HEALTH SERVICES CHARITABLE GIFTS BILL

Second Reading

Adjourned debate on second reading.

(Continued from 24 November 2010.)

Ms CHAPMAN (Bragg) (17:31): I will be referring to the Health Services Charitable Gifts Bill, but not as the lead speaker. My colleague the member for Morphett will have the conduct of the matter as the lead speaker on behalf of the opposition.

There are a number of aspects of this bill which I wish to canvass but I start by saying that the minister outlined in his contribution on 9 November last year the basis upon which this bill comes before the house and, in particular, the desirability of repealing the current Public Charities Funds Act 1935 which, for over 100 years with its predecessor, has effectively attended to the laws surrounding the management of donations to public charitable institutions in South Australia.

The basis upon which the government suggests there needs to be considerable reform, I suggest, is flawed and this bill really should be described as the 'raiding of the tomb' bill rather than what is presented as a contemporising and updating of the language, powers and definition of those who have been statutorily placed in charge of these donations to public charitable institutions.

Members will recall that, several budgets ago, the then treasurer announced that he would sell a number of buildings, that is, to liquidate some assets owned by the state, to in some way redress the financial crisis that we were heading into, and one of those was a building in Hindmarsh Square. It was pointed out to the then treasurer that, in fact, he did not own it. After shouting claims that he did—that is, that the state owned it—in fact, he had to ultimately admit to parliament that this was an asset owned on behalf of the commissioners under the Public Charities Funds Act 1935 and that, in fact, he had no power to sell it. It probably gave us an indication of what level the government was prepared to go to at the time to deal with its financial management issues, or mismanagement issues, which should have been a sign to us.

Alongside this was the preparing of a draft bill, which was really a predecessor to this, which was to, essentially, abolish the current system to be able to—again, under the grounds of contemporising it—expand the powers of the commissioners, but that they had to, effectively, invest their money at the direction of the Treasurer.

As I recall the bill at the time it was to require the investment of the funds, the assets of the trust, with Funds SA. That is not a unique requirement when we deal with a number of government instrumentalities, that is, of course, where we are dealing with government money and the requirement that there be direct accountability not only to the board of those instrumentalities but also to the Treasurer.

A classic example of that is the charter that was tabled here in the parliament today for the Motor Accident Commission, which sets out obligations of scrutiny and accountability and the obligation to, effectively, be under the financial management not only of a board, which they have, but in addition to that Treasury officials on behalf of the Treasurer, and the nature of and the extent to which they can invest independent of decisions outside of Treasury is very limited.

So, that was the first draft and that probably gave us the next hint of what the government was prepared to do to get hold of a fund which is approximately $75 million. The government says, 'This is legislation which is old. The drafting, language and focus is old-fashioned. It needs to be contemporised.'

Secondly, whilst preserving the powers of the commissioners we need to create a board, rather than individual status, and expand their powers, essentially, for investment—the most common example being to be able to buy themselves shares and to expand the opportunity to distribute to beneficiaries under the terms of the donation not only the interest but the capital. Some of these have merit and I will come back to them in due course.

The third tranche of the government's proposal is that it needs to increase accountability. There are a number of aspects under this which are to be enshrined in the law; that is, to outline the obligation to identify and ensure that those who are appointed as commissioners by the minister or by the Governor, but effectively nominated by the minister, that certain skills have to be identified and represented amongst the commissioners and that their powers and duties and responsibilities are set out in more detail.

Both of these things are of no concern to me. They are not unreasonable. We have got along pretty well by the appointment of these people over the last 130-odd years but, nevertheless, I would have expected ministers, in fact, to do just that, to make sure that these skills were represented amongst the commissioners. So, I have no objection to that. The extent though of accountability is to identify two things which do cause me concern; that is, the mandatory obligation of the commissioners, or the board, as it will become, to seek advice from the investment advisory committee. The obligation to take it is another matter, but there are some obligations that come with reporting to the parliament on this which make it pretty clear that the obligation is going to be to take the advice of this committee. I will come to that again in a moment.

Another area is to grant power to the commissioners to not comply with the donor's intent and be able to have the capacity to apply a gift to an institution or person other than the donor had identified. This is purportedly to deal with circumstances where the nominated beneficiary trust (an institution, for example) may no longer be in existence or the proposed beneficiary is one which does not have the capacity to carry out the will of the donor. That is, if a certain institution is given money to undertake breast cancer research and it is found that that institution does not undertake that research, they need to find somebody else who might be able to carry out that research. It is to facilitate that circumstance. I will have something to say about that in a moment as well.

The final area is to remedy some of the defects (if I can put it in a general way) that the Auditor-General has identified over a number of years, particularly when the bill is drafted in a way that the beneficiaries have to be named. The beneficiaries are scheduled or proclaimed under the legislation and, if they are not in the list, one can end up with a situation where money is given and received into the trust, and it is found, at a later date, that they had not been named. Therefore, it raises the validity of the commissioners accepting the funds in the first place.

The most recent example of this was exposed by crown law advice in 2008. It was identified that funds that had been received for the benefit of the Hanson Institute, a research arm affiliated with the Royal Adelaide Hospital (in fact, on their grounds), had been paid into the commission and held in trust for and on behalf of the Royal Adelaide Hospital because the Hanson Institute is not recognised. The Auditor-General said, 'Look, this is actually not in compliance with the law; we need to remedy this,' and it should be remedied.

On this issue, I am utterly appalled that the government has not acted, at least in the last two years when it has knowingly had crown advice, on the invalidity of continuing to receive funds under this legislation. The 2009 annual report tells us that well over 90 per cent of the funds are there for the benefit of the Royal Adelaide Hospital, but an undefined amount is clearly there for the Hanson Institute (probably tens of millions), and there are also funds there for the IMVS. We need to raise some issues about that.

