Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The Financial Framework Legislation Amendment Bill (No. 2) 2005, with the endearing acronym of FFLAB, seeks to amend 17 acts and is arranged into four schedules. A key feature of this bill is the underlying intention to extend provisions introduced by the Financial Framework Legislation Amendment Act 2005 to a number of other acts. I will say at the outset that the Democrats support this bill. The minister’s second reading speech accurately reflects the government’s intention, which was ‘to update, clarify and align or integrate several financial management provisions in legislation’.

Among other things, this bill reflects a response to the need identified by DOFA, the JCPAA and the ANAO for better risk management practices and protections. It is legitimate to add ‘and to lessen or diminish the mismanagement and sloppy administration that has been a past characteristic of special accounts’.

While the bill is an attempt to improve matters and while we are told that the bill is purely technical—perhaps even noncontroversial—and that it makes no substantive changes, it further entrenches special accounts and the decentralised management of them, which has its own dangers, and weakens the provisions applying to law enforcement agencies.

When I support the devolution of authority and responsibility to CEOs and CFOs for agency financial affairs, why then do I say that entrenching special accounts and the decentralised management of them has its own dangers? I might say I have particular regard for the expertise of the CEO of DOFA and his supporting executives, and I might say that I have particular regard for the Minister for Finance and Administration. I say what I have just said because DOFA and its minister have no regulatory power, and various Auditor-General reports have exposed how recalcitrant, wilful or plain sloppy ministers or agency executives have been able to ignore Finance directives.

We have an effective watchdog in the ANAO, but we have no Public Service regulator to match the private sector equivalent of ASIC. We have no effective regime of enforcement or punishment of transgressions of DOFA requirements of the scale outlined by the shadow minister in the remarks he was making earlier. Therefore, a special account system that could be satisfactory in a properly safeguarded, regulated and monitored system still carries instead the dangers of unsupervised discretion and improper management. Turning to the amendments of the Public Accounts and Audit Committee Act: they do nevertheless appear to be purely for clarification.

Schedule 1 of the bill amends provisions in nine acts pertaining to special accounts and is arranged into nine parts dealing with each of the nine acts to be amended. I will not read out the acts, but they concern matters ranging from Aboriginal affairs through to natural resources management. A special account is a mechanism used to record amounts in the consolidated revenue fund that are appropriated for specified purposes and represent a notional division within the consolidated revenue fund, which, as you know, Mr Acting Deputy President, has a constitutional basis. When Audit report No. 24 2003-04 reported, the Auditor-General advised us that there were 241 special accounts in existence. In the year of audit, $10.33 billion was credited to special accounts and $10.06 billion debited to special accounts, with $3.4 billion being held.

From the Democrats’ perspective, there are two crucial matters that require further attention when we discuss schedule 1. A number of the amendments to the aforementioned acts pertain to the use and application of special accounts, which in turn are funded with special or standing appropriations, as governed by section 20(4) of the Financial Management and Accountability Act 1997, which states:

The CRF is hereby appropriated for expenditure for the purposes of a Special Account established under subsection (1), up to the balance for the time being of the Special Account.

The finance minister alone can establish a special account as well as the quantum of money to be appropriated. Since standing appropriations effectively circumvent a large degree of the parliamentary scrutiny faced by other means of appropriating public funds, including budget estimates hearings with their corresponding parliamentary approval process, my inclination has been to seek to curtail their use and application to essential matters.

There are no administrative or other merits in seeking to exempt the use of public funds from regular parliamentary scrutiny and approval, yet standing appropriations can have this very consequence and do continue to grow unchecked. The numbers of special accounts and standing appropriations and the amounts of expenditure involved have steadily grown over the life of the Commonwealth. Today and yesterday there was a fairly lengthy debate on the offshore petroleum bills, but as far as I am aware no-one raised within that debate the issue of those bills carrying standing appropriations, and yet once that is through that is the end of it. Parliament will not have to come back to them.

