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

I rise today to speak on the Financial Framework Legislation Amendment Bill (No.1) 2012. This bill seeks to amend four acts and repeal two acts across three portfolios. It is part of an ongoing program of updating and enhancing the Commonwealth's financial framework. This is the ninth financial framework legislation amendment bill since 2004. These bills generally seek to correct misdescribed provisions, add clarity where required and enhance acts to make them consistent with complementary legislation. They also seek to repeal redundant components of the financial framework, such as prior programs that have expired.

Schedule 1 seeks to amend the Auditor-General Act 1997 to clarify that the Auditor-General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls. This will align the act with the definitions of Commonwealth control which were made in 2008 for the Commonwealth Authorities and Companies Act 2007. We of course support this amendment.

There is though, in my view, a case for placing stronger obligations on government departments and agencies, including the minister's own department, to more strictly adhere to the Commonwealth Procurement Guidelines. We are seeing far too many instances where guidelines are being flouted. That is not conducive to achieving best value outcomes. To this end, I wrote some time ago to the Auditor-General of Australia, Mr McPhee, to seek some clarity on just what is happening with regard to the purchase of property and services, the whole procurement process and the efficiency of that process, and to ascertain whether we as a community are seeing the government and its agencies doing things in a way which best meets the responsibilities they have to handle public moneys. As part of his response the Auditor-General says:

Your letter also sought advice on whether further reform of procurement could provide savings of 5 to 10 per cent over the forward estimates without compromising the standard of property and services purchased by the Commonwealth.

He goes on:

Because our audit was only focused on direct sourcing and whether agencies were adhering to the CPGs, we did not seek to quantify the potential saving that could be achieved.

He says, though:

Nevertheless, our audit work indicates that better value for money outcomes could be achieved through improvements to the procurement practices.

He talks about the fact that direct source procurement, which may include a competitive process, accounted for 43 per cent or $10.2 billion of the total reported value of contracts for the calendar year. But among the key findings of the audit was a 'lack of documentation' of agencies' value-for-money considerations for 74 per cent of the audit sample of direct source procurements, that agencies 'did not seek multiple quotes' in 85 per cent of the direct source procurements examined and that agencies could not consistently ensure that covered 'direct source procurements examined met the limited circumstances' in the Commonwealth Procurement Guidelines which permit direct sourcing. For the Auditor-General to use this language, to be this direct and to record such significant, in my view, oversights in the procurement process suggests an area of spending that is just startling. We are talking about a contract worth $23.5 billion, and in 74 per cent of the audit sample there was a lack of documentation on how they could show value for money out of that process. I have run public companies. If you took to a board proposals for capital expenditure of sums much smaller than this which did not convince the board of a value-for-money outcome, you would not be in a job long. Yet here we have startling results from the piece of work done by the Auditor-General and, when I raised it with the government, I got a perfunctory response—no response, really, of any consequence; just politics. It is a legitimate question. We are here as an opposition to ensure the accountability of governments. An Auditor-General is prepared to write back to me and report those sorts of findings, and the minister for finance treats it as just a political act by me. It is unacceptable and it does reflect, I think, mismanagement on a much wider scale or bad supervision by a minister on a much wider scale.

It helps explain the waste that the community understands that this government has become a symbol of. This government's waste, debt and deficits have become, I think, a matter of great embarrassment to this community. It is one of the reasons we got 750,000 more votes than the Labor Party at the last election, in spite of being the first—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member will refer his remarks to the bill. He will be relevant to the bill before us.

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

The bill—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The bill has nothing to do with the votes at the last election. I draw you back to the bill, please.

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

I was reinforcing my point, Madam Deputy Speaker, about the waste, which is very much a part of this bill. These provisions—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Yes, and I allowed you to make comments that I think were pretty borderline on the Audit Office as well, so I would heed the warning and be relevant to the bill.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Or just be relevant generally.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member has the call.

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

I will restrain myself, Madam Deputy Speaker. Schedule 2 would amend the Commonwealth Authorities and Companies Act itself to ensure that directors of Commonwealth authorities and wholly owned government companies and enterprises prepare budget estimates as directed by the finance minister rather than the responsible portfolio minister. This would make the act consistent with longstanding practice.

The most significant component of schedule 2 is the new obligation on the directors of Commonwealth authorities and wholly owned companies to notify their responsible minister of decisions about significant events immediately after a decision has been taken. Significant events include forming a company or participating in the formation of a company, acquiring or disposing of a significant shareholding in a company, acquiring or disposing of significant business or commencing or ceasing a significant business activity.

