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Bills Digest No. 171 2000-01
Alcohol Education and Rehabilitation Account Bill 2001
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Appendix A
Contact Officer & Copyright Details
Alcohol Education and Rehabilitation Account Bill
2001
Date Introduced: 20 June
2001
House: House of Representatives
Portfolio: Health and
Aged Care
Commencement: On Royal
Assent
To establish the Alcohol Education
and Rehabilitation Account which will disburse funding for education,
rehabilitation and prevention of alcohol and other licit substance abuse.
Opposition to the beer excise
From 1 July 2000, the Government has collected an increased
excise on beer and other alcoholic beverages. This is because the Government
amended the manner in which excise was calculated, to give effect to its
tax reform measures, particularly the replacement of the wholesale sales
tax with the goods and services tax.(1)
When the increase in beer prices was foreshadowed in
May 2000, there was considerable media attention given to the issue. It
was predicted that the price of draught beer could rise by up to 20 cents
a glass or 9 per cent, whereas the Prime Minister in his 1998 election
campaign had promised that the price of 'ordinary beer' would rise by
no more than 1.9 per cent.(2) The Government has consistently
maintained that 'ordinary beer' means packaged beer only, whereas Labor
and the Democrats interpreted the Government's promise as applying also
to draught beer.(3) At that time, the Australian Labor Party
and the Australian Democrats signalled their opposition to the Government's
proposed increase, and their intention to amend the legislation introducing
the excise amendments in the Senate.(4)
The difficulty arose from the manner in which excise
duties are introduced. Duties of excise are usually not initiated by a
bill, because of considerations relating to timing and drafting. Rather,
excise tariff proposals are generally introduced by way of motion in the
House of Representatives, or, if the Parliament is adjourned, by notice
published in the Gazette. Collection of the excise commences from the
date of the motion or gazettal, and is later validated by the introduction
of an excise tariff amendment bill, which imposes the excise retrospectively
from the date on which collection commenced.(5)
Proposals to refund the beer excise
The proposals to amend the beer excise were introduced
on 21 June 2000, to commence on 1 July 2000.(6) This put hotel
owners in the position of having to collect the excise from 1 July 2000,
while knowing that Labor and the Democrats had signalled an intention
to oppose the changes when the relevant excise tariff amendment bill was
debated in the Senate.(7) The brewers announced that they would
pay the higher excise under protest, and major brewers including Lion
Nathan and Foster's Brewing Group signalled an intention to challenge
the collection of the excise in the Federal Court.(8)
By January 2001, it was reported that major brewers had
lodged statements of claim against the Federal Government seeking a return
of the disputed beer excise, and were working on plans to either refund
the tax to drinkers - possibly through price reductions - or give it to
charities.(9) In February, the brewing industry announced results
of a survey in which 75 per cent of drinkers voted to put any excise refund
towards alcohol-related medical research, remedial programs and charities,
rather than lowering the price of beer. The Australian Associated Brewers
then stated it intended to use any refund from the Government to establish
the Beer Drinkers Foundation, which would be the biggest charitable foundation
in the country, with well over $100 million to invest.(10)
Alcohol Education and Rehabilitation Foundation
to be established
On 3 April 2001, in the midst of prolonged debate in
the Senate over the Excise Tariff Amendment Bill (No 1) 2001, the Government
announced it had reached agreement with the Democrats to prospectively
reduce the excise rate on draught beer to no more than a 1.9 per cent
increase. The Democrats agreed to legislation that would validate the
excise collected on draught beer from 1 July 2000 to 3 April 2001, and
allocate most of the amount collected in excess of the new reduced excise
rate to establish a new independent foundation, the Alcohol Education
and Rehabilitation Foundation (the Foundation).(11) Five million
dollars from the excise surplus would be allocated to the Historic Hotels
initiative, which provides dollar-for-dollar grants to preserve historic
hotels in regional and country areas which do not have gaming machines.(12)
According to the Memorandum of Understanding signed by
the Government and the Democrats, the objectives of the Foundation will
be to:(13)
- prevent alcohol and other licit substance abuse, including petrol
sniffing, particularly among vulnerable population groups such as indigenous
Australians and youth
- support evidence-based alcohol and other licit substance abuse treatment,
rehabilitation, research and prevention programs
- promote community education encouraging responsible consumption of
alcohol and highlighting the dangers of licit substance abuse
- provide funding grants to organisations with appropriate community
linkages to deliver the above-mentioned services on behalf of the Foundation,
and
- promote public awareness of the work of the Foundation and raise funds
from the private sector for the ongoing work of the Foundation.
