History of Australian sport policy series: Part 21

By Greg Hartung AO

A long search for El Dorado

Governments and national sport organisations have for decades longed for a source of reliable funds independent of the federal budget.

Ray Groom, Tasmanian Liberal and former AFL footballer, became responsible for sport policy when he succeeded Kevin Newman as Minister for Environment, Housing and Community Development in December 1977 and joined a small but influential group of government members looking for ways to tap into private sector funds for sport.  The Liberal Party was nervous about the dependence of national sporting organisations on taxpayer’s dollars for their basic survival and looked to crafting a sports policy which made it possible to attract significant funding from non-government sources.

Like some before, and many after, Groom was an advocate of a national sports lottery. He wanted the Federal Government to agree on the concept, as a starting point, and to commence discussions with State governments to make it a reality. 

Groom also was a proponent, as were others, of a national Sports Foundation to be set up as a vehicle for attracting funds from business and the community for the benefit of sport. Both concepts – the lottery and the Foundation – dominated discussion regarding alternative funding sources through the 1970s and 1980s.  And in the case of the national lottery, history is often forgotten or ignored while the concept continues to attract new adherents eager to succeed where others have failed.   

The Cabinet Papers of 1978 reveal that Groom took the lottery arguments to the Cabinet table, along with a proposal for an additional $800,000 from the federal budget to assist in travel costs for the 1980 Moscow Olympic Team and a further $300,000 to assist with the cost of athlete training in the period up to the 1980 Games.

The funding proposals succeeded. But facing stiff, though predictable, opposition from the Department of Finance, Groom failed to convince his colleagues on his lottery gamble. Cabinet held over any decision on the matter till the following year. (Ref 1) In a retrospective comment many years later Groom speculated that the mounting controversy over the 1980 Moscow Olympics following the Russian invasion of Afghanistan may have been a reason behind his failure to win support. (Ref 2) This may have had an influence.  However, the overwhelming concern then, as now, was that the State governments which depend on gambling revenues to meet their own fiscal priorities, would not get on board.

Tough nut to crack – but Foundation goes ahead

With respect to the non-government sources of potential funding, the lottery concept has never won universal favour with the States, despite the fact that it still regularly emerges in debate as a new initiative to deal with sport funding pressures.  

The concept of a Sport Foundation had more success though not as fulsome as originally envisaged.  As a mechanism to tap into private sector funding for sport the Foundation did, however, gain traction and became a reality after 1983 with the establishment of the Australian Sports Commission by the Hawke Labor Government. As will be discussed later in this Series, the Foundation was initially called the Australian Sports Aid Foundation with the name being subsequently amended to Australian Sports Foundation, dropping the word ‘Aid’.

Long line of supporters

A national sports lottery — to provide that elusive regular source of funding to Australian sport — has a long history: it has been promoted, talked-about, investigated by governments and political parties for several decades, most recently following the 2016 Rio Olympic Games. 

Prominent Liberal Senator Peter Rae (Tasmania) was a fan of the lottery idea in 1976 when he wrote an opinion piece for The Australian and urged the government to consider its implementation to address the low level of sport funding:  “…the total government expenditure on sport provided in the 1975 Labor budget was equal to the amount spent on the purchase of the painting Blue Poles…if governments cannot or will not provide the funds perhaps we could adopt the age-old technique of a lottery…..if Sydney’s Opera House can be built on this basis, perhaps we could get a national sports stadium and training complex together with a national coaching scheme funded by that method.”   (Ref 3)

The Confederation of Australian Sport (CAS), an enthusiastic supporter of a sports lottery, estimated that it would inject $10 million a year into the sport economy.  It sounded like financial salvation for struggling Olympic sports as Australian sports leaders looked with considerable envy at the successful lotteries operating overseas.  It was a dream that would not go away. What they did not bargain for was the strength of the opposition posed by the Australian States and the central finance departments of the federal government.