I strongly support this provision. It is consistent with the obligations of public companies, with continuous disclosure required, which makes eminent sense in the case of public companies, which are responsible to shareholders and prospective shareholders to advise what really is going on with the company. There is no good reason why the minister and the government of the day should not be similarly informed about the major organisations that they are responsible for. That raises the question of accountability. I welcome measures to make the directors of government linked entities more accountable. However, they are somewhat meaningless if the Minister for Finance and Deregulation is powerless to stop poor quality spending outcomes based on what the minister could suspect in advance were bad decisions. I will provide an example. Recently, I sent the finance minister a very detailed letter seeking clarity on a number of concerns regarding government due diligence and the oversight of the wholly government owned NBN corporation. The minister responded with literally pages of bureaucratic gobbledegook, yet failed to answer the key questions. It was one of the best examples of a Yes, Minister response I have seen in all my life. There were four pages of processes which, we are led to believe or are to be convinced, show the extraordinary accountability of NBN. Yet in all of these so-called safety provisions for accountability the minister was unable to identify or outline the red flag measures she has in place to identify problematic NBN company decisions that could result in wasteful spending. There were four pages of different procedures that supposedly outlined transparency and accountability, but none of it specified her ability to red-flag measures, which is a very standard risk management procedure of any company worth its salt.

Nor could she say that she had a veto authority over the company's spending activities, regardless of how questionable they might be. The government is the sole shareholder of what is the biggest infrastructure project, at $50 billion, in the history of Australia—virtually all borrowed money. At the moment, after 2½ years, it has 4,000 customers; it has more employees than customers. At Smithton, where it started, only seven people have taken it up even though they got a free offer. The technology that was put in place there two years ago no longer connects properly to the rest of the system. It is a dynamic sector, which they were warned about.

But in relation to the financial framework surrounding the NBN project, which this bill is particularly looking to improve, the original standard was set when the government refused to subject the proposal to a cost-benefit analysis. If you have got no cost-benefit analysis, which provides some reference point against which you can judge future implementation, no wonder there is no capacity for a red flag process. To not have the potential to veto any decision, no matter how problematic or misguided activities might be, is an extraordinary situation for a 100 per cent shareholder, the minister, who is ultimately responsible for the largest project in Australian history. It is the most disgraceful example of poor governance and it is becoming a symbol around the world of how not to manage a major public project. We are becoming a laughing stock over the implementation, the inefficiency, the costs, the timing and the fact that we are the only country in the world, that I am aware of, that is now renationalising the telecommunications sector at a time when that sector is the most dynamic of any sector in any economy. It is the last sector that you would want to renationalise with a bureaucratic culture. Taxpayers' money is at risk in an area where technology is changing by the day. Schedule 3 of this bill is devoted to—

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, I have a point of order on relevance—that is all I need to say.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Goldstein has strayed quite a lot. I have let him get away with it, but if he does not come back to the bill I will sit him down. You cannot in any way, shape or form tell me that what you just said about the NBN was relevant to this bill. The member for Goldstein has the call.

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

This bill—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Goldstein went off the track. I let him. If he does not come back, I will sit him down.

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

Schedule 3 of this bill is devoted to correcting two misdescribed provisions in the Financial Framework Legislation Act 2010, which are contained in section 27a of the Commonwealth Authorities and Companies Act that is replacing references to 'at common law and inequity' and 'at common law or inequity' with 'under the general law'. Schedule 4 relates in part to the special accounts appropriation under the Financial Management and Accountability Act 1997. This provision applies to special account appropriations which relate to either the COAG Reform Fund Act 2008 or a special account established under the Nation-building Funds Act.

Determination for such appropriations are done by way of disallowable instrument. As it stands, such a determination takes effect after the five sitting days in which the parliament can move to disallow pass. Such appropriations may be used by new government agencies once they are established. For the purpose of practicality this amendment allows the minister to prescribe a date in the instrument for which the appropriation takes effect. This allows a future date to be set which corresponds with the establishment date of a new agency. It has no material effect and serves to add clarity to the act to confirm such an instrument can come into effect at a nominated date beyond and immediately after the expiry of the disallowable instrument. At is a sensible measure.

Offsetting debt—the other key feature of schedule 4—is the provision to give the finance minister the discretionary power to offset debts owed to the Commonwealth by an individual or entity against payments owed to the same individual or entity. As it stands, Commonwealth payments must be paid in full regardless of debts owing. This new section provides a mechanism for the Commonwealth to recover debts in a cost neutral way and more efficient manner than allowed under current provisions. It is a sensible measure given the budget's vulnerability on account of this government's mismanagement and spiralling debt.

I have sought assurances from the minister, however, that this authority will not be used in a way to unreasonably disadvantage business whether big or small. For example, if a business has an arrangement in place with the ATO in relation to paying off a taxation debt, I was seeking comfort that the minister would honour such agreements. In other words, not override them but denying a business payments owed as a means of accelerated settlement of payment to the Commonwealth, because, by definition, if they sought an arrangement they have got a cash-flow problem. If this measure was used to recover the Commonwealth debt more quickly, it cuts across what has already been a decision to help that company meet its financial taxation commitment to the Commonwealth, but also not put itself in the position where it has a cash-flow problem and might face receivership or other difficulties. I do thank the minister for assurances that this measure would not lead to such eventualities.

Schedule 5 of this bill also proposes to repeal two redundant special appropriations to clean up the statute book. These include the Appropriation (Development Bank) Act 1975 and the Car Dealership Financing Guarantee Appropriation Act 2009.