In respect of specific beneficiaries, there are funds that have been there now, I think for several years, for the benefit of the disabled community which, by virtue of this legislation, will be able to be applied to Families and Communities in order to carry out the benefit that it was supposed to fulfil. I am concerned that what is identified, even if only half a million dollars (which in the size of the total fund is not a lot, but is a lot for the people who might be the beneficiaries of the disability money), has been locked up in this fund for so long when, clearly, it should have been available, if only the government had acted. What really concerns me here is that the government says it is proceeding with this now to remedy all of these things. In fact, it comprehensively brought to this parliament amendments to the Trustee Act 1936 which dealt with trustee investment obligations and duties and the like in 2003 and 2006 and which considered these types of issues, yet it has failed to deal with these other issues.

I suggest that, alongside of this, the reality is that the government has, firstly, failed to act to remedy issues such as the Hanson Institute, which it could have done as a former minister for health, Dr Armitage, did to deal with the funds in the Helpman Trust. These are funds which are referred to in the 2009 report and the beneficiary was the Royal Adelaide Hospital, with the commissioners operating as defacto co-trustees. He named this in the schedule (brought it into the parliament), so that we could get on with securing that entitlement. There are even some defects in that, but at least he did it and at least he brought it to the attention of parliament.

I suggest to members that the government's agenda here was to continue to allow this organisation to have qualified annual reports by the Auditor General, which had to keep noting time after time that this issue had not been resolved, even when they had obtained legal advice and still failed to deal with it, because, alongside this, they were thinking about how they were going to get a hold of this $75 million. That is what this is all about. In the mean time, they have set up their own research organisation; they have some federal money and they are building a new home for it. That is what this is all about—getting hold of this money. That is exactly what this legislation will allow.

So, this contemporary nonsense. Whilst we always update language and the like when we review legislation, I do not think that the examples used are very satisfactory because, under the much amended Trustee Act, we still have a definition of 'lunatic'. I remind the minister that when he starts throwing out language as examples, lunatic is defined as:

...means any person who has been found to be a lunatic upon inquiry by the Supreme Court, or upon a commission or inquiry issuing out of the Supreme Court in the nature of a writ of de lunatico inquirendo;

There is a significant relationship with other legislation. So, you do not just throw out language because you do not like it anymore or it has attained a new type of approach.

There are reasons for this, and this is an act which has been updated and some of this language is important. In fact, we keep Treason Act references in our criminal consolidation legislation in South Australia from Henry VIII. It is all there in the schedule if you want to read it—very old, flowery language—but there is good reason for some of it. So, do not come to me with some piffle excuse about having to bring this into the parliament to contemporise this. That is utter rot.

The second aspect is that, when we consider this question of investment powers to be able to buy and sell shares, to be able to apply capital and not just interest, that is fine, I can live with that. That could have been done at any time, as is consistent with what has happened in the Trustee Act. Without having to set out these obligations, at the time of dealing with the Trustee Act, they could have done what they did. I urge members to look at part 1 of the Trustee Act because it sets out very clearly what happens in relation to investments, the power of the trustee to invest and the duties. It encapsulates all the rules and principles in law, and in equity, in relation to the duties of trustees which include:

(a) a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust;

(b) a duty to invest trust funds in investments that are not speculative or hazardous;

(c) a duty to act impartially towards beneficiaries and between different classes of beneficiaries;

(d) a duty to take advice,

If, as I was advised in the briefing, it was important to bring this up to date as far as the Trustee Act goes and that it is a similar situation, why do we not have that in this bill? Why is it an obligation, not a duty, to take advice? I also refer to the matters to be taken into account in exercising power of investment which give an opportunity to get advice from the professional sources of their choosing?

Why is it that, in this legislation, we have to accept that there must be an investment advisory committee, with an official from the Treasury department on it, to have to seek advice? This is absolute nonsense. What would be appropriate and reasonable is that, similar to the Trustee Act, it binds other organisations and individuals in carrying out their duties, and I have no problem with that. However, this is a different scenario: this is an obligation in respect of a committee.

When they could not get away with insisting that this $75 million had to be invested at the direction of the Treasurer of the state, they introduced this other system, and this is completely unacceptable. In fact, it is insulting not only to the commissioners we have now but those in the future who may be appointed, with all the qualifications and skills imposed on them. I say that that is completely unacceptable and unnecessary and it should be removed, and that, if anything, we have a regime that is consistent with the Trustee Act.

The second aspect I want to refer to is the power to be able to completely ignore what the donor wants and be able to say, 'We are going to give it to somebody else entirely.' That is all about giving it to a body nominated by the government. Be under no illusion that they are going to get hold of this money and get hold of it as soon as this bill goes through.

In the briefing—and this is really concerning—I asked them to give me one example, in the last 130 years, where a donor had made a donation under the current act where there had been a problem with finding anyone who would be available to take the money—that is, the donor no longer existed or the duties they undertook were no longer able to be carried out—and there was not one example. I will close by saying that part 4 of the Trustee Act again provides a charitable trust—

The ACTING SPEAKER (Ms Thompson): Order! That is going a bit far, member for Bragg.

Ms CHAPMAN: There is a process: you go to the Supreme Court or you go to the Attorney-General.

The ACTING SPEAKER: Order! Member for Bragg, you have had your 20 minutes.

Debate adjourned on motion of Dr McFetridge.

At 17:53 the house adjourned until Tuesday 22 February 2011 at 11:00.