Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

The Financial Framework Legislation Amendment Bill (No. 1) 2007 is designed to reform the arrangements whereby government agencies are able to treat revenue that they receive as a result of their ordinary activities, or indeed sale of surplus items, as revenue that does not have to be accounted for in the wider appropriation process; but they can get authority from the Minister for Finance and Administration to deal with that as their own ordinary revenue and therefore to disburse the proceeds in the ordinary course of events for the purposes for which they are set up.

The idea of the legislation makes sense in order to liberate the process from existing arrangements which require the finance minister to give a specific exemption or reach an agreement with the particular agency, empowering them to treat these moneys in a certain way. It was revealed about a year ago, courtesy of an Auditor-General’s report, that this arrangement was being widely ignored or breached. Clearly, that raised questions about whether it was a sensible way to do things. The new arrangement put forward by the government does significantly liberalise this process and allows agencies dealing with these revenues and spending the proceeds of these revenues to be dealt with by regulation and in a more sensible way.

The opposition supports the legislation. We do, however, intend to keep a watching brief on how this unfolds. We are concerned on a number of fronts that the degree of decentralisation of financial decision making that the government has introduced into the government sector at the federal level is excessive and that that has a number of negative consequences—for example, on the front of purchasing, where there is virtually no across-agency coordination, which would deliver significant savings. So there are a range of reasons why we do have some general concerns about these structures. However, at first blush we believe that what the government is proposing here appears to be sensible. We certainly reserve the right subsequently, based on our own evidence of what is occurring in practice, to take a different view. We will be watching with interest, particularly if we are in government and I am the finance minister, which we hope will occur in the near future, to see how this arrangement works. But, on the face of it, it appears sensible and the opposition supports the legislation.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

It is certainly a delightful surprise to have the opportunity to speak on the Financial Framework Legislation Amendment Bill (No. 1) 2007. This is an important bill because it goes to the core of this government’s absolute commitment to ensuring that, when it comes to the financial management of the Commonwealth of Australia, we manage it in an appropriate and guided way. In that respect, it is important to take time to pause and to consider this government’s financial performance and the various legislative safeguards and initiatives that this government has taken to ensure that there is a suitable financial framework in place, and contrast that with the performance of previous federal governments which perhaps have not been quite so diligent when it comes to financial frameworks or, importantly, when it comes to the management of the Australian economy.

In this respect, I note that the bill primarily amends division 3 of part 4 of the Financial Management and Accountability Act 1997. There are five sections in the division, each of these relating to an appropriation authority. There are also a number of consequential amendments contained in the bill to the Auditor-General Act 1997, as well as to the Legislative Instruments Act 2003. I am also pleased to note that this bill clarifies other matters within the FMA Act with respect to delegations.

From my perspective, if you look at it in a collective sense, the amendments that are before the chamber today will reduce red tape when it comes to Australian government administration, will provide a simpler financial framework and will ensure that the administration and management of appropriations are simplified when it comes to Australian government decisions. This underscores the fact that there is continuing evidence of an ongoing incremental set of improvements to the financial framework. This is in fact the third financial framework legislation amendment bill, with financial framework legislation amendment legislation having been passed in the previous years, 2005 and 2006. Each of these has evidenced ongoing monitoring and review. This demonstrates that incremental improvements to the financial framework will continue on an ongoing basis.

I have basically touched upon all the key initiatives in this bill as I see them. I commend the bill to the House.

Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

Going through the various aspects of this bill reminds me of the complexities within government administration. I suppose to the average layman, when we talk about the complexities of government administration, the best example was that old series Yes, Minister. I recall the celebrated occasion in that series when Sir Humphrey was banned from the minister’s office and he appeared at the window of the minister’s office, tapping on the window and wanting to get in. As a member of this House I believe that we have to remember that vision of the Public Service with Sir Humphrey tapping at the window wanting to get in, because inevitably that is what happens in relation to overly bureaucratic practices. They will be tapping at our window, wanting to get in all the time. It behoves the government to be constantly aware of those sorts of things and when they hear the tapping at the window from Sir Humphrey they need to block that out. Do not let Sir Humphrey in. Avoid the temptation to allow the overly bureaucratic tendencies that sometimes flourish within the Public Service. Stamp them out and seek always more effective ways of doing things.