The process of ongoing maintenance and enhancement of the Commonwealth's financial framework commenced under the coalition. We support this endeavour in principle, including the changes outlined in this bill. However, we do feel in many respects it is a missed opportunity. I have taken the opportunity during my comments to point out some of those missed opportunities, which I think are highly relevant to the Commonwealth's financial framework, and in particular that NBN example. There has been $100 billion of public works, of infrastructure projects, that have been authorised by this government, none of which have had a benefit-cost analysis and certainly none which has been published. That was despite the assurances when the infrastructure Australia was set up. When infrastructure Australia was set up, the government said that it would publically conduct benefit-cost analyses that would be released. It is another example of where promises have been broken with the most blatant and brazen examples.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member is straying.

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

Madam Deputy Speaker, it goes very much to the financial framework, the financial management, which is at the heart of this bill. It is a missed opportunity. To avoid a benefit-cost analysis on $100 billion of infrastructure when it was promised and promised and never delivered is absolute disgrace.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

You talk the talk and you don't walk the walk.

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

I support the bill, but I do not support the dereliction of duty and the mismanagement of this government in regard to infrastructure.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Chifley is not helping the situation.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I am actually pleased to speak on the Financial Framework Legislation Amendment Bill (No. 1) 2012. It is another one of those bills that we deal with in this House which looks like it is a behind-the-scenes bill. It deals with the way the government handles and manages the people's money. I want to make a few comments before I go specifically to the bill about a number of things that the shadow finance minister had to say today. Can I start by saying how disappointing it is that the opposition, if they really did feel that there were serious issues in this bill to deal with, did not use the time honoured tradition of moving amendments and trying to contribute to the development of the financial framework.

We have currently, as everybody knows because it is covered endlessly, a hung parliament in the lower house. We have, as we nearly always have in Australia's modern history, a Senate in which minor parties have the balance of power. Having been both in opposition and in government, I know full well that one of the ways that oppositions contribute to governance is to actually work with the government to negotiate amendments through, particularly under the conditions that we have in the lower house. If, as the shadow finance minister says, they believed that there were changes that could have been made to this bill to in fact make it better, it is a shame it is in this Federation Chamber where bills go which have bipartisan support. The fact that it is in this chamber seems to indicate that the opposition is making political points rather than considering governance issues, because if it was a governance issue, there would be an amendment and it would be in the other chamber.

But the shadow minister is right in that we must always be vigilant in finding areas that are not working as effectively as they should in regard to the government's control of the people's money. The financial framework, as it is called, underpins the appropriation expenditure and the use of money and resources within the Australian government. It is a very important feature of a government being accountable and providing transparency in their daily work with agencies, office holders and their employees. It deals with things like the framework governing the conduct of banking by government bodies, competitive neutrality, procurement guidelines, cost recovery, foreign exchange and special accounts appropriations made under the FMA Act. It covers an incredibly broad range of activity. It is very, very complex by its nature.

But because the amount of money that governments deal with is in the billions, the hundreds of billions of dollars, small errors and small changes in the guidelines in the financial framework have profound impacts in the way that government manages its money and in its relation to business. It is incredibly important that we keep an eye on this and make these kinds of adjustments on an ongoing basis.

There have in fact been nine bills since 2004. This bill is the ninth financial framework legislation amendment since 2004. It forms part of that ongoing program to address financial framework issues as they arise and assist in ensuring that specific provisions in existing legislation remain clear and up to date. It is particularly important given the growing commitment and expectation of transparency. It is particularly important, as there is more and more scrutiny of government activity, that the rules under which our public servants operate are completely clear so that when members such as the member for Goldstein do find something that they feel is not as right as it should be, they can look at the rules and the rules are clear and transparent.

Six out of nine bills have become law, with the first and the sixth bills lapsing on the prorogation of the Australian parliament for the 2004 and 2010 federal elections. The first bill focused on amending legislation to reflect the creation of special accounts, and this bill covers a range of matters, some quite significant and some less so. Firstly, it amends the Auditor-General Act 1997 to clarify that the Auditor-General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls within the meaning of the Commonwealth Authorities and Companies Act 1997. Again, it seems when you read it that one would have expected that to already have been the case. This simply clarifies that that is the case.

It amends the CAC Act to ensure that directors of Commonwealth and wholly owned companies other than government business enterprises prepare budget estimates as directed by the Minister for Finance and Deregulation and that directors of Commonwealth authorities, including interjurisdictional authorities and wholly owned companies, notify their responsible minister of decisions to undertake certain significant events. Both of those provisions are ones that most people would expect are already in existence—so, again, quite a mechanical amendment.

It also amends two misdescribed provisions in the Financial Framework Legislation Amendment Act 2010. Essentially in the two provisions it replaces references to 'at common law and inequity' with the phrase 'under the general law'. Again, this is a fairly administrative amendment.

