Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

I rise to speak on the Financial Framework Legislation Amendment Bill 2008. This bill will continue the coalition’s work to promote transparent and accountable government finances for Australian government departments, agencies, Commonwealth authorities and Commonwealth companies which are predominantly contained in the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997.

The bill amends the Financial Management and Accountability Act 1997 to clarify the operation of the law, rather than changing it substantively, and allows for more efficient processes. The bill also amends the Albury-Wodonga Development Act 1973, the Public Service Act 1999, the Reserve Bank Act 1959 and the Defence Home Ownership Assistance Scheme Act 2008 to correct typographical errors and to make provisions in those acts consistent with the Commonwealth Authorities and Companies Act 1997.

The coalition supports any move to improve the transparency and accountability of government finances and to reduce the red-tape burden on government agencies and on business, particularly small business. I also note that this bill continues the work of the previous coalition government to improve and refine the financial governance arrangements for the Australian government. These changes have come about based on experience with the FMA Act, which has been in operation since 1997. This bill is the fifth bill of its type since the FMA Act was introduced. The act was introduced by the coalition in 1996 as part of a package of four bills and associated measures designed to modernise controls on Commonwealth finances and over businesses owned or operated by the Commonwealth. The act brought a greater degree of uniformity and clarity to financial reporting standards applying to Commonwealth authorities and established standards of conduct for those engaged in the management of these entities. These amendments build on the act and are aimed at improving governance and accountability arrangements for bodies within the Australian government.

As I have said before in this place, the coalition has a track record when it comes to improving governance, accountability and transparency across a range of areas. We introduced accrual accounting to provide details of the full cost of service delivery. For the first time, we in government published a balance sheet for the general government sector and the whole of the public sector. When Labor was last in government it had no idea, and as a result we had no idea, of the value of government assets or key liabilities, such as the unfunded superannuation liability.

The coalition introduced for the first time consolidated, whole-of-government financial reports audited by the Auditor-General and the output-outcomes framework to place the focus on what was actually being delivered for the money spent. We also introduced legislation to bring 2,800 Aboriginal and Torres Strait Islander corporations up to date with modern corporate governance and accountability standards. In 2003 it was the coalition that established the Defence Materiel Organisation, or the DMO, as a prescribed agency, giving Australia’s largest project management organisation greater responsibility and accountability in providing better procurement to ensure equipment was delivered on time and on budget.

The coalition paid attention to making migration settlement programs outcome oriented, accountable and focused on delivering services that ensured migrants, refugees and humanitarian entrants became independent, active participants in Australian society as quickly as possible. When Labor was last in government, settlement grants were distributed on political grounds rather than according to community need, while poor management and lack of accountability jeopardised settlement program delivery.

There is much debate in the community at the moment about the state of the Australian economy. I will take this opportunity to discuss some of the concerns the coalition has about the direction in which this government is headed under a Treasurer and a Prime Minister who clearly have no financial or economic capacity to manage a $1.1 trillion economy. I draw the attention of the House to lending data for June showing a decline in the seasonally adjusted value of finance extended for owner-occupied dwellings, which is down 1.1 per cent, and commercial finance, which is off two per cent. The seasonally adjusted series for the value of total personal finance commitments rose by 5.8 per cent. In fact, in seasonally adjusted terms, the total value of dwelling finance commitments, excluding alterations and additions, decreased by 0.9 per cent in June. Owner-occupied housing commitments decreased 1.1 per cent and investment housing commitments 0.3 per cent. In July this year, 85,411 new motor vehicles were sold. That is a seasonally adjusted figure and is 3.4 per cent lower than the total for June and 4.1 per cent lower than one year ago.

The seasonally adjusted estimate of turnover for the Australian retail and hospitality services series decreased by one per cent in June in nominal terms and by 0.6 per cent in volume terms. This follows a revised increase of 0.9 per cent in May. The June results were lower than market expectations. Annual growth in the Westpac-Melbourne Institute leading index of economic activity fell to 2.1 per cent in May, which is well below the index’s long-term trend of 3.9 per cent. The coincident index fell from 3.2 per cent in April to three per cent in May, remaining below its long-term trend of 3.8 per cent.

I turn now to business confidence. The government’s record in this regard is shameful in such a short period. The National Australia Bank monthly business survey indicates that confidence remained steady at negative nine points in July to be at its lowest level since September 2001. The measure has fallen 24 points since last June and 15 points since November 2007. The May 2008 quarterly Sensis Business Index shows that small business confidence in the Commonwealth government has fallen 53 percentage points since the election of the Rudd government in November last year. I repeat that statistic: the May 2008 index shows that small business confidence in the federal government has fallen 53 percentage points since its election only eight months ago.

It is an amazing story in relation to not only business confidence but also consumer confidence slumping. The August Roy Morgan consumer confidence rating is 90.1, which is the lowest since December 1991. It is down 1.9 per cent from July 2008 and it is 35.1 points lower than the figure in August 2007. The August 2008 Westpac-Melbourne Institute consumer sentiment index is currently 86.2 per cent, which is a recovery from the July figure of 79 per cent, which was the lowest level since July 1992. Obviously this index is below 100, showing negative sentiment. It is 22.4 points below the figure in August 2007 and it has fallen 24.3 percentage points since the election in November last year.

