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Friday, 23 August 1985
Page: 298


Senator LEWIS(3.06) —The matter of public importance which I have submitted to the Senate reads:

The failure of the Government to exercise proper control over the allocation of funds to the Community Housing Expansion Program and adequately safeguard the Commonwealth interests in properties purchased.

This debate brings before the Senate for examination the very fine report of Mr Brian O'Donovan into the community housing expansion program in the Australian Capital Territory. I emphasise the words `expansion program'. One of the key paragraphs of the report is paragraph 2.6 where Mr O'Donovan explains that what the Government did in its 1983-84 Budget was to give Mr Uren $1m to spend how he liked on `a wider range of housing opportunities'. There was no legislative provision that described the purposes for which moneys appropriated could be expended. That was left for administrative decisions.

The Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) stand condemned for that action in which in effect they said: `We trust you, Tom. Here is a million dollars; you go and spend it on those fancy co-operative housing schemes you have been telling us all about for some time'. Well, of course, they could not trust him. He always has been able to be conned by those who know how to treat the Australian Labor Party in Government as a milch cow. Just think of the number of ALP supporters who became very wealthy under the Whitlam Government. People like them are back at the trough. Mr David Combe saw the opportunities of a new Labor government. Honourable senators will recall his prediction that he expected to become a millionaire before this Government went out of office.

When Mr Tom Uren was thrown out of the Territories job he left a real bucket of worms. However, that is not to say that his successor, Mr Scholes, should not have realised that it was a bucket of worms. That is not to say that the Prime Minister and the Cabinet can be excused for their failure to look into the bucket when they had at least two opportunities to do so, first in the 1984-85 Budget and then again in the May 1985 expenditure review.

In February 1984 a public seminar was held in Canberra to promote CHEP. The outcome of this seminar was that the Minister, Mr Uren, allowed a committee of self-interested people to determine how they would advise him how he should spend the million dollars on themselves. And that is what happened. Mr O'Donovan reports:

There is also no doubt that each of the associations that were recommended for assistance under ACT CHEP had a close association with one of the community members of the CHEP committee who was present when the recommendations were made.

Indeed, the poor old Canberra School of Arts missed out because the students' representative was not at the meeting when the recommendations for advances were made.

By May of 1984 the Minister, Mr Uren, the Department of Territories and the members of this committee were panicking that 30 June would arrive before they could get their hands on the money. So they started to look for some sort of a fiddle that would enable them to get the funds out of the Government before 30 June. They found that it was too late to set up a trust account or to amend the legislation. So the Minister agreed to make the grants prior to 30 June on certain conditions. Honourable senators will recall that he had been given carte blanche by the Prime Minister, Cabinet and the Treasurer. At that time the three successful associations had not even been incorporated.

Of course, as the report reveals, no adequate safeguards were obtained. It is now necessary for a whole range of measures to be taken to try to obtain some adequate safeguard of the Commonwealth's interests and the report lists those measures which will have to be taken. Mr O'Donovan is extremely critical of Mr Uren's so-called guidelines. He said that those for 1983-84 `were so highly flexible that they could not . . . be regarded as a program'. He said that those for 1984-85 did not `reflect the basis upon which Cabinet and the Minister had agreed to the appropriation of $669,000 for that year'. I charge Mr Uren with having misled Cabinet with those guidelines. Clearly from Mr O'Donovan's report, he is saying that the guidelines adopted by Mr Uren did not reflect the basis upon which the Cabinet and the Minister had agreed to the appropriation. But even assuming that the guidelines did constitute programs for both years, Mr O'Donovan again said:

. . . at least some of the approved grants would seem to have fallen outside the guidelines so approved.

If one thinks about that one can see that Mr O'Donovan is saying, in effect, that the guidelines were weak and flabby. In fact, the 1984-85 guidelines did not follow the guidelines for which the moneys were appropriated. But even then, the grants made by Mr Uren fell outside his own guidelines. Unfortunately for the taxpayers of this nation, Mr O'Donovan has to report that because the Minister had a blank cheque to make the grants, the grants he made are not recoverable.

I turn now to chapter 5 of the report which relates to Wyuna. This chapter is absolutely damning of the CHEP committee, the Department of Territories and certain participants in the Wyuna scheme. Mr O'Donovan states:

. . . even on the information available at the time the CHEP committee's recommendation was made, the grant ought not to have been recommended.

Mr Acting Deputy President, you will understand that the CHEP committee was considering these applications. It had before it an application from Wyuna. Mr O'Donovan says that, on any basis, when the CHEP committee looked at that application, the grant ought not to have been recommended. The reasons are set out in the report, but I will summarise them. The first is that the property was already occupied and beneficially owned by the community which was applying for the grant for its so-called purchase. The members of that community already owned the property. They were in occupation and they beneficially owned it. Yet they were applying for a grant to buy the property and to carry out certain extensions to it. So, of course, this money, which was being allocated towards the purchase of the property, could not result in any expansion of community housing in the Australian Capital Territory. Eligibility for assistance was doubtful and a number of other factors should have alerted the CHEP committee to the possibilities of a very nasty smell. But the committee recommended the application.

