The Rolls Royce Of Lotteries

The 1977 Gaming and Lotteries Act defined charity as including any purpose ‘beneficial to the community or any section of it’. Thus it had a wide application-too wide according to some critics. Groups concerned with sports and recreation, culture, the arts, film, the nation’s heritage, youth, the aged, community development, medical and scientific research, as well as welfare organizations, were all eligible for a piece of the pie. In the 1988-89 year, a total of $51 million was allocated, 37 percent to arts and culture, 31 percent to sport and recreation, 13 percent to community development and welfare (including general, aged and youth), 11percent to grants for 1990 sesquicentennial projects and 3 percent to medical and scientific research. The Minister of Internal Affairs also retained some ‘discretionary’ lottery profits in a Special Projects Fund over which he or she had personal control. Some $4 million ended up in this fund, prompting charges of ‘ slush funding’ and overindulgence, such as when Margaret Austin decided in 1990 to spend nearly $1 million on two Charles Goldie paintings for the National Art Gallery. When Graeme Lee became Minister he decided to slash this to $350,000 and consult two parliamentary colleagues before making spending decisions. He also instituted a system of public disclosure and explanation of how and why the Lottery Grants Board and its committees made their decisions.
 
Given the nature of its operation, the occasional controversies that have broken out over Board decisions were only to be expected. The vast majority of individual funding decisions (about 5,000 annually in recent years) have not been challenged. However, since the inception of Lotto, traditional recipients have seen their allocations fall drastically in real terms. Welfare groups, in particular, have criticized the fact that the biggest regular recipients in recent years, the Queen Elizabeth II Arts Council and the Hillary Commission, have been classified as ‘charities’. Lotto advertisements which proclaim that Online lottery funds have gone to charity have misled the public and damaged the fund-raising efforts of mainstream charities, they claimed. It was a moot point, at least to a degree. Denied any money from the Lottery Grants Board because it was both government-funded and nationally organized, the IHC, for example, watched in dismay in 1988-89 as profits from its own fund-raising lotteries slumped from $900,000 to $185,000 in the face of competition from Lotto. On its 1988 appeal day, Crippled Children Society collectors met with refusals on the misperception that the organization already received Lotto profits. Appeal takings fell by more than half.The Foundation for the Blind was similarly disadvantaged: proceeds from its own lottery dropped by three-quarters in twelve months from July 1987. Like the other bodies, it complained that the Board had not made up the loss of revenue caused by Lotto’s ‘poaching’ of the discretionary dollar. But their criticisms need to be kept in perspective as not all the drop in returns could be blamed on Lotto’s success. The recently imposed Goods and Services Tax had made people more circumspect with their money and the fright of the October 1987 share-market crash both dried up discretionary income and made any kind of specula tive investment seems not worth the risk.
 
Sports bodies, however, did appear to receive disproportionately generous funding from both Internal Affairs agencies and lottery profits. Barnardo’s chief executive complained that the Board was too concerned with both political acceptance and its own image. ‘The 1990 Commission and the Commonwealth Games had wide public appeal,’ he maintained, ‘whereas glue sniffers and intellectually handicapped children did not.’ That was the harsh reality. The welfare funding market had been deregulated along with all the others, and some charities were sinking deeper into debt.
 
In February 1990 the Board faced a crisis when the Audit Office found serious deficiencies in its modus operandi. After studying 50 grant applications, the auditors criticized the way funds were handled, how grants were allocated and the lack of checks on what was done with the money. Because the Lottery Grants Board had no predetermined policy for allocating funds there could be no effective public scrutiny of its priorities. In the absence of such a policy, the Audit Office concluded, Parliament was unable to evaluate its performance. These criticisms were partly borne out by a concurrent in-house Internal Affairs review of Board administration. One point was not in doubt. The spectacular increase in funds available for distribution-from $18 million in 1985-86 to $86 million in 1989-90-meant that they were outgrowing the bureaucratic means for distributing them.

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