The June 2008 Sensis Consumer Report indicated a net balance of 35 per cent of Australians reporting confidence in their financial prospects for the year ahead. That is a fall of nine percentage points from last quarter alone, bringing confidence to the lowest point recorded since the start of the Sensis Consumer Report, in May 2004. Over the past six months, confidence levels amongst consumers have fallen by 26 percentage points. Only 22 per cent of Australian households believe they are better off now compared to a year ago, which is down three percentage points in the past quarter. That is the lowest level recorded in the history of the Sensis Consumer Report. Nearly 80 per cent of Australian households believe that they are no better off than they were a year ago.

In conclusion, I just want to say that this really underscores the fact that, far from instilling business and consumers with confidence, this government is detracting from that very prospect. At the moment, we are seeing a considerable slowing in growth, largely because the Australian business community and the Australian consumers have no confidence in where this government is headed. The view in the small business community in particular is one of great uncertainty. They do not know what the next month holds let alone what the next 12 months hold under this government. They know that there are international factors at play—nobody denies that—but what underscores the difficulty being experienced by small business at the moment is that they believe that this government does not have the policy settings to deal with those international factors. That is the very distinct point that needs to be made about the management of the Australian economy, a $1.1 trillion economy, under Kevin Rudd and Wayne Swan and the management under the coalition when we were in government. The coalition when in government experienced international factors, including a downturn in the United States economy—in fact, a recession in the United States in 2001. We dealt with the economy after 9-11, which belted confidence out of business because they did not know exactly what the future held for their business and indeed for the country as a result of the terrorist attacks. We withstood the SARS threat, which went close to crippling our tourism industry. But confidence remained in the ability of the government of the day to deal with those issues.

The point that needs to be made is that over the last eight months this government has demonstrated it has no capacity to deal with those international factors and mitigate them and provide certainty for small business. If small business are not certain about their environment and their future, they will not invest in staff, they will not build new factories, they will not buy new motor vehicles and they will not put capital back into their business to grow their businesses in the way that they did during the last 10 or 11 years. That is the situation we find ourselves in at the moment and it is why this government needs to come to the dispatch box now and explain itself. The Assistant Treasurer is busily writing away and making notes—I will send him a copy of the Hansard later on. He needs to come to the dispatch box now and explain to the Australian people why this government has belted the confidence out of the marketplace.

There are literally tens of thousands of Australians in casual and part-time employment at the moment who are having their hours cut. There are thousands of employees who are being retrenched. Imagine telling small business 12 or 18 months ago that they would find themselves in the position where they would have to put staff off or cut back their hours. In their view, that situation was completely unimaginable. Those members opposite who have no experience in small business whatsoever have no idea, frankly, of what we are talking about when we say that small business are in a very different environment today than they were 12 months ago. The reality is that this is a government not for small business. It is not about creating the circumstances where business feel confident about employing staff or where consumers feel confident about making purchases and supporting the growth of the Australian economy. As I say, it is the reason that the Assistant Treasurer and this government need to come to the dispatch box now to apologise to Australian business for the way in which they have conducted their economic policy over the last eight months. This minister needs to apologise to Australian consumers, particularly families who are having their hours at work cut right now because business do not feel confident about retaining staff in an uncertain environment. That is the onus that is on this government. Whether or not it is up to the challenge remains to be seen. At the moment, business and consumers need reassurance so that we continue to grow a fundamentally strong economy—which is the result of the economic performance of the previous coalition government in period 1996 to 2007. As I said in my opening remarks, we support the bill before the House. I commend the bill to the House.

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to support the Financial Framework Legislation Amendment Bill 2008. This bill amends a number of acts, namely the Financial Management and Accountability Act, the Albury-Wodonga Development Act, the Public Service Act, the Reserve Bank Act and the Defence Home Ownership Assistance Scheme Act 2008. The amendments in the bill will provide clarification of the operation of the law in the area of public financial management as well as correcting typographical errors and providing consistency in a range of areas.

Good governance practices are essential for the operation of our democracy. We heard precious little about that from the member for Dickson when he was speaking a moment ago, but it is something on which the Rudd Labor government places great importance. I have spoken previously about the need for government administration reform that is aimed at achieving consistency, transparency, accountability and the reduction of red tape. When I spoke earlier this year on the Commonwealth Authorities and Companies Amendment Bill, which forms a pair with this bill, I spoke on exactly those same themes, and today I want to speak about a number of the particular provisions of this bill that help advance those aims of consistency, transparency and accountability.

It would be funny, if it was not so tragic, to hear the suggestion from the member for Dickson that those of us on this side of the House have no experience of small business. Sitting next to me is a fellow legal practitioner who has run his own small business for some 21 years. Perhaps the member for Dickson had not noticed, but I was self-employed before coming into this place; I ran my own business for some 22 years. I venture to suggest that there is a great deal more knowledge of small business presently on this side of the House—certainly represented by the member for Blair and myself, to speak of but two—than perhaps anything the member for Dickson personally knows about small business.

As for the fake concern about the rights of workers, one is tempted to ask where the member for Dickson was when the Work Choices legislation was being put through this place. Where was the member for Dickson standing up for the rights of workers, as he now professes to be doing while in fact expressing this fake concern about the conditions in Australian workplaces? Where was he when the Howard government put through its Work Choices legislation, representing as it did an immense and unprecedented attack on workplace conditions in this country? As for the suggestion that anyone on this side of the House needs to apologise to Australian business, that apology needs to come to Australian business from the other side of the House for the things that they did in government to directly damage the economy of this country. But I should return to the bill.