By the time the committee's recommendation came to receive departmental consideration, other matters of concern had emerged. The Minister had called for a valuation which was below the proposed sale price. There had been a complaint by a neighbour about the application and there was concern as to whether the extensions might contravene the lease purpose clause. I would like the Senate to think about that. I am talking about the Department of Territories, which is bound to uphold lease purposes of properties in Canberra. It was considering an application for finance to conduct works which might breach the lease purpose.

I turn now to individuals mentioned in the report. Dr Cairns was lobbying as hard as he could. He has said that he received no benefit from the CHEP allocation to Wyuna, but the evidence on which Mr O'Donovan reports now shows that moneys paid to Wyuna were disbursed in part by paying off a loan of $11,648 to Wyuna from Dr Cairns and by discharging loans from the Commonwealth Bank totalling $51,778, for which Dr Cairns would have been jointly liable, together with J. Morosi, D. Ditchburn, M. Morosi and L. Morosi. So all these people have received a benefit by having their liability to the Commonwealth Bank paid off. Further, Mr O'Donovan reports that there is fairly persuasive evidence, although not conclusive evidence, that at least one of the loans discharged was secured on No. 22 Morant Circuit. That is the adjoining property to Wyuna, the owners of which are shown to be Dr Cairns, D. Ditchburn and J. Morosi.

One Bernadette Morosi occupies an interesting position in this drama. She was a member and public officer of the Wyuna community. She was employed by the Commonwealth as a community tenancy scheme housing worker from November 1984 to 31 May 1985. They are very significant dates in regard to this application. She attended almost all the CHEP committee meetings, firstly as an observer and then as a member of the committee. Mr O'Donovan finds:

. . . that, at all material times, Bernadette Morosi was the tenant of a government flat at . . . Lyons, even though she has regularly given her residential address as 24 Morant Circuit.

In other words, that is the Wyuna home. Of course, as a tenant of a government flat she was already receiving housing assistance from the Commonwealth Government. Bernadette Morosi indeed played a very important part in the allocation of funds to Wyuna. Mr O'Donovan reports that Wyuna was `less than frank' with the CHEP committee and with the Department. That is clear from the application. Mr O'Donovan says `less than frank', which is really a euphemism for `some lies' or `very careful drafting'. Words are used which subsequently, on examination, have a different meaning to what they might have appeared to have had on first reading. Nevertheless, that cannot excuse the CHEP committee or the Department because there were enough flashing red lights and odours to alert anyone that there was something fishy about this matter which ought to be looked at. In light of Mr O'Donovan's discovery that nine members of the Wyuna community have non-resident status-in other words, they are in Australia on a visitor's permit-and one of them is, in fact, a prohibited non-citizen, one should look very carefully at the possibility of other rackets in this community.

This report is devastating for the Government. Let us examine it in some detail. The CHEP scheme had been looked at by Cabinet for the 1984 Budget and again for the May 1985 economic statement. The report of the Auditor-General in April 1985 contains a catalogue of serious breaches of the Audit Act and Finance Regulations within the Department. This alone should have alerted the Minister and Cabinet. In the May 1985 expenditure review Cabinet did not take up Mr Scholes's offer to surrender the whole of the program's $669,000 but left $429,000 in the program. Why? In particular I would like to ask the Minister for Finance (Senator Walsh) why. Who lobbied whom? Who lobbied him? Who determined that the amount left in the program would just nicely cover the amount of Wyuna's application for $421,820? I might say that Wyuna did not get that; it got $133,000, but its initial application was for $421,000. That was just the nice round sum that the Expenditure Review Committee decided that Mr Scholes must have left in the scheme. Who had told whom how much Wyuna was seeking?

The Prime Minister became aware of the full implications in June of this year, but he took no action until 19 July when he learned that the National Times was going to expose the racket. As I said, this Government stands condemned by the report. The Prime Minister, the Treasurer, the Minister for Finance and two Ministers for Territories failed to ensure adequate protection of government funds. Mr Uren had set up an irresponsible scheme and misled his Cabinet colleagues as to how he was using the funds by making grants outside his own guidelines. Mr Uren also made it clear to Mr Scholes that he supported the activities of the Wyuna community and his mate Dr Cairns, no doubt with a view to influencing Mr Scholes in the decision he had to make about Wyuna's application.

Mr Scholes inherited a scheme he disliked but the Prime Minister and Cabinet insisted on its continuation so that Wyuna could get its loan. Why did they not take up Mr Scholes's offer to abandon the scheme? Notwithstanding his dislike for the scheme, Mr Scholes failed to see any of the warning lights or notice the smell of the Wyuna application. I have already indicated another smell which might be in that application. I hope he takes that up.

So the report condemns this Government's two Ministers for Territories. As I have already pointed out, the Prime Minister, the Treasurer, the Minister for Finance and other Cabinet members had opportunities which they ignored and ultimately they must have collective responsibility for this scandal. I congratulate Mr O'Donovan on his report. Within fairly narrow terms of reference and working to a very difficult and short timetable, he has produced an informative and revealing report which, in dispassionate terms, effectively is a major indictment of the Government.