Debate resumed from 19 June, on motion by Senator Abetz:

That these bills be now read a second time.

Senator MURRAY(Western Australia)(8.43 pm)—As the Democrats finance spokesperson, I rise to speak to the five appropriation bills before us. At the outset, let me make it clear that the Democrats support the passage of these bills. Appropriation Bill (No. 1) 2007-2008 appropriates close to $59 billion for the ordinary annual services of government—that is, for ongoing expenditure. The main provisions are practically identical to the Appropriation Act (No. 1) 2006-2007. In that bill nearly $20 billion goes to Defence. Appropriation Bill (No. 2) 2007-2008 appropriates approximately $10.1 billion for funding for other expenditure and agencies. In terms of the compact of 1985, Appropriation Bill (No. 2) is meant to be for non-annual services, for new policies and other projects of government. It should be noted that the minister can determine terms and conditions for the payment of money and withhold it if the terms and conditions are not met by the territories or local government. Appropriation Bill (No. 5) 2006-2007 provides for additional appropriations relevant to the 2006-07 financial year and concerns expenditures in Appropriation Bill (No. 1) of that year. The total of the items specified in schedule 1 is close to $555 million.

The additional appropriation in Appropriation Bill (No. 6) 2006-07 is around $259 million. This funds an additional $250 million to the Department of Transport and Regional Services for the AusLink Strategic Regional Program. The funding increase is partially offset by savings in other programs. Both Appropriation Bill (No. 5) and Appropriation Bill (No. 6) seek approximately $840 million and the major items provided for are an increase of $66.3 million for the Department of Education, Science and Training and $435.8 million for the Department of Health and Ageing. The last appropriation bill is the Appropriation (Parliamentary Departments) Bill (No. 1) 2007-08, which appropriates $170.7 million out of the consolidated revenue fund for expenditure in relation to the Department of the Senate, the Department of the House of Representatives and the Department of Parliamentary Services.

I cannot deal with all the matters in these bills so I will concentrate on a few themes. Over the last decade or so the shape of public finance has radically changed. The principal features of the new regime are output based budgeting and appropriations and accrual accounting, and the main statutory reflection of the change is the Financial Management and Accountability Act 1997. There are great advantages in this new public finance system. It gives executive government a better picture of its total financial position and the resources at its disposal and facilitates government control over its total budget.

It has, however, some negative features, and these relate to the transparency of funding and expenditure and accountability to parliament. A report presented in March 2007 from the Senate Standing Committee on Finance and Public Administration, on which I sit, entitled Transparency and accountability of Commonwealth public funding and expenditure represents an attempt to overcome those negative aspects of what is otherwise a positive current system. In essence, the committee was unequivocal in its recommendations to government that transparency and accountability requires improvement. It stated:

The Committee has made several recommendations and a number of suggestions which, if adopted, would go some way to restoring the Parliament’s constitutional and historical prerogatives with regard to the control of the Executive’s funding and expenditure.

This statement by the committee should not be dismissed lightly. It draws on evidence received during the inquiry from the Australian National Audit Office, the Department of Finance and Administration, academics in the fields of finance, accounting and governance, parliamentary officers and others.

The main problem from a parliamentary point of view is that the annual appropriation bills now bear a somewhat tenuous relationship with actual public funding and expenditure—much more tenuous than they did in the past. The appropriation bills do not give a true picture of the funds available to government or the purposes for which they are to be expended. In the first place, the annual appropriations now account for something less than 20 per cent of the resources available to government. Most of the money comes from so-called ‘special appropriations’ or ‘standing appropriations’, which are provisions in hundreds of acts of parliament appropriating money for particular purposes in the longer term, usually of indefinite amount and often of indefinite duration. These appropriation provisions have proliferated to the extent that government itself does not have a full picture of them. A report by the Auditor-General in 2003-2004 found significant illegalities and lack of proper management and control in these special appropriations. I stress that in many cases the illegalities were regarded as technical rather than substantive.

In addition, departments and agencies have available to them other sources of funds which are not reflected in the appropriation bills. Those sources are, firstly, advances to the Minister for Finance and Administration, which are funds for urgent and unforeseen or overlooked expenditure and which potentially amount to $390 million in the appropriation bills for the financial year 2007-08. A second source is that departments are able to carry over surpluses from their annual appropriations, providing them with cash to add to their appropriations in the future. A third source is where these surpluses are increased by building provision for depreciation into annual budgets. The next source is that revenue raised by departments may be retained by agreement of the Minister for Finance and Administration under section 31 of the FMA Act. Further, special accounts are created by the Minister for Finance and Administration under sections 20 and 21 of the FMA Act, and in 2002-03, when the accounts were last audited, this amounted to $3.4 billion into which some revenues are directly paid. Lastly, appropriations of an unspecified amount are made under section 30A of the FMA Act to allow payment by departments of the goods and services tax.