It makes four other changes to amend the Financial Management and Accountability Act 1997 to clarify commencement dates and amend the operation of drawing rights. Some of them are quite significant in their own way, but I will not go into them here. It also does something which is quite interesting. The shadow minister for finance has already spoken about this a little. It inserts a new section 35 to enable the Commonwealth to set off in whole or in part an amount owing to the Commonwealth by a person with an amount owing by the Commonwealth to the same person and make regulations with respect to this section. The shadow minister has already raised the issue of what might happen if a company had entered into an agreement with the tax office. I am glad he has raised that. By going to the minister and seeking clarification on that one he has done exactly what one expects a good opposition to do, which is to look at a bill and find areas where it can be improved or where there may be unintended consequences. I commend him for that action. It is a shame he did not take similar actions if he has concerns about other sections of this bill. Whingeing is one thing; contributing to governance from opposition is another. I would hope, quite frankly, that they would improve their performance in that area if they genuinely do have concerns.

This is an interesting new section. I have had a number of discussions with businesses lately about the cash flow ramifications when sections of the economy get locked up—one person owes this person, that person owes another one, that person owes another one. We joke sometimes about having a clearing house where everyone can come into the same room and exchange cheques or transfer electronically and essentially free up what is currently sometimes quite blocked cash flow accounts as it trickles down to the next one. I have also heard from businesses how they get into that blocked situation with government departments, where they quite legitimately owe one government department under their normal course of actions but another government department owes them for a contract and somehow they get stuck in this 'You owe us so we won't pay you' kind of scenario, which generally blocks cash flow and in many cases is quite unnecessary. With businesses which are on the negative side of this, this is quite an extraordinary, very small addition that will make their lives a whole lot easier. We do, of course, have to be concerned about the possible opposite consequences. Again, I am very pleased to have heard from the shadow minister for finance that he has clarified with the minister that the tax office will honour the arrangements that it has with business. They do involve serious cash flow issues for business and that is a good result.

The other sections of the bill involve repealing some redundant special appropriations, which is just about cleaning up the statute books. There is always a lot of stuff in the laws of Australia which is redundant. We have a constant process of trying to clean those out. This repeals two of them: the Appropriation (Development Bank) Act 1975 and the Car Dealership Financing Guarantee Appropriation Act 2009, which was the Car Dealership Act. Again, just a bit of housekeeping there.

I will finish by returning to where I started, that these bills appear to be very dry when you read them. They are in a language which I do not think is English, personally. Sometimes I have to read the paragraphs a couple of times. I am sure you get better at it if you deal in this area more often. But they are essentially about making sure that the way government operates is fair in its relationship with business, that it does not interfere in the market with a competitive advantage where that is not the intent, that when handling large amounts of money its processes are very clear. If you are handling large amounts of money, small changes have very, very large impacts. The changes make sure that transparency is continuing to improve and that the rules for people who manage people's money on our behalf in the Public Service have a very clear set of guidelines. And they make sure that the natural tendency to increase the complex of defensiveness by our Public Service as the transparency guidelines improve and there is more interest, along with a natural tendency perhaps to proliferation, is kept in check. This is an important bill, even though a little dry one. I commend it to the House.

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

I rise too to speak to the Financial Framework Legislation Amendment Bill (No. 1). It is, as the member for Parramatta remarked, not the most existing piece of legislation that has ever gone through the chambers. Notwithstanding that, it is an important one. Like so many things in life, the important stuff is perhaps not as exciting. That notwithstanding, this bill seeks to amend four acts and repeal two acts across three portfolios. It is part of an ongoing move that is being undertaken by government, as I understand it, with respect to tidying up and updating the Commonwealth's financial framework. This is in fact the ninth financial framework legislation amendment bill since 2004. The bill operates to effectively through the various schedules of the bill clarify a number of matters. I will just walk through them, because there are some aspects that I would like to focus on and others that are purely technical that I would move to quite quickly.

Schedule 1 of the bill seeks to amend the Auditor-General Act of 1977 and effectively operates such that the Auditor-General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls. As I understand it, the operation of schedule 1 moves to ensure that the definitions of the act with the definitions of Commonwealth control, which were made in 2008 through the Commonwealth Authorities and Companies Act 2007, will be aligned. I know the shadow minister has taken the view that there is a case for placing stronger obligations on government departments and agencies, indeed including the minister's own department, to more strictly adhere to Commonwealth procurement guidelines. There have been concerns that have been raised by the shadow minister and by others about procurement guidelines not being appropriately followed or not followed as closely as should be when it comes to achieving best value outcomes. This is an important aspect for taxpayers. There should be procurement obligations and concern for value for money when it comes to dealing with the taxpayer dollar.

Schedule 2 amends the CAC Act itself to ensure that directors of Commonwealth authorities and wholly owned government companies and enterprises prepare budget estimates as directed by the finance minister rather than by their responsible portfolio minister. This is effectively just a formalisation of actual longstanding practice. In this respect, it is a tightening or a clarifying measure. The most significant component of schedule 2 is the obligation on directors of Commonwealth authorities and wholly owned companies to notify their responsible minister of decisions about significant events immediately after taking those decisions. Significant events have been defined to include forming a company or participating in the formation of a company, acquiring or disposing of a significant shareholding in a company, acquiring or disposing of a significant business or commencing or ceasing a significant business activity. There are measures that make directors of government linked entities more accountable for their decisions. I think this is perhaps the single most important aspect of this particular piece of legislation.