A copy of the Memorandum of Understanding is annexed
as Appendix A.
There has been some attempt to ensure that the money
allocated to the Foundation is not consumed in administrative costs. The
Memorandum of Understanding requires the Foundation to spend:(14)
- at most 10% on administration and promotion
- at least 30% on treatment and rehabilitation
- at least 10% on public education
- at least 20% on prevention, and
- at least 20% of total expenditure (including in categories described
above) on projects targeting indigenous Australians.
These percentages are only prescribed for the first year
of the Foundation's operation. No percentages are prescribed for later
financial years. However, the Government and the Democrats will have to
approve of the budget covering all four years of operation. Further, under
the proposed constitution of the Foundation, the annual budget will be
subject to approval by the board, and reports will be provided annually
to Parliament on grant allocation decisions and overall operations.(15)
At least 85% of all of the Foundation's expenditure must
be outsourced to professional and community organisations, who will apply
to the Foundation for grants. Grants will be approved by the board. The
Foundation must establish procedures for monitoring and reporting on the
cost effectiveness and social impact of funded programs.(16)
The decision to establish the Foundation was re-announced
in the Federal Budget 2001-2002, and a total amount of $115 million has
been allocated to the Foundation over four years.(17)
Support for the establishment of the Foundation
The Alcohol and other Drugs
Council of Australia and the Australian Medical Association have welcomed
the establishment of the Foundation, while calling for further commitment
to an integrated strategy for the prevention and treatment of drug-related
problems, including alcohol, tobacco and illicit drugs.(18)
Similarly, the Aboriginal and Torres Strait Islander
Commission has supported the establishment of the Foundation. The Chair
of the ATSIC Peninsula Regional Council noted the urgent need for education
programs and rehabilitation facilities in Cape York, and voiced the hope
that the Foundation could provide resources to meet some of these needs.
However, he expressed concern that the Foundation may be yet another once-off
initiative, with no guarantee of ongoing funding once the initial appropriations
are spent, and with no provision for financial support from the alcohol
industry.(19)
Clause 3 states that the object of the Act is
to establish the Alcohol Education and Rehabilitation Account, which will
provide money to the Foundation to spend on the five purposes listed above
as the objectives of the Foundation.
Alcohol Education and Rehabilitation Account
Clause 5 establishes a 'Special Account' called
the Alcohol Education and Rehabilitation Account (the Account). A 'Special
Account' is an account established either by a determination of the Finance
Minister or (as in this case) by an Act, for certain identified purposes.
It is a way of setting aside money in a notional separate ledger within
the Consolidated Revenue Fund for a particular purpose, and ensuring that
the money is used only for those purposes.(20)
Funding
Clause 6 appropriates money into the Account annually
over the next four years. The amounts of the appropriations are $10 million
on Royal Assent (for the 2001-2002 financial year), $24 million on 1 July
2002, $40 million on 1 July 2003 and $41 million on 1 July 2004, a total
of $115 million.
All money standing to the credit of the Account must
be paid out under one or more funding agreements by 1 July 2005 (clause
8).
Funding agreements
Clause 9 permits the Minister to make a funding
agreement with the Foundation for making payments to the Foundation for
the Foundation to distribute.
Clause 10 permits the Minister to terminate the
funding agreement with the Foundation unilaterally if either:
- the objectives of the Foundation are inconsistent with any of the
purposes of the Bill listed in clause 3, or
- the Foundation fails to comply with a condition of the funding agreement.