Being a fan of the concept was one thing; being able to navigate the constitutional and practical hurdles was entirely another.  The challenge was taken up by Liberal Minister, Bob Ellicott, who, when at the helm of sport policy, commissioned a study into the feasibility of a National Sports Lottery to fund sport.  The study was to conclude and report by late 1980.  (Ref 4)

Ellicott had advanced the lottery idea after a visit to Canada in 1979 to examine funding initiatives in that country.  Ellicott, one of the most influential Ministers to be appointed to cover the sport portfolio, told the Melbourne Age  that an amount in the order of $25-$30 million a year could be raised for the benefit of Australian sport if a lottery along the same lines as that operating in Canada was established.  (Ref 5)

After receiving at least some initial in-principle backing from his Cabinet colleagues, Ellicott issued a media release on 20 July 1979 stating he was taking the concept further in discussions with his State counterparts.

“…A national lottery could have a dramatic effect on the promotion and development of sport in Australia,” Ellicott said in his media statement. “It could be a great help in any attempt to hold the Olympic Games in Australia.” (Ref 6)

Lottery Feasibility Study 

The result of the independent 1980 feasibility study commissioned by Ellicott identified the clear distinctions between those for and those against the national lottery. In the lottery supporters camp were, predictably, sporting associations, most state sports departments (although, interestingly, Queensland and Western Australia did not participate in the study) and enthusiastic members of the public. 

In the opposition camp were State Treasuries which feared the erosion of their revenue base; charitable organisations which feared a negative impact on their own revenue streams; and operators of existing State-based gambling organisations which feared the ‘diminution’ of the available gambling dollar and hence the negative impact on their revenues. 

It came back to the conclusion that there was a limit to the discretionary gambling dollar and a new national lottery would pose a serious risk to the current balance and revenue streams. Despite the negativity toward the idea, there was no doubt that the lottery advocates had substantial support — just not in the right places. 

Prize Bonds

Ellicott announced on 27 November 1980 that the option the Government would be considering, based on the study conclusions, was a “prize bonds lottery scheme”.  Having examined a range of different options, the consultants concluded that this scheme would be the more feasible for Australia. (Ref 7)

It was concluded that to have a chance at success, a prize bonds lottery scheme carried the most merit in that it did not involve the loss of stake money by participants.  Under the scheme, participants would contribute money to a savings scheme in the same way was as investors invested in Australian Government Savings Bonds.  The difference would be that interest monies from the scheme would be pooled and from this pool, prizes would be drawn as in a traditional lottery.  It was the interest which would make up the prize pool; the original stake holder money was to be protected.  The consultants advised the Government that if such a Prize Bonds scheme were introduced it would deliver an amount of $520 million over 10 years if the interest was declared free of income tax. 

The report to Ellicott recommended that if money from the scheme was to be channelled to sport then a “Sports Trust” should be established to manage the operation, reporting directly to the Minister. 

It highlighted the main advantages of the Prize Bonds Scheme to overcome the political impediments:

1:  it would have little adverse effect on State revenues whereas all other options would have major impacts;

2:  it provided an incentive to save, rather than to gamble and so would increase national savings;

3:  it would be more compatible to Government as it would promote savings rather than gambling;

4:  it was less regressive in its taxation effects than most forms of gambling;

5:  it would be less subject to fluctuation than a lottery, thus providing a regular income to sport;

6:  participants would not lose their stake money;

7:  revenue could be spent on a national basis to the best advantage of sport;

8:  it could be sold through Post Offices throughout the country;

9:  to identify with sport, the Bonds could be called Sportsbonds.

On the negative side of the ledger, it was suggested the Prize Bonds Scheme would:

1:  compete directly with Australian Savings Bonds;

2:  compete to some extent with other forms of savings, for example semi-government bonds;

3:  compete to a small extent with State lotteries.

The Sports Bonds proposal seemed a logical solution to the demand for a reliable source of funds for sport while addressing, to some extent, the concerns about gambling and “cannibalising” of State revenues.

