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Political Influence of Donations
Political influence of donations

HARRISON, Mr Anthony, Senior Policy Officer, Foundation for Alcohol Research and Education

MILLER, Professor Peter, Director, Centre for Drug, Alcohol and Addiction Research; and Professor of Violence Prevention and Addiction Studies, School of Psychology, Deakin University

THORN, Mr Michael, Chief Executive, Foundation for Alcohol Research and Education

Evidence from Professo r Miller was taken via teleconference—

CHAIR: Welcome. Thank you for appearing before the committee today. We might ask the Foundation for Alcohol Research and Education to kick off your opening statement.

Mr Thorn : Thank you. I have tabled a supplementary submission this morning, and I would just like to walk through that very quickly as my opening statement.

Our interest in this matter is because the consumption of alcohol in this country results in more than 5,500 deaths each year and 160,000 hospitalisations. A million kids are affected by their carers' or their carers' friends' drinking. Ten thousand of them are in the child protection system as a consequence of their carers' consumption of alcohol. It is not an insignificant issue. The way to control and prevent many of these deaths, hospitalisations and other impacts from alcohol is through a series of policy interventions directed at either the price of alcohol, the way it is promoted or its availability.

In particular, today I'd just like to focus on one aspect of how you might control the price of alcohol, and that is through our alcohol tax system and, in particular, the wine equalisation tax, which is the most egregious part of the alcohol tax system in that it promotes the production of cheap booze, and it is cheap booze which is the preference of our heaviest drinkers in this country. One of the things that the World Health Organization has said—and Australia is one of the 198 members of that organisation—is that the alcohol industry shouldn't be involved in the formulation of alcohol policy. But, unfortunately, there is a long history of the alcohol industry influencing public policy, and today we wish to examine some of the history and patterns of political donation by the alcohol industry and its agents and track them against the way the wine equalisation tax has played out over the last 15 years.

Our submission actually covers three separate examples. We've looked at the WET as well as the impact on some policy issues in the Northern Territory and the issue of poker machines in New South Wales. We believe these studies show there's clear evidence that the donations from the alcohol industry and its related entities are positively correlated with the policy outcomes that benefit that industry. Since 1998, the alcohol industry has donated more than $33 million. That's an average of $1.8 million per year. The top 10 donors were responsible for about two-thirds of this, $20 million. We believe that by looking at these examples we can make the case for a better system in relation to the regulation of political donations, period, and specifically in relation to the alcohol industry donations: that they should be banned.

The wine equalisation tax is a tax system based on the wholesale price of alcohol, unlike beer and spirits, where alcohol is taxed on the volume of alcohol per litre. It is a system that is very preferential; it prefers the wine over the other products. We believe it contributes to the production of too much cheap alcohol, and that contributes to a lot of the harm in this country from the consumption of that alcohol. Large donations from the alcohol industry coincided with the introduction of the WET. On slide No. 6 of the deck that I tabled this morning, you can see the uptick in donations as this issue came onto the political agenda in 2001-02, as the GST was being introduced. Large donations from the alcohol industry have followed formal recommendations for the abolition of the WET. You can see again an increase in political donations at the time of Ken Henry's review of the tax system. Most recently when the government was looking at reforming the wine equalisation tax rebate, the accompanying scheme to the WET, there was another increase in donations from the alcohol industry. This analysis suggests that political outcomes can be bought. As I said, the industry has paid $33 million to political entities around this country since 1998-99.

Policy decisions have favoured the continuation of the tax system that is both harmful from an economic and a health perspective. Decisions have often been accompanied by donations from alcohol industry bodies and other vested interests. These industry interests, I would argue, have prevailed over public interests. We believe that governments must act to address this influence of the alcohol industry. Our submission is that the parliament should adopt a principles based approach to political donations. It should seek to prohibit the use of associated entities to conceal donor identities. It should require immediate disclosure of political donations—in other words, real-time disclosure—remove the disclosure threshold and require that all donations and other receipts be reported and published in real time. Our view, consistent with the World Health Organization's view, is that donations from the alcohol industry should be banned, period. Thank you.

CHAIR: Thank you very much, Mr Thorn. We have Professor Miller on the line. Do you have an opening statement?

Prof. Miller : I do. I would like to deliver the findings from our Australian Research Council linkage grant study, which was conducted in collaboration with the Foundation for Alcohol Research and Education, Cancer Council Victoria, the University of Newcastle, Curtin University and the London School of Hygiene and Tropical Medicine.

