Mr BURKE - 2002-10-08
Chief Minister, your government appointed the accounting firm Ernst & Young as club managers and investigating accountants to report on the future viability of the Arafura Sports and Community Club. In April this year, the accountants reported the club was insolvent, had debts totalling $513 000 that had to be paid, and should be wound up. Given these recommendations, when did the government decide to wind up the club, and why weren’t the members informed of this until you met with them on 29 September 2002?
ANSWER
Madam Speaker, let me just inform the former Attorney-General about some of the legalities here. The government did not wind up the club. The government did not play a part in the winding up of the club. Let me just take the Opposition Leader, who seems to think he has all the details, through what are the details of what has happened.
The Arafura Sports and Community Club is in my electorate and is an organisation I have been involved with for a long time now. The fact that this club has had to be wound up is extremely disappointing for me and is a very sad occasion. If we look at the facts of how we have dealt with the situation confronting us, and compare that with what the previous government did not do, then there is a very stark contrast here.
Earlier this year, the Registrar of Associations responded to concerns of club officials and of creditors about outstanding debts and, quite properly, started an investigation to determine what the financial position of the club was, and Ernst and Young were appointed to do that. Ernst and Young did a very diligent job and provided a detailed report to the Department of Justice. They looked at a number of options for the club and looked at what their exact financial situation was.
The key recommendations of that report, done by one of our most respected accounting firms, Ernst and Young, said quite clearly that the club was trading insolvently and should be wound up, that the club should be placed in judicial management, which we did, and the government should acquire the club’s land and buildings for fair value. That was in April.
With the agreement of club officials, we appointed Ernst and Young as judicial managers. They then took over the club’s running because the Dry Season is a chance that the club had to trade itself out of its problems. It had a chance. The Dry Season is when we get a lot of bowlers from interstate into town, and it is the most active time of the year. So under the judicial management of Ernst and Young, the club continued to trade. What we found towards the end of the season was that they weren’t able to continue trading, that they were going backwards. We worked very closely with them.
The appointment of Ernst and Young as judicial managers meant that the club’s committee members were protected from the consequences of trading insolvently, and that is a very serious thing to be faced with as club officials. When you look at the debts that were accumulated, from financial mismanagement, of over $500 000, the fact that we took that very diligent action of appointing judicial managers meant that those club officials were protected; a very important step to remember.
Mr Burke: You know you had legal advice to say they weren’t personally liable. Tell the truth.
Madam SPEAKER: Order!
Ms MARTIN: Madam Speaker, I think the Opposition Leader’s ignorance is on show here. I am demonstrating the due diligence that has been taken by this government in appointing an accounting firm to look at the situation, then appointing them as judicial managers, and having that whole process go through that ended up with the Supreme Court recognising the fact that the club had to be wound up.
Quite properly, we followed through what Ernst and Young advised us, and we did put an offer in for the club. We sought an AVO valuation of that: $550 000. So we put that to the court and said we were prepared to acquire the land, and that was accepted. That is the situation. Let us compare that with how the previous government acted towards the Arafura Sports and Community Club. It is a very stark contrast.
Mr Burke: Remember they are listening to you. They know what was said.
Madam SPEAKER: Order!
Ms MARTIN: Oh, yes, and I certainly welcome the presence of bowlers here today because the bowlers know about the letter that was sent in April 2001. The Opposition Leader has very conveniently forgotten to mention, when he goes out and makes his public statements, that as Chief Minister - I take you back to April 2001 when he received a letter. It starts: ‘Dear Chief Minister’. It comes from the then Arafura Bowls and Social Club and is signed by the Secretary/Treasurer, and it is just after the then Chief Minister has granted the Palmerston Golf Club $165 000.
Mr Stirling: How much?
Ms MARTIN: $165 000.
Mr Burke: They’re still trading.
Ms MARTIN: It comes just after that …
Members interjecting.
Madam SPEAKER: Order! Members!
Ms MARTIN: … essentially, Madam Speaker, I will table this letter.
Madam SPEAKER: Chief Minister, cease for a moment. Members, I do think the people in the Gallery would like to hear the answer without interruption.
Ms MARTIN: Madam Speaker, the letter indicates that there are financial troubles with the club, and says to the then Chief Minister $190 000 will get us out of trouble and set us up for the future. There was no response. Not a skerrick of response came from the then Chief Minister. So April 2001, a club saying we are in trouble, a club indicating they need some kind of direction. And what does the club get from the then Chief Minister, the member for Brennan? Nothing. No response. No response at all.
If the then Chief Minister had done what he says was not diligent action from us, he would have taken a look at the club’s financial situation. He might have decided, based on that, that there was support due to the club and he might even have replied to the club’s letter. But he did nothing, he did nothing. There was some level of meeting, I believe, with the club, or some indication, before the election, enough indication that maybe it’s the wink and the nod, but the club then, obviously very injudiciously, went ahead with building and redevelopment based on a wink and a nod from the then Chief Minister that it would be funded later on. So the club spent the best part of $160 000, as I understand it, on a promise from the then Chief Minister that he might help them out or would help them out. A disgraceful episode. $160 000 that simply tipped the club over into financial mismanagement and debt that they could not escape from. We have a man who is standing in here being sanctimonious, pretending now to care about the club, yet 18 months ago didn’t care, made false promises when he did do something. A disgraceful episode.
It is very sad that the Arafura Sports and Community Club has been wound up, but the debts were high. Their financial situation was unsustainable, and we have done, as government, a fair thing. The Disabled Sports Association will be paid out. The business people around Darwin who are owed tens of thousands of dollars by the club will be paid out. All those debts will be met. We will work with the lawn bowlers to make sure that their important sport not only at the elite level, but at the community level, will be sustainable in the future because it is very important for us to make sure that these community facilities, community sports, are well supported. That is what this government will do. Compare that very starkly with the disgraceful behaviour of the then Country Liberal Party government and look at the great difference there is. I table this letter, Madam Speaker.
