Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Hansard source

I rise to speak on the Public Governance, Performance and Accountability Bill 2013. The bill proposes to replace the existing model for Commonwealth financial management established through the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. It would consolidate under one piece of legislation the governance, performance and accountability requirements for the Commonwealth and relevant entities which are covered currently under both the FMA and CAC acts. The bill would introduce a new financial framework for the Commonwealth, impacting on some 195 entities and around 300,000 individuals who work within them. Such reform must not be taken lightly, nor be driven by undue haste.

This bill stems from the Commonwealth Financial Accountability Review, which commenced in December 2010. The existing financial framework was enacted in 1998 and, while it can be reasonably argued that it is unnecessarily complex and fragmented, all agree it remains workable. It has undergone regular, ad hoc amendment in order to maintain its serviceability as issues have arisen and this has added to its complexity. But, with the current parliament nearing its end, there is nothing to necessitate the passage of this bill before it rises. If anything, this is the type of reform that should now be reserved for the new parliament regardless of its colour or stripe. The importance to get this right is underlined by the remarks of the Auditor General, Mr Ian McPhee, when he said there are few Commonwealth laws that have such broad application. Collectively, the entities it would cover manage and account for revenue and expenses of over $350 billion, assets of over $390 billion and liabilities of over $640 billion.

Most appropriately, this bill has been subjected to an inquiry by the Joint Committee of Public Accounts and Audit. This process has exposed two fundamental concerns with this bill: firstly, the lack of specific detail about how the new financial framework would be actually applied; and, secondly, the unnecessary haste with which it is being brought before the parliament and the need for additional consultation.

During Senate estimates the Secretary of the Department of Finance, David Tune, said he found it frustrating that there was a sense of unease about the bill, but specific areas of concern were not coming through. Well, that is precisely the point. The major issue is that the bill itself largely represents the direction and principles of reform, with much of the mechanical detail to be set out in future rules tailored for individual entities.

The major issue is that the bill largely represents the direction and principles of reform with much of the mechanical detail to be set out in future rules tailored for individual entities. We have progressively found ourselves debating bills that in many respects give you very little idea of how the objectives of those bills will in fact be implemented. We are seeing bills that have up to 70 per cent or 80 per cent of the objects being framed through the regulations. And here we have in front of us today bills of great consequence. The principles and objectives of these bills are in large part agreed by all parties, but the detail of how these bills will be implemented is the fundamental issue. This practice is increasing, with more and more of the legislation that we are debating being basically a shell—a framework; a set of principles; a set of objectives—when the significant operational aspects are left for others to determine via regulation.

We agree that the broad principles behind the bill are not objectionable, namely: government should operate as a coherent whole; public resources are public resources and a common set of duties should apply to all resources handled by Commonwealth entities; performance of the public sector is more than financial and; engaging responsibly with risk is a necessary step in improving performance. We agree with these broad principles. But the major issue is that the bill largely represents a set of directions and principles of reform with so much if not nearly all of the mechanical detail to be set out in future rules tailored for individual entities.

It is also argued that a more simplified financial framework is required as 'the deficiencies in the current framework will, over time, become a drag on the performance of the public sector'. A single act would as far as practicable 'apply a consistent principles based framework to all Commonwealth entities'. It should also be compatible with specific enabling legislation that mandates the establishment and functions of public entities.

The bill also places a greater emphasis on risk management, something that is said to be deficient in the existing financial framework. In principle, this would be applied in a way that accommodates both autonomy, and also personal responsibility, which would be welcomed. We agree with all of these things; these principles; these suggested guiding objectives. What we have not seen, unfortunately, are the very detailed mechanics that would give effect to these objectives and these principles.

For example, according to the explanatory memorandum, 'the bill seeks to bring about cultural change by placing a duty on entities to establish their own appropriate systems of risk oversight and management and by introducing the principle of earned autonomy'. This would draw on the better practice principles for regulators identified by the Productivity Commission, which includes streamlining reporting requirements; risk based monitoring and enforcement; and a graduated response to regulatory and compliance breaches. These are very important requirements that stem from the Productivity Commission.

