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Monday, 20 August 2001
Page: 26071

Senator CHRIS EVANS (12:31 PM) — The Alcohol Education and Rehabilitation Account Bill 2001 is the product of two broken promises from the Prime Minister. The Senate made him keep his first promise that the price of ordinary beer would not increase as a result of the GST: it was demonstrated that ordinary beer served across the bar would actually suffer a large increase in price, and the government was forced to backflip by reducing the level of beer excise. The Prime Minister then promised that all the money collected during the period when beer prices had risen would go into a foundation to reduce the impact of excessive use of alcohol and other legal drugs. He signed a memorandum of understanding with the Democrats, setting out this commitment and undertaking a range of specific commitments that the foundation would be accountable for. These promises have now also been broken, because the foundation has been short-changed and has not been set up as a properly accountable body.

On 14 August 1998, just before the last election, John Howard said about the GST:

Across the board there is virtually no change in relation to alcohol. A tiny CPI equivalent rise in relation to ordinary beer. Perhaps a small reduction for low alcohol beer.

Then on the John Laws program on 23 September, he said:

There will be no more than a 1.9 per cent rise in ordinary beer prices.

The Prime Minister said that the price of ordinary beer would only go up by 1.9 per cent, and yet he oversaw a program that put it up by more than 10 per cent when excise indexation is taken into account. The Prime Minister repeatedly gave an absolute watertight guarantee that the price of ordinary beer would go up by only 1.9 per cent, and it is Labor that forced him to honour that promise.

In April, when the government and the Democrats signed an agreement to establish a private foundation, we were told that the government had collected some $155 million in surplus excise payments during the period from 1 July 2000 to 3 April 2001. This bill has only allocated $115 million to the foundation. Including the additional $5 million to go to heritage hotels, this leaves an unexplained gap of $35 million. The government has refused to produce the Treasury figures that were relied upon to arrive at its calculation of how much had been collected. The figures it showed to the Democrats have never been shared with the rest of the Australian community. What has the government got to hide? Why won't it allow Treasury to produce the figures on which its calculations are made?

The Senate inquiry has heard that the government now argues that the figure of $150 million was an estimate for a full 12 months at the higher rate of excise. However, it has also heard from the brewers, who advised by letter last Friday that in fact they had paid out $145 million above the original estimate. The Australian public are entitled to know whether all the money unlawfully obtained through the overcharging of excise is being returned to them; there are strong grounds to believe it is not.

The agreement the Democrats actually signed off on on 3 April said that the private sector foundation was to be given the full agreed $115 million from the surplus beer excise collections during 2000-01. However, the government has now decided to spread the handover of the money over four years, without any adjustment for interest. In the case of the Natural Heritage Trust, the government paid interest on the sum while it was held by Treasury. In this case, it has refused to hand over the unlawfully collected excise and has refused to pay interest on the money while it is held by the Treasury. This short-changes the foundation by more than $13 million, at the current long-term bond rate of six per cent. This comes on top of the other $30 million or so short-changed because of the dispute over undisclosed estimates of excise receipts.

The deal between the government and the Democrats also contains a number of broad intentions about how the foundation is to operate and stipulates various things about how the money is to be allocated. This includes at least 85 per cent being paid out to professional and community organisations and various minimums to be spent in the first five years on treatment and rehabilitation and on public education and prevention, including an overall minimum of 20 per cent on Aboriginal programs. A maximum expenditure of 10 per cent on administration and promotion in the first year is stipulated. Because this agreement was negotiated in private there is no information about how these proportions were arrived at, and they are not included in this bill. As they only apply during the first year, when $10 million will be spent, there is no indication of the proportions that will apply in subsequent years. Hence, the proportions do not apply to the vast bulk of the proposed spending. It is understood that some of these matters may be dealt with in the constitution of the foundation, but unfortunately that document is not available to throw any light on the subject. I call on the minister to table the foundation's constitution, so that the Senate can know what it contains.

The Labor Party was amongst the first to advocate that the surplus excise collections should be spent through a foundation, and that remains our view. Labor proposed the following specific priorities: promotion of responsible drinking patterns; research into and treatment of alcoholism; support for community partnership projects related to alcohol education; reduction of domestic violence due to alcohol; and reduction of substance abuse in indigenous communities. We highlighted the fact that a significant proportion of draught beer sales occurs in rural areas and suggested that particular attention should be provided to programs in rural and regional Australia. A number of these themes were also picked up in the agreement entered into by the Democrats, but I am disappointed that some issues, such as reduction of domestic violence, were omitted.

The opposition is concerned that its proposal that the foundation should look at programs to reduce the impact of domestic violence was ignored or overlooked in the negotiating process. We wish to insert this objective at this stage. The focus of the foundation will depend significantly on who is actually appointed. Once again, this is a process that we have no information about, except that the government and the Democrats will select people behind closed doors.

It is difficult to discuss this bill because it deals with only a small part of the total proposal and the details of the foundation itself have not been revealed. There are a number of key areas of concern. Firstly, there is a need for the constitution of the proposed foundation to be tabled in parliament before this bill is passed, because the bill is hard to interpret without that information. Under the 3 April agreement, this constitution was to have been completed between the government and the Democrats by mid-April.

It is not even clear exactly what sort of body the foundation will be. The 3 April agreement refers to the foundation as being an `incorporated charitable trust'. However, the bill simply includes two versions of the name under the definition of `foundation' in section 4. It is objectionable that the constitution has not been open to comment by others and that it will not have any parliamentary consideration. At the inquiry, the nominated chair of the foundation suggested that he thought the foundation might be a company limited by guarantee, but he could not be very sure.