We have a particular concern around donations from dangerous consumption industries, including the alcohol industry, the tobacco industry and the gambling industry, and have investigated them in relation to the development of public health policies. Our current research into corporate political activity has shown a strong consensus that the industries have the resources and the people available to gain inequitable access, particularly through donations. From our research, it was found that respondents reported that political donations do influence how donors are viewed and consequently their access and influence. The high threshold for donations is easily exploited, especially by industries such as the alcohol industry, which has many small stakeholders such as local pubs and gambling facilities. Australia is one of the least-tightly regulated. There is no consistency between states. We had reports of circumvention of state laws by going to other states.

One of our key recent analyses showed that the way in which there were delays in terms of government policy in implementing alcohol warning labels was likely due in part to alcohol industry interests lobbying. We have interviews from our study that clearly state that the relationships with policy-makers were starting early. So donations are not just at the final point but start very early in politicians' careers and continue throughout their careers, making an expectation of favourable influence and access. We also found spikes in donations around the time of important policies—for example, the alcopops tax and Andrew Wilkie's gambling reforms. We also found there are a range of other donations which need to be considered, so it's not just up-front cash. We need to think about tickets to grand finals and access to other sporting events, fine bottles of wine and, in particular, the issue of the revolving door whereby former politicians or senior public servants are being employed in industries afterwards.

We recommend that donations be allowed only from individual people who are on the electoral roll. There should be a cap on donations of $1,000 per donor per year; real-time, easily publicly accessible records for all political donations, with persistent archiving of donation records; an increase in public funding for elections; a ban on all hazardous consumption industry donations and addiction industry donations; easily publicly accessible records disclosing political spending; and a strong and independent monitoring and enforcement agency. Thank you.

CHAIR: Thank you very much.

Senator BROCKMAN: Just in the philosophical realm, I'd like to just look a little bit at the evil that we're trying to correct here. Can you point to specific examples of, say, negative outcomes through industry lobbying of the sort you talked about in your opening statement? I'm just looking at the Australian Institute of Health and Welfare, and alcohol consumption is down 10 per cent over the last decade, there is a 13 per cent fall in those drinking at risky levels over the last decade, and more people are in alcohol treatment, yet this is during the same decade when supposedly there have been significant increases in the amount of lobbying and money flowing and negative outcomes. So could you just talk through where you see the negative occurring.

Prof. Miller : Sorry, I'm unclear whether you're talking to me or to Mr Thorn.

Senator BROCKMAN: I'm happy to take that from whoever wants to answer it.

Prof. Miller : Okay. Firstly, the data you're reporting reports fairly limited trends. One of the key things is that those trends are based on self-report surveys, not actual consumption trends. If you look at the recently reported alcohol consumption trends by the Australian Bureau of Statistics, consumption has increased again. Much more importantly, the people who answer surveys tend not to be the people who have strong drinking problems, so you get quite disjunct. While consumption on average may have gone down, what you see is that far more vulnerable groups are actually experiencing greater levels of harm, and these are the people who are most susceptible to public health interventions like restrictions on trading hours, increases on price or a minimum unit price, and restrictions on alcohol advertising. So that data can always be presented in different ways by different people, but the key thing is that, while consumption in some groups has gone down, consumption has remained stable or increased in other groups, and the harms have increased. The key point is that simply because something goes down doesn't mean it's at an acceptable level.

Senator BROCKMAN: But what I was asking you to do was to point to particular evils or wrongs that you believe are—

Prof. Miller : Well, the key point is the absence of good intervention. We have known that these interventions work—the evidence locally and internationally is very significant—and yet we have not seen any change in the taxation of alcohol since the alcopops, a very specific sort of taxation response. We have not seen any changes in terms of restricted trading hours in any of the states, and we see no changes in terms of advertising to our kids—whether that be on television or on the internet, which has exploded massively—the supply of alcohol through home delivery, or the turning of our sporting heroes into alcohol banners. It's more about the absence rather than the influence in many ways. That's the key thing: there has been no significant change in policy.

Senator BROCKMAN: But there has been a reasonably significant change in consumption, hasn't there? Overall—I'm talking averages here.

Mr Thorn : I don't believe that the—

Senator BROCKMAN: What I'm reading in front of me here is based on taxation and sales data. It's not self-reporting; it's actual taxation data, which I would have thought would be reasonably accurate.