The existing framework is also described as 'very linear' and focused on straight lines of vertical authority which create hurdles to 'citizen centric service delivery' and to collaborative working practices both across government and between government and other sectors. The framework, it is said, does not seek to alter or impinge the operational independence of entities as set out in their enabling legislation. The RBA, the ABC and the SBS are cited as examples. Again, none of this is objectionable, but what is objectionable is not knowing how or if these principles will in fact be satisfactorily applied. This detail will only be revealed in the specific set of rules, the legislative instruments, that are yet to be drafted let alone sighted by anyone who is being asked to pass this piece of legislation. The general consensus is that these rules will be developed over 12 months.

Under sections 101 to 105, the bill affords quite substantial power and discretion to the finance minister to make rules 'necessary or convenient to be prescribed for carrying out or giving effect to this act'. The government has agreed to subject these future instruments to the scrutiny of the Joint Standing Committee of Public Accounts and Audit, as it should. But given the broad reach of this bill it would, at the very least, have been prudent for the government to have produced a comprehensive set of exposure drafts of the proposed rules for the scrutiny of the entities they would affect, broader stakeholders and parliament itself.

This has not occurred and it increases the suspicion that the bill has been rushed into the parliament to give this government, which has very little in the way of substantial achievements to point to, a superficial symbol of financial reform. This is no different from what we saw in the first instance with the so-called Gonski legislation—pages of pleasant-sounding objectives and principles, with not one skerrick of detail of how these things would be implemented. We have it again in this legislation. We are also seeing it in the 100-plus bills that are confronting this House and that are mounting up for consideration over the next eight days.

The Auditor-General, Mr Ian McPhee, recently told the JCPAA inquiry:

We would feel more comfortable with this legislation if the bill had been subject to a more open exposure process, given the number of entities and officials affected by it and because of the fundamental importance of the legislation, as indicated earlier. We have also had no visibility of the complementary rules which, together with the legislation, will establish the Commonwealth's financial management framework and contribute significantly to it. For these reasons, our support for the legislation is more measured than it may have been under different circumstances and with more time.

That was the Auditor-General speaking. This is the man who played a very significant part in framing the two bills that this piece of legislation will replace. If the Auditor-General feels uncomfortable and believes that there has been a very limited open exposure process and that the lack of consultation has undermined the confidence in this bill, surely that is a red flag to the government to withdraw this bill and come back with it once the mechanics have been detailed so that we as members of parliament with responsibility for making informed decisions in this House can actually find the detail on which we are making decisions.

More significant testimony was given to the recent inquiry. The Auditor-General's view was supported by none other than the Australian Public Service Commissioner Stephen Sedgwick. His testimony stated:

The Public Service Commissioner … is sympathetic to the Auditor-General’s view that it would have been preferable if the bill had been subject to a longer exposure process, given the number of entities and officials affected by it and because of the fundamental importance of the legislation.

The ABC is one of the almost 200 entities that would be covered by the new financial framework and, in testimony before the inquiry, the chief operating officer of the ABC, David Pendleton, said:

I guess the reservation we have about the haste is around clarity on the rules that sit underneath the legislation and the detail that flows with them. That would be our one caution around the timing of the haste of this.

Stephen Bartos, an expert in public sector governance and risk and the former deputy secretary of the Department of Finance and Deregulation, noted in his submission to the inquiry:

It is worth reminding the JCPAA that the processes to replace the Audit Act 1901 with the FMA and CAC Acts took around a decade. They involved a number of hearings of the JCPAA, open consultation, submissions from many Commonwealth departments and agencies, and detailed consideration of the pros and cons. The current Bill deserves the same sort of consideration, not a rushed process.

In addition, Stephen Bartos went on:

The introduction of as yet unspecified rules to give effect to the governance framework relies on a heroic assumption that the Finance Minister (and her/his department) in future will put in place a set of rules that fosters good governance, rather than unnecessary checking procedures and pettifogging compliance.