That is the purpose of this bill. This is a conscious effort by the government to continue to refine the framework within government administration to make it more efficient, more effective, more transparent, more accountable to the public and more accountable to the parliament. I commend the parliamentary secretary and the others involved in drafting this piece of legislation because, dull though it might be and difficult and convoluted at times, it is important that we continue to put ourselves into harness and fight the forces of gravity that drag us down always towards more bureaucracy and more opaque reasoning and language and administrative practices. This is a government that is committed to reducing red tape and instituting a simpler financial framework. That is a fact. Despite the occasional scoffing—do you remember, Parliamentary Secretary?—by members opposite, the government continues to put itself into harness and continues to fight for the reduction of red tape in effective ways.

We do this in an environment in which it is important to maintain principles of security, accountability and transparency, and the government is well and truly on the record as a performer in this regard. In both 2005 and 2006 the government passed financial framework legislation acts, both of them simplifying the system. So we come back to it again and again and we look for ways to improve the framework, to make it less bureaucratic and more accountable to the parliament as well as to the public, and more transparent. This bill continues the work in reducing the red tape in government administration, simplifying the framework and the administration and management of appropriations.

These amendments relate primarily to the Financial Management and Accountability Act 1997. The FMA Act was introduced almost 10 years ago and this bill ensures that its processes continue to evolve to meet the needs that apply today. The measures that we are talking about today are of particular importance when functions are transferred between government agencies. Of course that happens from time to time and I am aware that from time to time things can fall between the cracks in those kinds of changes. It can result in different emphasis being placed on issues within new departments and it is important that the control and the allocation of those appropriations be done effectively and smoothly and in a way that is clearly transparent and clearly understood by all those parties involved.

The changes impact upon the act in various ways. For example, you can really only interpret section 31 of the FMA Act by looking at three different sets of documents. That is a complex and very legalistic undertaking, and something that is not transparent. So in these amendments today the government propose to get rid of the need to consult those three different documents—although I suppose that is still open—and reduce it to a situation where there is just a single point of reference for the regulations. That is something that makes it much more clearly understood.

The amendment will effectively also—and I am sure that this, Mr Deputy Speaker Haase, is something you will approve of—improve parliamentary scrutiny. Where the current agreements made under section 31 are exempt from parliamentary disallowance, the fact that these are now going to be covered by a regulation and are subject to disallowance by the parliament is something that I think, Mr Deputy Speaker, you would wholly endorse, and I think any vociferous member and supporter of democracy in Australia would do the same. It is good that we cover this by way of regulation and make it in a way that it is disallowable and therefore accountable to the parliament. That is something Sir Humphrey would not have liked. He would not have endorsed such an incredible and obvious expression of accountability to the public or to the parliament, would he, Mr Deputy Speaker. Once again, Sir Humphrey tapping at the window and we do not let him in. It is something very important to the ordinary and good-sense government that we need in this country.

In the case of sections 28 and 30 there is an interesting state of affairs where there is apparently a similar form of words applied in two different respects. But the way in which it is worded is very opaque and it is not clear, on the immediate reading of it, how it works—which particular set of circumstances are referred to in the first case and which in the second. The amendment to section 28 clarifies the way this is written. It will now clarify the status of repayments by the Commonwealth. And section 30 will clarify repayments to the Commonwealth. That might seem like a piffling matter but, if you were to get those two things confused, no doubt it would result in quite a mess. The fact that it is opaquely worded at present I think is something that members would find disappointing, and the amendment seeks to pick that up.

