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Finance and Public Administration Legislation Committee - 02/06/98 - PRIME MINISTER AND CABINET PORTFOLIO - Program 1—Departmental policy coordination

Senator Hill —To answer your original question, Senator, that amount of a bit over $5 million does represent an increase from the expected to the projected outcome for 1998[hyphen]99.

Senator ROBERT RAY —Page 21, running costs: is that you, is it? There is a $5 million increase from the second last column to the last column, representing a 22 per cent increase. I suppose my first question is: why the underspend in 1997-98? Sorry, the underspend is essentially not from the predicted budget outcome; it goes down by $2 million and $3 million from the revised appropriations to the $26 million outcome. So you have gone down $3 million, even though you predicted it to go up $3 million in the supplementary estimates. Why the underspend?


Dr Watt —In a general sense, I think the department is broadly understaffed, and that has been reflected in the underspend. That suggests we have not recruited as expeditiously as we should have, and that is probably correct. That has partly been pressure of work on the department across a number of different areas of the department. There will always be a number of individual explanations for individual areas, but I think that is the broadest explanation. My colleagues on my right assure me that is the case. There has also been an increase in estimated outlays for running costs for the establishment of the Office of Indigenous Policy. That is picked up in the growth between 1997[hyphen]98 and 1998[hyphen]99.

Senator ROBERT RAY —What percentage of the $5.756 million would that absorb to explain that?

Dr Watt —The amount of $2 million. It is a bit over one-third.

Senator ROBERT RAY —How much of the running costs were carried over from last year to this year?

Mr d'Angelo —This is from last year to this year.

Senator ROBERT RAY —We have not actually expired this year. You are absolutely right. We have another 28 days to spend some money. What is your anticipated carry over?

Mr d'Angelo —From 1997[hyphen]98 to 1998-99 we are anticipating to carry over a full 10 per cent.

Senator ROBERT RAY —That is your maximum.

Mr d'Angelo —That is correct.

Senator ROBERT RAY —That is about $300,000.

Mr d'Angelo —No, more in the order of $5 million.

Dr Watt —That is not just running costs.

Mr d'Angelo —This is for the department as a whole.

Senator ROBERT RAY —I see, part of which is a carry over of running costs.

Mr d'Angelo —That is running costs.

Dr Watt —The distinction has not been drawn.

Senator ROBERT RAY —I think I understand that you do not draw a distinction program by program of how much you carry over—just the totality of the whole PM&C running costs. I understand. If you undershoot on running costs again for some reason in this next financial year, we went through last time in another program your capacity to spend that for other purposes. Would you like to explain what capacity you have to spend excess running costs on other projects, such as advertising?

Mr d'Angelo —The department is provided with $48 million for running cost purposes. It is entitled to spend that $48 million to meet its objectives. In terms of approving the expenditure of public moneys, basically two or three conditions need to be met under the financial management and accountability act.

Senator ROBERT RAY —If you had an anticipated expenditure—that is, running costs are established at a certain level basically to pay salaries and everything else—you would have to notate it here somewhere in this particular statement, wouldn't you?

Mr d'Angelo —Each of the subprograms list their main objectives, and running costs are provided to the department to meet those objectives.


Senator ROBERT RAY —It would be totally non-you to bulk up your running costs and have some other expenditure in mind but not produce it here. That is basically what I am saying. I am asking you whether you are going to use some of this surplus in running costs that you are likely to have for advertising purposes, as was proposed in the current financial year?

Ms Harrison —There is no plan for the next financial year.

Dr Watt —I think the key thing in that issue is not whether we are in prospect of an underspend or indeed an overspend on running costs. We also have the ability to borrow forward in certain years. If you wish to use running costs for other purposes, be whatever they may, you could actually do that in an overspend position as well, I assume.

Senator ROBERT RAY —It would be a lot safer to do it, in terms of prudent bureaucratic management, by squirreling a few nuts away and spend them rather than borrow into the future, isn't it?

Dr Watt —As someone who manages a small part of this budget, I would like to get my hands on some of those nuts for running cost expenditure purposes.

Senator ROBERT RAY —If you underspent last year, and you have given reasons for the underspend, even taking into account the new office that you want to set up, you still have $3 million sloshing around unless the parameters change. What is going to change this year to absorb that money or should you give it back to Finance?

Dr Watt —We certainly hope we would be better staffed than we were last year. People have been working under a fair amount of pressure, given the government's agenda in a number of areas, which I think we would like to avoid continuing, if we could.