The reality is that we have seen too many examples of very poor quality spending when it comes to the current government. We have seen, both under Prime Minister Rudd and under Prime Minister Gillard, example after example of very poor quality spending decisions where the government has engaged, through its agencies, in spending that frankly has not delivered value for money for taxpayers. There are many examples I could talk about with respect to the so-called Building the Education Revolution. How many covered outdoor learning areas did we see that were purchased at taxpayer expense for two or three times the estimated cost of acquiring that particular COLA, as they are called.

The reality is that this government has become synonymous with a government that wastes money. This government does in fact waste money. This is a government that has undertaken a number of spending initiatives that have led to very poor outcomes. It is a great shame that we have not seen more emphasis placed on achieving value for money. If this particular piece of legislation can help to reinforce a culture that says there should be value for money then I think it is a good move. It is somewhat meaningless though if the finance minister is powerless to stop poor-quality spending outcomes on what they could in advance suspect are based on bad decisions.

Take, for example, what is Australia's single largest spend with respect to a new government agency—that is, the creation of NBN Co. NBN Co. represents the nationalisation of telecommunications in this country. NBN Co. represents, at the cost of some $40 billion of taxpayer funds, the rollout of almost a Soviet era approach to national infrastructure. You can see how proud they would be to stand up in their caucus and, in the great Soviet tradition, say, 'Look at this magnificent new project that we are building across Australia.'

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Reds under the optic fibre. Not reds under the bed but reds under the optic fibre.

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

The fact that there are so many commercial marketplaces that exist in our metropolitan areas where private operators would be more than willing to spend private company money to achieve exactly the same outcome seems to be lost on those opposite.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Order! I remind the member for Moncrieff that we are debating the Financial Framework Legislation Amendment Bill (No.1) 2011 and ask him to keep his remarks relevant to that. I urge the member for Chifley to ensure that those remarks are heard in silence.

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

I take this opportunity to highlight that this underscores why there is some confusion. Nothing could be more relevant to the bill than talking about the need to achieve good quality spending for taxpayers. The NBN Co. is an example of not achieving good quality spending for taxpayers because NBN Co. is about nationalisation of telecommunications in this country. It is not about good quality spending—

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point order: I heard a very clear direction from you and I am concerned that the member for Moncrieff is challenging your ruling. I urge him to be relevant to the bill.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Chifley. The member for Moncrieff will return to his remarks.

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

I will continue my remarks because, as I am very certain the Deputy Speaker understands, the financial framework legislation that is before us is about ensuring that government agencies are spending taxpayers' money appropriately. It is about accountability processes in government. The NBN Co. is a classic case of a new government agency. We are seeing some $40 billion of taxpayers' money going into NBN Co. and we are now seeing the rollout of this spending across the Australian community. I think—and I would caution that I am not absolutely certain of these figures because I am going on memory—that it has been put forward by the government that by the end of this calendar year there will be fibre rolled out to some 700,000 homes across Australia. It will be rolled out—I will come back to the bill because I can see the member opposite getting all excited—by a Commonwealth government agency to 700,000 homes.

At this point in time, as I understand it, there are 20,000 to 30,000 homes that have had fibre rolled out to them. So we are talking about 670,000 homes that are apparently going to be reached between now, February, and December this year. That kind of environment creates a recipe for disaster when it comes to good-quality spending by a government agency. That kind of environment masks a multitude of spending decisions that no doubt will run entirely contrary to the spirit of this bill and entirely contrary to good purchasing decisions when it comes to taxpayer dollars.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I rise on a point of order. This is clearly outside what the bill is proposing to do.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

The member for Moncrieff is reminded that I have read the bill and the second reading speech. I am struggling, though I have given him a long bow, to work out how discussions of the National Broadband Network are relevant to the bill. The Speaker, at the beginning of this week, issued a new ruling on relevance. It is that new ruling on relevance that I am seeking to uphold in this debate.

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

I always seek to comply with the chair. I am trying to be helpful, because I am not sure if the member for Oxley is intending to speak on the bill. I will move, with great swiftness now, to a conclusion and outline just a couple of additional aspects of the bill.

Schedule 3 of the bill corrects two misdescribed provisions in the Financial Framework Legislation Amendment Act 2010. The two provisions sought to update section 27A of the Commonwealth Authorities and Companies Act, by replacing references to 'at common law and in equity' and 'at common law or in equity' with 'under the general law'.