One of the other important factors in good administration is that there be clear lines of administration between the CEO, the departmental head, the person responsible for a department’s functions, and those who are there carrying the functions out, so that we have a clear line of responsibility. Chief executives of departments need to have full oversight and control over the appropriations for which they have responsibility, so there are amendments to section 53 that would clarify a chief executive’s role in issuing directions when delegating a power or function. Of course, powers are delegated from time to time, but it is important that it be made clear just how those sorts of delegations are being made, and what changes are entailed within them, and to ensure that the chief executive’s role and the extent to which powers have been delegated remain clear. So the amendments to section 53 pick that up very directly; something that I endorse wholeheartedly.

Within the changes proposed by this bill, it is important that, where there are incremental improvements to the financial framework, these be undertaken regularly, as I said before. We have done that in 2005, 2006 and now again in 2007. It is important that we continue to press this forward. So I urge the parliamentary secretary and others within the government to continue to push for amendments that do these commonsense changes justice and ensure that the government is placed in a good position to be able to make the activities and responsibilities of its departments more readily understood and accountable to the parliament and to the public.

I have a few overriding comments about the bill. It is important that we note that the changes today clarify how financial transactions can occur between the financial management act agencies. They amend the FMA Act to allow for a single disallowable legislative instrument in place of a series of over 80 appropriation agreements. They insert a new section to the FMA Act clarifying the timing of adjustments to appropriations. They clarify how and when the goods and services tax liability affects appropriations. They amend the FMA Act to clarify a chief executive’s power to issue directions to officials, and make consequential amendments to the Auditor-General Act 1997 and the Legislative Instruments Act 2003 as a result of the proposed amendments to the FMA Act.

This bill will facilitate the adoption of appropriate administrative practices through clearer legislative provisions generally, which will reduce red tape and should improve the efficiency of agency operations. The amendments to the FMA Act relating to net appropriation agreements, including consequential amendments to the Auditor-General Act 1997, arose from the findings of the Australian National Audit Office in their audit report No. 28. So the government is responding to those suggestions from the ANAO. Changes that make the system more transparent, more clearly understood and more accountable to the public and to the parliament are being introduced. I commend the bill to the House.

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I thank members for their contributions to this debate, particularly the member for Blair, who has just demonstrated a very thorough knowledge and understanding of this bill. I thank him for his contribution. The Financial Framework Legislation Amendment Bill (No. 1) 2007 primarily amends division 3 of part 4 of the Financial Management and Accountability Act 1987, otherwise known as the FMA Act. That division consists of five sections, each relating to the appropriation authority. The bill also contains a small number of consequential amendments to the Auditor-General Act 1997 and the Legislative Instruments Act 2003, and clarifies another matter in the FMA Act in relation to delegations.

Significantly, the amendments will considerably strengthen parliamentary oversight capacity for the FMA Act to increase agency appropriations. Current arrangements under section 31, for example, require three separate sources of information in order to identify both the amount of an increase as well as the original source of the appropriation authority. Those three sources are the agency section 31 agreement, of which there are 80-plus, as well as the text of section 31 of the FMA Act and the annual appropriation act in question.

In addition to also being exempt from parliamentary scrutiny, these arrangements can vary widely from agency to agency. The revised arrangements in the form of a regulation to apply uniformly to all agencies will also be subject to parliamentary disallowance. The revised arrangements will also be restricted to departmental items. In addition to the increased oversight by parliament, officials themselves will have better scrutiny and control over the appropriations administered within their respective agencies. The new section 32A will eliminate the current scope for appropriations to be increased automatically by operation of law without officials necessarily even being aware that the increase has occurred. The revised arrangements will ensure that no increase to an agency’s appropriation will take place until a record has been made in the agency’s accounts and records. This considerably tightens agencies’ oversight of appropriations.

The amendments are evidence of the ongoing incremental improvements in the financial framework. This is the third financial framework legislation amendment bill, with financial framework amendment acts having been passed in both 2005 and 2006. Each has evidenced ongoing monitoring and review, showing that incremental improvements to the financial framework continue on an ongoing basis. While this area is relatively technical in its nature, it is an important part of financial management accountability that this government takes seriously. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

A message has been received from His Excellency the Governor-General recommending in accordance with section 56 of the Constitution an appropriation for the purpose of this bill.

Ordered that the bill be reported to the House without amendment.