Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Commonwealth Authorities and Companies Amendment Bill 2008. One of my favourite TV shows was Yes, Minister, brilliantly written by Jonathon Lynn and Antony Jay. It tells the story of the often hapless yet crafty Jim Hacker, the minister for the fictitious Department of Administrative Affairs in the United Kingdom government in the 1980s, and the smooth-talking head of the department, Sir Humphrey Appleby. There are many famous episodes of Yes, Minister but perhaps my favourite is called A question of loyalty. The minister had to front a select committee looking into the affairs of the department. He is fully briefed—so he thinks—and he goes to the committee with a scrum of public servants. His nemesis, opposition MP Betty Oldham, the member for Derbyshire East and a member of the committee, had leaked to her a new book by a retired civil servant detailing government waste in the department. This causes the minister much embarrassment and frustration at the meeting. When it is Sir Humphrey’s turn to front the committee, he gives a vintage performance. I mention this because it highlights why the Rudd government’s amendment is so timely. I would just like to repeat a passage which humorously illustrates the point. Mrs Betty Oldham says:

Isn’t this a fantastic waste of taxpayer’s money? Do you agree the money was wasted?

Sir Humphrey Appleby replies:

It is not for me to comment on government policy. You must ask the minister.

Betty Oldham says:

Look, Sir Humphrey, whatever we ask the Minister, he says is an administrative question for you, and whatever we ask you, you say is a policy question for the Minister. How do you suggest we find out what’s going on?

Sir Humphrey then replies in his own way:

Yes, I do think there is a real dilemma here, in that while we have government policy to regard policy as the policy of Ministers and administration has the responsibility of the officials, questions of administrative policy can cause confusion between the administration of policy and the policy of administration, especially when responsibility for the administration of the policy of administration conflicts or overlaps with the responsibility for the policy of administration of policy …

Mrs Betty Oldham replies:

That is a lot of meaningless drivel, isn’t it, Sir Humphrey?

Sir Humphrey replies:

It is not for me to comment on government policy. You must ask the minister.

I speak in support of this bill because it talks about the policy of administration and the administration of policy. Its purpose is to amend the legislation that regulates the financial affairs of Commonwealth authorities and companies under section 7 of the relevant act. Under section 7, a Commonwealth authority is a body holding money on its own account as a body corporate incorporated for a public purpose by an act of parliament or regulation. Under section 34 of the act, a Commonwealth company remains a Corporations Act company in which the Commonwealth has a controlling interest. It is these definitions that are being repealed under the new bill. The test that determines whether the Commonwealth controls a company has been improved under the new bill; hence, we have a better definition of what Commonwealth companies are. The existing section 4 states that a Commonwealth company does not include a company in which the Commonwealth has a controlling interest through one or more of the interposed Commonwealth authorities or Commonwealth companies. This new definition is a vast improvement because it provides greater certainty as to when the Commonwealth controls a company. It controls it if, and only if, it controls the composition of the company’s board—that is, it can appoint or remove the majority of its directors—it controls greater than 50 per cent of the total votes at a general meeting; or it controls greater than 50 per cent of the issued share capital.

Why does this esoteric legal definition matter at all? It matters because legislation that governs these issues talks about reporting and accountability of Commonwealth governments and it talks about the regulation of Commonwealth companies and Commonwealth authorities. Commonwealth companies have reporting obligations beyond mere companies operating under the Corporations Law. We are talking about taxpayers’ funds. We are talking about the need for informed transparency and accountability. Hitherto, there has been uncertainty and vagueness as to just what is a Commonwealth company and what is a Commonwealth authority. Henceforth, amendments will be put in plain English. The bill says quite clearly that a person’s appointment as a director of a company follows necessarily from the person being an agency head or a statutory office holder. Thereby, that person is accountable. That is important. We expect as much of company directors.

This leads to another important reform in the bill. It aligns the act with the Corporations Law for offences, penalties and terminology. This is particularly so relating to the failure to prepare financial statements or have them properly audited. A further important reform is to section 27F(1) of the act. A director of a Commonwealth authority who has a material personal interest in a matter that relates to the affairs of the authority currently needs only to give notice to the other directors. Under the bill, that director must not be present when the matter is being considered at a meeting or vote on the matter. This is an admirable reform in the area of law relating to conflict of duty and interest, and it surprises me that it was not included in the first place when the original legislation was promulgated in 1997. Further, the new bill clarifies the use of credit cards by Commonwealth authorities and introduces penalties for their misuse. The existing act is silent on the issue. We currently live in a world of vagueness. The bill sets out that cash, goods and services can be obtained by a Commonwealth authority by use of a credit card or a credit voucher. Regulations pursuant to the act will specify who is authorised to use that credit card or voucher on behalf of the authority and the circumstances in which it may be used, where it may be kept and the maximum amount that may be borrowed. There are tough penalties of up to seven years in prison for those who so misuse. The bill also simplifies the application of the general policies of the Commonwealth government, making those policies more efficient and transparent.