The Minister's determination to terminate a funding agreement
will be disallowable by the Parliament.
If the Minister has terminated a funding agreement with
the Foundation, he or she may nominate one or more 'replacement bodies',
whose objectives are consistent with all the purposes listed in clause
3, to replace the Foundation (clause 11). Any determinations
nominating replacement bodies are also disallowable instruments.
The Minister may then enter into a funding agreement
with the replacement body or bodies, authorising him or her to make payments
to the body or bodies for distribution (clause 12). The Minister
may terminate these funding agreements in the same circumstances that
a funding agreement with the Foundation may be terminated, and the determination
to terminate will be disallowable (clause 13).
Unlike determinations to appoint replacement bodies,
or to terminate funding agreements, the Minister's decision to enter into
funding agreements, either with the Foundation or with replacement bodies,
will not be disallowable. However, the Minister must table a copy of every
funding agreement in each House of Parliament within 15 sitting days (clause
14).
This section makes a number of comments based on a comparison
of the Bill with the Natural Heritage Trust, a prominent current example
of a Special Account established by legislation.(21)
Establishment of Foundation by statute or otherwise
The Bill establishes the Account and enumerates its purposes,
but does not establish the Foundation, which will be an incorporated charitable
trust.(22) The Memorandum of Understanding sets out the composition
of the board of directors of the Foundation. The board of directors will
be broadly representative, consisting of a Chairman, three community-based
treatment and education representatives, and one representative each from
medical, research, church, Aboriginal and Torres Strait Islander, sporting
and youth bodies.(23)
In contrast, the Natural Heritage Trust of Australia
Act 1997 establishes the Natural Heritage Trust Ministerial Board
(consisting of the Minister for the Environment and the Minister for Primary
Industries and Energy(24)) and the Natural Heritage Trust Advisory
Committee. It contains provisions dealing specifically with Committee
membership, appointment procedures, disclosure of conflicting interests,
remuneration, termination of appointment and other terms and conditions.
None of these details are contained in the present Bill.
The Bill envisages that in certain circumstances other
bodies may replace the Foundation as the body which distributes money
from the Account to professional and community programs. These bodies
could have a significant role in evaluating and approving grants of money
to such programs. However, the Bill imposes no requirements on these bodies,
other than that their objectives must not be inconsistent with the purposes
of the Account contained in clause 3.
Who approves of projects
Grants from the Natural Heritage Trust are made directly
by the Ministerial Board. The role of the Natural Heritage Trust Advisory
Committee is, as its name suggests, to provide advice to the Ministers.
The present Bill has chosen an alternative model, outsourcing
decisions on disbursement of funds to approved programs directly to the
Foundation, or to replacement bodies, without Ministerial oversight.
Accountability
The Natural Heritage Trust of Australia Act 1997
makes the Ministerial Board accountable in a number of ways:
- preparation and tabling in Parliament of an annual report
- preparation of estimates of money available in the Natural Heritage
Trust Special Account
- auditing of financial statements, and
- monitoring the effectiveness of funded programs in achieving the Natural
Heritage Trust's objectives.
The Memorandum of Understanding similarly requires that
the Foundation must report annually to Parliament on grant allocation
decisions and overall operations, will be subject to independent auditing
both of its accounts and performance, and must establish procedures for
monitoring and reporting on the cost effectiveness and social impact of
funded programs.(25) The key difference is that these accountability
mechanisms will be imposed on the Foundation through its constitution,
not legislation. This fact is important, given that the Bill envisages
the possibility of the Minister terminating a funding agreement with the
Foundation, and entering into one with a replacement body or bodies. Neither
the Bill nor the Memorandum of Understanding contain any requirements
that replacement bodies will be accountable to Parliament or through other
mechanisms, such as auditing or monitoring. These matters are left to
the discretion of the Minister when entering into funding agreements with
such bodies.