Despite Ellicott’s best efforts and the logic underpinning the Prize Bonds scheme, the States were proving to be difficult to budge. The report’s recommendations were left to gather dust under the heavy burden of these State concerns.  The end result was that the national sport lottery concept was “parked”, at least for the time being. It was left to wait for a new generation of politicians and administrators to emerge to revive it once again, if only to be met with the same result.

Lottery: panacea or pipe dream

What was there not to like for a cash strapped sporting community! Everyone, it seemed, wanted to join the lottery race but there was no one to fire the starting gun.  At a series of seminars in 1979 – called the “Sports Forum” – CAS had reinforced its attraction to a lottery solution to sports funding.  And, again, in July 1981, CAS publishing in its ‘Sport Report’ newsletter a plea to government to get the lottery off and running:

 “Sport in Australia is in serious need of a reliable and permanent source of funding in addition to those currently offered through Government, the commercial sector and for self-help programs,” CAS proclaimed.  CAS was on solid ground in drawing attention to the ad hoc nature of the financial base for the bulk of Australian sport.  “The stop-start nature of the present Government funding does not allow sporting organisations to embark on development projects geared to such funding resources for periods longer than 12 months.” (Ref 8)

CAS said the level of government funding did not match the genuine needs of sport. However, the CAS advice also carried the caution that sporting organisations must get their funds from a number of different sources in order to retain their independence from government.  With independence of sporting organisations from government interference a critical element of its philosophy, CAS recommended that if a lottery was ever to materialise that the CAS itself should have a key role in its operation. This ambitious positioning alone may have raised concerns in Canberra.

In a submission to Ellicott’s lottery feasibility study, CAS said that a key objective of the lottery ought to be to provide a viable funding source to enable national sporting organisations represented through the Confederation of Australian Sport not only to survive but to enhance their objectives. Although with a staff of less than five people, CAS ambitiously declared that through its anticipated involvement, the lottery would promote all aspects of sport in Australia “from a base level to the elitist athlete resulting in a healthier, more involved and aware society.”

The lottery, according to CAS, would provide funds for the construction and maintenance of world standard stadia and facilities “for all sports” and it would promote lesser-known sports providing equal opportunity among sportsmen and sportswomen.  In addition, CAS concluded, the sports lottery would “…reinforce and uphold the objectives of the Confederation of Australian Sport in its role of representing some five million sportsmen and women in Australia.”

Back to earth

Some eleven years later, CAS was still an advocate for a sports lottery, although by the 1990s it seemed more realistic and had abandoned its bid to become a central controlling force in its management.

In a comprehensive sports policy white paper ‘Target 2000’ released in September 1992, CAS recognised the reality of the Constitutional impediments to the creation of a national lottery but still held on to the hope that a lottery – which was working well in countries such as Italy – would, if implemented in “some form”, be an excellent way to “top up” federal government assistance to sport. 

The Target 2000 report recommended that the sports lottery proposal and options also reviewed and canvassed in the report of the Interim Committee for the Australian Sports Commission (ICASC) in 1984 was worthy of re-consideration.  The Target 2000 report took up the case: “The scheme would be administered through banks or post offices.  Instead of the interest on the bonds being credited direct to the bond holder, it would be pooled and regular draws held.  Approximately 55 percent would be returned to bond holders in prizemoney and 45 percent put into a sports fund.  This scheme is used overseas and deserves consideration.” (Ref 9 )

Not a magic pudding  

The concept was talked about by new generations of politicians and administrators and was largely supported “in principle” by the major federal political parties.  It just could not get off the ground; nor could it be killed off!

It has always sounded like a good idea and the UK lottery was often used as an enticing example of how money could be raised from the general public for investment in sport.  But successive governments have found that given Australia’s federated system of government and the jealously with which State governments protect their revenue sources it was an idea which was easier said than done. Lotteries have long formed an important element of State revenues.

Not to be easily dissuaded, the Labor Opposition, as early as 1983, had adopted it as central to its policy mix.

The lottery concept, and its prize bonds derivative, became part of Shadow Minister, John Brown’s sport policy for Labor’s successful 1983 election campaign. Brown acknowledged that the main problem would be to convince the States – especially Queensland and Western Australia.  But he advocated that it was a concept which was still worthy of further discussion “in order to provide Australian sports with a steady inflow of financial support.”