Senator ROBERT RAY —You hope to have—I know this is average staff years—250 in the financial year 1997[hyphen]98, but your estimated outcome is 217. What is wrong with the management that you cannot recruit and fill these vacancies so that the pressure can be relieved on obviously very hardworking officers?

Dr Watt —I think the SES of the department collectively has to take some criticism for not being expeditious enough to recruit.

Senator ROBERT RAY —Performance pay has gone, hasn't it?

Dr Watt —No, we are still eligible for performance pay.

Senator ROBERT RAY —I see. So there is no performance pay for any of you now?

Dr Watt —Less performance pay. I think one of the things that can happen in a small department with a busy agenda is it is very easy to get yourself into a vicious spiral of being shorthanded and therefore the immediate crowds out the important or the urgent crowds out the important. I think in a few areas of the department that is what has happened in the last 12 months.

Senator ROBERT RAY —Have you done some sort of research or some sort of assessment of why people have left and these amounts of vacancies are occurring?

Dr Watt —It is a two[hyphen]edged sword. I am not sure that we have had more people leave than normal but I suspect that, whatever the level of outflow has been, it has been matched by relatively slow inflows.

Senator ROBERT RAY —Do you want to bet your next year's performance pay that you will in fact fill the 44 staff years that you are now promising to do?


Dr Watt —It strikes me as not a wager I would be likely to do particularly well at, Senator and, as I am not a wagerer, I will pass, thank you.

Senator ROBERT RAY —It just goes back though to the accuracy of the figures. If the 44 staff years are unachievable, really the running cost figure should have been ratcheted back a bit. That is the only point I am making.

Dr Watt —I can see now in principle the reason why they are unachieved.

Senator ROBERT RAY —That is all I have on running costs. It has certainly gone to the end of my expertise in it.

Senator FAULKNER —Dr Watt, I saw an article in today's Australian Financial Review headed `New team to sell tax reform'. I do not know if you saw the article.

Dr Watt —I must admit, Senator, I did not.

Senator FAULKNER —I just wondered what involvement your own program might have had in this.

Dr Watt —You have me at a disadvantage without actually seeing the article, Senator.

Senator FAULKNER —It is on its way.

Senator ROBERT RAY —Why don't you have a little read of the article and maybe I can ask someone else a question for a minute. Is that a good idea?

Senator FAULKNER —That is a great idea.

Senator ROBERT RAY —Does anyone know what the cost of the aborted Premiers conference here was? Remember they all walked out in high dudgeon over public hospitals? What was the cost of putting together that Premiers conference that did nothing? It is not you again, Dr Watt, is it?

Dr Watt —I am afraid it is, Senator.

Senator ROBERT RAY —I was hoping it would be someone else.

Dr Watt —I do not believe that we have a separately identified costing for that. We can certainly try to find one for you. I think the marginal costs of the Premiers conference, in so far as the Commonwealth bears them, are pretty small.

Senator ROBERT RAY —I was pretty pleased to see that when none of them turned up for the lunch, you invited all the rest of the B[hyphen]class staff along to have lunch there. I thought it was very good. But that does not help you read that article.

Senator FAULKNER —Can I ask in relation to this particular article that you now have: is your program aware of any major advertising campaign on the issue—for want of a better description—of tax or tax reform for which the Department of the Prime Minister and Cabinet is the client?

Dr Watt —As you might be aware, the government apportioned a certain amount of money in the 1997[hyphen]98 budget papers for advertising in relation to tax reform. That is in the Treasury portfolio and I think, frankly, it would be much more appropriate to address your questions to the Treasury portfolio.

Senator FAULKNER —I am aware of that, and that is why I specifically asked the question in the way I did, which was: whether you were aware of any advertising in this area for which the Department of the Prime Minister and Cabinet is the client.

Dr Watt —I am sorry. The Department of the Prime Minister and Cabinet is—I missed the last word.


Senator Hill —The question was: are you aware of any advertising in this area where PM&C is the client?

Dr Watt —No, I am not.

Senator FAULKNER —So that means there is none.

Dr Watt —Not that I am aware of, Senator, no. I believe I would be aware if we were.

Senator FAULKNER —Thank you for that. Have you engaged with Treasury officers in relation to any advice, commentary, discussions or negotiations on the detail of such a campaign?