The bill is not reassuring on this score. Finally, he says:

The public service is too important to Australia to be reformed without more open and searching investigation of the issues. The JCPAA should seek a remit to conduct such an inquiry.

We have just heard the words before this inquiry of the Auditor-General, the Australian Public Service Commissioner, the Chief Operating Officer of the ABC and a former deputy secretary of the department of finance, Stephen Bartos. They have all expressed, as one, their deep reservations about the lack of consultation, the lack of transparency, the lack of any detail. That is the problem. No-one is objecting to the fluffy, furry and acceptable principles that are included in this bill and some of the guidelines as to how the rules will be prepared. About 80 per cent, if not more, of the impact of this bill is in the rules. Here we have major public servants and others who have got or who have had responsibility for these very provisions, for the framing and the operation of these acts, all expressing to a public inquiry deep reservations about the haste and the lack of any detail.

Yet the government goes on in the arrogant way that it had been going on in so many areas of legislation in this place. It is like a conveyor belt of legislation going through the guillotine without any opportunity for this side of the House to really have any impact. They have a tin ear, not just to our side of the parliament but to so many of the stakeholders. In this case the stakeholders are the public servants themselves. In many cases none of the departments have had any substantive input into this bill. Certainly there has been no substantive input into the rules which, by their own admission, have not even been prepared yet. This is again another black mark on this government. It is starting to become endemic in terms of the insult that is served up in so many pieces of legislation where we are expected to put our hands up and go along with a whole lot of fluffy, good-sounding sentiments and objectives without the benefit of knowing exactly how these things will be implemented. Invariably everyone is disappointed. If you do not confer, if you do not consult with those who do know the operation and are in fact responsible for carrying out and working within the confines of these pieces of legislation, in this case the public servants, then if you have not conferred with them in a proper manner and it has not had a proper airing and consideration, it is no wonder these things end up being inadequate and not doing the job.

A separate transitional and consequential amendments act will also be required to ensure consistency between this bill and existing legislation and regulations which apply to those entities covered. The substantive provisions of this bill would commence on a date to be fixed by proclamation or on 1 July 2014, whichever happens first. The Auditor-General has also suggested that a six-month delay of this bill would not necessarily mean that the start date would have to change.

In conclusion, the words of Rob Elliott, the General Manager, Policy, and General Counsel, Policy and Advocacy, for the Australian Institute of Company Directors, are most salient. I quote:

When governments are considering new laws there should be appropriate consultation and full transparency of all aspects of the proposal, including for associated regulations. This will ensure that issues of principle, unintended consequences and practical problems can be identified and addressed. Delay seems prudent, given the lack of imperatives for this bill to be passed by this parliament.

I would like to thank in particular colleagues Senators Dean Smith and Anne Ruston for their work in relation to the bill on the Joint Committee of Public Accounts and Audit. Their conclusions were widely reinforced by the comments that I have just referred to, and many more in that inquiry. I also thank Senator Arthur Sinodinos and his staff member John Adams for their contribution.

This is a very important matter that is before the House. It goes to the administration of the Public Service and related bodies. If it is not passed, nothing will change. It will be business as usual and the entities covered under the existing framework will continue to function without any negative impact on taxpayers in the broader community.

We have had what are called 'pious amendments' moved in this place for a long time. They are often moved by the opposition which is not in a position to lead to a change in policy. They are an expression of intent. So 'pious amendments' have become a common practice in this place for good reason, especially for an opposition which is not the government of the day and cannot impose its will on the parliament.

What we have now is what I would call 'pious legislation' starting to become the feature of this parliament. Pious legislation is legislation which is full of fine-sounding sentiments but actually gives no effect to what those objectives seek to give effect to. It is becoming a ridiculous situation; it is irresponsible. It is shifting the responsibility that should be very much that of people in this parliament back to individual ministers and their advisers. It is unacceptable. It is a recipe for bad government and bad public policy. Future administrations of whatever colour or stripe need to be alert to this growing practice of what I would term 'pious legislation' arriving in this parliament. It is for these reasons that the coalition stands opposed to the Public Governance, Performance and Accountability Bill 2013 in its current form.

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