Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I rise to speak on the Financial Framework (Supplementary Powers) Amendment Bill 2024. The title of this bill is pretty vague; I doubt that a lot of members of parliament, let alone the average Australian, would give it extensive consideration. Such an innocuous title could make you think, 'Nothing to see here.' But this is a bill about how government spends taxpayer money—a key government responsibility. The act this bill amends, the Financial Framework (Supplementary Powers) Act 1997, is a key source of legislative authority for Commonwealth spending via mechanisms such as grants. The bill clarifies that sections 32B and 39B provide the authority for spending via grants. By doing so, it seeks to put beyond doubt the validity of many government spending programs.

Tens of billions of dollars are spent by the government every year through grant programs. This is not loose change, and I support the government's intention to ensure that grant programs have legislative authority. Grants are so important to regional electorates like Indi and are an effective way to get money directly into the community where it's needed. The Growing Regions Program and the Regional Precincts and Partnerships Program were allocated $1 billion in the government's October 2022 budget. In my electorate, local governments; health services; disability and family violence organisations and support services; and arts councils all applied for much-needed funding under these programs. I hope that we're going to see announcements for successful applicants very soon.

Let me be clear: I support the government's powers to spend money on these valuable services—I do. I don't want to see this money stop because of a lack of legislative authority. But, as the government have said repeatedly when touting their 'responsible' budget, there is not unlimited money to spend on every worthy project—there is not. That's why I want to see governments having the proper processes in place to ensure that the money we do have is awarded to the projects that need it the most—those which have the most merit and where we know that taxpayers are truly getting bang for their buck. I want to make sure that taxpayer money is not wasted, and I know every Australian feels the same way. Most importantly, I don't want to see valuable hard-earned taxpayer money used to buy votes in marginal seats—to do what is colloquially known as pork-barrelling.

The bill before us does nothing to prevent this practice. This bill is really another way to justify what governments from both sides of politics have time and time again called 'discretionary executive spending powers' in order to deliver election commitments. It's what some politicians from the major parties call a 'feature' of Australian democracy. Well, I would say that pork-barrelling must not—must never—be accepted as a feature. It's a flaw, and it's a critical flaw in our democracy. We've seen egregious pork-barrelling in recent years, and I've spoken about many of these pork barrels many times in this place. Indeed, when this government was in opposition they railed against blatant pork-barrelling by the then government.

At best, pork-barrelling is poor administration, but, at its worst, it is corruption. Eighty per cent of Australians view pork-barrelling as corrupt conduct. Pork-barrelling undermines public trust in governments and in politicians, who are elected to make decisions on our behalf in the public interest and for the common good. It truly undermines trust in our democracy, and that's a very serious matter. It perpetuates a cynicism in the community that giving your vote is about getting stuff rather than about getting good, evidence based policy.

The bill before us is an opportunity to get the right processes in place for the government to spend taxpayer money transparently and to be accountable for their decision-making; to make sure the projects that are most in need of funding have the best chances of getting it; and to make sure that, if the government decide to pork-barrel, voters know about it. I will be moving amendments to this bill which set out a best practice model in government spending. My amendments would require all grants programs to have clear and publicly available merit based selection criteria and guidelines. It's surprising that it's not something that's routine now. My amendments would ensure robust reporting to parliament about what grants are awarded to whom and why. We don't have that now either. This would include the requirement for ministers to report to parliament in a timely manner when they've gone against advice from government departments about who is best placed to receive a grant. My amendments would create a new joint parliamentary committee on grants administration and investment mandates. This committee could oversee grants administration, including compliance with guidelines. That would deal the parliament right back into oversight on grants. Surely, that's a fundamental role of our parliament.

These amendments are not radical. They don't take away the discretion of ministers to award grants, something that can be especially important in times of emergencies like floods or fire. These amendments don't stop parties from making election commitments to spend money if they win government. But what these amendments would do is set out a simple and practical framework for ensuring that when a minister makes a captain's call or when a major party delivers on an election commitment it's done transparently, fairly and responsibly. Surely that's what we are here to do.