Schedule 4 relates to special account appropriations under the Financial Management and Accountability Act 1997. Effectively this is a very minor change but one that is profoundly important. As it currently rests, determinations for appropriations are done by way of a disallowable instrument which takes effect five sitting days after the determination was effectively moved through the parliament. Such appropriations are often used by new government agencies once they are established. For practical purposes this act will now, under schedule 4, move to allow the minister to prescribe a date in the instrument on which the appropriation takes effects. It is a small change but an important change, because it enables the appropriations for new government agencies to effectively not take place five sitting days after it has gone in but rather on a prescribed day, which is a key thing.

In addition there is an area that raises specific concerns for me—that is, with respect to the schedule 4 initiative to offset debt. Effectively it is a provision to give the finance minister the discretionary power to offset debts owed to the Commonwealth by an individual or entity against payments owed to the same individual or entity. As it stands currently, the Commonwealth must pay in full regardless of debts owing. This new provision will ensure that there is a mechanism for the Commonwealth to recover debts in a cost-neutral way and in a more efficient manner than is allowed under provisions.

I want to put very clearly on the record my very profound concerns about this. I think that this is not a good provision. The reason is this: I know of numerous examples where the Commonwealth asserts—I emphasise 'asserts'—that there is a debt owing to the Commonwealth. Under this provision, opportunity will arise for the Commonwealth to not make a payment or a net payment to an individual, company or a recipient of the Commonwealth, an amount that the Commonwealth merely asserts it is owed. My concern is that this could have a very significant impact upon those who have dealings with the Commonwealth, on the basis of a mere assertion. The fact is that there are numerous instances where the Commonwealth's word is not sacrosanct—where the Commonwealth's word is not holier than thou, is not like Scripture from the Bible that goes without challenge.

There are numerous instances where the Commonwealth can assert that a debt is owed to it and be wrong. There are numerous instances where the Commonwealth can assert that a certain quantum of money is owed when in reality it is owed a different quantum of money. My concern is that, where there is already a pervasive culture that I am constantly hearing about from members of my community—that government departments engage in a form of bullying when it comes to payments—this provision will entrench that attitude. I suspect it will be an approach that says: 'It's my way or the highway. We allege that you owe us $500. We owe you $600, so you're only getting $100,' to use a basic example. I think there is very good reason for those two processes to be entirely separate. There is very good reason for the Commonwealth to pay the $600 and invoice the $500, to continue the example.

I believe it is not good enough, in what often is the case—and I particularly emphasise this to the member of the executive at the table—to simply say that the Commonwealth has the right to net out the difference between an assertion of an amount owed to the Commonwealth and an amount that the Commonwealth does in fact owe to an external party. For that reason, I say that I as an individual member of this House significantly disagree with the provisions of this act that go to that particular matter. It is simply, I believe, going to be abused by Commonwealth government bureaucrats to reinforce an assertion they make where a debt is owed, and I do not believe it is appropriate that that should be contained in the legislation.

The final schedule is schedule 5 of the act, which proposes to repeal two redundant special appropriations to clean up the statute book; they are the Appropriation (Development Bank) Act 1975 and the Car Dealership Financing Guarantee Appropriation Act 2009. With that, I conclude my remarks.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Moncrieff for his contribution, both said and otherwise. I am pleased to speak on this bill because it does have significance and reflects the fact that it is part of an ongoing process to change appropriations, governance and financial management issues. The Financial Framework Legislation Amendment Bill (No. 1), if enacted as was indicated in the second reading speech, potentially amends four acts and will repeal two others over three portfolio areas. This is all designed as part of the ongoing process of clarifying aspects of the Commonwealth's financial framework. As I indicated earlier, it is not the first time this has been done. In fact, since 2004, there have been nine different versions of this bill. It is designed as part of the overall process to take a collaborative, whole-of-government approach to looking at the way in which we can improve the management of finances.

The breadth of appropriation, governance and financial management issues means that we do need to keep looking at how we can best improve on those matters. That is the reason why the Department of Finance and Deregulation works with all parts of government to help address financial framework issues once they emerge. If there are things that do need to be dealt with it is important that they are dealt with quickly and that, as part of that process of departments being able to appreciate changes to the way they need to operate in order to provide better value for money and better management of our finances, we do move swiftly to encourage a different focus and a different operating approach by departments.

The act will amend four acts. First, it will amend the Auditor-General Act 1997. By doing so it will clarify, for instance, that the Auditor-General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls. There are a number of government business enterprises. We have heard reference to the National Broadband Network Co., NBN Co., but Australia Post is another GBE that may be affected by this. This will align the Auditor-General Act 1997 with amendments made in 2008 to expand the meaning of 'Commonwealth control' in the Commonwealth Authorities and Companies Act 1997, an act that is followed closely by the GBEs that I mentioned earlier, as they are compelled to do.

The other aspect of the changes proposed is that the bill will amend the Commonwealth Authorities and Companies Act 1997, which I have just referred to. It will ensure that the directors of these authorities and of wholly-owned Commonwealth companies, other than GBEs, will prepare budget estimates as directed by the Minister for Finance and Deregulation. The significance of this is that departments will be compelled to follow direction from the finance minister as opposed to their own minister. Again, this is a signal sending an important directive about the way in which finances will be managed into the future. It is also consistent with an ongoing practice over many years. As a result of the amendments to the Commonwealth Authorities and Companies Act, it will ensure that directors of authorities and wholly-owned Commonwealth companies notify their responsible minister of any decisions regarding certain significant events, such as creating a subsidiary.

