Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Hansard source

by leave—I move coalition amendments (1), (2) and (3) on sheet 7162 together:

(1)   Schedule 1, item 19, page 6 (line 32) to page 7 (line 3), omit subsection 18B(1), substitute:

(1)   The Auditor-General may conduct a performance audit of a Commonwealth partner if the partner is, is part of, or is controlled by, the Government of a State or Territory.

(2)   Schedule 1, item 19, page 7 (after line 4), before paragraph 18B(2)(a), insert:

(aa)   the person or body is, is part of, or is controlled by, the Government of a State or Territory; and

(3)   Schedule 1, item 19, page 8 (lines 1 to 3), omit subsection 18B(9).

I take the points raised by speakers in this debate and move these amendments on behalf of the coalition. The effect of these amendments is to limit the scope of the Auditor-General's powers effectively at the door of government. We have taken account of Senator Bishop's concerns earlier when he said that we need to give the Commonwealth Auditor-General the power to look into other branches of the federation where they are in receipt of Commonwealth money. The coalition strongly agrees with this and has proposed it. We have argued in this place before that, in respect of money appropriated and spent by this place for a purpose—whether it be directly or through another level of government—the members of this place have an interest, on behalf of all Australians, in checking up on the spending of that money to determine whether or not the money was spent effectively, whether or not the program was designed efficiently and whether or not the program was administered well.

We have heard a number of examples of where that has failed over the last few years. We have seen it happen with school halls, where we know there were billions of dollars wasted. As I said earlier, the idea that we would have asked Australians a few years ago for the undreamed of amount of money of $14 billion—a once-in-a-generation amount—to be invested in education, and that we would have spent it that way, is, I think, something that not even members of the government would own up to. That is because they cannot look in the mirror and say, 'We spent that $14 billion as well as it could have been spent.' Imagine the benefits that could have gone to teacher training, to teacher remuneration and reward and to other facilities in schools—not just school halls. I think that in the years to come we will hear complaints about lack of schoolyards in some of these schools. I live in the inner city of Melbourne and a number of these schoolyards—

Senator Farrell interjecting—

Senator Polley interjecting—

They do not have a yard any more, Senator Polley and Senator Farrell. They do not even have a schoolyard. There is nowhere for them to run around. They are rostering lunchtime and playtime at schools that have a real-estate challenge. But we whacked on a hall because many of the schools were old. If we had asked ourselves if this was the best way to spend this once in a generation amount of money we would have said this is not the way to do it. No one can contend that this was the single best thing to do with $14 billion.

Senator Farrell interjecting—

I hear the very soft interjections about school halls. I have teachers in my family, Senator Farrell, and no one thinks the school hall or the improved schoolyard is the best way to have spent that money. That the children in those schools will spend many years of their working lives paying back the debt you ran up to pay for the school halls, long after they have finished building them and probably long after those school halls have become redundant and been torn down, is tragically ironic.

The challenge around this bill in particular is: where do we draw the line and what is the legitimate burden to place upon those people who are in receipt of Commonwealth funding? I have no problem whatsoever in applying the same burdens to Commonwealth agencies, state governments and state agencies. However, the coalition has a substantial concern that a subcontractor working on a school hall, with 10 degrees of separation from the appropriation of money in this place, is somehow going to be the person facing the audit from the might of the Commonwealth Auditor-General's office. We know from the JCPAA report that they do not expect there to be a significant increase in workload nor a significant increase in the requirement for resourcing of the ANAO as a result of the recommendations that have been incorporated in this legislation.

The problem, however, is that we do not need to see a substantial increase. What worries me is that we are actually going to see one or two small or medium sized businesses subjected to a substantial audit, which they often do not have the capacity to deal with. Lend Lease, if we were going after them, would have the capacity to deal with the Commonwealth Auditor-General. But how on earth does a two- or three-person firm working in plumbing, electricals or even service provision, like IT, have the capacity to face up to the Commonwealth Auditor-General?

The truth is that it does not. The truth is that we are not even looking at the right spot.

The effect of these amendments is also to bring the burden back upon us. As politicians, as members of the executive opposite, at the state and territory level as well, the burden is upon the public sector not only to appropriate the money and throw it around but to actually design the programs well and to administer them well. The opposition's view is that we can actually meet the objectives outlined in the JCPAA report and that we can meet the objectives of ensuring value for money, ensuring that programs are administered and funded efficiently and ensuring that we get the outcomes we desire. We believe we can do that by holding government departments and agencies accountable. Whether it is a state department of education or the Commonwealth department of sustainability, the burden should be upon the public sector to make sure the program is designed well, to make sure it is administered reasonably and to make sure it achieves the objectives that the money was appropriated for. I do not think the need has been established that we should be going after the person who is necessarily in receipt of that.

All the flaws that have led to this particular bill have actually been flaws on behalf of government. I do not want to assign a motive to those opposite, but it does concern me that there is a bit of misdirection going on here. It is as if the private sector businesses in receipt of these malformed and maladministered programs are somehow the ones completely at fault. I do not know whether they are or not, but the truth is that we know there were substantial flaws in the government administration of this. We know that there was not the capacity of the Auditor-General to look into this. We know that we could not test whether there was value for taxpayers' money. So why don't we, at least in the first instance when we are dealing with this problem, say: 'Let's fix up our side of the equation. Let's fix up our side of the negotiating table and make sure government programs get it right'? I do not think—and it is an extreme example—that making the subcontractor company of two or three subject to the Auditor-General is going to solve the problem. It will only be one instance anyway.