In the event that the government does not back this first set of amendments, I will move further amendments which would replicate the current Minister for Finance's own private member's bill introduced in the Senate in 2021, only three short years ago, called the Public Governance, Performance and Accountability Amendment (Improved Grants Reporting) Bill—a straightforward title. In this bill, Senator Gallagher quite rightly sought to address this problem that we face. In this bill she sought to force ministers who award grants in their own electorate or against departmental recommendations to report the decision to the finance minister within just 30 days of the approval, and then the finance minister would have to table that report in the parliament within five sitting days. Now, the government will no doubt say that ministers are currently required to report this information to the Senate, but I'm here to tell you that this is only once per year, and it's absolutely not good enough. It stifles transparency in government grant-making. Indeed, when Senator Gallagher introduced her bill she said her bill would:

… dramatically reduce the time ministers are able to hide their dodgy decisions from the Australian community, and there is no reasonable argument for any senator in this place, particularly those on the government benches, to oppose this bill.

Well, I agreed with her then and I would agree with her now. I know Senator Gallagher, like me, supports integrity in public expenditure, and I thank her very much for meeting with me to discuss my private member's bill the Accountability of Grants, Investment Mandates and Use of Public Resources Amendment (End Pork Barrelling) Bill. But if the government fail to support amendments that simply replicate a bill previously introduced by their own finance minister then I really won't know what to say.

This is a government that campaigned on a platform of integrity. I know they know more can be done to end pork-barrelling, but they are choosing to do less, not more. That truly disappoints me, and that truly disappoints Australians all over our fine country. I know that voters are very disappointed about that. So, if the government fails to support these amendments, I think the Australian people truly deserve to know what has changed since 2021, when Senator Gallagher put forward her bill. Let's not forget we are not in this place simply to wield power; we are here to represent our electorates and to serve the people who voted for us. It's a privilege to be elected to parliament—I know every parliamentarian feels that—and we must never take the votes of our constituents for granted. Votes should be earnt, not bought by whoever has the biggest chequebook.

I urge the government: send a message to the Australian people, especially as we approach the next election—it's coming at us like a steam train—that their vote matters, that taxpayer dollars are being spent fairly and transparently. I urge the government to back my proposed amendments and end pork-barrelling.

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

This bill, the Financial Framework (Supplementary Powers) Amendment Bill 2024, is a technical amendment bill that seems innocuous, but it draws attention to a much bigger issue that goes to the heart of government accountability for spending our money. Under the Constitution, federal government can only make laws about certain listed topics, but there's a really fundamental question that's actually unresolved and is currently being dealt with through a combination of carefully worded court decisions, some bandaid legislative amendments and an assumption that no-one is really going to challenge it anyway. That big question is: when can the executive government spend our money—on anything it wants or only on things specifically authorised by parliament?

As background, laws need to be approved by a majority of both houses of parliament, but regulations can be made by the executive government of the day and then challenged or disallowed by parliament on a case-by-case basis, so there's an assumption that they're valid unless specifically questioned. At the moment, based on some court decisions and some legislative amendments, the executive government can spend taxpayer money under regulations, which it can change, and it doesn't actually need a law passed by parliament to justify the spending of money. The amendment bill we're talking about today firms up an aspect of this authority but doesn't really go to the core question of whether we think executive government spending should have parliamentary oversight.

There are some obvious advantages to executive government in being able to spend money based on regulations. It's faster, because the executive doesn't need to wait to pass laws when there's a need to spend money quickly, like during the pandemic. Another advantage to the government of the day is that it has a broader power to spend. But there are disadvantages for taxpayers. There's less parliamentary oversight. When a piece of legislation is debated in parliament, it gives the public the opportunity to consider whether this is what the country needs. If money can be spent based on regulations, not laws, there's less specific consideration about whether this is how taxpayer funds should be spent. This could potentially undermine trust in government.

