From: The Torres Strait Regional Authority

To: Dr Kilian Perrem - Inquiry Secretary for the Standing Committee on Indigenous Affairs Department of the House of Representatives

For the: Inquiry into food prices and food security in remote Indigenous communities

The following submission is made on behalf of the Torres Strait Regional Authority (TSRA). Responses are provided against each of the nine Terms of Reference.

TOR 1: The environment in which Remote Community retailers operate

The population of the Torres Strait region – which includes the islands of the Torres Strait as well as the Northern Peninsula Area (NPA) on the northernmost tip of mainland Queensland – was estimated at 10,920 in the 2016 Census. Over 80% of residents are Torres Strait Islander and/or Aboriginal people, and within this population, there is a range of cultural and language groups.

A number of Community Stores operate across the populated islands of the Torres Strait as well as the NPA. The main food supplier in the region (CEQ/IBIS), is set up as a Queensland Government statutory body under the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act 1984. As such it is exempt from taxes (with the exception of FBT and GST).

CEQ acts as a commercial enterprise for the benefit of residents and as such is required to provide communities with healthy food, drinks and household items at a fair price and apply its operating surplus or assets to promote, support and improve its services and general welfare of the communities it services (Part 7A, Division 1 60B of the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act 1984.

CEQ has stores across most of the populated islands of the Torres Strait as well as one in the Northern Peninsula Area and as a commercial enterprise (currently primarily in retailing) provides goods and essential services to Torres Strait, NPA and mainland Aboriginal remote communities.

CEQ Corporate Office is based in Cairns servicing 22 retail outlets (including IBIS and Col Jones) in the Torres Strait and Northern Peninsula Area and five Community Supermarkets on the mainland.

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The 12 remaining food stores across this very remote region are owned and managed by ALPA (operating in the region as Island and Cape) or are independently owned.

Additional factors related to the environment in which these stores operate include: • they provide food retailing services across a number of remote islands and communities (most of which are only accessible by sea or air) • lack of economies of scale (they service small communities, spread over a wide area) • dealing with adverse weather and tide conditions which often impact on distribution • high running costs for items such as power, insurance, building and plant maintenance, and freight • complexities of Native Title • difficulties with staff retention and trade support • infrequent visitation to some remote island communities eg. Stephen Island does not have all-tide barge access and weather determines whether the monthly food barge can dock and unload.

TOR 2: The licensing and regulation requirements and administration for Remote Community stores

ALPA stores are Indigenous community owned and managed. Their management processes require significant input from, and consultation involving, clan and family groups across their founding communities. A significant proportion of their profits are returned back into these communities, for community run and managed enterprises and programs such as:

• accommodation building, renovation and bespoke furniture making enterprises • supporting the ‘Remote Schools Attendance Strategy’ • benevolent programs that support local festivals and ceremonies, community buses, etc. • child and youth programs such as school holiday programs and drop-in centres • education programs including higher education hubs • literacy and numeracy training for their own staff; and • even subsidising the cost of freight of fruit and vegetables to help reduce costs in their stores

CEQ/IBIS’s requirements under the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act (1984) include: • a requirement to “… act as a commercial enterprise for the general convenience or benefit of the residents …” of the Torres Strait and NPA • Obligations to: “… apply its profits or assets to promote, support and improve its services and the general welfare, including the knowledge and skills, of the Aboriginal and Torres Strait Islander residents …” in the region (section 60B, p42)

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CEQ/IBIS maintains a very strong financial position. Its net revenue from operations in the 2018-2019 financial year amounted to $98.1M, with a healthy ‘net return’ of $3.2M. However, despite its strong financial standing, and despite having the largest presence in the region (in terms of community stores), as outlined below, there does not seem to be significant commitment on CEQ/IBIS’s part, to fulfill the community obligations noted above.

TOR 3: The governance arrangements for Remote Community stores CEQ has a board of management which is responsible for ensuring CEQ’s strategies for performing its functions and includes 10 members. At least 1 member is a consumer representative and community representative. There are 6 indigenous representatives on the current Board, including 2 from the Torres Strait region.

Although the income invested from profit is for the benefit of the communities of the Torres Strait and the NPA, their direct contributions to the community over the last financial year (based on information from 2018-19 Annual Report) amounted to only $95,000 ($41,000 in donations and $55,000 in events sponsorships). By way of comparison: • the company returned $135,000 in performance bonuses for their 7 staff in top level management positions over the same period, on top of already generous salaries • 2018-19 Annual Report (p 27 of Annexure 1) shows salaries for these 7 positions total $1.2 million. The breakdown is CEO, $323k; General Manager (GM) Finance, $186k; GM Retail operations, $142k; GM Human Resources, $171; GM Business Development, $171k; GM Merchandise, $137k; Stakeholder Engagement Officer, $70k. • ALPA, over the same period, returned over $400,000 to their 5 Northern Territory communities (for projects such as listed in TOR 2 above).