Arguably in significant respects the Foundation will
be more accountable to the Government and the Democrats than to Parliament.
Under the terms of the Memorandum of Understanding, the Government and
the Democrats will agree on the constitution of the Foundation, will approve
the four-year budget drawn up by the Foundation, and will agree on the
directors to be appointed to the board of the Foundation.(26)
The Memorandum of Understanding is not legally enforceable,
and its status would be uncertain if the Government were to change. This
could have some ramifications, given that a number of important matters
such as the accountability requirements and the appointment of directors
to the board of the Foundation are contained only in the Memorandum of
Understanding and not in the Bill.
- For more information on the excise, see Ian Ireland, Bills
Digest No 107 of 2000-01 on the Excise Tariff Amendment Bill (No
1) 2001, 23 March 2001.
- Transcript of radio interview between Prime Minister the Hon. John
Howard MP and John Laws, 23 September 1998.
- Michael McGuire, 'Froth and trouble: brewers are furious at the 'dishonesty'
of the federal government over excise increases', Australian,
23 June 2000; Ross Peake, 'Liberals condemn beer cuts campaign', Canberra
Times, 5 April 2001; Ross Peake, 'Howard pays for ambiguity', Canberra
Times, 31 March 2001.
- See Steve Lewis, 'Beer excise faces Senate hurdle', Australian
Financial Review, 8 May 2000; Laura Tingle, 'Row over beer excise
sets up a bar-room brawl', Sydney Morning Herald, 3 June 2000.
- See L M Barlin (ed) House of Representatives Practice, (3rd
ed, 1997), p. 401.
- Mr Peter Slipper, MP, Excise Tariff Proposal (No 2) 2000 and Customs
Tariff Proposal (No 2) 2000, House of Representatives, Hansard,
p. 17848, 21 June 2000.
- See Phillip Hudson, 'Cheerless thought: each pot will cost 20c more',
The Age, 1 July 2000.
- Kath Cummins and Simon Evans, 'Costello's beer tactics 'offensive'',
Australian Financial Review, 5 July 2000.
- 'Brewers take action over beer excise', Canberra Times, 19
January 2001; Jason Koutsoukis, 'Brewers go to court over beer excise',
Australian Financial Review, 19 January 2001; Michelle Grattan,
'Brewers chase $100m in court', Sydney Morning Herald, 19 January
2001.
- Michelle Grattan, 'Brewers raise glasses to charitable drop', Sydney
Morning Herald, 8 February 2001.
- See Prime Minister the Hon. John Howard, MP, 'Excise on Draught Beer',
Media Release, 3 April 2001.
- See Senator Meg Lees, '$115millon Foundation for Alcohol Education
and Rehab', Media Release, 4 April 2001; Prime Minister the Hon.
John Howard, MP, 'Excise on Draught Beer', Media Release, 3 April
2001.
- Alcohol Education and Rehabilitation Foundation Memorandum of Understanding
between the Government and the Democrats, incorporated in speech by
Senator Ian Campbell on the Customs Tariff Amendment Bill (No 2) 2001,
Senate, Hansard, p. 23783, 5 April 2001.
- ibid.
- ibid.
- ibid.
- The Hon. Dr Michael Wooldridge, MP, '2001-2002 Health Budget: people,
care, quality' Press Release, 22 May 2001.
- See Alcohol and other Drugs Council of Australia and the Australian
Medical Association, 'A lost chance on drugs', Media Release,
22 May 2001; Dr Kerryn Phelps, 'Health Budget is all 'Smoke and Mirrors'',
Press Release, 23 May 2001.
- 'ATSIC welcomes grog foundation - but more is needed', Media Release,
3 May 2001.
- Section 81 of the Constitution requires that all revenues or moneys
raised by the Commonwealth must be credited to the Consolidated Revenue
Fund. Section 83 of the Constitution provides that moneys cannot be
drawn out of the Consolidated Revenue Fund without Parliamentary approval.
