Regulating Alcohol in the Northern Territory: in whose interest?

 

This might be the pate of a politician….one that would circumvent God

Hamlet Act 5, Scene 1

 

Introduction

The recently released Independent Panel Review (IPR) into the proposed Dan Murphy (DM) development in Darwin is, in public policy terms, a fascinating document (link here). It was commissioned by the Board of Woolworths, one of Australia’s largest and most ubiquitous corporations. The panel appointed was led by Danny Gilbert, one of Australia’s most well connected and socially aware corporate citizens. It is comprehensive, analytically dense, rigorously argued, and deals with a multitude of issues. On its face, it is about the role and responsibilities of Woolworths in particular, and business more generally, in relation to contentious public health and social policy issues arising from corporate operations that have negative impacts of one kind or another on the community.

 

So, the IPR canvasses issues such as corporate social responsibility in a modern economy, corporate Australia’s relationship with Indigenous Australia, governance standards within a large corporation, particularly in relation to subsidiaries, an economic, demographic and social snapshot of the Northern Territory, alcohol consumption in Australia and particularly in the NT, regulation of alcohol sales in the NT, the adequacy of community consultation processes by a large corporation. While all of these issues are discussed in relation to a particular proposal, namely the proposed Dan Murphy’s retail development in Darwin, much of the discussion is relevant to, and has implications for, broader relationships between corporate Australia and the wider community.

 

However, the IPR is also about the broader relations between what I will term mainstream Australia and Australia’s Indigenous citizens. In particular, it is about one of the most fraught issues underlying sustained and ongoing Indigenous disadvantage, namely, excessive alcohol consumption, and its wider ramifications.

 

The challenge for the nation is to find a sustainable balance between the rights of citizens to consume alcohol and managing the severe, but non-universal consequences of excessive consumption. For a range of complex but in many ways obvious reasons, a proportion of Indigenous citizens appear to be particularly vulnerable to these adverse consequences. I don’t propose to explore the issues of responsibility for these outcomes in this post, but would merely note that like many social processes, it seems likely there are multiple causes underlying these adverse outcomes.  

 

In this context, corporations clearly have social responsibilities to minimise harm arising from their operations. The IPR can be read as one of the most robust and rigorous arguments in support of this proposition to emanate from within the business community. However, so too do governments have responsibilities both to regulate potentially harmful activities within the community in the public interest, and to minimise harm from their own policy decisions and actions.

 

The IPR is framed as a report to the Board of Woolworths, and its focus is squarely on what Woolworths should do to align its commercial policies in Darwin and surrounding regions with its wider corporate social responsibilities. The IPR makes nine key findings, all directed to Woolworths and by extension to its (currently) majority owned subsidiary Endeavour which in turn owns the Dan Murphy brand and network of retail outlets (link here).

 

The concluding sentences of the Executive summary are a succinct summary of the IPR’s overarching conclusion:

… the Panel recognises that the negative impacts that arise from the over consumption of alcohol in the Northern Territory, laid out in detail in this report, are off the scale, not just by Australian, but by international standards. The resulting impacts in terms of human suffering and social and economic costs cut right across the Northern Territory community and are not confined to Aboriginal and Torres Strait Islander Territorians. They cannot be ignored. (p.13).

 

I recommend readers take a look at the IPR. The Executive summary, summaries at the beginning of each chapter, and the use of well-designed graphs and figures go a considerable way to making an otherwise complex document accessible.

 

In this post, I seek to go beyond merely summarising the IPR’s arguments and findings (important as they are) and to focus on what the IPR reveals (perhaps unintentionally) about the role of government in fulfilling its role in protecting the public interest in relation to the consumption of alcohol. Given the space limitations of blog post and the detail included in the IPR itself, I would characterise this post as merely an outline of an argument. In effect, I am laying out an alternative way of reading the IPR, and pointing to just some of the facts and events they identify and analyse that support such a reading.

 

In December 2020, Woolworths (to its credit) established an independent review to examine the recently approved proposal to establish a DM retail outlet in Darwin (link here). This decision followed an outbreak of community concern — indeed outrage — about the regulator’s decision to approve and the way it had been approved by the NT regulatory authorities (link here). One of the back stories to the genesis of the IPR is the mounting of an extraordinarily effective campaign against the proposal by Indigenous organisations and their allies based in Darwin and beyond led in large measure by an extraordinary Indigenous leader, Olga Havnen. This post does not attempt to chart the history of those efforts, but there is no doubt that without the campaign, the Woolworths Board would not have commissioned the IPR. 

