigenous Land Corporation in May, but minister Nigel Scullion described the review’s findings as ambiguous and confused.
Senator Scullion will consult further on any changes to the two bodies’ operation.
IBA said it was working on its risk management and credit policies.