The 'Special Account' provisions in the Financial Management and
Accountability Act 1997 provide that when an amount of money is
appropriated for the purposes of the Special Account, that money is
set aside within the Consolidated Revenue Fund and can only be spent
for those purposes. All funds appropriated and amounts spent are deemed
to have gone into or come from the Special Account which notionally
exists within the Consolidated Revenue Fund. See sections 20 and 21
of the Financial Management and Accountability Act 1997.
- Formerly the Natural Heritage Trust Reserved Money Fund.
- Alcohol Education and Rehabilitation Foundation Memorandum of Understanding
between the Government and the Democrats, incorporated in speech by
Senator Ian Campbell on the Customs Tariff Amendment Bill (No 2) 2001,
Senate, Hansard, p. 23783, 5 April 2001.
- ibid.
- Section 40 of the Natural Heritage Trust of Australia Act 1997.
The Minister for Primary Industries and Energy has been replaced on
the Natural Heritage Trust Ministerial Board by the Minister for Agriculture,
Fisheries and Forestry, http://www.nht.gov.au/overview.html.
Alcohol Education and Rehabilitation Foundation
Memorandum of Understanding Between the Government
and the Democrats
An appropriation bill will be introduced in the autumn
sittings 2001. This bill will ensure that the full equivalent of the increase
in excise collected on draught beer since 1 July 2000, less $5 million
allocated to the Historic Hotels initiative, is appropriated and allocated
to a Foundation, to be called the Alcohol Education and Rehabilitation
Foundation.
The Foundation will be established as an incorporated
charitable trust with a constitution, to be agreed between the Government
and the Democrats by letter, by mid-April 2001.
A board of approximately ten directors will be appointed
for the Foundation, by agreement between the Government and the Democrats,
with board members appointed in the following expert and representative
capacities:
- Chairman (1)
- Community-based treatment and education (3)
- Medical (1)
- Research (1)
- Churches (1)
- Aboriginal and Torres Strait Islander (1)
- Sporting (1)
- Youth (1)
The objectives of the Foundation will be to:
- Prevent alcohol and other licit substance abuse, including petrol
sniffing, particularly among vulnerable population groups such as indigenous
Australians and youth;
- Support evidence-based alcohol and other licit substance abuse treatment,
rehabilitation, research and prevention programmes;
- Promote community education encouraging responsible consumption of
alcohol and highlighting the dangers of licit substance abuse;
- Provide funding grants to organisations with appropriate community
linkages to deliver the above mentioned services on behalf of the Foundation;
- Promote public awareness of the work of the Foundation and raise funds
from the private sector for the ongoing work of the Foundation.
The Foundation will submit by August 2001 a detailed
business plan for approval by the Government and the Democrats, encompassing:
- A Budget for the first four years of operation. The budget will be
designed to expend 80% of the initial endowment within four years and
adhere to the following prescribed percentages of total expenditure
in the first year:
- Administration and promotion at most 10%
- Treatment and rehabilitation at least 30%
- Public education at least 10%
- Prevention at least 20%
Particular priority, with at least 20% of total expenditure,
will be given to projects targeting indigenous Australians.
- An operational plan detailing procedures for the disbursement of funds,
encompassing:
- Procedures for enabling professional and community organisations to
apply for grants.
- Procedures for avoiding cost shifting from existing or intended alcohol
and related funding at the Commonwealth, state and territory level.
The constitution of the proposed trust will include:
- A requirement that at least 85% of all Foundation expenditure is outsourced
to professional and community organisations;
- Procedures for seeking approval of the annual budget by the board;
- Procedures for seeking approval of professional and community grants
by the board;
- Procedures for reporting annually to Parliament on grant allocation
decisions and overall operations;
- Procedures for independent auditing of the accounts and performance
of the Foundation;
- Procedures for monitoring and reporting on the cost effectiveness
and social impact of funded programs.
Katrine Del Villar
26 June 2001
Bills Digest Service
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ISSN 1328-8091
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