The Financial Management and Accountability Act and the Commonwealth Authorities and Companies Act provide the framework for managing the Commonwealth’s finances. The amendments proposed in this bill provide clarification about the use of finance minister’s orders and financial management and accountability regulations, and I will start with that particular aspect of the bill. Items 17, 26, 45, and 57 of schedule 1 amend sections 10, 13, 40, 60(2)(a) and 60(2)(b) of the Financial Management and Accountability Act by replacing references to the ‘Finance Minister’s Orders’ with references to ‘regulations’. These amendments clarify the operation of finance minister’s orders, which are documents that form quite an important part of the financial administration of this country. The finance minister’s orders are described in this way in the department’s description of them:

The FMOs are produced each year and have the force of law under the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act). The FMOs outline the requirements for the preparation of Financial Reports of Australian Government Entities. One of the main purposes of the FMOs and supporting Policies and Guidance is to ensure consistency of accounting policy choices across Government Entities where Australian Accounting Standards allow choices. Consistency is important to ensure comparability of Financial Reports across Entities and to facilitate the consolidation of individual Entity Financial Reports when preparing the Australian Government’s Consolidated Financial Statements. The FMOs aim to enhance the usefulness of information presented in Financial Reports to Government and major external users.

It is the case that at present there are two sets of finance minister’s orders. Both are made under section 63(1) of the Financial Management and Accountability Act but they can deal with any matter on which the financial management act ‘requires or permits Finance Minister’s Orders to be made’ and any matter ‘on which regulations may be made.’ The difficulty with that is that the same subject matter can be the subject of both finance minister’s orders and regulations, which, of course, results in possible discrepancy and confusion for those agencies that are required to comply with the financial framework.

The purpose of these proposed amendments is that matters will be either the subject of regulations or, in the case of matters that relate to an agency’s financial statements and financial reporting, they will be the subject of finance minister’s orders. It is precisely the kind of clarification, elimination of duplication and simplicity that ought to be the object of all legislation in this place and certainly is a priority of the Rudd government. These particular changes are going to help to provide consistency across government in terms of accounting policy choices. The Department of Finance and Deregulation has actually pointed out that consistency is important to ensure comparability of financial reports across entities.

There are many other changes that are contained in this bill. Items 28 and 29 amend section 16(1) of the Financial Management and Accountability Act to clarify that the Legislative Instruments Act applies to special instructions issued by the finance minister. Perhaps I should say, more generally, that although this bill is primarily technical it is in line with the broader objectives of the Rudd Labor government to foster open government.

I should mention the provisions of this bill which tidy up the situation in respect of the Albury-Wodonga Development Corporation. At present, the Commonwealth Authorities and Companies Act does not apply to the Albury-Wodonga Development Corporation and there is what I think is fair to describe as a great deal of messiness in respect of who the responsible minister for the Albury-Wodonga Development Corporation is. At present, the finance minister is the minister responsible but, as at 30 June 2007, the responsibility had been, under the former government, with the Parliamentary Secretary to the Minister of Finance and Administration, who at the time was Senator the Hon. Richard Colbeck. The fact that the responsible minister may not necessarily be the finance minister is reflected in the use of distinct terms of ‘minister’ and ‘finance minister’ in the Albury-Wodonga Development Act, and that, of course, is a degree of unnecessary complexity.

The main effect of the repeal of the provisions that are listed in items 1 to 14 of schedule 1 of the bill will be to apply the Commonwealth Authorities and Companies Act to, in future, the Albury-Wodonga Development Corporation. That is appropriate because the Commonwealth Authorities and Companies Act deals with matters relating to Commonwealth authorities, including reporting and accountability, banking and investment, and the conduct of officers. Notably, part 3 of the Commonwealth Authorities and Companies Act deals with reporting and other obligations for Commonwealth authorities. The Albury-Wodonga Development Corporation, because it meets the definition of a Commonwealth authority as that definition appears in the Commonwealth Authorities and Companies Act—because it holds money on its own account and is a body corporate that is incorporated for a public purpose by an act, namely the Albury-Wodonga Development Act—is certainly an appropriate body to be brought within the overall framework of reporting and accountability that is constituted by the Commonwealth Authorities and Companies Act.

More generally, although this bill is properly described as primarily technical, I can say that it is completely in line with the broader objectives of the Rudd government to foster open government. This government has a clear agenda of accountability and integrity in government. The parliament has already seen this through changes to public sector administration; through announced changes to electoral laws and to freedom of information laws; and through the inquiry that the Standing Committee on Legal and Constitutional Affairs, which I chair, is presently conducting into a scheme of whistleblower protection for the Australian public sector. All of these are areas of improvement which will help to restore confidence in the integrity of our political system.

Specifically, I should mention the freedom of information changes that Senator Faulkner, Cabinet Secretary, has recently announced in relation to the freedom of information laws, which will indeed be the most significant overhaul of the Freedom of Information Act in its more than 25 years of existence. Specifically, the government has moved to abolish the power of ministers and agencies to issue conclusive certificates under the FOI Act, and Senator Faulkner has announced the creation of the position of Freedom of Information Commissioner to be a statutory office holder. This is legislation that we would hope to see shortly.