Section 28 and section 43 will both be replaced. This is important: under those two sections a minister may notify the directors of a Commonwealth authority in writing of general policies of the Commonwealth government. The responsible minister must consult the directors before notifying them of government policies. This is an extraordinary reversal of what I think the relationship should be between elected government officials and the public service. This section in its original form could easily have been drafted by Sir Humphrey Appleby out of Yes, Minister. He would have loved the section, because poor old Jim Hacker, the minister, was always required to consult with Sir Humphrey before even the general policies of the fictitious Department of Administrative Affairs were applied.

Under the existing act, directors must ensure as far as practicable that policies are carried out in relation to subsidiaries of the authority. It is hard to see how they can do it. It is full of vagueness and obscurity, and I am certain Sir Humphrey could have drafted it even better than that. Even then, under this existing legislation, the minister could in writing exempt the directors of a Commonwealth authority from carrying out the general policies of the Commonwealth government.

Section 43 of the act applies the same appalling drafting and bad public policy to Commonwealth companies. Really, the previous Howard government should be ashamed of itself for this particular piece of legislation in those sections. I am pleased that the new sections in relation to Commonwealth authorities and Commonwealth companies make it plain who is in charge: the government is here to set the policy, and the public servants are here to execute it. The new provisions state explicitly that directors of Commonwealth authorities and Commonwealth companies must ensure those entities comply with the general policy orders to the extent to which those apply. Further, directors may even exclude their requirements to comply with that order in relation to the ABC, the SBS, the ANU and the AIDC—and rightly so.

The new bill is important in this regard—it has consequences that the directors of a Commonwealth authority or Commonwealth company, and not the Auditor-General, must provide financial statements and audited reports to the responsible minister. Also, the new bill requires all Commonwealth companies to provide a base level of annual reporting to the responsible minister, whose duty it is to table the report in parliament.

Since the late 1990s, we have seen a toughening of duties and obligations for company directors under the Corporations Law. When the Commonwealth Authorities and Companies Act was enacted in 1970, it was modelled on the Corporations Law which was then enacted. In those days, officers’ duties were far less onerous and the corporate veil of protection was stronger than it is today. I welcome the strict liability offences under section 27F(1A), a new provision which states that strict liability applies to the circumstance where the director of a Commonwealth authority has a material personal interest in a matter that relates to the affairs of that authority—and so it should. They should be found strictly liable.

I applaud the government in respect of the notification provision for general policies. General policies apply to Commonwealth companies, and Commonwealth authorities will now be identifiable. Those general policies will be published on a federal registry of legislative instruments pursuant to the Legislative Instruments Act, and the Australian public will then be better informed accordingly. These provisions show that the Rudd Labor government is serious about openness, good corporate governance and accountability. The amendments in the bill bring the bill and the legislation into line with the Corporations Law.

The act when it was first enacted detailed rules about reporting and accountability, but we have had 10 years of corporate experience since that time. Much has changed in our society’s attitude towards corporations concerning corporate governance and accountability, and we expect more of companies and directors in the private sector. We expect them to follow the same rigorous rules that we expect also of Commonwealth companies and Commonwealth authorities and their directors.

I listened with interest to the previous speaker, the member for Dickson, who seemed to be in denial when it came to so much of the previous Howard government’s performance—accepting all of the credit but taking none of the responsibility. He was then both politician and prophet, prophesying that the Rudd Labor government would excise and not commit itself to the commitments it made in the last election. I have news for him: we will carry out all the commitments that we made in Dickson as well as in Blair.

The Rudd Labor government is fair dinkum when it comes to promoting the public interest. It is fair dinkum about not giving legislative licence to the Public Service to frustrate the policies of the elected government of this nation. Genuine reform to improve transparency, efficiency controls and practice is needed. The Rudd Labor government is prepared to do it. This bill is yet another step in the government’s reformist agenda to restore trust and integrity in government. This government is determined to build a modern forward looking and thinking Australia. It is determined to improve Public Service efficiency and get value for taxpayers’ dollars.

The government is determined to face the challenge of economic management and accountability. The Rudd Labor government will ensure those who run Commonwealth companies and Commonwealth authorities report properly, act with probity and engage in best practice. Australia needs an impartial, competent public service committed to securing the public interest. The Rudd Labor government is determined to see it happen and any Sir Humphreys in the Public Service should beware.

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