Brown, borrowing extensively from the earlier work of Ellicott, referenced the Canadian national sports “pools” which would raise funds for a range of projects in the arts, sport, recreation and medical research.  About 40 percent of the funds raised would be used as prize money and the rest of the funds would support the targeted areas. He also was supportive of an alternative but related concept developed in Britain for a “Prize Bonds” scheme. This was a proposal which was referenced in Ellicott’s 1980 review and was further developed by the Interim Committee for The Australian Sports Commission (ICASC) in its report to Minister Brown in 1983.

Brown, like Ellicott, thought that the alternative Prize Bonds scheme would be more acceptable to the Australian public and to the State governments.

Expanding on the Ellicott review, Brown explained it this way in his election policy bid to win support: “Prize Bonds are not a traditional lottery. Investors do not lose their initial stake money.  As with Australian Savings Bonds (Aussiebonds) a person invests, say $10, for a period of months or years.  Or, the investment can stay in Prize Bonds forever, a permanent ‘ticket’.  Interest from these investments by individuals is pooled and a percentage of this interest money is offered as prizes in a normal lottery draw. The distribution of these funds to sport could be made by a Sports Trust, established by the government whose board members could be answerable to the responsible Minister. The sports bonds concept would still mean that sporting associations would have to continue their self-help practices and to approach the local, state and federal governments for funding.  However, depending on the success of the sports bonds, the growing pressure for budget funding would lessen.” (Ref 10)

Brown and Ellicott were on a unity ticket regarding the Sports Bonds scheme.  While persuading the States to engage in a straight forward lottery would be difficult, Brown hoped that the sports bonds might be the compromise which would get their support.  

A lottery AND a Foundation

The Lottery concept, and variant, was brought forward again by the ICASC in its report to the Minister which reinforced Brown’s dual approach to attracting greater private investment in national sporting organisations.  This was through a variant of a straight forward lottery, as well as the creation of the Australian Sports Aid Foundation.  The Foundation, it was argued, was one of the core reasons for the establishment of the ASC as it would become “the fund-raising arm of the Commission”, not a separate organisation.

The ICASC considered the provision of adequate resources for sport as a necessary prerequisite for basic reform.  It concluded that resourcing required “urgent and detailed attention”.  Further, the identification and development of supplementary sources of funds should be a continuing function of the ASC.  The ICASC considered both a Lottery/Prize Bond hybrid as well as a Sports Foundation The Foundation would be empowered to offer tax deductibility for donations which would give the government, and sport, the best of both worlds – but only as a supplement to government funding, not as a replacement.

A cold shower

The ICASC reported to the Minister toward the end of 1983, but it was not until mid-1985 that its report was tabled in Parliament.  To complicate the consideration of the funding options, there was an unfortunate timing overlap in the delivery of the ICASC review and the powerful report of the House of Representatives Standing Committee on Expenditure enquiry into sport funding. 

This House Committee — now chaired by Labor MP, Leo McLeay — poured a large bucket of cold water on both the lottery and Foundation options.

The report, ‘The Way We P(l)ay’, was tabled in November 1983, almost concurrently with the ICASC report to Minister Brown.  It ran a counter argument to the ICASC recommendations with the blunt recommendation that a national sports lottery should not be introduced, either as an alternative or a supplementary form of assistance, to sport and recreation. (Ref 11) 

Further, the House Committee report opposed the extension of tax deductibility to cover donations to sport, thus undermining one of the basic requirements to underpin a future sports Foundation. This put the Parliamentary Committee in direct opposition to key recommends contained in both the ICASC report to Minister Brown and the earlier consultancy report to Brown’s predecessor in the former government, Bob Ellicott.

In arriving at its position, the Parliamentary enquiry sought the views of the Department of Finance and the Department of Sport, Recreation and Tourism on the possibility of a national sports lottery, including its variant the Sports Bonds or Prize Bonds scheme as operating in the UK.  The Department of Finance advised that establishing a national sports lottery “was fraught with problems” (Ref 11 p95 p4.35). 