As I mentioned a moment ago, the Attorney-General has requested the House of Representatives Standing Committee on Legal and Constitutional Affairs to inquire into and report on a preferred model for legislation to protect public interest disclosures or ‘whistleblowing’ within the Australian public sector. It seems self-evident that more effective and comprehensive protection for whistleblowers will increase the likelihood of public interest disclosures being made, which will, in turn, improve the quality of government in this country. In developing a preferred model of legislation on this subject of public interest disclosure, the outcome of the inquiry presently being conducted by the standing committee will deliver on the government’s commitment, prior to the last election, to provide best-practice legislation to encourage and protect public interest disclosures.

I should perhaps mention also a couple of other provisions in the bill. There are some very welcome provisions in it which will simplify language that is contained in the legislation. Too often we see legislation that is written in a way that loses clarity for the sake of some imagined precision. In areas of the law that are technically complex, it is sometimes inevitable that the language will be technical and complex. Nevertheless, there should be at all times an attempt made to ensure readability—an attempt made to ensure that laypeople, when they come to read the legislation, will have some possibility of understanding it. We see an example of an attempt being made to use simpler language to express complex areas of regulation in the offering of a replacement for section 44(2) of the Financial Management and Accountability Act, which reads like this:

If compliance with the requirements of the regulations, Finance Minister’s Orders, Special Instructions or any other law would hinder or prevent the proper use of those resources, the Chief Executive must manage so as to promote proper use of those resources to the greatest extent practicable while complying with those requirements.

That is to be replaced, as proposed in this bill, with a much simpler and much shorter wording, which I will read:

In doing so, the Chief Executive must comply with this Act, the regulations, Finance Minister’s Orders, Special Instructions and any other law.

It is a much simpler way of expressing an almost identical requirement. The drafters of this legislation are to be commended for making the attempt and it is to be hoped that that indeed continues.

Finally, I should mention the provision of this bill which uses the Criminal Code. One of the purposes of establishing a Criminal Code for the Commonwealth was to ensure that there would not be duplication throughout the Commonwealth statute book of provisions which touched on criminal law, which created criminal offences or which described the way in which criminal offences are to be prosecuted. This proposed legislation continues that approach of adopting, where possible, provisions of the Criminal Code, maximising the usefulness of the Criminal Code so that, where one is needing to look at anything with a criminal concern, one goes first to the Criminal Code. That is why we see in item 16 of this proposed legislation a repeal of section 7 of the Financial Management and Accountability Act, which states that chapter 2 of the Criminal Code, the provision that sets out the general principles of criminal responsibility, applies to all offences against the financial management act and deals with maximum penalties. Section 7 is no longer needed because subsection 2.22 of the Criminal Code already provides that, subject to provisions of the code dealing with something not relevant in this context—self-induced intoxication—the code ‘applies on and after 15 December 2001 to all other offences.’ We see here a cleaning up of the statute book by making sure that that Criminal Code general provision will have application. I commend the bill to the House.

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

It is terrific that people come from all parts of this country to this House, from all states and territories, from all different kinds of professions—farmers, unionists, schoolteachers, lawyers, police officers—and from all manner of backgrounds. We have had some distinguished police officers who have served this parliament. The current Minister for Ageing is a former police officer and my former federal member, the Hon. Bill Hayden, was a former copper, as he would put it. I had the pleasure recently of having lunch with him in Gatton, honouring a wonderful communitarian in my electorate, Herb Olm, whose grandson works for me and who is the oldest and longest-serving Labor Party member in the country at 100 years of age. Bill talked to that meeting about his background. But it is a bit rich that the member for Dickson, a former police officer, should lecture those on this side of the House, many of whom have extensive business experience.

I speak in support of this legislation, the Financial Framework Legislation Amendment Bill 2008. This bill is about transparency, openness and good governance. It is what small business expect. As a former small business operator myself, I know it is a challenge to run a small business. Small business operators in this country and the public at large expect government to be run well, and this legislation is about better governance in this country. I spoke, as the member for Isaacs did, in relation to the Commonwealth Authorities and Companies Amendment Bill 2008 earlier this year. The legislation that we have before us today is about aligning the legislation and the kind of governance we have in this country, particularly with respect to outsiders—non-Commonwealth entities—and also with respect to Commonwealth entities.

The governing legislation being amended is the Financial Management and Accountability Act 1997. The bill before us today amends that act and a number of others, including the Albury-Wodonga Development Act 1973, the Public Service Act 1999 and the Reserve Bank Act 1959. In this area there have been a number of amending pieces of legislation passed since 2004, all of them designed to clarify, simplify and make better use of public administration and public moneys in this country. This bill purports to do the same, as well as reducing red tape in relation to governance and reporting.

Some of the provisions in this bill are akin to those of the Statute Law Revision Bill which this House uncontroversially passed earlier this year. There are corrections which are quite minor in relation to dates and parentheses but also some which are quite substantive. I will not touch on the Albury-Wodonga Development Act legislation amendments, as the member for Isaacs has already dealt with those as well.

The Minister for Finance and Deregulation said in his second reading speech on 26 June 2008 that this bill will reduce red tape in the administration of about 100 agencies which are governed by the Financial Management and Accountability Act, including 19 departments and a whole host of differing statutory and executive agencies. I agree with the final comments in the minister’s speech, where, referring to this bill and the amendments in the Commonwealth Authorities and Companies Act 1997, which was introduced in this House on 13 February 2008, he said:

Overall, this work demonstrates the government’s ongoing commitment to deregulation, where appropriate, of the financial framework, while optimising the accountability and transparency of the operations of government generally.

