Katy Gallagher (ACT, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

I rise to speak on this important private senator's bill, the Public Governance, Performance and Accountability Amendment (Waiver of Debt and Act of Grace Payments) Bill 2019, which, if passed, would improve accountability and transparency in government operations. The Public Governance, Performance and Accountability Act, the PGPA Act, is the key piece of legislation underpinning the financial framework and governance architecture of the Commonwealth. It applies to all Commonwealth entities and companies. The establishment of the PGPA Act was done during the term of the previous Labor government, in 2013. It replaced the Financial Management and Accountability Act and the Commonwealth Authorities and Companies Act, both of which had been in place since the late 1990s. The PGPA Act was designed to establish the framework necessary for a modern public service. The act, along with the necessary governance and accountability aspects, also contains provisions for the granting of discretionary financial assistance to members of the public.

The bill before us today deals with two aspects of this discretionary financial assistance: waivers of debt and act-of-grace payments. Section 63 of the PGPA Act authorises the finance minister, on behalf of the Commonwealth, to waive a debt owing to the Commonwealth. This waiver extinguishes the debt, meaning the Commonwealth cannot pursue the debt at a later date—even if the financial circumstances of the debtor, person or organisation change for the better. These debts relate to non-corporate Commonwealth entities, so it would relate the debts owed to the tax office or to Centrelink. Debt waivers are granted when the decision-maker—the finance minister for debts over $100,000, and Finance officials for amounts below that—considers that recovering the debt would be inequitable or would cause ongoing financial hardship and that other debt treatment options are not deemed appropriate. Financial hardship, as stated by the Department of Finance, would exist where payment of the debt would leave some unable to provide food, accommodation, clothing, medical treatment, education or other necessities for themselves or their families or other people for whom they are responsible.

The PGPA Act also provides the finance minister with the power to provide act-of-grace payments. Section 65 of the PGPA Act authorises the finance minister, on behalf of the Commonwealth, to make payments to a person if they consider it appropriate to do so because of special circumstances. These special circumstances are not defined in the act; however, the Department of Finance cites examples where such circumstances may exist, such as where a non-corporate Commonwealth entity has taken action or failed to take action which has caused an unintended or inequitable result for someone, or where Commonwealth legislation or policy has an unintended, inequitable or otherwise unacceptable impact on someone. Like waivers of debt, the provision of an act-of-grace payment is discretionary. Each request is treated individually, at the full discretion of the relevant decision-maker, and does not create a precedent for future requests.

While this bill covers both act-of-grace payments and waivers of debt, I want to particularly focus on the waiver-of-debt aspect. At Senate estimates in October last year, it was revealed that the Tasmanian housing debt worth $157 million was waived under the waiver-of-debt power in the PGPA Act. Finance officials also stated that these debt waivers and act-of-grace payments are not reported publicly. Of course, the waiver of the Tasmanian housing debt was a measure in the MYEFO of that year, but I find it interesting in terms of government accountability and transparency that there is no requirement at all for reporting on these debt waivers and act-of-grace payments. After all, we're talking either about taxpayers' money being given in a discretionary fashion to people or organisations, or about debts owed to the Commonwealth—that is, the taxpayer—being waived at the stroke of a pen. This is extremely pertinent, particularly as we now understand the government has to repay debts to the value of $721 million as part of the illegal robodebt scheme. While anyone of course can ask through the estimates process or questions on notice for an update on these figures, governments are not required to and do not voluntarily put that information out into the public domain.

When you look back at what has happened over the term of this government, it's interesting to see that, from 1 July 2014 to 30 June 2019—so, over that five-year period—there were 723 decisions made by finance portfolio ministers or appropriate delegates to waive debts owed to the Commonwealth with a total value of $159.9 million or an average of $220,608 per decision. From 1 July through to October 2019, just in those four months, there were 26 decisions to waive debt with a total value of $158.6 million—so, almost exactly the same total as over the previous five years—and the average skyrocketing to $6.1 million per decision. But note this is in the period of time that the Tasmanian housing debt was being waived. By March this year, those waivers had increased to 62 decisions, with a total value of $159.4 million. So over that 5½-year period, almost six-year period, we saw almost $320 million of taxpayers' funds being waived through the waiver-of-debt process.

