Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Hansard source

I rise to speak on the Auditor-General Amendment Bill 2011. The bill seeks to amend the Auditor-General Act to implement various recommendations of report 419, tabled in December 2010, of the Joint Committee of Public Accounts and Audit. The bill seeks to extend the Auditor-General's mandate to undertake performance audits of private sector providers and state government agencies in certain circumstances and to undertake a specific audit program of a sample of agency performance indicators. The bill will allow the Auditor-General to conduct, in certain circumstances, assurance reviews with the same powers and access to information and premises as applies to performance and financial audits.

Assurance reviews are undertaken by agreement with a client, either at the request of the client or in response to a request from stakeholders, including ministers, the Joint Committee on Public Accounts and Audit and other parliamentary committees. The terms of the review are negotiated directly with the client. The Auditor-General's existing powers in relation to the conduct of performance and financial audits by arrangement are outlined in section 20 of the act. The Joint Committee of Public Accounts and Audit recommended extending the Auditor-General's existing powers to include the conduct of assurance reviews. This will ensure greater confidence that the Auditor-General can carry out such reviews without having to negotiate terms, breadth and access to information directly with the client.

The bill also provides clarity with respect to claims of legal professional privilege for information or documents—ensuring that such claims do not override the Auditor-General's information-gathering powers. In doing so, the bill makes it clear that the information or documents do not cease being the subject of legal professional privilege if produced in response to a direction by the Auditor-General. The Australian National Audit Office has noted that agencies have, directly or indirectly, obtained legal advice which claims that certain documents are protected by legal professional privilege and therefore cannot be produced. In evidence to the Joint Committee of Public Accounts and Audit, the Auditor-General noted that, despite these difficulties, the Audit Office has never been refused access to such information. By clarifying the situation, however, this amendment will improve the efficiency of the audit process by removing the time-consuming process of having to negotiate the provision of privileged documents. The bill also clarifies that the Auditor-General is able to audit any Commonwealth controlled entity, including Commonwealth controlled companies and their subsidiaries. This is by far the most significant amendment in this bill. This will allow the Auditor-General to follow the money and audit parties of government contracts and agreements. This means that private sector and state and/or territory entities that receive Australian government funds to implement Australian government programs will come within the definition of those to be audited. Under the current arrangements, the Auditor-General can access the records and information of such external parties, but only when assessing the performance of the relevant agency, not when directly assessing the performance of an external party. This means that the Auditor-General is unable to access the extent to which the external parties that receive the government funds achieve the purpose for which those funds were provided. This bill gives that authority to the Auditor-General, along with the authority to undertake audits of those Commonwealth partners.

The bill contains appropriate restrictions and protections on the extent of these powers, particularly in relation to state and territory entities, and the government anticipates that they will be used sparingly. For example, the Auditor-General will be able to assess the operations of a state or territory entity only after a request has been made by the Joint Committee of Public Accounts and Audit, or by the responsible minister, and only to the extent that those operations relate to achieving the purpose for which the funds were provided.

The amendments to the bill implement those recommendations of the Joint Committee of Public Accounts and Audit report that require legislation, with one exception. That exception relates to the performance-auditing arrangements for government business enterprises. The Auditor-General Act currently provides that government business enterprises can only be audited by the Auditor-General at the request of the Joint Committee of Public Accounts and Audit, the minister responsible for the government business enterprise or the finance minister. The Joint Committee of Public Accounts and Audit report recommended that the act should be amended to give the Auditor-General the broad authority to initiate audits of government business enterprises.

Successive governments have taken the view that the Auditor-General should not have the ability to audit government business enterprises of their own motion. Government business enterprises are subject to competitive pressures and disciplines that do not apply to other Commonwealth bodies, and to the greatest extent possible they should be subject to the same audit arrangements as their competitors. The government considers that audits of government business enterprises should be requested by the parliament in response to general public interest concerns about aspects of their operations, rather than as an incidental part of an annual work program. The Joint Committee of Public Accounts and Audit, which comprises members from across the political spectrum and can conduct hearings in private, is the appropriate body to consider whether a particular government business enterprise should be audited.

The House of Representatives agreed to the amendments which now form part of the bill before the Senate. Accordingly, the Auditor-General Amendment Bill would allow only the Joint Committee of Public Accounts and Audit to request an audit of a government business enterprise by the Auditor-General and, as is currently the case, the Auditor-General could ask the Joint Committee of Public Accounts and Audit to request an audit for a particular government business enterprise. The measures contained in the bill will ensure that the Auditor-General has the tools to respond to today's audit challenges. The government supports the bill before the Senate. We see it as an appropriate response to that important report of the Joint Committee of Public Accounts and Audit, and I commend the bill to the Senate.