And that is what the public expect. They expect good governance, open government and better use of public moneys and better public administration. Certainly when I do the many mobile offices that I conduct in my electorate people talk to me about a whole range of issues, but they want value for their dollar. They want the Public Service to work well, efficiently and effectively. I must say that in this country we have been well served by a wonderful pillar of our community, the Public Service. But this is about making the system run better.

I want to concentrate on a few of the reforms in this bill. The first one I want to concentrate on is a curious expression called ‘outsiders’, which can be found in a new section, section 12, of the legislation. It is a very odd way to put it, but ‘outsiders’ are defined as:

… any person other than the Commonwealth, an official or a Minister.

In essence, an outsider is a non-Common-wealth entity. This amendment will permit an outsider to make payments of public money where the agreement or arrangement engaging them is authorised by parliament or the finance minister. This is going to help other third parties who contract with government as well as contractors and trustees which handle money. It will allow an outsider to, for instance, deduct authorised fees before sending the balance to the Commonwealth. This is not now the case. So this form is both practical and deregulatory in its focus.

The next reform I want to concentrate on is a change to section 44 of the Financial Amendment and Accountability Act, which concerns chief executives and the proper use of Commonwealth resources. The bill adds a note to section 44, to this effect:

A Chief Executive has the power to enter into contracts, on behalf of the Commonwealth, in relation to the affairs of the Agency.

We have done this a lot, both at state and federal levels—adding notes to explain legislation. I think it has been a wonderful initiative over the last few decades. This particular note clarifies and explains section 44(1) of the act, which affords the chief executive of the agency an implied capacity to enter contracts and which imposes on the chief executive the obligation to promote the proper use of Commonwealth resources. In practice, this power is actually delegated or authorised by the chief executive to a subordinate official of the agency, usually under section 53 of the legislation. This is the case even though the power and capacity to contract, lease or license mirrors that of the minister in whom the executive power of the Commonwealth vests.

The third reform in this bill which I want to refer to is the additional requirement concerning the proper use of Commonwealth resources. Under section 44(1) of the FMA Act, the ‘proper use’ must be efficient, effective and ethical. But now, under this amending legislation, it must not be ‘inconsistent with the policies of the Commonwealth’. I think the public would be surprised that that is not actually in the existing legislation. That is not the same as ‘in accordance with Commonwealth policy’, so there is a degree of flexibility there, and it is less prescriptive in its tone. It recognises the situational and contextual aspects of, say, procurement. This ensures decisions can be taken into account but must be looked at in the context of current Commonwealth government policies.

I want to make it plain: in my reading of the legislation—and I have read it thoroughly—this bill is not about reducing the independence of chief executives, for example the Auditor-General and the Ombudsman, who have legislative independence that is longstanding. But I do think the public, certainly the public in my electorate of Blair, want the Public Service to act consistently with the policies of the democratically elected government of the day.

The fourth point I want to make relates to new section 44A in this amendment bill. This amendment effectively is the same as the operational procedures under the Commonwealth Authorities and Companies Act in terms of the amendments we made to it earlier this year. It aligns the Financial Management and Accountability Act with the CAC Act. It means a chief executive must:

(a) give the Minister responsible for the Agency such reports, documents and information in relation to the operations of the Agency as that Minister requires; and

(b) give the Finance Minister such reports, documents and information in relation to the financial affairs of the Agency as that Minister requires.

Further, it makes it very plain that the chief executive must comply with a requirement concerning time limits set by the minister. Finally, the section does not limit any power that a minister has to require such information.

I think this is a good provision. It makes the Public Service and those entities governed by this particular legislation more accountable to the government of the day, and I think that is a good thing.

I want to talk about the audit committee requirements found in new section 46. This clause takes away the requirement for the finance minister’s orders to address the audit committee requirements and instead sets out the functions of an audit committee. The amendment allows for regulations to prescribe the composition of such committees and, again, is consistent with the Commonwealth Authorities and Companies Act 1997. The actual provisions, as I said, are found in new section 46, which is very clear. It says:

(1) A Chief Executive must establish and maintain an audit committee with functions that include:

(a) helping the Agency to comply with obligations under this Act, the regulations and Finance Minister’s Orders; and

(b) providing a forum for communication between the Chief Executive, the senior managers of the Agency and the internal and external auditors of the Agency.

In summary, this bill is about good governance, as the member for Isaacs said. It is about openness and transparency in government. It provides for auditing and an audit committee. It simplifies procedures concerning the use of public moneys and makes it clear that Commonwealth resources must be used properly, efficiently, effectively and ethically but not in ways inconsistent with the policies set out by the Commonwealth government of the day. It is this executive and this parliament that are accountable to the Australian people, not the Public Service, and it is this executive and this parliament that must determine how Commonwealth resources are used. Who should contract, who should lease, who should license and other arrangements must be determined by the government of the day. These powers must be used wisely in the public interest and with express authority, and not in some messy arrangement that is muddled and uncertain. That authority must be given by legislation or regulation. The Australian public deserve no less and they expect no less. This bill is an important part of the Rudd government’s good governance policy. I think it will ensure that public administration of this country functions more effectively. That is good for my electorate, good for my state and, I believe, good for the nation. I commend the bill to the House.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Financial Framework Legislation Amendment Bill 2008. This is an important bill albeit, as the member for Isaacs described it, a highly technical one. It is a significant bill because it is an important part of this government’s deregulation agenda. There are two elements that, at the broader level, I wish to focus on in respect of this bill. It is a bill first and foremost about deregulation and about better government. They are the two principles that are enshrined in this bill: better government and putting the deregulation objective back on the agenda.