Promotions that once emphasised changing consumer behaviours, such as regular specials on healthy foods, and discouragement (through price mechanisms) of unhealthy items, along with employment of a nutritionist to promote healthy lifestyles in the community, seem to have been pared back over recent years. Instead CEQ/IBIS now take what seems to be a standard (mainstream) supermarket approach, promoting fortnightly ‘Best Buy’ specials and ‘Low Priced Everyday’ items, with a declining emphasis on healthy foods. For example, while their current specials (June 22nd to July 5th) include some fresh meats, fruit and vegetables, they also include a number of low nutrition, pre-packaged foods such as noodles, cup-a-soups, and sugary deserts (see Appendix 1), and even coke – all be it the ‘No Sugar’ variety.

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In 2009, the Torres Shire Council highlighted in their submission to that year’s ‘Community Stores Inquiry’, there was a need to review CEQ/IBIS’s management, operations and purchasing to ensure it was serving the region in the most appropriate way. Possible ways that could be explored include: • Reinstating or strengthening programs such as ‘Healthy Choice’ and ‘Healthy eating/Healthy Life’ • Re-employing a nutritionist to promote healthy food options within the store and out in the community, through special events, educational activities, demonstrations and cooking workshops • Buying locally: This ‘goal’ has been mentioned ‘in passing’ in past Annual Reports, but has not been addressed in any substantial way, whereas it could be used to build local enterprise and economic growth in the region, providing a significant boost to the communities that CEQ/IBIS serve. For example, fresh produce such as seafoods could be sourced from established Torres Strait fishers and enterprises. While regular supplies of fresh fruit and vegetables might not be viable at present, there is potential for IBIS (as well as other local organisations) to support improved horticulture production in the region (eg: through investment in native gardens, nurseries, community garden projects). • More detailed reporting and ongoing price tracking is needed to substantiate IBIS’s claims regarding their efforts to keep the prices of healthy foods down. This would help to reassure key organisations and community members across the region, many of whom remain concerned about high prices. • Giving more control and say back to the community: At present, community representation (including board representation) and input into how the organisation can best serve the community, is very limited. With improved community involvement and direction, it may even be possible to negotiate that a set (reasonable) percentage of profits be set aside each year for ‘giving back’ directly to the community, as well as how this should best be shared.

TOR 4: Comparative pricing in other non-Indigenous remote communities and regional centres

It is not straight forward to directly compare pricing of foods in our region, compared to other ‘non-Indigenous remote communities’ but the following evidence is provided to support ‘anecdotal evidence’, that costs remain too high in the Torres Strait. • In a 2015 study, the ABS and the Department of Health partnered to compare CPI growth to food price increases over the 14-year period to 2014. Their analysis showed that nationally, fruit and vegetable prices grew faster than CPI (averaged at 2.7% per year). Vegetables had the fastest average annual rate of increase (3.8%), followed by fruit (3.0%). (Source: http://www.abs.gov.au/ausstats/[email protected]/Lookup/6401.0Feature+Article1Dec+2015 ) • The following table compares CEQ/IBIS’s most recent specials (from their one-page catalogue, 22nd June to 5th July 2020, as shown in Appendix 1) to the same or similar

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• products from the 28 pages of specials available at Cairns IGA (for the week commencing 24th June). • On the whole, most products sold at the stores are 50-70 percent more expensive than Woolworth/Coles in Cairns. In the past, IBIS maintained its position on pricing due to single barge (freight) expenses. A barge provided, Seaswift, is delivered twice weekly to the Torres Strait.