Standing appropriations now amount to over 80 per cent of all Commonwealth government expenditure. Comparable jurisdictions have not allowed standing appropriations to expand to this degree. Research shows that in the United Kingdom, for example, they amount to about 25 per cent of total government expenditure. More concerning still is that, in the report on the financial management of special standing appropriations of November 2004, the Australian National Audit Office found widespread illegalities and a lack of accountability and control in the management of these appropriations. More than half of the appropriations were not properly reported by departments and agencies in their annual financial statements.

By way of an example, consider the first act listed for amendment within this bill, the Aboriginal and Torres Strait Islander Act 2005. On the surface, there may appear to be little difference in converting a land fund to a land account but for the designation of this account as a special account. On closer inspection of the act, it is apparent that funds derived for the purposes of carrying out the act are derived my means of standing appropriations, as stated in section 144TA of the act in question:

Money payable to TSRA

(1) There is payable to the TSRA such money as the Parliament appropriates from time to time for the TSRA.

(2) The Finance Minister may give directions as to the amounts in which, and the times at which, money so appropriated is to be paid to the TSRA.

Also of concern is the fact that this bill directs surplus funds appropriated for the act to be invested and for earnings from the investment to be credited to the special account. That may make sense for a time, but, once the funds accumulate to a level where they are not retained earnings husbanded for later expenditure, what then? I am of the mind that, regardless of the government agency in question, if substantial surplus funds exist then such money should be returned to the consolidated revenue fund for use in other areas. I am not at all convinced that the department of finance has systems in place to monitor these issues and to police these matters effectively. Once again, I do not reflect on the quality and ability of DOFA staff; I reflect on the means by which they can do the job that is required.

There will always be a government agency or department in need of funds or that is underfunded. The automatic question therefore is: why should some agencies invest surplus funds for their own purposes when other agencies suffer a funding shortage? That is always a question that needs to be asked and answered. If there exist funds surplus to the needs of carrying out the intention of the underlying act by which a government agency or department is governed, then that agency has fulfilled its purpose with adequate funds and the surplus should be returned to general revenue.

Part 4 of schedule 1 proposes a number of amendments to the Child Support (Registration and Collection) Act 1988. Specifically, the government proposes broadening the types of accounts that can be credited to the Child Support Agency as well as broadening the types of payments that can be made from the Child Support Agency. Is the flexibility that might be achieved from broadening the types of payments and receipts made from or to the CSA either desirable or necessary? Does broadening the forms of transactions that can occur pose an unnecessary risk to the underlying system or does it improve the administration of the underlying system? These are questions that are difficult to ask, and perhaps difficult to answer, since the CSA already struggles under the pressure of many individuals and their financial difficulties and problems. Many Australians who currently maintain a responsible relationship with the CSA are acutely aware of the pressure that comes with meeting the financial obligations with which they are encumbered. I do not know the answers to my questions; I just pose them as commonsense questions.

In addition to the application of special accounts, the second key area of concern I wish to raise about this bill is the delegating of authority away from ministers to senior public servants. Once again I confirm my belief that the principle of sheeting responsibility home to the CEO and the CFO is a good one, but only if it is accompanied by full and frank accountability to DOFA and to the parliament and under a regime where regulation, enforcement and punishment for transgression operate—which they do not. That is the weakness in our system. For example, the proposed amendments to the National Health and Medical Research Council Act 1992 transfer responsibility for dealing with money held in trust from the minister for finance to the minister responsible for administering the NHMRC Act and from that minister to the chief executive officer of the NHMRC or to an APS employee.

When ministerial responsibility has deteriorated to the worrying situation of, ‘I didn’t know; I wasn’t told,’ or ‘It was the actions of a bureaucrat that caused the problem’—and fortunately we do not have anyone claiming deafness yet, as they do in the AWB farce—then the chief executive officer must be fully accountable instead. The question I would ask is: if you are going to devolve responsibility, if they are going to acquire that responsibility, are they fully accountable, especially in circumstances where the government of the day has already shown on particular issues that it is willing to muzzle them, to censor them and to require them not to answer questions in specific areas?