It was only in 2009 that the courts found that spending should be linked to a substantive power—that is, the executive can't just authorise itself to spend money in any area. It can only be spent in areas the Constitution lists as areas of jurisdiction of the Commonwealth. Now, this hadn't been challenged before. Generally, when the government's spending money there isn't anyone who has enough of a specific interest to argue against it. Then, in 2012, the High Court held that there must be parliamentary authorisation before money can be spent. The government response was section 32B—legislation that sought to retrospectively validate 400 non-statutory programs and said: from now on, if money is spent under regulations then that will be adequate. Just think about that, Madam Deputy Speaker. It's a pretty big deal to say, 'By the way, all that spending was okay and we can now spend money on whatever we want if we make some regulations about it.' The courts have since interpreted this narrowly and found that it still has to be within constitutional heads of power. In 2012, 75 per cent of spending was made using special appropriations—that is, under legislation—and 25 per cent was not. I don't know how that percentage has changed since 2012, but it gives you a sense that this is not a small amount of money we're talking about.

So we have this section 32B of the Financial Framework (Supplementary Powers) Act, inserted by a previous government and today shored up by the current government, which purports to make everything okay and gives the government the power to spend taxpayer money without a specific piece of legislation authorising it.

This amendment that we're discussing today is a small technical change that changes words that may be construed as limiting this catch-all power. It just shores up a shaky extension of the power of executive government to spend what it likes. Various committees and experts have drawn attention to this awkward hole in accountability. Regulations can still technically be challenged, but it's harder and gets less attention. Loads of regulations pass every month, and to challenge them parliamentarians need to know about them and move to disallow them within a short period.

Is this enough oversight when it comes to spending our money? Professor Anne Twomey has said that section 32B is part of an incautious approach by Australian governments to the Constitutional risk of spending on grants and programs outside of the Commonwealth's legislative heads of power. She points out that the amounts of money are large and the scrutiny of them is limited. It amounts to a 'she'll be right' approach to government spending.

Although I accept that many regulations need to be able to be made nimbly to respond to changing circumstances, it seems reasonable to me that if taxpayer money is being spent, it needs to clearly fit under a law that has been considered by the parliament. No government is going to voluntarily increase its accountability, but taxpayer money should not be granted without appropriate scrutiny. We have a Constitution for a reason, and we have limits on the powers of the Commonwealth for a reason. This amendment reduces the likelihood of a specific type of legal challenge to government spending, but it doesn't address this broader issue, which I think deserves attention. If we want to rebuild trust in government, Australians need to believe that their money is spent carefully and in line with the powers granted to the federal government by the Constitution. This is not a new issue, and this government is not the first to want to shore up its spending power.

I will be supporting the member for Indi's proposed amendment to this bill, which would bring the provisions of her Accountability of Grants, Investment Mandates and Use of Public Resources Amendment (End Pork Barrelling) Bill into this bill. The effect of those changes is greater accountability for grants programs. We spend billions of dollars on grants that have pretty shaky business cases. These come to our attention only when they are particularly egregious, like the last government's sports rorts.

A division having been called in the House of Representatives—

Sitting suspended from 10:17 to 11:23

To continue, these come to our attention when they are particularly egregious, like the last government's sports rorts. But spending money in marginal electorates has become completely normalised, and unless there's someone with standing who's motivated enough to challenge it, it just happens. The member for Indi's amendment would require all grants programs to have clear and publicly available merit based selection criteria and guidelines. It would also require robust reporting to the parliament about grants, create a committee to oversee grants administration and require the minister to report to parliament about how money is being managed.

In the interest of greater accountability for government spending, I would like to see this bill referred to a Senate committee to consider this broader accountability issue.

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

The question before the Federation Chamber is that this bill be now read a second time.

Question agreed to.

Bill read a second time.