We know, with the BER and with home insulation, that there were systemic problems. There were problems at a policy level and at a government administration level. The problems were not just with a few dodgy people. The problems were because of what this government did. As I have said before, this government was warned about this. It was warned about this during the inquiry into the stimulus, it was warned about it on the way through, it was warned about it while it was happening and it was warned about it after it started happening, yet at no point was the Labor government, under the then Prime Minister and now foreign minister, interested in heeding those warnings until it was too late, in both economic and, tragically, personal terms.

A concern we have about the bill as it stands is that, if the Auditor-General were to start auditing a couple of small firms, I can imagine some firms I know that would be in receipt indirectly of Commonwealth funding that simply would have to stop work. They do not have the redundant capacity to have their books audited. They might be family businesses. They might be small businesses with just a few people and an accountant employed as a bookkeeper. How on earth do we expect those people to deal with the Auditor-General? A lot of these small businesses are already struggling under the burden of red tape. We read only a couple of weeks ago that, under the national OH&S laws proposed by this government, every small business and home business in my home state of Victoria has to develop an evacuation plan. That is tens of thousands of businesses that have to figure out a way to get out of their house or garage, just to comply with national regulation.

This is a mind-set that worries us on this side of the chamber. I do not think there is necessarily anything malevolent about this, nor malicious, but what does concern us is that there is a complete lack of understanding of the impact that rules like this can have on small business. I know that this is going to scare off a lot of small businesses. For a family business that might be in receipt of Commonwealth money, the mere risk of being subjected to an audit of this scale—adding the tax office, WorkSafe, Fair Work Australia and whatever other agency you have to deal with to the Commonwealth Auditor-General—is actually just too great.

I just want to reinforce these points. We do believe in chasing the money trail, but I think the responsibility of the money trail is actually one of the public sector. It is our responsibility to design, administer and implement programs efficiently. That is our burden. It is not an unreasonable one and I do not think we should try to shift blame, if we get it wrong, because someone else has not run the program properly. There are always people who misbehave with public funds. Our responsibility is to make sure the incentive and the opening is not there for them to do it. That is where this government failed. That is where the Building the Education Revolution failed and that is where the Home Insulation Program failed. Undoubtedly there were some people undertaking acts that could be described as wrongdoing. But I do not see why we should subject all the businesses of Australia—most of which are overwhelmingly doing their best to comply with the plethora of regulations at local, state and federal level—to this threat because we cannot get our programs right.

This bill has not come up over years of contracting. I know there are concerns on the crossbenches. They are entirely legitimate concerns about how we keep an eye on contractors and the increasing use, particularly at a state level—as I am sure senators Xenophon and Rhiannon would have been aware of—of commercial-in-confidence as a cover-all claim to prevent public scrutiny of the expenditure of public funds. I have been there and I actually agree with those concerns. But the burden then is upon us to design and run the programs properly, to make sure there is no incentive for malfeasance, to make sure there is no ability to rort a program, to make sure that you do not have a situation where someone can get a phone book and start cold-calling pensioners and saying: 'I can put insulation in your roof. I have got no qualification. It will be free.' That is not necessarily the problem of all the businesses that were working in that space legitimately—most of whom, by the way, have now gone out of business. The fact that there might have been one or two builders or others that might have taken advantage of the Building the Education Revolution funds that were splashed around Australia, particularly in New South Wales, does not mean that all the builders in every state of Australia should have the threat of an ANAO audit hanging over their head. The fact that we are not dramatically increasing the size of the resourcing makes me wonder if, when the political pressure is on, one business or two businesses, who may have done nothing wrong, are going to get audited. There is a lack of understanding, in this city in particular, that even if you have done nothing wrong—even if you have no risk of being inconsistent with the guidelines and have done everything by the book—the audit is still going to cost you money and time. In the case of a family business it is also going to cost you in stress, because in many cases the spouse of the businessperson is the bookkeeper.

An example of this at the moment is dentistry. Many dentists throughout Australia have committed the technical error of not putting paperwork in on time because they were not familiar with the Medicare bulk-billing system. Historically dentists have not had a great deal to do with this process; they have done it for only a number of years. Yet we have dentists with bills of $70,000, $100,000 and in one case several hundred thousand dollars. The government is coming in and auditing them. These are family businesses in many cases, and this is putting their families through a great deal of stress. I was at a dentist with the shadow minister only last week in northern Melbourne. Three nurses had been placed full time at that dentist's practice to deal with the Medicare audit and chase up the paper trail. Medicare is not alleging that any money has been misclaimed. It is not alleging that any money has in some way not been appropriately spent. They are simply saying, 'You didn't do the paperwork; you didn't tick all the boxes.'

This is an example of what an audit can mean to a small business. The threat of an audit is a real and present problem that will scare small businesses away from bidding for government contracts and government work. And the last thing this country needs is more Lend Leases getting more government work. I have nothing against them, but the last thing this nation needs is fewer small businesses getting less government work because of the compliance burden. Since the previous government lost office in 2007 there have been 200,000 job losses in the small business sector and around 20,000 fewer small businesses operating in Australia. We do not need to make their life any more difficult, but the threat of an ANAO audit will do that.

I urge senators on the government benches and the cross benches to consider these amendments, because I think we can deal with all the legitimate concerns about chasing the money trail by actually taking that responsibility upon ourselves and making sure the government of the day—in whatever jurisdiction it may be—actually designs, administers and implements its programs appropriately. That is why we stand for office. It is our responsibility, and we should not try to avoid blame.