Schedule 2 amends the Safety, Rehabilitation and Compensation Act 1988. A number of anomalies are removed from the act, including the inability of employers to provide paid leave or sick leave to injured employees prior to the determination by Comcare and the inability of Comcare to pay employees via employers or to reimburse employers. This is achieved by the establishment of a predetermination period which allows the employee to be paid and, following a favourable determination, for Comcare to offset the compensation against the pay received whilst off work. Amendments are proposed which will also allow Comcare to pay employees via employers. This is currently prohibited under the Safety, Rehabilitation and Compensation Act but is said to be administratively superior and favourable for employees, who receive a seamless income stream whilst injured. I support these amendments, and I encourage the government to continue reform in this area.

Schedule 3 groups together a number of other amendments to disparate bills and is titled ‘Other amendments’. These amendments are so grouped as they all pertain to delegating decision-making power away from the Treasurer to the finance minister and in some cases further down the seniority list to senior public servants. The bills in question include the Australian Institute of Marine Science Act 1972, the Financial Management and Accountability Act 1997, the Native Title Act 1993 and the Public Service Act 1999.

As I have already highlighted with reference to the proposed amendment to the Child Support (Registration and Collection) Act 1988, I do have concerns about a number of provisions contained in this bill that appear to act to broaden the scope for payments to or from special accounts because they do not appear to be accompanied by sufficient regulatory safeguards. I am not talking about the determinations or the directions that are issued from Finance, which generally speaking are very good; I am talking about the ability to police them, to enforce them and, if there are transgressions, to punish those who transgress them. This includes extremely general references to special circumstances payments as proposed for the Public Service Act 1999 and acts of grace payments for the Financial Management and Accountability Act 1997, all of which are ultimately derived from special appropriations.

With regard to delegating authority, the Australian Institute of Marine Science Act 1972 gives the finance minister power to delegate authority to an official. My question to the minister would be: would you still assume responsibility for those decisions made under your delegated authority? Would the minister be responsible for the actions they have directly or indirectly authorised? Or is the new culture in the Public Service that the only person fully, absolutely and completely accountable is in fact the official and not the minister? This has become very grey in all our minds as we have watched the unfolding of the Howard government culture.

The final issue that I wish to discuss in relation to schedule 3 is the amendment to the Financial Management and Accountability Act 1997 which proposes extending access to modified applications allowed under this act to law enforcement agencies. These provisions currently only apply to intelligence and security agencies. The purpose of this amendment is to protect employees that are involved in sensitive or undercover operations. Once again, this is an amendment that reduces the level of accountability for government agencies—but for an apparently good purpose. While I agree that the safety and security of the employees concerned is of paramount importance, the government must still be held to account for the financial management of its security operations. I concur with views of the member for Melbourne, who attested in the other place that ‘these changes will take place without the benefit of the Australian Commission for Law Enforcement Integrity, promised prior to the last election but which has still not been delivered’.

Schedule 4 is the final schedule in this bill. It proposes repealing two redundant acts: the Employment Services Act 1994 and the Loan Act 1977. The Employment Services Act 1994 was passed to establish Employment Assistance Australia and the Employment Services Regulatory Authority, both of which are now non-operational organisations, making the act redundant. The Loan Act 1977 authorised the Treasurer to borrow money for the year ending 30 June 1978 and is also being repealed due to redundancy. I should say that these moments when we get rid of legislation and regulation should be greeted by a round of applause. I would remind the Senate of the calculation that, in the last 10 years, we have produced more legislation and regulation than in the previous 90 years. There must come a stage when we should be asking ourselves when enough is enough. Our real problem is in fact enforcing and regulating and ensuring that existing law operates fully and effectively and that existing law is pursued to its fullest extent. My congratulations go to the government for wiping some regulation and legislation off the books because they are redundant.

In the committee stage, with the shadow minister from Labor, I will be moving amendments to address our concern with regard to the reporting and the proper listing and aggregation of special accounts and matters like that. It has been very difficult to get a tag on what exists and in what form it is. I happen to know that DOFA has had similar concerns and has been improving its own aggregatability, if you like, to put this sort of information together. With Labor, I will be seeking to give this some legislative bite.