The McLeay report confirmed what most already knew, that State governments were not enthusiastic.  They considered that a national sports lottery, of whatever type, would erode their own lottery revenue which in 1981-1982 terms amounted to almost $300 million.  The report concluded that the responses from the States was the major practical obstacle impeding a national sports lottery.  The Department of Finance, looking past the obvious enthusiasm of vested interests and at the more practical problems, also made the following observations:

• There was no provision in the Constitution granting the Commonwealth the power to legislate with respect to lotteries or sporting matters as such.  Therefore, without a referral of power by the States it might not be possible to establish a national lottery for constitutional reasons;
• It would be crucial to have the support of all States and an agreed formula between the Federal government and the States for controlling and distributing the funds generated.

The Department of Finance also raised a number of other political and budgetary risks and advised that there was “no compelling reasons why funds should be obtained in this way for sport as distinct from any other program.”

Based on these reasons, the Committee concluded that a national sports lottery was not feasible without the support of the States: “Even if the agreement of the States was forthcoming to a modified scheme such as a Sports Bond Lottery proposal, the Committee was not prepared to recommend such a scheme.  The Committee could not bring itself to argue that sport and recreation had such a high priority or that the level of sport and recreation activity was so low as to warrant preferred treatment over other areas of need such as health and welfare.” (Ref 11)

The lottery proposal, despite support at different stages from both sides of the political divide, did not go anywhere.  The advice of the Department of Finance held sway.  The McLeay Committee report gave no comfort – it even opposed the extension of existing sales tax exemptions on sporting goods and equipment, another initiative put forward in the government’s election policy to provide some financial respite to sport.

Ronaldson revival

The Lottery has, for good historical reasons, earned a reputation as somewhat of a policy perennial. It seemed nothing could ruin a “new” bright idea. The Liberal Party through its Shadow Minister for Sport, Michael Ronaldson, breathed life back into the debate in an interview given to the Spring 1993 edition of the CAS magazine “Sport Report”. 

Ronaldson bravely promised prior to the 1993 election that a lottery was back in political play: “I give a very firm commitment that a Coalition Government will remove any impediments at the government level to conduct that type of fundraising.  If it requires some constitutional changes, then I will be very actively pursuing them because we need to give sport the chance to support itself.”  (Ref 12).  Despite having a view which was overly optimistic about a full national sports lottery, Michael Ronaldson, was one of those politicians who made a genuine contribution to the sports debate.  He successfully reintroduced sports policy to the Liberal Party campaign agenda and was beginning to re-establish the Liberal Party’s credentials in sport. Unfortunately, Ronaldson never had the opportunity to put his policies into practice. The Labor government led by Prime Minister, Paul Keating, was returned against the odds for a fifth election in a row in March 1993 — a win which Keating famously described as “the sweetest victory of all”.  

Hard to win a lottery

Over the next 16 years a further two federal reports failed to deliver the lottery proponents a policy victory.

The first, in 1999, was the Sport 2000 Task Force report “Shaping Up: a review of commonwealth involvement in sport and recreation in Australia”.  It concluded: “The idea of a national sports lottery was considered and then dismissed by the Task Force because of the concerns that have been raised about the social and economic implications of gaming and the political impediments relating to States/Territories. Therefore, other off-budget revenue sources were explored with a preference for funding sources that are derived from the industry itself.” (Ref 13)

The second report, prepared in 2009 by the Independent Sport Panel — the ‘Crawford Report’ — for the Department of Health and Ageing, reinforced the position that a dedicated nation-wide sport lottery was unlikely to succeed in Australia and attempted to steer the conversation toward another line of enquiry: “The Australian Government should not introduce a national sports lottery at this stage but should negotiate with state and territory governments to provide a share of existing lottery revenue for sport and recreation facilities and programs.”  (Ref 14)

Dust it off

The setbacks ensured that the concept was as elusive as ever and the nirvana of tapping into a large and reliable source of ongoing private funding for sport remained frustratingly out of reach. The Australian Sports Commission, struggling with its own financial pressures, valiantly led yet another attempt at a sports lottery around 2016 as the Australian Team sought success at the Rio Olympic Games. 