In past years the Minister for Finance and Administration could also increase the annual appropriations of departments within specified ceilings, totalling $40 million in the appropriation acts for 2006-07. Reports by the Auditor-General found problems with special accounts and the system of retaining surpluses similar to those encountered with special appropriations. As a result, it is no easy exercise to determine the total funds available to departments and agencies.

The Senate Finance and Public Administration Committee made a number of recommendations to improve transparency and accountability to parliament of public finance. In summary, these recommendations encompass: the presentation to parliament annually of a full account of expenditure from special appropriations; regular and systematic review of special appropriations to ensure that they are still required for purposes deliberately continued by government; full reporting of transfers of expenditure between different forms of appropriation, for example, between annual appropriations and special accounts; improved accounting for revenue retained by departments and agencies; retention of unspent appropriations by departments and agencies only for specific and justified purposes deliberately approved by government; accounting for expenditure from GST revenues by states and territories; reframing of outcomes to reduce their ambiguity; reporting of expenditure at the level of programs in the budget documents, including the appropriation bills; expediting the harmonisation of accounting standards; a better system for funding depreciation rather than inclusion in annual appropriations; a review of the content and nature of portfolio budget statements; and a settlement of the permissible content of appropriations for the ordinary annual services of the government.

These changes cannot be implemented without the cooperation of government. It is up to the Senate and all parties in the Senate to convince the government of the day, in this case the coalition government, that these recommendations are in its and the country’s best long-term interests, because lack of accountability does cause problems for any government, and all governments in the long run.

Some of these difficulties came forcibly to parliamentary and public attention with the government’s workplace relations advertising campaign in 2005. Some $55 million was spent on an advertising campaign for legislation which had not even been introduced into the parliament, much less passed by the parliament. This expenditure was charged to outcome 2 of the Department of Employment and Workplace Relations, which read ‘Higher productivity, higher pay workplaces’. Outcomes expressed in terms like these allow government enormous scope to invent and spend large sums on entirely new projects, even those which have not been notified to the parliament, much less submitted for parliamentary approval. It is now notorious that the High Court held that this expenditure was validly authorised by parliamentary appropriation and was entirely legal.

I do not think here is the place for analysing that judgement in detail, except to say that I agree with the minority justices that it did overthrow established High Court precedent and it did allow any government to spend money pretty well on whatever it pleased, providing the original appropriation was in the appropriate bill, even though it was expressed in the widest of terms. I quote two passages in the separate judgement of the Chief Justice:

If Parliament formulates the purposes of appropriation in broad, general terms, then those terms must be applied with the breadth and generality they bear.

The higher the level of abstraction, or the greater the scope for political interpretation, involved in a proposed outcome appropriation, the greater may be the detail required by Parliament before appropriating a sum to such a purpose; and the greater may be the scrutiny involved in a review of such expenditure after it has occurred.

I think the High Court were right in that they threw the ball directly back to the parliament. It is up to the parliament and parliamentarians, it is up to the political parties, not the courts, to ensure that government expenditure is sufficiently transparent and accountable.

This difficulty is nowhere more apparent than with the new heights the coalition government has scaled in recent government advertising expenditure. Consider these figures: The 2005 report of the Senate Finance and Public Administration References Committee, Government advertising and accountability, revealed that ‘media spend’ between 1996-97 and 2003-04 was well over $1 billion on advertising placement alone. I say alone, because this figure excludes production and advertisement agency costs and related market research, otherwise known as ‘below-the-line’ expenditure. It also excludes the whopping $55 million expended on the 2005 Work Choices advertising campaign. Consider also current government expenditure. We have $40 million being spent on advertisements spruiking its Work Choices legislation; we have the $69 million superannuation ‘information’ campaign; and we have the upcoming multimillion dollar ‘climate clever’ campaign to be funded out of the $52.8 million assigned to climate change awareness in the budget.

The Labor Party and others estimate that the Howard coalition government over the last 11 years has spent a colossal $1.7 billion of public funds on government advertising since coming to power. If you add the below-the-line costs it would be more, because reporting on ‘communications’ expenditure is very loose and difficult to pin down, a cause of complaint from Dr Sally Young, a leading academic researcher and commentator who has tried to analyse this area.

The public purse is not there to be used to prop up a government’s electoral campaign. It is there to provide essential services. In the finance committee’s estimates in May, I cited the Australian’s Steve Lewis. He wrote:

The Coalition’s exorbitant use of taxpayers’ money to advertise government propaganda represents a multi-million dollar swindle.