Product CEQ/IBIS special price Cairns IGA special price Red grapes $6.49 kg $3.90 Red meat cuts (beef, lamb 3 choices offered, between 6 choices offered, between and pork) $22.99 and $32.49 kg $11 and $20 kg 150g jar of Nescafe Instant $9.99 $4.70 coffee Sumin 70g Cup Noodles $1.89 85c Sarah Lee Chocolate $8.49 $5.00 Bavarian Desert ‘No Sugar’ Coca Cola $3.79 ‘Selected’ Coca Cola products available at $1.65 Sources: https://www.ibis.org.au/specials/ and https://www.tiendeo.com.au/Catalogues/cairns- qld/310645?view=result&buscar=IGA&pos=1&refPageType=OFFERS&pagina=1

Staples

Product CEQ/IBIS price Woolworths online Milk long life – home brand $1.89 $1.25 1 litre Rice – 10 kg $25.99 $24.00 Flour – 5kg $14.99 $10.00

Toilet paper – 24 pack $21.76 (18 pack) $12.00

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TOR 5: Barriers facing residents in Remote Communities from having reliable access to affordable fresh and healthy food, groceries and other essential supplies

Significant barriers for the region include: a) Lack of affordability: the region is highly dependent on expensive food ‘imports’ while average incomes are low. Food costs take a high proportion of families’ incomes, especially when combined with high costs of other ‘essentials’ such as transport, housing and fuel.

Over recent months, a Senior Nutritionist from the Torres Strait’s main hospital has been collecting and analysing data on food prices across the Torres Strait (supported by the University of Queensland). This study is yet to be finalised, but early findings show that most families in the region are experiencing significant ‘food stress’. For example: • median income families need to spend between 31-37% of their income on food and groceries • low (minimum wage) income families need to spend between 35-41% of their income • ‘welfare only’* income families need to spend between 47-55% of their income

Particularly for families on low or ‘welfare only’* incomes, these proportions sit well above the Australian standard indicators of ‘food affordability’ (benchmarked at 30% of income) and ‘food stress’ (benchmarked at 25% of income).

* Government pensions and allowances are the main sources of income for over half the Indigenous people aged 15 and over across the region. (ABS: National Aboriginal and Torres Strait Islander Social Survey 2015-15). b) Access to local stores: for residents of the region, access can be significantly impacted by: • severe weather conditions causing air, ferry and barge shutdowns • poor ‘connectivity’ – some islanders have long distances to walk, ride or ‘boat’ to their nearest store c) High costs of freight and infrastructure (exacerbated by a lack of subsidies and lack of competition)

The Queensland government’s 2014 Inquiry into Coastal Sea noted that the Commonwealth and Queensland governments need to be reminded that Torres Strait communities ‘… meet the same criteria and deserve similar assistance …’ to other (largely non-Indigenous) communities that currently benefit from freight subsidies, and recommended that these should be pursued for the region. For example: • The Queensland government subsidises rail freight to remote towns in western Queensland (communities where a competitive freight service is not possible).

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• The Commonwealth government contributes to freight subsidies for the Tasmanian ‘Freight Equalisation Scheme’.

Other factors contributing to high transport costs include: • Lack of competition (the region is serviced by only one sea freight company at present) • high travel and hire costs for labour and crewing • the variable quality of infrastructure such as ports and ramps in many destinations • the lack of ‘back freight’ options, and inability to use large vessels to help off-set delivery costs • high port charges (for example levies at Port Kennedy are five times those applied in Cairns)

TOR 6: The availability and demand for locally produced food in Remote Communities

At present, there is limited capacity for the region to supply its own food. While the following obstacles could be overcome with the right incentives and support, the region’s current limitations are largely due to: • Inadequate water supplies and other resources impact on the potential to grow food in the region • lack of sustained financial and other support from key organisations over recent years, frustrating attempts to establish either production or regular purchasing of local produce. This is despite the positive outcomes that could result from such endeavours, including improved shelf-life, quality and affordability of foods, as well as contributing to the economy, health and wellbeing of the community. • the impact of quarantine zones: Commonwealth legislation establishes the region’s importance as a ‘buffer zone’ for ‘Australian security’, but at the same time, limits the potential to create larger scale market gardens because in some areas, produce can only be sold across neighbouring islands.

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TOR 7: The role of Australia’s food and grocery manufacturers and suppliers in ensuring adequate supply to Remote Communities, including: a. identifying pathways towards greater cooperation in the sector to improve supply b. the volume of production needed for Remote Communities c. challenges presented by the wet season in Northern Australia as well as any locational disadvantages and transport infrastructure issues that might be relevant d. geographic distance from major centres

The provision of fresh fruit and vegetables to the region can quickly be compromised if there is a breakdown in any part of the supply chain.

For stores in the region, bringing in fresh foods involves multiple steps. Firstly, goods often need to travel by rail or road (about 1,750km), from Brisbane to Cairns, where they are re- palleted or containerised. They are then shipped to Thursday Island (approximately 1,000 km - 2 days travel) and from there reloaded to smaller vessels for transporting to stores across the outer island stores (up to another 300 km). Suppling mainland (NPA) stores requires different supply runs and has its own challenges, particularly during the wet season.