In an interview in the Australian Financial Review on 23 July 2016 prior to the Rio Olympics, the then chair of the ASC, John Wylie, explained he was already looking beyond the Games to increase the money flow to Australian sport.  He told Journalist, John Stensholt, that he and the Sports Commission had plans to launch an online lottery later in 2016.  Wylie: “It is absolutely clear to me going forward that with no government funding increases in seven years, if Australia wants to remain competitive in world sport the financial challenge is increasing and the funding to sport has to increase.  We will be looking at new sources of revenue rather than just asking for more government appropriation.”  (Ref 15). He foreshadowed that the lottery if given the green light would deliver $50 million a year for Australian sport. (Ref 16)

The numbers are up  

Since the 1970s there has been a mountain of history accumulated behind the lottery concept. It has always sounded so superficially simple, yet every effort to make it happen has fallen short. It remains as unattainable today as it was 50 years ago.   

But have we seen the last of it?  Don’t bet on it.

.References

1.  Proposed Commonwealth-State Participation in Sports Lottery, Cabinet Submission, 16 July 1979
2. Sid Maher, Games under-performance led to funding submission, The Australian, 21 December 2008
3. Peter Rae, The Australian 5 Aug 1976
4. Peat, Marwick, Mitchell Services, Feasibility study of a national sports lottery for the Dept. of Home Affairs. Sydney Peat, Marwick, Mitchell Services 1980.
5. Ellicott wants a sports lottery, The Age, 28 May 1979
6. Bob Ellicott, National sports lottery,  Minister for Home Affairs News Release, 20 July 1979
7. Bob Ellicott, Consultants’ report favours ‘prize bonds’ for sports lottery , Minister for Home Affairs News Release, 27 November 198
8. Confederation of Australian Sport,  Sport Report July 1981
9. Confederation of Australian Sport, Target 2000: a white paper on the direction of Australian sport, September 1992, Canberra, CAS, 1992
10. Australian Labor Party. The A.L.P. sport and recreation policy Canberra, ALP, 1983.
11. House of Representatives Standing Committee on Expenditure. The way we p ( l ) ay : Commonwealth assistance for sport and recreation : report, 1983.
12. Michael Ronaldson, Sport Report, Spring 1993. 
13. Shaping up : a review of Commonwealth involvement in sport and recreation in Australia; a report to the Federal Government (Oakley report), Canberra : Dept. of Industry, Science and Resources, 1999.
14. Independent Sport Panel. The future of sport in Australia (Crawford Report). Canberra , Commonwealth of Australia, 2009.
15. John Stensholt, Will John Wylie’s Winning Edge plan pass its Rio Olympics test, Australian Financial Review, 23 July 2016
16. John Stensholt, Federal government sports lotto faces many more hurdles and much opposition, Australian Financial Review, 21 July 2017    

Author’s Background

Greg Hartung AO brings great knowledge and experience to the development of sport in Australia. He was a sport & political journalist, Member of the Interim Committee of the Australian Sports Commission (1983-1984), inaugural CEO Australian Sports Commission (1983-1988), Commissioner of the Australian Sports Commission (1991-1996), 2006-2010), Chair of the Australian Sports Commission (2008-20100, Member of the Australian Sports Foundation Board Member (1995-1996, 2006-2010 ) Chair of the Australian Sports Foundation (2008-2010), President of the Confederation of Australian Sport (1989-1995) and Australian Paralympic Committee (1997-2013) and Vice President of the International Paralympic Committee (2009-2013) and Adjunct Professor, University of Canberra (2014-)

greg@hartung.com.au

Part 22 – Crusade to Attract Non-Government Cash to the Aid of Sport – and High Hopes for the Australian Sports Foundation

Listing of articles in History of Australian Sport Policy Series