During the member for Moncrieff's contribution, I was particularly active in attempting to bring him back to relevance to the bill, specifically because some of the matters he was raising in reference to NBN will be dealt with by this bill. For example, if NBN were to change anything that it indicated it would do under its corporate plan, it would need to notify the minister for communications accordingly. This bill will have the effect of doing that just that. If NBN Co. decided to change its direction in a significant way, this would trigger the significant event provisions that are dealt with under this bill and it would need to notify the minister accordingly. I think it is important for that to happen, particularly if there is an impact on the financial elements of NBN Co.'s operations. For example, if the change were going to affect its stated returns on investment or if it were to affect the way in which the rollout is to occur and that would have a financial implication, I would imagine that that should be notified. The changes that we are making here today will ensure that that occurs.

The bill will amend two other minor misdescribed provisions, as they are called, that appear in the Financial Framework Legislation Amendment Act 2010. Those provisions sought to update the Commonwealth Authorities and Companies Act 1997 to replace references to 'at common law and in equity' and 'at common law or in equity' with the phrase 'under the general law.'

The bill will amend the Financial Management and Accountability Act 1997 to make four changes. It will clear up the commencement date for the determination of special accounts and it will also make sure that certain determinations will start on a date specified, outlined in that determination if that day is later than the last day upon which a disallowance resolution is passed by the parliament. It will also ensure that we concentrate on the operating of drawing rights on payments, and it will remove the penalty relating to those drawing rights. In addition, it will insert a new whole-of-government element that would make sure that the finance minister could set-off, in whole or in part, an amount owing to the Commonwealth by a person with an amount owing by the Commonwealth to the same person. Finally, it will increase certain limits around which the finance minister could delegate to officials in relation to the making of certain instruments.

The bill that we are debating will repeal two acts that include special appropriations that no longer have any effect or are redundant. They are the Appropriation (Development of Bank) Act 1975 and the Car Dealership Financing Guarantee Appropriation Act 2009. When taken in their breadth, all the changes that are occurring, as I said earlier, are designed to ensure that we are keeping up to date with events as they are occurring on the ground. They are also important in ensuring that departments are finetuning the way that they are approaching the management of finances.

This government is proud that it has been able to oversee the fastest rate of fiscal consolidation in, I think, four decades. Anything that can be done at a micro level within departments needs to be encouraged. As I said before, this is not the first time that this has been done. The coalition, when it was in government, also embarked on similar sorts of changes in a similar vein. Again, these changes need to be made to ensure that departments are moving with the times and that we are prudently oversighting the expenditure of funds. To not do so would see the compounding of potential problems or difficulties in the management of finances so that we would be unable to halt or better and efficiently manage finances within departments. I indicated earlier that I have been concerned about the breadth of criticism of NBN Co. These bills ensure that significant events are picked up and that they require notification to the government of anything that would change, for example, the way NBN Co. operates. That has an impact on the rate of return or the stage at which expenditure would be required to be outlaid as part of the rollout over a significant period of time, and it has an impact on the size of that infrastructure project, where we are renewing the nation's technological infrastructure in a way that has not been done before. If there is any significant change to the way that that project is done outside the corporate plan, bearing in mind that this corporate plan is submitted to the shareholding ministers—the minister for communications and the minister for finance—which would ultimately, in some major way, change the rollout, then that should be picked up. That is why the member for Goldstein and the member for Moncrieff, who both made this point when was talking about the NBN, should rest assured, as should the coalition, that any changes to those corporate plans will be picked up by this bill.

Also, bills will be repealed. For example, as I mentioned at the tail end of my contribution, we would be repealing the Car Dealership Financing Guarantee Appropriation Act 2009 and the Appropriation (Development Bank) Act 1975. They have either been in existence for some considerable period of time and are simply redundant or the events which required the establishment of certain acts, such as the Car Dealership Financing Guarantee Appropriation Act 2009, which flowed out of the fact that during the GFC car financing was directly affected. We needed to act quickly to ensure that, for the auto sector, customers who were purchasing vehicles had some sort of security and ability to procure finance. As has been previously described in the House, 46,000 Australians are employed within the sector. That act at that point in time was useful. I notice that the member for Corio and the parliamentary secretary, whose electorates are deeply affected by these issues, would have been two of many electorates that benefited from the Car Dealership Financing Guarantee Appropriation Act 2009. However, as times have changed, we no longer require that act. There has been stabilisation within that sector with people being able to obtain finance and it is clear we no longer need those acts. As I said, this fits within the broader attempt by government that we change acts and repeal them when they are no longer required.