Steve Lewis is a very senior journalist but he is not exactly a radical lefty. He continues:

There is little justification for the advertising blitz, which is filling the coffers of Australia’s media companies but making a mockery of the Coalition’s pretence to be guardians of fiscal prudence.

There is substance to this view. For the financial year 2005-06, Nielsen media research listed the Howard government as the second highest advertiser in Australia behind the Coles-Myer group. Critically, this abuse of budgetary discretion by the executive to promote partisan political material is part of a much larger argument. It is part of perhaps the most profound of all political issues in the history of our democracy, and that is the decline of parliament’s ability to control executive spending.

The Senate committee’s Government advertising and accountability report that I referred to earlier makes this patently clear. I remember well the regret I felt when speaking to this report’s tabling. That regret was because, quite apart from exposing the aggressive misuse of public moneys by the coalition government, it also revealed a disregard for accountability measures—a disgraceful disregard, in my view. It laid bare how executive power can render the parliament powerless to control or even restrain government spending on politically contentious advertising activities. It revealed how the appropriations process has been perverted to permit almost ‘anything goes’ in spending in this area. The critical point to recognise is that the High Court has told us that this is perfectly legal and legitimate. So it is a moral, ethical and accountability problem; it is not a problem of law and legality.

The essence of the matter is this. We now have a parliament as an adjunct to, or even the creature of, the executive—a situation that has escalated and does need to be addressed. The Work Choices advertising campaign amply demonstrates the tussle between the executive and the parliament and that tussle now continues through the current stronger safety net for working Australians campaign. It is typically characterised as a tussle between two political parties, namely those contending for the right to be the government of Australia. But it is much more than that. It is fundamentally a tussle between the executive and parliament. Of the current IR campaign, Jack Waterford in the Canberra Times on 23 May wrote:

By any standards, the ads are beyond the pale in abuse of incumbency.

Respected academics in this field Graeme Orr and Joo Cheong-Tham wrote in the Age on 17 May:

Leaving aside the fact that there are no details until a bill is drafted and Parliament debates it, the style, content and timing of the ads give away their partisan intention. Their purpose is to attempt to neutralise an issue on which the Coalition is vulnerable. If the aim were purely informational, the Government would wait until the law was settled.

I must stress that the Democrats take no issue with government advertisements that inform Australians about taxpayer funded government programs and services, or that are directed to issues of public health and safety, or that are otherwise in the public interest. However, we oppose outright governments misusing public funds to pay for partisan ads under the guise of legitimate government spending. It is and always will be a thoroughly corrupt process. It borders on fiscal fraud and it should cease. Australia should catch up with the other democracies that have imposed constraints on the use of public resources for electoral campaigning. The amendment we are once again jointly moving with Labor seeks to impose far tighter rules on government advertising. I welcome federal Labor’s commitment to much greater accountability in this area.

The last and very current issue is whether the Prime Minister’s taxpayer funded official residences should ever be used for party political fundraising, either directly or indirectly. The answer from the Democrats and Labor is an unequivocal no. It is totally inappropriate for Kirribilli House ever to be used for formal party political matters by any Prime Minister or political party. It does not matter what the cost or imputed cost is and it does not matter if the Liberal or any other party pays for part or all of the cost. The point is that the principle is just wrong and the practice should be prohibited. The Labor/Democrats amendment tries to do just that. Kirribilli House or the Lodge definitely should not be used to raise campaign funds for political parties, either directly or indirectly.

The last point I make—and I ask for your forbearance briefly, Mr Acting Deputy President, because we are bound to get a bill seeking appropriation for this a little later—is the government’s announcement today of its intended actions with respect to the Northern Territory issues. For my part, I welcome the Prime Minister of Australia taking leadership in this area. We have to pay very much attention to the future, and to do that we have to deal with the present. I know it is going to be an extremely contentious area; I have already seen some remarks which are suggesting racism and authoritarianism. I do not leap to those judgements. I think that if you continue to argue, as I do, that excessive alcohol use and alcohol abuse is bad for the community in any shape or form—black, brown, white or yellow—you have to do something about it; you cannot just tut-tut on the side. And if you feel the same way about the sexual assault and abuse of children you have to do something about it. So I for one am glad the Prime Minister of Australia is getting onto this issue. Of course, that is not to say that his proposals should not be carefully examined, and those which are inappropriate or maybe wrongly phrased will not be immune from criticism. This issue of great national importance deserves to be examined with care, but I think leadership is necessary in this area and I am glad that that is about to occur.