Dr Watt —There is an officer of the Department of the Prime Minister and Cabinet who has been discussing the campaign with Treasury officers. That is not myself; it is Mr Peter Vaughan.

Senator FAULKNER —Is Mr Vaughan here to help us?

Dr Watt —No, I do not believe he is. He was here earlier for the Office of Indigenous Policy issues.

Senator ROBERT RAY —What relation does he have to the tax minute?

Senator Hill —Multiskilled.

Dr Watt —Senator Hill indicated `multiskilled'. I think there are two sides.

Senator ROBERT RAY —You are not going on past track record with advertising here? I am not trying to be harsh. If you are liaising with Treasury on a campaign, do you just go and pull someone out of indigenous affairs, is that right?

Dr Watt —No. I think the point is that we use the SES fairly flexibly. Mr Vaughan has had experience in advertising issues, as you have pointed out previously at these hearings.

Senator ROBERT RAY —I do not think we have pointed out his expertise in this regard.

Dr Watt —I did say `experience'.

Senator ROBERT RAY —Can I ask one question in regard to this campaign: has anyone gone back and checked the provisions of the Electoral Act with regard to this form of advertising so close to an election? Has anyone bothered to do that?

Senator Hill —You are asking PM&C whether they have considered provisions?

Senator FAULKNER —That's right; you've got it.

Senator ROBERT RAY —Yes, I am. They usually have much higher standards than other departments; that is why I am asking. They are usually careful to check these things.

Senator Hill —I am not sure what Mr Vaughan's role in all of this is. You said it is being run by Treasury.

Senator FAULKNER —We will try to establish that. It would be a bit more helpful if Mr Vaughan could join us. I assume he is not in the building; is that what you are saying?

Dr Watt —I think, having completed his particular function, Senator, he has departed.

Senator FAULKNER —Can you tell us in general principle what is the nature of Mr Vaughan's engagement, or the Department of the Prime Minister and Cabinet's engagement, with Treasury on these matters?

Dr Watt —I am not able to really tell you very much. It is a role Mr Vaughan is playing rather than something I am closely involved in.


Senator ROBERT RAY —Precisely where does PM&C's role come in?

Dr Watt —In relation to the advertising campaign?

Senator ROBERT RAY —Yes.

Dr Watt —Again, Senator, as it is something in which I am not directly involved, I am unable to comment.

Senator ROBERT RAY —Look, we have established that there is an involvement, the extent of which we don't know. We were just wondering why.

Senator Hill —We know that Mr Vaughan does other things as well. So it seems to be likely that there is not a very great involvement at all. I presume it is just a coordination role, isn't it?

Dr Watt —I think that may well be part of it. The issue is primarily being handled in the Treasury portfolio; the funding is in the Treasury portfolio. Taxation issues are handled in the Treasury portfolio.

Senator ROBERT RAY —They were ready to roll over the whole $10 million to your knowledge, were they, not just 10 per cent of it?

Dr Watt —I really could not comment on what another portfolio might do with its funding, Senator.

Senator FAULKNER —As a process issue, perhaps you could explain to the committee who made the decision that Mr Vaughan would fulfil this role. One assumes one of Mr Vaughan's senior officers made this decision. That might be a useful piece of information for us. I am assuming that Mr Vaughan was not completely self-motivated in this. Someone must have made a decision that he would be the relevant officer to engage with Treasury. Could you tell me who?

Dr Watt —Senator, it might be better if we take that one on notice. I would prefer not to speculate when I am not in complete control of the information.

Senator FAULKNER —Would this not normally be something dealt with by someone from your own subprogram?

Dr Watt —Not necessarily, Senator.

Senator FAULKNER —Why not?

Dr Watt —In our program, we would have people who would have economic expertise and some people who would have tax expertise. That would be an expertise that would also reside in the Treasury. In this case, it may have been other sources of experience sought.

Senator ROBERT RAY —You do not need any expertise. The fix is already in for the company that is going to get it, so you would not even need to have expertise, although that is not your fault. Could we adjourn this part, Mr Chairman.

CHAIR —When you say `adjourn', what do you mean?

Senator ROBERT RAY —We will put it off. Depending on the timing and whether we have to resume on Thursday with PM&C, we might pursue it further with Mr Vaughan here. If we have finished all other business I doubt we will recall the committee just to deal with this issue.

CHAIR —Okay. We will move on to subprogram 1.1, economic, industry and resources policy.


[9.07 p.m.]