 

Reading between the lines, it seems likely that the decision to commission the IPR also suggests a level of concern within the Board of Woolworths regarding the actions and decisions of its wholly owned subsidiary Endeavour. Complicating the back story, Woolworths had announced in July 2019 that it proposed to pursue of demerger of the recently established Endeavour Group while retaining a minority shareholding and single Board position within the newly listed entity. That demerger has yet to be finalised.

 

On 29 April 2021, following receipt of the IPR, Woolworths announced that it would not be building a DM retail outlet in the location previously proposed (link here and link here). On 9 June 2021, along with the release of the IPR, Woolworths and Endeavour issued separate responses to the IPR (link here and here), and Woolworths issued a detailed document reflecting on the IPR and responding albeit briefly to what it considered the key findings (link here). While I don’t propose to analyse those responses in detail in this post, it is clear that the Endeavour response is more limited and much more defensive than the Woolworth’s response. This is perhaps explained by the forthcoming demerger, which will leave Woolworths with a minority shareholding in Endeavour of 14 percent, and Endeavour with the task of undertaking the heavy lifting in terms of balancing its commercial alcohol retail operations in Darwin and the wider public interest in harm minimisation.

 

The NT Government’s role and responsibility

 

Chapter 5 of the IPR describes the level and consequences of alcohol consumption in the NT. The summary of the chapter states, inter alia,

The Northern Territory has the highest rate of alcohol consumption in Australia, and a much higher share of the population drinks at risky levels compared to the Australian average…The financial costs to Darwin and the Northern Territory Government from these harms are also acute. Given the demonstrable health and economic costs, it is clear that the level of alcohol-related harm requires urgent and meaningful attention. (p.49)

 

Contextualising the horrendous statistics on disadvantage amongst Indigenous citizens, the IPR states:

There is a view of some in the community that Aboriginal and Torres Strait Islander disadvantage is intractable and that First Nations peoples must bear full responsibility for their status without any compromise to the requirements and wishes of the non-Indigenous population. The Panel rejects that perspective (pp.52-3).

 

The chapter goes on top lay out with surgical precision the devastating statistics on alcohol abuse across the NT:

The Northern Territory has nearly six times the level of alcohol-related emergency department presentations compared to the next closest state or territory (p.53)….

…Dr. Mahiban Thomas, reported that an estimated 350 cases of broken jaws and noses were admitted to the hospital each year, with 88 per cent of those cases caused by alcohol-related assaults. Darwin was suggested to have the highest rate of broken jaws in the world, second only to Greenland (p.54)…

…The Northern Territory has nearly three times the level of alcohol-induced deaths compared to the next highest State or Territory, at a rate of 8.9 per 100,000 population in Darwin, and 28.5 deaths per 100,000 in the rest of the Territory. This figure was more than five times the Australian population-weighted average...

 

On the costs of alcohol consumption, the report quotes research suggesting the financial cost of alcohol consumption to the NT community is $1.4 billion, some 5 percent of the $24.3 billion NT Gross State Product, or 17 percent of the $7.3 billion spent by the government on services to the public.

 

Clearly, the both the economic and social costs of alcohol are such as to warrant proactive harm minimisation policies by the NT Government. What clearly sits behind the IPR’s conclusions are the enormous personal costs and harm of alcohol abuse imposed on individuals, families and children. The IPR mentions these at pp.55 and 126, but it is nevertheless likely that most readers will pass over these points without a second glance. Yet the reality is that alcohol is inexorably destroying the lives of drinkers, families, and children, one day at a time. Most insidiously, alcohol has all the characteristics of an addictive drug, and its misuse has lifelong adverse health and psychological  implications both for users and their close families.

 

Chapters Seven and Eight of the IPR deal the progression of the Woolworths / Endeavour proposal through the extant regulatory processes, and are the key chapters for understanding the actions of the Northern Territory Government in this saga.

 

In April 2017, the NT Labor Government established a review by a former Chief Justice of the NT Supreme Court, Trevor Riley, to review all aspects of the Liquor Act 1978 and surrounding policies. The Riley review was published in October 2019, and made 220 recommendations proposing a whole of government integrated alcohol harm reduction framework. The NTG accepted 187 recommendations and pledged in principle support for a further 32 recommendations. The single recommendation rejected was to ban takeaway sales on Sundays (p.59). As a result of the Riley review the Liquor Act was amended in a series of amendment Acts through 2017 to early 2019, which are clearly summarised on pp. 71-2 of the IRP.