When it comes to better government in this country, it is no longer a question of big government versus small government; it is about efficient and effective government. I think that this bill very much recognises that. To achieve effective government we also need to be conscious of the principles of responsible government and to ensure that there is accountability inherent in the processes of government. I think that this bill certainly achieves that objective.

In terms of deregulation, this government has been very active in trying to put deregulation back on the agenda after it was put on the backburner by the previous government for their more than a decade in office. One of the first moves that this government undertook was to ensure that we have a Commonwealth minister for deregulation and, indeed, a minister assisting the minister for deregulation. That is a significant symbolic decision that this government took to ensure that matters of deregulation were at the forefront of the thinking of this government. I note both the Minister for Finance and Deregulation and the Minister Assisting the Finance Minister on Deregulation have been out there assiduously talking to stakeholders both within government and, more broadly, within the community to ascertain the key issues and objectives that we as a government could be pursuing to move ahead at a rapid rate of knots on that agenda. That is certainly something that we have already done. Much progress has been made through the COAG process in trying to streamline the Federation and get it working much better than it has in the past. This is an important deregulation initiative. It is also about making sure that government is working better.

In addition, the deregulation agenda has included the entrenching of the new one-in one-out principle, where any new regulation must be matched, by identifying areas where regulation can be simplified or where regulations can be removed, to ensure that the overall regulatory burden is not increasing as the demands of greater regulation in a greater number of areas continue to be a challenge that government confronts. Our deregulation agenda has also involved moving the Office of Best Practice Regulation into the Department of Finance and Deregulation. The minister has said—and I believe this to be the case—that his role is now very much about being a guardian against excessive regulation. He is out there seeking to ascertain ways in which regulation can be reduced and processes can be streamlined to allow greater productivity not just within the processes of government but more generally within the way government deals with stakeholders throughout the community.

I want to turn to some of the provisions of this bill. Both the member for Isaacs and the member for Blair have covered most of this territory comprehensively. I want to focus on some of the amendments to the Financial Management and Accountability Act—in particular, the clarification in relation to notional payments. The amendments contained within this bill clarify that notional payments—payments within the Commonwealth and payments between agencies—should be treated as if they were payments to non-Commonwealth related entities for the purposes of regulating or assessing those particular transactions. This is an important element that restores and clarifies that position but ensures that there is further accountability in that area.

In the area of outsiders payments, the government is conscious of the need to increase flexibility in the way in which government does what it does but also of the need to do so in a way that ensures there is still accountability in place. This will allow a person who is neither a minister nor an official nor part of an FMA Act agency to make payments of public money. But they are only able to make those payments of public money where the agreement or the arrangement engaging them is authorised by the parliament or by the minister. So there is the flexibility that comes with allowing those outsiders payments but the check and the balance come and the accountability is secured by ensuring that that is only the case where the arrangement or the agreement entered into is authorised by the parliament or the minister.

The bill also proposes a number of changes in relation to the power of chief executives to enter into contracts, although, I think—if the truth of the matter be known—rather than to change those existing practices, this bill seeks to confirm and clarify what the position is. There has been much case law on this issue. I know that it may appear to some as though the matter has been settled—certainly, in some of the commentary available on this area, that would appear to be the case—but, by inserting the note, which is item 47 of the bill, at the end of section 44(1), there is greater clarity that chief executives do have that power. I think that this measure goes some way towards providing that greater certainty that chief executives, agencies and officials require of knowing the limits of their authority to enter into contracts. So that is a positive development envisaged in this bill.

The bill also makes some changes in relation to the notion of ‘proper use’ as defined within the act. The notion of proper use is extended so that the definition not only includes ‘efficient, effective and ethical use’—which I am sure we would all agree is entirely appropriate—but also ensures that such use is not inconsistent with the policies of the Commonwealth. To some that might be seen as something that should be a given but, for the purposes of clarifying and confirming the importance of government policies, guiding decisions and guiding notions of what might or might not be the proper use, this amendment certainly does achieve that greater certainty.

I will now move on to item 50. Item 50 goes to ensuring explicit recognition of something that might already, within various agencies, be seen to be implicitly the situation already—that is, to confirm and codify the entitlement of the minister to seek reports and information from agencies to ensure that the principle of responsible government is being upheld. All of these measures combined go a long way towards advancing not only the deregulation agenda but also, more specifically, our agenda of ensuring that government is able to operate more efficiently and with less complexity and bureaucracy.

I want to turn briefly to some of the comments made by the member for Dickson in his contribution. His contribution became quite wide ranging. He made a number of comments in relation to the economic outlook in this country and, more particularly, in relation to consumer confidence. It is truly bizarre for those on the other side to come into this place and, on the one hand, have no plans for how to secure Australia’s economic prosperity and, on the other hand, claim that, as a result of a decline in consumer confidence in this country, that is merely evidence of failures on the part of the Rudd government.

Right across the world, there is economic uncertainty at the moment. We are seeing various measures in countries all over the world at the moment. Consumer confidence measures have been in decline. There is no question about that. In the US, consumer confidence and business confidence are now at a 16-year low; in the UK, a 16-year low; and in New Zealand, a 17-year low. There are some enormous economic challenges that we face internationally. We all see the impact of the credit crisis. That is not just something occurring on the other side of the world; it has impacted on securitisation markets in this country and has had a great impact, a flow-through impact, on those people who have mortgages, in terms of increases in the interest rate that people are paying as a result of those funding cost increases. We are seeing in other parts of the world the oil shock, which, whilst it might be occurring in other parts of the world, is certainly being felt very seriously by many people in our community. There is the increase in world food prices. All of these factors are combining to paint a picture of a challenging international economic environment.