I was particularly pleased to see in the bill, and I made reference to this earlier, that the Department of Finance and Deregulation approaches these things within the spirit of collaboration. It does so clearly to ensure that departments have buy-in in the way in which these regulations are introduced because it will have an impact when rolled out within departments. These types of finance provisions and the impact they may have on programs or people within the department should be managed in a way that there is buy-in at a fairly early stage. It will ensure that we are able to quickly address financial framework issues. Once those issues emerge we are able to design solutions in the repealing of those two acts.

The other thing is that directors get clear signals. It is not just departments, but directors of Commonwealth authorities or wholly owned Commonwealth companies get a clear signal that they, ultimately, in managing finances within GBEs are accountable and are required to report to the finance minister. GBEs themselves are subjected to quite a degree of oversight. There are not too many companies in Australia required to appear before Senate estimates committees and have their entire operations scrutinised to the finest detail in a very public way. A lot of this would occur behind closed doors. Auditors or authorities like APRA, for example, would have the ability to scrutinise finances or issues closely.

If the Minister for Finance and Deregulation requires that budget estimates be compiled instead of going through the responsible minister, it is entirely appropriate that the Department of Finance and Deregulation be involved in this process to ensure that there is consistency across departments and that we are better able to scrutinise, and for the accountability of parliament and what is expected of parliament—in particular the Senate—it is only right that that occur.

While a lot of people will say that there are a lot of things in here that are dry and not necessarily the stuff that would attract significant debate within the House, I would actually counter that by saying that the things that we are doing in here are absolutely consistent with what we on this side of the chamber are focused on, which is, as I said, the finer and the efficient management of funds and spending within government. I commend the bill to the chamber.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker Leigh, I commence my contribution to this debate on the Financial Framework Legislation Amendment Bill (No. 1) 2012 by acknowledging that this is the first time you have been in the chair as Deputy Speaker when I have spoken. I am sure that in your role as Deputy Speaker you are going to bring great wisdom, make some great rulings and, at the same time, be entertained by some very edifying speeches that will be put to the parliament. I know that you have a deep interest in the economy and economic institutions, and I am sure that you as a member of parliament find this financial framework legislation imperative and riveting and the kind of legislation that we as a parliament need to be passing.

The Financial Framework Legislation Amendment Bill (No. 1) 2012 seeks to amend four acts and to repeal two acts across three portfolio areas, as was so eloquently put to the chamber by the previous speaker, to clarify the Commonwealth's financial framework, among other related measures. The bill also seeks to amend the Auditor-General Act 1997 to clarify that the Auditor-General may accept an appointment as the auditor of any company that the Commonwealth controls as defined under the Commonwealth Authorities and Companies Act 1997. It also seeks to amend the CAC Act to ensure that directors of Commonwealth authorities and wholly owned Commonwealth companies may prepare budget estimates as directed by the Minister for Finance and Deregulation and notify the responsible minister of any decision. This is a very important aspect of the CAC Act and it really goes to the core of financial management and government authorities.

The bill also amends the Financial Management and Accountability Act to clarify the commencement day for special account determinations and the operation of drawing rights to clarify the financial delegations power. It updates, clarifies and aligns related financial management provisions and repeals two redundant acts that contain special appropriations, the Appropriation (Development Bank) Act 1975 and Car Dealership Financing Guarantee Appropriation Act 2009.

This legislation is all about openness and transparency and ensuring that our financial framework works in the way that it should. It has given me great pleasure to be able to make this contribution to the debate. I wholeheartedly support the legislation.

Richard Marles (Corio, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

I thank all members who have contributed to the debate on the Financial Framework Legislation Amendment Bill (No. 1) 2012. Firstly, as a matter of clarification regarding the implementation of the proposed section 35 of the FMA Act regarding set-off, I would like to make a couple of comments in response to queries from the member of Goldstein's office regarding the interaction of this general provision with existing detailed specific statutory provisions. The government does not intend that this provision be used in relation to a tax liability that may be payable to the Australian Taxation Office within the broad meaning of a tax liability under the Tax Administration Act 1953. I wish to also offer a further point of clarification with regard to the retrospective commencement of items 1 and 2 of schedule 3, which seek to amend misdescribed provisions in the Financial Framework Legislation Amendment Act 2010 that would have made technical amendments to the Commonwealth Authorities and Companies Act 1997. These items seek merely to substitute references to 'at common law and in equity' and 'at common law or in equity' with the phrase 'under the general law'. The Financial Framework Legislation Amendment Act 2010 added a definition of 'general law' in the CAC Act as meaning 'the principles and rules of the common law and equity'.

As explained in the explanatory memorandum to the bill, the retrospective commencement of these items would not cause detriment to any person, as substantively the connection to common law and equity are retained within the meaning of general law. Moreover, consistent with the request from the Senate Standing Committee for the Scrutiny of Bills in their Alert Digest No. 2 of 2012, I also advise the parliament that the changes could not possibly cause detriment to any person. This bill, if enacted, will clarify specific provisions in four acts and repeal two acts across three portfolios. This bill reflects an ongoing commitment to ensuring that financial framework laws remain clear and up to date. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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