Mr Thorn : Average per capita consumption in the last report by the Australian Bureau of Statistics actually went up. It ended a short period of modest decline in average per capita consumption. Australia's alcohol consumption reached its peak of nearly 13 litres of pure alcohol per person per year in the mid-1970s. It has trended down since then, to the early 1990s, when it arrived at about 10 litres of pure alcohol per person, and it has kind of bumped around that level over the last 25 years. This rate of consumption is four times what Australians were drinking in the 1930s. The issue in the end is not the actual consumption. That's merely an indicator of what people are doing. The real issue is the magnitude of the harms: we have 5,500 deaths each year and 160,000 hospitalisations; and state by state there are increasing rates of ambulance callouts, which is one of the most significant indicators of what is actually happening in the community with the consumption of alcohol. The fact of the matter is that rates of harm—death rates, hospitalisations, family violence rates—are all on the increase, despite those very marginal decreases, for a short period, in consumption of alcohol.

We should acknowledge reductions, and certainly the reductions in the consumption of alcohol by children under the age of 18 is a very good thing. They have been significant and we should hope that those patterns of drinking by that population cohort continue as they get older. But there is no guarantee of that, especially when alcohol is so affordable and so available and marketed in the most egregious ways, on occasions. In today's media we saw some terrific examples of how bad it can get.

Senator BROCKMAN: I think you possibly misunderstood the direction of my question. I'm not arguing the public policy case on alcohol. I'm more trying to look at the intersection between political donations, which is what we're looking at, and the trends in alcohol consumption.

Mr Thorn : The data about political donations is hard to get and hard to analyse. In our submission we've had a crack at trying to understand what some of those patterns are. If you look at the submission we made to the committee you can see the correlation between the increase in donations and when a policy issue comes onto the government's agenda. The particular case we've talked about today is the wine equalisation tax. Every time that there has been an effort to reform the way wine is taxed, there is an increase in political donations. That's the simple fact of the matter. We know that there will be significant impacts on the wine industry if governments are to put wine onto the same tax footing as beer and spirits, as it should. So, there is a very strong interest in the wine industry arguing against and seeking to stop the sorts of reforms that have been recommended by, now, 11 government reviews, the most recent, in the last two weeks, by the Australian Productivity Commission.

Senator GEORGIOU: How do political donations inhibit or block your awareness campaign for drinking less alcohol?

Mr Thorn : There are practically no public awareness campaigns for alcohol in this country, so I could either assert that it has been highly effective in preventing all public awareness campaigns, or, in the absence of it, I can't comment.

Senator GEORGIOU: Don't we have something like DrinkWise—isn't that some sort of public campaign to lower alcohol consumption rates?

Mr Thorn : DrinkWise is an alcohol industry entity. It is known in the game as a SAPRO, a social aspects and public relations organisation. These are entities that have been established by the alcohol industry to deflect change by governments and to prevent the sort of policy interventions that organisations like FARE and people like Dr Miller would prefer to see. They do that by giving the appearance of activity by the alcohol industry. What they do is almost exclusively focused on campaigns where there is no evidence they actually have any impact on consumption rates by drinkers. I don't have any time at all for organisations like DrinkWise. They are ineffective and in fact are a massive political distraction and a barrier to real change in this area.

Prof. Miller : I would just add that we've studied submissions by DrinkWise and we've also surveyed people in terms of their awareness of the labelling, for example, that DrinkWise put on it. While people can identify the name of DrinkWise, not a single person actually goes through to their websites and looks at the information that we've surveyed. So, what we've found is that it is a great PR mechanism for the industry, but it doesn't actually enact behaviour change in any way. More concerningly, people actually think that DrinkWise is a government agency. They believe the government is regulating what's on the bottles rather than it being an industry front.

Senator GEORGIOU: What do you think is more harmful: political donations or targeted advertising on alcohol consumption?

Prof. Miller : Political donations. Political donations ultimately influence the entire sphere of what is able to be done. They are one part of a multi-facetted, very long-term strategy by whichever industry we talk about, whether it be coal, tobacco, gambling or alcohol. Overwhelmingly, the aim is to buy out influence, to purchase influence. When somebody gives you $1,000, they are trying to support you. When they give you $100,000, they are trying to buy you. That was a statement from one of our interviewees regarding this, an ex-politician, and also it's very clear. Similarly, when they support one political party, it's about ideology. When they support two political parties, it's about buying access. So it's very clear that the aim is to influence politics, not to show support for a political ideology.