I'd also note, and this has come to me through questions on notice, the status of other housing debts in the pipeline. After Tasmania had their housing debt waived—if senators recall, for the vote of Senator Jacqui Lambie for the government's tax legislation which actually passed tax cuts, which passed by one vote in this place, the price was $158 million to Tasmania—as you'd expect, the other states with housing debts to the Commonwealth have all sought to have their debts waived and to renegotiate their loans from the Commonwealth. We know that New South Wales has a $838 million debt in relation to housing debts; Queensland, $278.5 million; Western Australia, $343.2 million; the ACT, $114.9 million; and Northern Territory, $190.5 million. Presuming that these loans were engaged in similar ways to Tasmania's and that all state governments have similar arguments about the fairness or otherwise of those loans, and Tasmania have had theirs waived, you would think the other states would have equally strong arguments on the same grounds. If those grounds were applied as they are required to be under the PGPA Act, there will be more waivers of debt coming our way for the finance minister to sign off in the not-too-distant future. Indeed, when I pursued this at estimates in March this year, Treasury confirmed that they had provided advice to the government on state housing debt forgiveness in relation to the further applications they've had, but the Treasury is unable to comment on the specific nature of the timing of the advice or indeed, I presume, when the government will make a decision on that.

I can certainly say from the ACT government's point of view, when engaging with the Commonwealth on loans, that my experience is they haven't been as generous as they've been with Tasmania in any way—perhaps because they know my vote doesn't count as much as Senator Jacqui Lambie's does for the purpose of particular legislation. I presume that's the reason why they haven't waived the ACT's debt. When we negotiated with them about the asbestos dump and the houses riddled with asbestos in this town from when they actually administered the territory, they wouldn't even give an inch on that loan. In fact, it's a billion-dollar loan which the current Chief Minister has paid out after going and getting cheaper debt from the private sector because of the terms of that loan. The Commonwealth has been reluctant to waive debts for any other state government in any other situation other than what it serves their purpose to get one vote in this chamber. All of a sudden, the waiver of debt requirements have been met and the debt is washed away with the designing of an instrument. Tasmania is certainly better off for it, but all the other struggling state governments with similar debts are left to manage their debt with the Commonwealth with a closed ear, it would seem.

This bill would improve in a small but important way the level of accountability and transparency to the creating of debt waivers and act-of-grace payments. I think accountability and transparency are issues that this government has a problem with. We know this from all the OPDs that've come back that have been mostly ignored. We know from the committee processes that we're involved in how often cabinet-in-confidence is used or how questions come back from the Public Service not answered or answered in a way that doesn't provide any information. So we know this government doesn't like providing information to the parliament and therefore to the community. This is an important way of requiring that. We shouldn't have to pursue it and wait 30 days. This is information that the community is entitled to. It is the community's money. It is not the government's money to do secret deals with and hide away and hope people don't ask about. It's the community's money, and it should be reported. That is what this bill seeks to do.

It increases transparency without infringing on the privacy of individuals and organisations. I know that would've been a response from the government—that you can't identify who you are providing debt waivers or act-of-grace payments to, and fair enough. That's why this bill has been drafted in a way that would require the Department of Finance to report in its annual report the number of debt waivers made during the period that the annual report covers, the total dollar amount that was waived as a result of those debt waivers, the number of act-of-grace payments made during the period the annual report covers and the total dollar amount that was paid as a result of those act-of-grace payments. As the explanatory memorandum to the bill states, I would anticipate this looking like, for example, 'In 2019-20, X debt waiver authorisations were made with Y in debts waived and, in 2019-20, X act-of-grace payments were made totalling Y.' And then, if people have further questions about that, of course they can pursue it. It's simple, straightforward and adds a layer of accountability but, importantly, sends a message to the Public Service and to executive government that this is information that is legitimately in the public interest and should be provided as a matter of course, as other details are in the annual reports. Given that all the bill is asking for is for the publication of aggregate or global figures for the total amount, no private information would be made public and the identities of recipients of a debt waiver or act-of-grace payment would not be made known.

When you look back at the last six years of decisions made under this government, we know that the total involved is about $320 million. It's not a small or insignificant sum by any means. We know that the applications keep coming in. We know that the Tasmanian housing debt was one of them. We know that there are applications in from five other jurisdictions to have their housing debts waived. So, potentially, this is going to be a mechanism that is used to offset in excess of $1 billion—$1.3 billion worth of loans. It's only appropriate that the government report this clearly and that it become standard practice in terms of information that is required to be put in the public domain. It's not controversial. I can't see any reason why any senator in this place wouldn't support it. It's about providing taxpayers with a level of transparency they don't have at the moment. It also requires a more open government in terms of information that is provided to the community. These are both positive initiatives. Hopefully, the Senate will support this bill.