 

Separately, Woolworths, through its subsidiary Endeavour, in mid-2018 sought regulatory approval to establish its Dan Murphy development. See the overview of the legal processes on p.73, and the detailed consideration over the following pages. In September 2019, the Liquor Commission refused Woolworth’s application, based on its detailed assessment of the community impact which would flow from the proposal and its consideration of the public interest. The IPR summarises the Commissions reasons at pp. 76-78. In an extraordinary response, the NT Government released a public statement calling the decision of its own independent regulator  ‘a kick in the guts for responsible drinkers who want more choice in the Darwin market’, and pointed out that it was open to Woolworths to appeal the decision (p.81).

 

The Liquor Commission decision was followed by an application by Woolworths to the NT Civil and Administrative Appeals Tribunal (NTCAT). The appeal was dismissed. Woolworths then appealed to the Supreme Court of the NT in January 2020. In March, a legislative amendment resolved the issue in dispute in such a way as to allow the Liquor Commission to now approve the proposal, thus negating the action in the Supreme Court. A further application appealing the Liquor Commission’s decision not to approve the proposal was filed with NTCAT by Woolworths in April 2020. This was subsequently deferred and then abandoned after further legislative amendments which enabled a new ‘expedited’ decision making process to be undertaken by the Director of Liquor Licencing (‘the Director’). See pp.79-81 for a detailed description of these processes.

 

In Chapter Eight, the IPR assesses the impact of the 2020 legislative changes that, inter alia, removed the decision making responsibility from the Liquor Commission, and provided for the Director to make an expedited decision of four historical applications, including the DM proposal. Extraordinarily, the legislation allowed the Director to make a decision without prior notice to the applicant or any other person, without holding a hearing, and provided that any decision would not be reviewable by the NTCAT. The IPR concluded that these amendments were not good public policy. See the detailed analysis and discussion on pp 83-86.

 

The IPR went on to report that there had been ‘significant engagement between Endeavour and the Northern Territory Government’ in relation to the 2020 legislative amendments to the Liquor Act 2019 (p.86). Endeavour’s proposals were closely aligned with the eventual amendments, but with the significant difference that Endeavour proposed that the matter be advanced by a Ministerial decision rather than the approach ultimately adopted of the Director making the decision. The IPR were critical of Endeavour for its approach, in particular, its suggestion that ‘explicitly excluded any requirements to satisfy the public interest and community impact test’ in the post Riley legislative framework (p.87).

 

Without seeking to exonerate Endeavour, it is clear that the NT Government bears a much greater responsibility for what transpired. It is governments that are expected to act in the public interest, yet all that the NT Government could muster was a craven attempt to facilitate the interests of a major corporation. Moreover, they deliberately established a system where a public servant (the Director) made the decision rather than a Minister as suggested by Endeavour, and rather than the independent Liquor Commission as required by the pre-existing legislative framework. It goes without saying that a public servant is not independent of the executive arm of government. Further, the legislation established a framework that explicitly denied the community natural justice, while making a cynical assumption that the technical complexity involved and (apparent) non-involvement of a minister would diminish any public criticism.

 

Finally the IPR undertook a critical assessment of the Director’s decision to approve the Woolworth’s DM proposal. The assessment identified various legal shortcomings, problematic reasoning, and an approach which adopted a starting point favourable to Woolworths, which set aside expert opinion in favour of the Director’s own previous experience and informal advice from the police, and which set aside the views of local communities most impacted by the proposal (pp. 88-91).

 

Conclusion

 

So to summarise, the NT Government responded to the decision of the independent Liquor Commission that had identified extensive harm and community impact as likely to flow from the establishment of a DM retail outlet by turning 180 degrees from  its explicit 2019 commitments to implement the Riley review recommendations, by criticising its own independent statutory body, by overturning its own legislation to implement the Riley recommendations, and legislating a new process that required a public servant to make a new expedited decision within a legal framework that set aside natural justice, precluded public hearings, prevented appeals, and allowed problematic reasoning to trump expert opinion and community views. In short, the NT Government pro-actively facilitated the pursuit of private interest to the exclusion of substantial evidence that it was not in the public interest.

 

One of the more insidious impacts of this type of behaviour by governments is the way in which trusted institutions within the public domain are politicised and pressured, with deeper and widespread implications for levels of trust in our democracy and core institutions. To take just one example highlighted by the events described by the IPR, the NT police appear to have been influenced (either explicitly or implicitly) to self-censor their perspectives on the social impacts of increased availability of cheaper alcohol in relation to the DM proposal. According to the IPR, in July 2020, the NT police gave evidence in another application for a substituted liquor licence. The IPR reported (p.57):

In Superintendent Antony Deutrom’s evidence to a Liquorland application for a substitution of premises in Palmerston in July 2020, Northern Territory Police stated that the impacts of alcohol on the Northern Territory continue to be “appalling and pervasive…culminating in extra strain”. At the time, demand for police services across the Northern Territory was on the rise, up 39.5 per cent compared to the previous period. Further, 15.4 per cent of those incidents were alcohol-related. Superintendent Deutrom also said, “an increase in alcohol availability could further impact on these figures in a negative manner” [footnotes deleted].