CHAIR: I might ask a few questions about the case study that you presented on the wine equalisation tax. One of the things that obviously stands out is that one of the big donors is the South Australian branch of the Australian Hotels Association. Can you explain, perhaps for those people who might not be aware, why the South Australian branch of the AHA would be one of the biggest donors to both sides of politics through each of the different phases of the wine equalisation tax introduction and the various reviews? Why has the South Australian branch played such a significant role?

Mr Thorn : This is an area of conjecture from our perspective, but I believe it's because, firstly, South Australia is our biggest wine-producing state. Secondly, it is one of the biggest producers of cheap alcohol. Thirdly, by their own admission, the AHA in South Australia has more hotels in wine-producing areas than anywhere else in the country. So I imagine that they would see that their members would be affected by a more rational approach to the taxation of wine.

CHAIR: This is probably a question for mathematical boffins. Based on the graph you provided, there are three very significant peaks in donations from the alcohol industry, and in particular from the South Australian branch—but from the alcohol industry—and they all correspond to either the introduction or review of the wine equalisation tax. They are spaced out over almost two decades. I just wonder whether that's something you could perhaps take away as some homework. What is the likelihood of that occurring as a random event, as opposed to that being correlated with those specific issues? My suspicion is that the probability of it being a random event—where those massive surges in donations occurred by coincidence in relation to the wine equalisation tax—is very, very low. I take it you haven't done that, but I just wonder if that's something you would like as a little bit of homework for you?

Mr Harrison : I suspect that the probability of that occurring by random chance is exceedingly small. It is not something we have looked at specifically at this stage. Certainly, we can take that on notice and see what we can do in that respect.

CHAIR: Great.

Mr Harrison : I think it's important to remember here that both the donors and the recipients in these transactions have an interest in ensuring that firm conclusions can't be drawn about the direct influence. So—

CHAIR: That would be corruption, wouldn't it?

Mr Harrison : Absolutely.

CHAIR: That would be out and out explicit corruption?

Mr Harrison : Yes, absolutely. The fact that we are able to observe these apparent trends—this apparent relationship between donations and policy outcomes—in the way that we have, is something that is fairly profound, I think, given the motivation to conceal these sorts of relationships.

CHAIR: How do you define the alcohol industry? Do you have a definition?

Mr Thorn : I think the inner circle is really the producers of alcohol, be they wine, beer or spirits, and the retailers of alcohol, be they pubs, clubs or bottle shops. What we know about that cohort is that there is a massive concentration of ownership. The vast majority of the world's alcohol production is in the hands of half a dozen companies. In Australia, when it comes to the retailing of alcohol—bearing in mind that 80 per cent of all alcohol sold is in a packaged form: in other words, in bottles or containers of one form or another—Coles and Woolworths control approximately 60 per cent of that market, so you can see that it is a highly concentrated industry. As a consequence, I suspect it is easy for those companies to bring really focused political influence on governments looking to make change to the policy settings. Around that is a massive distribution industry; there is the advertising industry; there is the broadcasting industry; and there are all those grape growers in the Murray-Darling Basin, for instance, that make up the alcohol industry and are dependent in one form or another. And, of course, there are the agents of the alcohol industry companies that circulate around places like this parliament.

CHAIR: Dr Miller, the research cited in your submission involved a number of key informant interviews. We have heard from a number of stakeholders but we haven't heard from individuals who might be involved. How did you pick them? And just give me a sense of what the overwhelming views of those key informants were?

Prof. Miller : The key informant sample was a structured sample, whereby we sought interviews with a range of obvious people who could give us insights—so, politicians, ex-politicians, journalists, senior bureaucrats, people who worked with policy interface, so that may be police or the health industry, and we sought the views of the industry. We were able to get a couple of DrinkWise people, but none of the major alcohol, tobacco or gambling industry people would talk to us, unfortunately. We had a structured sample, in terms of attempting to reach the same number of people from each one. The key themes really were that money buys access and influence, as I mentioned before. This was right across gambling and alcohol.

I would just add to Mr Thorn's statements before that it's also important to consider the links between alcohol, gambling and tobacco. We found that even thinking about them separately, particularly at the retail level, is not necessarily helpful. For example, the AHA and Crown work closely together in influencing different governments.