ANSWER
Madam Speaker, let me just inform the former Attorney-General about some of the legalities here. The government did not wind up the club. The government did not play a part in the winding up of the club. Let me just take the Opposition Leader, who seems to think he has all the details, through what are the details of what has happened.
The Arafura Sports and Community Club is in my electorate and is an organisation I have been involved with for a long time now. The fact that this club has had to be wound up is extremely disappointing for me and is a very sad occasion. If we look at the facts of how we have dealt with the situation confronting us, and compare that with what the previous government did not do, then there is a very stark contrast here.
Earlier this year, the Registrar of Associations responded to concerns of club officials and of creditors about outstanding debts and, quite properly, started an investigation to determine what the financial position of the club was, and Ernst and Young were appointed to do that. Ernst and Young did a very diligent job and provided a detailed report to the Department of Justice. They looked at a number of options for the club and looked at what their exact financial situation was.
The key recommendations of that report, done by one of our most respected accounting firms, Ernst and Young, said quite clearly that the club was trading insolvently and should be wound up, that the club should be placed in judicial management, which we did, and the government should acquire the club’s land and buildings for fair value. That was in April.
With the agreement of club officials, we appointed Ernst and Young as judicial managers. They then took over the club’s running because the Dry Season is a chance that the club had to trade itself out of its problems. It had a chance. The Dry Season is when we get a lot of bowlers from interstate into town, and it is the most active time of the year. So under the judicial management of Ernst and Young, the club continued to trade. What we found towards the end of the season was that they weren’t able to continue trading, that they were going backwards. We worked very closely with them.
The appointment of Ernst and Young as judicial managers meant that the club’s committee members were protected from the consequences of trading insolvently, and that is a very serious thing to be faced with as club officials. When you look at the debts that were accumulated, from financial mismanagement, of over $500 000, the fact that we took that very diligent action of appointing judicial managers meant that those club officials were protected; a very important step to remember.
Mr Burke: You know you had legal advice to say they weren’t personally liable. Tell the truth.
Madam SPEAKER: Order!
Ms MARTIN: Madam Speaker, I think the Opposition Leader’s ignorance is on show here. I am demonstrating the due diligence that has been taken by this government in appointing an accounting firm to look at the situation, then appointing them as judicial managers, and having that whole process go through that ended up with the Supreme Court recognising the fact that the club had to be wound up.
Quite properly, we followed through what Ernst and Young advised us, and we did put an offer in for the club. We sought an AVO valuation of that: $550 000. So we put that to the court and said we were prepared to acquire the land, and that was accepted. That is the situation. Let us compare that with how the previous government acted towards the Arafura Sports and Community Club. It is a very stark contrast.
Mr Burke: Remember they are listening to you. They know what was said.
Madam SPEAKER: Order!
Ms MARTIN: Oh, yes, and I certainly welcome the presence of bowlers here today because the bowlers know about the letter that was sent in April 2001. The Opposition Leader has very conveniently forgotten to mention, when he goes out and makes his public statements, that as Chief Minister - I take you back to April 2001 when he received a letter. It starts: ‘Dear Chief Minister’. It comes from the then Arafura Bowls and Social Club and is signed by the Secretary/Treasurer, and it is just after the then Chief Minister has granted the Palmerston Golf Club $165 000.
Mr Stirling: How much?
Ms MARTIN: $165 000.
Mr Burke: They’re still trading.
Ms MARTIN: It comes just after that …
Members interjecting.
Madam SPEAKER: Order! Members!
Ms MARTIN: … essentially, Madam Speaker, I will table this letter.
Madam SPEAKER: Chief Minister, cease for a moment. Members, I do think the people in the Gallery would like to hear the answer without interruption.
Ms MARTIN: Madam Speaker, the letter indicates that there are financial troubles with the club, and says to the then Chief Minister $190 000 will get us out of trouble and set us up for the future. There was no response. Not a skerrick of response came from the then Chief Minister. So April 2001, a club saying we are in trouble, a club indicating they need some kind of direction. And what does the club get from the then Chief Minister, the member for Brennan? Nothing. No response. No response at all.
If the then Chief Minister had done what he says was not diligent action from us, he would have taken a look at the club’s financial situation. He might have decided, based on that, that there was support due to the club and he might even have replied to the club’s letter. But he did nothing, he did nothing. There was some level of meeting, I believe, with the club, or some indication, before the election, enough indication that maybe it’s the wink and the nod, but the club then, obviously very injudiciously, went ahead with building and redevelopment based on a wink and a nod from the then Chief Minister that it would be funded later on. So the club spent the best part of $160 000, as I understand it, on a promise from the then Chief Minister that he might help them out or would help them out. A disgraceful episode. $160 000 that simply tipped the club over into financial mismanagement and debt that they could not escape from. We have a man who is standing in here being sanctimonious, pretending now to care about the club, yet 18 months ago didn’t care, made false promises when he did do something. A disgraceful episode.
It is very sad that the Arafura Sports and Community Club has been wound up, but the debts were high. Their financial situation was unsustainable, and we have done, as government, a fair thing. The Disabled Sports Association will be paid out. The business people around Darwin who are owed tens of thousands of dollars by the club will be paid out. All those debts will be met. We will work with the lawn bowlers to make sure that their important sport not only at the elite level, but at the community level, will be sustainable in the future because it is very important for us to make sure that these community facilities, community sports, are well supported. That is what this government will do. Compare that very starkly with the disgraceful behaviour of the then Country Liberal Party government and look at the great difference there is. I table this letter, Madam Speaker.
Last updated: 09 Aug 2016