We can ignore those new and emerging international economic realities or we can develop a plan to address them. This is a government that is absolutely determined to implement its plan to address those challenges. Central to that plan, the cornerstone of our plan, is the delivery of a strong budget surplus, a budget surplus that was contained within the budget that was delivered by the Treasurer in this place and is now being blocked in the Senate by those opposite. Those opposite would argue that there is a decline in consumer confidence and that that is as a result of the government, but, frankly, they have failed to articulate any alternatives. If all of what they are proposing were to be adopted—and, when I speak of what they are proposing, I am not just talking about the lack of support for our revenue measures but, in addition to that, the spending that they are talking about embarking upon in relation to cuts in excise—if those proposals were to be undertaken, they would blow a massive hole in the budget surplus. We all know what that means. That means more pressure on inflation.

It took those on the other side a long time to come around, but finally they have acknowledged the great inflation legacy that the former government left this country. They have come around, but they have not come to the point of recognising that strategies need to be implemented in order to address that. A strong budget surplus is the most important thing that we can do in order to fight inflation and try and take the pressure off interest rates and all of those cost-of-living pressures that are affecting individuals, families—people right across this country.

So I call on those on the other side to either develop an alternative plan or get out of the way. To the extent that they have an alternative plan at the moment, it consists only of these so-called excise cuts, and we do not know whether they are 5c, 10c or 20c—there are a range of views on that on the other side, but that is about the only plan they have. So, if they want to criticise the clear, strong, economic policy that the government are implementing, they should come up with an alternative or they should get out of the way and ensure that our budget gets passed in the Senate so that we can start delivering a real attack on inflation and, hopefully, achieve some respite for those people suffering as result of higher interest rates and all of the pain that comes with that. I commend the bill.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to support the Financial Framework Legislation Amendment Bill 2008, and I commend the broad and thorough speeches of the members for Isaacs, Blair and Lindsay and their detailed treatment of the legislation before us. Before I too turn to the legislation, I just want to touch base with some of the points raised by the member for Dickson in what was quite a bizarre approach to the legislation before us. I wonder sometimes, if he is the opposition’s economics whiz-kid, what his actual grasp of the world economy is and what his grasp of even practical economics is. It must be a little bit different in Brisbane on the other side of the river, I guess. People on the southern side of the river obviously have a different view of the world—although, thankfully, our Treasurer does provide a little bit of logic over that side of the river.

It was amazing that the member for Dickson was able to detail the last 11½ years of economic reform and he was able to encapsulate all of the last 11½ years of economic reform as being, quite simply, some accounting skills that the Howard government touched on. That was it. Look at the great Hawke-Keating reforms of the decades before. All the member for Dickson was able to touch on was the fact that there had been some accounting skills demonstrated by the Howard government. So I think the time of the member for Dickson as an economic spokesperson is limited, and the member for Higgins might be able to provide him with a bit of guidance. He certainly needs to do a lot more work when it comes to understanding the world economy.

Whether we look at local sporting clubs, multinational companies or suburban households, no matter how big or small, every organisation needs a useful system in place to manage its finances, to pay its bills and to invest for the future. Obviously the Australian government is no different except that the accounting sheets are just so much more significant. Could I just take this moment to thank all of the treasurers across Australia, especially the volunteer treasurers, who do that great work for their organisations just for a pat on the back.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Often not that.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Yes, often not that; that is right. The government’s financial framework is governed by the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. The Financial Management and Accountability Act exists to provide for the proper use and management of public funds, public property and other Commonwealth resources—the funds, property and resources that belong to the good people of Australia. The act ensures accountability and transparency in the management of public money, and obviously all Australian taxpayers would expect nothing less. Hopefully, the members opposite—as they cling to the last remaining shreds of economic responsibility—would want the Australian taxpayers’ money to be managed properly and will be able to support this legislation a lot more readily than the member for Dickson. The absence of speakers from the opposite side perhaps suggests that silence is assent.

This bill amends the Financial Management and Accountability Act to further simplify the system. This bill will amend the act to reduce red tape in the administration of 19 departments and 100 agencies under the act. It will also update and clarify governance and reporting provisions, ensuring even greater efficiency and accountability. Taxpayers expect all governments to manage public dollars with the highest levels of integrity and accountability. They also expect us to be smart about the way that we invest and position Australia in the global economy. In the global economic market, like in the Olympics, we are a small country, but we do fight above our weight.

Australia is leading the world when it comes to fund management. This government will continue to drive initiatives that strengthen Australia’s position as a financial services hub, particularly in Asia. Through my background as a lawyer and in the union sector, I have seen employers and employees coming together with their industry funds, which seem to outperform so many other funds. Anything that this government can do to boost that is to be commended. The finance and insurance sector contributes more than seven per cent of GDP, employs around 400,000 and contributes about $30 billion in tax revenue. The policy of compulsory superannuation saving, introduced by the Hawke and Keating governments, has helped build offshore managed fund assets worth $1.4 trillion. That is the sort of economic reform that I was talking about—rather than just fiddling with the balance sheets, as the member for Dickson referred to.