In terms of other themes, there is a key issue around the level of donations. In terms of being able to document what donations are important, in fact we only see 50 per cent of donations that are made. Our key informants, particularly an ex-politician, were able to give us insight into the way that local hotels are able to strategically influence local politicians by giving donations under the threshold. If you get 50 donations of $10,000 from 50 hotels, it substantially changes the dynamic around which that occurs. That was a specific example from that politician. The other element that they talked about was the small money lobbying—so the access through going to sporting events and all of those sorts of things—and how most of this occurs because there's inadequate financing and monitoring of the donation system and the political system the way it is. Is that enough?

CHAIR: That's plenty, thank you.

Senator KETTER: Mr Thorn, you've clearly said you want to ban all donations from the alcohol industry, you've talked about limiting the use of associated entities to avoid disclosure, and you support real-time disclosure of donations. Do you have any specific recommendations on how that might be structured?

Mr Thorn : Not really. I would be just taking a layman's view on it, other than to observe that in this day and age, given we're talking about real-time transfers of funding in the banking system, it shouldn't be beyond the wit of our system to establish a similar thing for the receipt of financial donations to political parties.

Senator KETTER: Would you welcome a public register of ultimate beneficial ownership so people can get an understanding of who owns legal entities including companies, trusts et cetera?

Mr Thorn : I would support that, unquestionably.

Senator KETTER: Dr Miller, I ask you the same question about a public register of ultimate beneficial ownership. Do you support that?

Prof. Miller : Strongly, particularly given the links we see between the major alcohol industry, the tobacco industry and the gambling industry. I think it's very important that the public be able to see that.

Senator KETTER: You've expressed some concerns about DrinkWise. Are there any other third parties or associated entities out there in some of these areas of dangerous consumption that you have any concerns about?

Prof. Miller : At the moment, I'm not aware of major ones in Australia. Sorry, I'd have to take that on notice for gambling, because I know they have some, but it's a bit different. I'd have to take that on notice and supply information, which I'd be very happy to do.

Senator KETTER: Okay.

Prof. Miller : In terms of alcohol, what we see is that this is really a global trend: DrinkWise in Australia, Drinkaware in the UK, Cheers in New Zealand, and the International Center for Alcohol Policies, which has now changed its name to the International Alliance for Responsible Drinking. These have been around for a long time, and they were all strategically set up to do the same thing. They often will make separate submissions, particularly the International Alliance for Responsible Drinking, but they have a range of bodies around the world that do the same sort of thing. We haven't seen one in tobacco for a while since the plain packaging effort of the Australian alliance of retailers—sorry, I'd need to check the name.

Senator KETTER: I think it was called the retailers alliance or something. So that doesn't function at the moment?

Prof. Miller : Yes.

Senator KETTER: Just back to you, Dr Miller, this issue of real-time disclosure of donations—do you support that? Do you have any specific recommendations on how it could be implemented?

Prof. Miller : Yes, I do strongly support it. I think that our informants told us that there was one key way to make politicians and senior bureaucrats to reflect on their relationship. As far as I know, the only system in operation is the one in Queensland, but I couldn't comment on its robustness.

Senator KETTER: Just one further question. Dr Miller, I think you are calling for an increase in public funding for elections—is that correct?

Prof. Miller : That's correct, yes. If there are going to be changes around the political donations scheme, I think it's important to look at ensuring there is adequate funding for political parties to get their message across, and it also becomes quite important in terms of stopping what we call the revolving door as well in terms of having politicians looking to their next job while in their current job.

Senator KETTER: Would you also agree with, say, the Labor call for this increase in public funding to be tied to campaign expenditure to avoid profiteering from public funding?

Prof. Miller : It would be a personal opinion rather than an evidence based opinion. I don't have any evidence as to whether it would influence public policy one way or another. No, sorry, I couldn't comment on that.

Senator KETTER: That's fine. Thank you.

CHAIR: Any more questions?

Senator GEORGIOU: One more question to Dr Miller. What clear evidence is there that banning all donations from the alcohol industry would lead to a better quality of life?

Prof. Miller : I think it would be scientifically impossible to relate that to, given the massive amount of compounding amount of variables that you'd put in the equation—I'm sorry: I don't think your question's valid.

Senator GEORGIOU: Thank you.

CHAIR: Thank you for your contributions today. I think we might have given you a little bit of homework: 23 November is our deadline.