Other significant supply chain issues noted by CEQ/IBIS in their 2018-19 Annual Report include ensuring that: • temperature sensitive products are maintained at the right temperature over the long journey, especially as they are being re-packed, and moved from one vessel to the next • goods are not damaged or contaminated in transit (including by seawater)

TOR 8: The effectiveness of federal, state and territory consumer protection laws and regulators in: a. supporting affordable food prices in Remote Communities particularly for essential fresh and healthy foods b. addressing instances of price gouging in Remote Communities c. providing oversight and avenues for redress

In 2008, the Department of Health produced guidelines for ‘Remote Indigenous Stores and Takeaways’, aimed at improving access to quality, affordable, healthy foods in remote Indigenous communities.

However, these guidelines have been criticised for having little positive impact, largely due to a lack of monitoring and review, as well as a lack of ongoing funding to support their

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implementation. In particular there is “… limited evidence … [of] … increased sales of fruit and vegetables …” in areas where “…store committees and managers are not motivated to change their food stocking practices.” (Sarah Hudson: ‘Healthy Stores, Healthy Communities: The Impact of Outback Stores on Remote Indigenous Australians’, 2010).

The importance of ensuring transparency and accountability of remote stores has been well documented, but gaps remain. The ANAO has noted that efforts on the part of bodies such as COAG to encourage transparency and accountability from community stores, have been lacking. (ANAO: The Auditor-General ANAO Report No.2 2014–15 Performance Audit: Food Security in Remote Indigenous Communities, 2014).

There is an urgent need for government regulation and funding to enforce accountability while at the same time, supporting ongoing independent surveys that monitor and publish comparisons of, healthy food costs across remote communities.

TOR 9: Any other relevant factors a) Other factors contributing to poor uptake of healthier diets:

In most remote communities, including our region, there are factors other than those related to the supply and cost of quality fresh foods, which also need to be addressed because they are a further cause of peoples’ reliance on (often less nutritious) convenience and packaged foods. In particular housing in our communities is often old and of poor standard. There is significant overcrowding and many homes have structural problems and/or broken-down facilities such as cooking and refrigeration appliances. Inadequate food preparation and storage space also make it harder to keep foods fresh and properly prepare meals. b) Counting the economic and health costs of poor diets: An affordable and consistently secure, fresh food supply is essentially a ‘basic need’, and is vital to improving health and reducing the costs of long term and chronic diseases in remote communities. In 2009, COAG estimated that up to 19% of the health gap between Indigenous and non- Indigenous Australia can be attributed to diet. Despite numerous interventions and government funded nutrition and health programs over the last few decades, recent health surveys and studies reveal ongoing (and in some cases worsening) health problems across our region. While the latest ABS Indigenous health survey shows that consumption of fruit and vegetables has been improving in our region, the amounts of fruit and especially vegetables eaten still do not meet NHMRC nutrition guidelines.

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Alarming health statistics – which can largely be attributed to the lack of availability and high costs of fresh foods – persist for the region. The region’s poor health status in turn imposes heavy financial burdens on individuals, communities and governments. Regionally specific data obtained by TSRA (from ABS Indigenous health and social surveys, and from Primary Healthcare Networks) show that: • in the Torres Strait and NPA, obesity rates are worsening. Recent findings revealed that just under half of our region’s Indigenous residents (49%) were in the obese weight range, with another 19% in the ‘overweight’ range • While the percentage of people with a long-term health conditions has improved over the last decade, these conditions are still affecting almost half our people (48%)

• For the Torres Strait and Cape regions: - the diabetes rate is four times higher than for the rest of Queensland - the rates of coronary heart disease, chronic obstructive pulmonary disease and stroke are each two times higher than for the rest of Queensland.

Recently published ABS data provides life expectancy data by remoteness area, shows the gap remains more pronounced for people living in remote and very remote areas. For indigenous people living in these areas, life expectancy was: - 65.9 years for men compared with 79.7 years for non-indigenous – a difference of 13.8 years - 69.6 years for women compared with 83.6 for non-indigenous – a difference of 14 years (Source: Life Tables for Aboriginal and Torres Strait Islander Australians, 2015-2017 (cat. no. 3302.0.55.003)

In remote communities, poor nutrition during pregnancy, infancy and childhood also contributes to: • low birth weights, poor growth rates, and increased risks of infant death • anaemia and malnutrition in Indigenous children under 4 (at almost 30 times the rate of non-Indigenous children); • Life-long impacts including lower cognitive functioning, education outcomes and school retention

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Appendix 1: CEQ/IBIS specials 22nd June – July 5th 2020

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