This has helped develop Australia’s reputation as a well-respected, experienced and appropriately regulated financial hub—something that the rest of Asia looks to in amazement on occasion. We are a world leader, but we can do better. Despite being a world leader, only a small amount of foreign funds are under management here, with less than three per cent of fees derived from foreign investment. This was an opportunity missed over the last decade. With less than three per cent of fees derived from foreign investment, we needed to turn our gaze, more than a decade ago, to Asia to try to attract some of their funds and promote our experience and our credentials as a manager of funds. This government is reducing the withholding tax rate to encourage greater foreign investment in managed funds. Under new measures to be implemented, foreign investors will eventually be subject to a minimum 7.5 per cent withholding tax rate. This will make Australia more competitive, particularly in our region, and boost exports in the financial sector by more than $3 billion.

Much of this bill corrects typographical errors—and I know you are stickler for typographical errors, Deputy Speaker Sidebottom—or clarifies existing provisions. While I welcome the corrections, I do not intend to dwell on them today. However, I will address some of the more significant amendments contained in this bill. This bill gives public servants, particularly chief executives, a clearer understanding of what is required of them and their reporting obligations regarding government resources—that is, the resources that belong to the good people of Australia. The bill clarifies that chief executives must use Commonwealth resources in synergy with Commonwealth government policy.

Chief executives already understand the efficient, effective and ethical use of public resources. This amendment bill builds on this understanding to make it clear that approval of expenditure must also be in keeping with the relevant Commonwealth policy. Any fair-minded person would expect that public funds should be spent in a way that is consistent with government policy. This amendment effectively enshrines in law the modus operandi that is already in place in the Australian Public Service. The Rudd government have a very high regard for the Public Service, and that is why we want to ensure that their obligations and expectations are always clearly defined.

The Public Service has a long tradition of independence and effective implementation of government priorities, irrespective of the government. It is important that the independence of the Public Service is upheld. It was reassuring to see after the election in November last year that there were no job losses—or no ‘night of the long knives’—as occurred when the Howard-Costello show hit Canberra back in March 1996. Instead, we had faith in the public servants here in Canberra. I stress that these amendments before the House do not in any way undermine the independence of statutory officeholders, like that of the Auditor-General and the Ombudsman.

This bill will also deregulate the ability for contractors to handle public money when authorised by an act or by the finance minister. Contractors can already make payments of public money, but it is a very complicated legal process. It either involves complex legalese or actually occurs in contravention of the law. This amendment will sort out those anomalies. Obviously, we do not want to take anything away from the good work of lawyers, but this will simplify things. Under this amendment, any agreement will still need to be authorised by the parliament or the Minister for Finance and Deregulation, the Hon. Lindsay Tanner, but it will ensure that contractors can legally make payments, rather than only being able to receive and hold money on behalf of the Commonwealth.

This bill will also remove two archaic bodies corporate from provisions dealing with Commonwealth investments and streamline rules for how agencies rely on appropriations. Further, this bill amends the Albury-Wodonga Development Act to bring the Albury-Wodonga Development Corporation under the Commonwealth Authorities and Companies Act. As a Commonwealth authority, it is more appropriate that the Albury-Wodonga Development Corporation come under the CAC Act rather than outside a recognised framework. I thank the Minister for Finance and Deregulation for introducing this bill and, in doing so, I commend the bill to the House.

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

in reply—I thank all members for their contribution to the debate. The Financial Framework Legislation Amendment Bill 2008 primarily amends the Financial Management and Accountability Act 1997 to further simplify the financial management framework. This bill will help reduce red tape in the government’s internal administration of the 104 agencies that are now governed by the FMA Act, including 19 departments of state and a range of statutory and executive agencies. The bill also sets out consequential amendments and corrects minor errors in other laws. The bill’s key reforms are to sections 12 and 44 of the Financial Management and Accountability Act 1997. Each reform relates to aspects of Commonwealth contracts to clarify respectively the ability of non-Commonwealth entities to deal with public money and the source and nature of the power of chief executives to enter into contracts on behalf of the Commonwealth. In this regard, the amendment to section 44 also states:

Explicit chief executive’s decision making on the use of resources for their agency is not to be inconsistent with the policies of the Commonwealth.

In addition to amending the FMA Act, the bill will make a minor consequential amendment to the Public Service Act 1999 and the Defence Home Ownership Assistance Scheme Act 2008. It will also correct typographical errors in the Reserve Bank Act 1959 and amend the Albury-Wodonga Development Act 1973 to make the Albury-Wodonga Development Corporation subject to the Commonwealth Authorities and Companies Act 1997.

The bill has been scrutinised in Bills Digest No. 2, dated 19 August 2008, which notes that the amendments will have:

… obvious benefits for efficient and transparent administration because administrators should have a clearer understanding of their functions and duties.

One question asked in the digest relates to the proposed transfer of funding for the Water Smart Australia program involving the debiting of a special account which is a form of appropriation authority. The digest suggests that this debit should be matched somewhere by credit elsewhere. The response to this point is that the relevant amount was in fact made available directly to the Department of Environment, Water, Heritage and the Arts through the last budget.

In short, the bill reflects that the FMA Act and the CAC Act comprise a robust financial framework for the Commonwealth. The present proposals will ensure that the financial framework continues to meet the needs of the parliament and the government. I commend the bill to the House.

Question agreed to.

Bill read a second time.