 

See also Superintendent Deutrom’s comments on p.55.  In contrast, the NT Police comments to the Liquor Commission hearing into the DM proposal were much less robust:

In relation to the Darwin Dan Murphy’s development, Commander of Police in the Northern Territory, Travis Wurst, gave evidence to the Liquor Commission in 2019. Commander Wurst referred to the risks attached to the proposed Bagot Road site from a public and road safety viewpoint, the problems of public drinking, and more generally about the role of the Police Auxiliary Liquor Inspectors and the impact of alcohol restricted areas in the Greater Darwin area and surrounding remote  communities. Commander Wurst also noted that the Northern Territory Police were neutral on the application by Woolworths Group and that the application was neither objected to formally, nor endorsed in any way (p.57) [emphasis added].

 

Of course, the unanswered question raised by this clear NT Government strategy to support the DM proposal is ‘why?”’ Why did the NT Government reverse course? Why did it ignore the very significant health, social and economic costs likely to flow from the DM proposal? Why did the Indigenous members of the Government remain silent and accede to this policy? Endeavour has stated that it was in discussion with the NT Government regarding the changed location of the proposed DM outlet (link here). We know that Endeavour proposed legislative change that was substantively taken up by the NT Government. What other conversations were undertaken between Endeavour and the NT Government? The short answer is that we don’t know and the IPR doesn’t tell us.

 

In an appendix, the IPR provides an extensive list of the stakeholders consulted. It is clear that it sought to engage widely within and beyond the NT. It lists engagement with a small number of NT agencies, but there is no mention of any Ministers in the NT Government being consulted. It seems highly unlikely that the Independent Panel did not seek to engage with ministers (it mentions that it consulted with the MLA for the seat surrounding the proposed development, Labor backbencher Mark Monaghan, as well as representatives of the Opposition). The IPR mentions that a number of stakeholders consulted did not wish to be named in the report. Either way, the unpreparedness of Ministers in the NT Government to engage on the record with such a high profile assessment of the proposal speaks volumes for the disdain the Government has shown both to the norms of public debate about issues of significant importance for the NT, and to the NT community itself.

 

While the extraordinary campaign led by Indigenous interests and leaders such as Olga Havnen have won this battle, it is far from clear that they will win the war.

 

The importance of this case study of an important public policy process is that it has largely been driven by business. The Woolworth’s Board clearly decided that they may not be getting the full story from Endeavour (see p.111), and thus commissioned the IPR. The IPR clearly found that Endeavour had been engaging closely with the NT Government.

 

The facts demonstrate that ‘when push comes to shove’, the NT Government is unwilling and/or incapable of pursuing and protecting the public interest. Perhaps the solution is for the corporate sector as a whole to take a wider view of the issues relating to alcohol consumption across the NT, and to develop an active strategy that seeks to protect the public interest as well the private corporate interests they are entitled to advocate for and pursue. After all, if — as the evidence suggests is the case — governments are in the pocket of business, then perhaps it is time for the business sector to step up and pursue the public interest as well as their private interests. It is actually in business’s interest that the nation is inclusive, has a vibrant economy, and a healthy citizenry. The IPR is potentially the first step towards a much more inclusive and visionary stance by corporate Australia.

 

My recommendation to Woolworths would be that its credibility with Indigenous Australia, and the community more generally, would be enhanced were it to actively and transparently use its market heft and influence, as well as its directorship on the Endeavour Board, to ensure that both Endeavour and the NT Government put the public interest above commercial interests in the development of future alcohol policy in the NT.

 

My recommendation to the NT Government is that they should take the opportunity of the publication of this report to undertake a fundamental reconsideration of their policy approach to alcohol regulation. To do otherwise will be to deepen their complicity in an entirely preventable scourge that is taking a terrible toll on many Territorians, including a substantial proportion of Indigneous Territorians. If they cant fix this, their credibility on every other area of public policy will remain in tatters.

 

Finally, I am conscious that I have not mentioned a role for the Australian Government in these issues. Yet it was only fourteen years ago that the Australian Government legislated alcohol prohibition across remote NT communities citing statistics that have barely changed from those we see today. While I am not advocating a return to those punitive policies, there is a role for the Australian Government through the range of policy levers at its disposal to encourage public policy and corporate policy outcomes in the wider public interest. Silence and sitting on the fence is not an adequate response to the ongoing health crisis linked to alcohol abuse across the NT and beyond.