Since the bill was introduced, the government has announced a list of people whom they propose to invite to form this foundation as a private entity belonging to those people. This unusual process was apparently agreed between the government and the Democrats, but I think it should be the subject of wider scrutiny. The board members will not be statutory office holders, they will not have fixed terms of office, they will not be subject to any accountability requirements, there are no public conditions of appointment and remuneration and there is no procedure for the appointment of replacement members. This is unacceptable given the large amount of public funds that will be distributed by the foundation.

The people who are nominated appear to be very worthy individuals, and I make no criticism of them—they obviously have expertise in alcohol and other drug programs and in managing community grants programs. However, I think they are putting their reputations at some risk in being involved in such a strange and unaccountable process. Others active in the field will have cause to question how these individuals were chosen, to whom they are accountable and whether they will have any conflicts of interest when it comes to deciding which grants are approved. There cannot be much confidence in a secret process that leads to appointments lacking any clarity about the terms and conditions.

The next issue of concern is the part of the deal for the foundation to submit a detailed business plan `for approval by the government and the Democrats by August 2001'. This business plan is the document that will guide the foundation's work, but it is approved through a political process. The agreement envisages that the business plan would be tabled in parliament. However, the bill contains no requirement for the business plan to be released and no requirement for the foundation to operate under open and transparent processes, free of bias. Given the massive rorting of the public purse to the tune of $20 million per month on political advertising over the last six months, there are legitimate suspicions about the government's motives. Why would the Democrats accept the word of a dishonest government which has frequently broken its promises?

The 3 April agreement envisages that procedures for the foundation to report annually to parliament should be in the constitution of the proposed trust. However, this should be done with parliamentary authority in accordance with the annual reporting provisions applying to similar bodies. The standard and timing of reports should be determined by parliament in line with normal practice for similar bodies. It is inappropriate for a body to determine on its own behalf how and when it will report to parliament. If the bill does not deal with these matters, it is quite possible that the foundation's constitution will not require it to report to parliament or that the foundation itself may resolve in future years to stop reporting.

The provision for a replacement body to be nominated by the minister if the funding agreement is terminated increases the need for the accountability requirements to appear in legislation and not to rely on the constitution of the initial recipient of funds. The government has been unable to provide satisfactory responses on this issue. The best it can suggest is that the annual reporting provision might be built into the funding agreement in some way, but it suggests it will take the form of a requirement to report to the minister and that the minister may table the report. This is not the same thing as reporting to parliament and it does not give parliament the ability to review the reports or for the body to be considered through the Senate estimates committee, as would be the case for any other body handling such sums of public funds.

The agreement also makes reference to monitoring and reporting on the cost effectiveness and social impact of the foundation without clarifying by whom or to where the foundation reports. These matters should not be left to chance. The bill is also silent about the role of the Auditor-General. The 3 April agreement envisages `independent auditing of the accounts and performance of the foundation'. Given the large amount of public money involved, this should be conducted by the Auditor-General with parliamentary authority. The use of a commercial auditor will introduce problems in achieving the proper level of scrutiny of how the organisation has performed. The body of expertise in the Australian National Audit Office, in relation to maintaining the probity of community grants programs, would be ignored.

It was suggested at the Senate inquiry that the Auditor-General had agreed to use his powers to audit these accounts, but it is quite possible that the new foundation board will not invite the Auditor-General to do so and that the Auditor-General would not be able force the board to comply. The board could appoint an auditor of their own choosing, simply because they are an entirely private company under this bill, free of any accountability to government or to parliament.

The agreement refers to procedures for approval of grants, but does not specify any requirements in relation to how probity and management of conflicts of interest will be managed in running what is a very large grant program by any measure. The legal issues concerning how funds will be recovered by the foundation from non-performing grant recipients also needs to be resolved to ensure that public funds are not misused. The consequences and liability of board members for any maladministration by the foundation or its staff are left up in the air, because the foundation is being created as a private body external to government and is isolated from the probity and auditing provisions that decades of experience have proven are essential for protecting public funds.

Labor's preference is that the foundation should be established on the proven model of the Victorian Health Promotion Foundation. This is a body with a statutory base and direct lines of accountability to parliament and the Auditor-General for the spending of public funds. It is widely recognised as independent in its decision making and enjoys support from all political parties—partly because, somewhat uniquely, each political party has an MP on the board, which gives it full transparency. There should be a defined board membership and a process for filling vacancies and all of the normal accountability provisions for a person holding a significant public office: defined terms of appointment and remuneration, declarations of interest, removal for bankruptcy and limits on directors' liability. The foundation should be subject to the Auditor-General and report formally to parliament. Many of these provisions apply to the Natural Heritage Trust, which has a similar role to play in the distribution of funds to community projects. There should be controls on excessive remuneration and political advertising.

Labor is a strong supporter of the concept of the foundation and sees a large backlog of work to reduce the harm caused by alcohol abuse. It is a pity that the concept has not got off to a smooth start because the normal procedures that have been developed over the years to manage the fair and efficient distribution of public funds have been ignored. I hope the Senate will support the amendments that the opposition will move to achieve this very desirable outcome. We hope that our amendments will make the bill better and ensure the success of the foundation by putting in the proper accountability and reporting mechanisms from the start, rather than this rather inadequate approach that the government has adopted. As I say, we will be moving a series of amendments in the committee stage, and I will address those then.