That's an answer to a question in the House of Lords. It needs to be read between the lines. Government doesn't effectively receive anything but according to the second article cited by Wikipedia, Paul Kane, who originally runned the .io domain said that the Crown Bank was receiving money :

"In a second conversation with Kane, he reiterated that “we do remit money to the Crown bank in accordance with our agreement. We pay X amount per name.” Kane did not say what “X amount” was, due to confidentiality."

Meanwhile it seems that in 2017 Affilias has bought the .io domain for 70 millions dollars...

Well whoever's getting the money, it's not the indigenous islanders who should be getting it.