Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

At the heart of the resolution that we have placed before the Senate is the general decline in financial accountability standards of the Howard government, particularly over the last two to three years. The issues that highlight the decline in financial management and standards of the Howard government go to matters like the accurate costings of billion-dollar promises, often turning out to be inaccurately costed to the tune of hundreds of millions of dollars; the lack of ongoing transparency and accountability; and the lack of due process—the government’s own processes that it lays down for the costings and announcements of major policies. Why has this come about? Labor would argue that at the heart of this problem, which I am going to illustrate with specific examples a little later in my comments, are the Prime Minister, Mr Howard, and the Minister for Finance and Administration, Senator Minchin.

What we have in Mr Howard—I concede that he is a very smart political operator and has been in parliament for almost 33 years—is a Prime Minister who takes short-term, knee-jerk opportunistic policy decisions when the government gets into trouble. I will illustrate this with some examples later on. We have a government that has now been in office for almost 11 years and finds itself out of touch in a number of public policy areas. The Prime Minister has decided that, in order to regain public popularity and credibility, particularly in an election year, he has to cobble together policy on the run. This government is becoming very old, tired and lethargic and it has cobbled together these policies at the last minute.

Labor is not complaining about the content of some of the policies, but we do complain about the inaccurate costings, the failure to report ongoing costings where there are cost overruns and the lack of due process. It is a real sign of decay when a government makes short-term, opportunistic decisions on the run and fails to cost them in an adequate way. It is not just me that is making this observation. A number of expert and highly regarded independent commentators are starting to analyse the Howard government’s decaying approach to financial management and responsibility, including Mr Allan Fels, formerly of the ACCC, a highly regarded former regulator who is now the Dean of the Australia and New Zealand School of Government—and I think he is an economics-law graduate; and Mr Fred Brenchley, the former editor of the Australian Financial Review, who only this week observed that this Liberal government’s financial discipline and management is in decay and that its approach to the financial framework of government appears to be alarmingly weak.

The Audit Office—thank goodness it is independent; it is one of the few statutory authorities that have not been nobbled by this government—has made some very alarming observations about financial management and the lack of discipline in government departments. When it reported this month on the outcomes and outputs framework for government spending programs, it painted a worrying picture of a very carefree attitude to where the money is going. That is a serious conclusion by the Audit Office. Whilst there can be some legitimate criticism of programs administered by departments, at the heart of this is the level of accountability of the Minister for Finance and Administration, Senator Minchin. I do not criticise or blame those hardworking, dedicated and committed officials in Treasury and Finance, whom I often see at Senate estimates. I criticise the political misdirection by the Prime Minister and the lack of political direction by the finance minister in terms of fiscal management and the costing of policies.

The Liberal government has two key bibles in its approach to the costing of policy announcements and ongoing financial management. One is the Cabinet Handbook and the other is the Charter of Budget Honesty. They set out the requirements for the consideration of policy, for the costing of policy and for the whole-of-government considerations, particularly cabinet considerations, for that detailed examination of policy. I am going to refer to a couple of examples of recent billion-dollar announcements that were not presented to cabinet. I am going to refer to a couple of significant examples of breaches of the Charter of Budget Honesty when it comes to reporting significant financial outcomes and cost blow-outs. Nowhere in either of these bibles does it say, for example, that billion-dollar commitments should not go to cabinet. In fact, it says the reverse—that policy announcements are supposed to go to cabinet. All too frequently we have had major announcements, with significant problems in terms of costing and ongoing financial reporting, that have not been going to cabinet. That is one of the failures, the decays, that have been occurring within this government in the last two years.

I want to go to a couple of examples to highlight this government’s decaying financial management supervision and discipline. Labor today touched on one example in question time—the recent water policy announcement by the Prime Minister, which is worth $10 billion over 10 years, or $1 billion a year. What should occur is that the detailed policy proposals in a policy announcement should be thoroughly examined by the Department of Finance and Administration. Once these policy proposals were brought together by the Prime Minister, as is his prerogative, there should have been adequate time for the department of finance to examine these specific policy proposals. What happened? A one-page brief on a $10 billion policy was provided to the department of finance 2½ days prior to its announcement. That is not what Labor would regard as a rigorous and proper financial examination of a policy announcement—and nor would the Liberal government until a few years ago—particularly for a policy that is worth $1 billion a year and $10 billion in total.

Secondly, this billion-dollar expenditure did not even go to cabinet in the normal way, whereby other ministers could discuss the proposal and contest it or argue about its merits. At the heart of the Westminster democratic system is collective cabinet decision making—and then later decision making by the parliamentary party and by the parliament itself—not prime ministerial decrees on $10 billion expenditures. We had the extraordinary contrast of a $250,000 carriage for Her Majesty the Queen—