The PRESIDENT —I welcome the Clerk of the Senate, Mr Harry Evans. The committee prefers to take all its evidence in public, but should you wish at any stage to give evidence or answer any questions in camera, you may make an application to do so. However, you should note that the Senate or the committee itself may consider it necessary to authorise the subsequent publication of any such evidence.

The committee has received your submission, dated 1 May 1997, which is submission No. 9. Do you wish to amend it in any way?

Mr Evans —No, Madam President.

The PRESIDENT —I invite you to make an opening statement, if you wish to do so, at the conclusion of which senators may ask questions.

Mr Evans —No, Madam President. I just point out to the committee that my submission consists of the paper which I provided to the President back in August when this matter was first considered.

Senator MacGIBBON —Every change that is introduced in this place is never predicated on doing the job better, but is always in financial terms. This one seems to conform with that practice. Assertions are made that there are big savings to be made. Have all the proposals that have been made in the past about changing the administration of the parliament been supported by any detailed analysis as to what the benefits would be? Is there any depth to the analysis supporting this assertion that there are savings to be made in administration to the extent of about 1 1/2 to two per cent?

Mr Evans —I think you are right in saying that proposals of this sort are based fundamentally on financial issues. In the note to the Presiding Officers I have endeavoured to emphasise that non-financial issues, non-economic issues, have to be taken into account. In relation to detailed analyses, the ability to make savings was always put forward as the basis of past proposals, but I certainly did not see anything which I regarded as a detailed and convincing analysis of the savings.

As for economies to be made out of this proposal, I have pointed out in the submission that amalgamation of itself does not achieve any savings, does not achieve anything in fact. In that paper it is suggested that economies can be made principally through the amalgamation of the corporate services areas of the separate departments. For a detailed analysis, that document is the most detailed thing you have at the moment.

Senator BOURNE —Mr Evans, you just mentioned that corporate services would be the place to save money. How would money be saved through corporate services being amalgamated--would it just be through jobs or some other way?

Mr Evans —Yes, basically by reducing staff because, as you know, each department has its own corporate services area at the moment and one effect of this proposal would be that they would be reduced to two corporate services areas. That area of corporate services is the only area where there is anything which could be called overlap between the departments.

Senator BOURNE —There have been considerable savings made already, have there not?

Mr Evans —Yes, in the last financial year, as you know, the government said they would like $10 million to be saved out of the parliamentary departments in addition to the other percentage savings that were imposed. Basically, those savings were achieved by deferring capital expenditure. The bulk of those savings came out of the departments which have the large capital items. The Senate department has made considerable economies by cutting back things here and there, but the bulk of that saving came out of the departments with the capital expenditure items.

Senator ROBERT RAY —You have taken a $10 million cut to the parliamentary departments and a four per cent cut in running costs? So you have had approximately $15 million taken out of the budget in the last four years? Is that right?

Mr Evans —Yes, that is correct.

Senator ROBERT RAY —And the out-year figure when you achieve your maximum savings in the amalgamation of departments is estimated at $2 million?

Mr Evans —That is the estimate, yes.

Senator ROBERT RAY —When does that cut in? In which out- year would you achieve the $2 million saving?

Mr Evans —It is envisaged that this process will extend over a considerable period. I am not sure whether that is indicated in that document which you have, but it certainly will not be achieved tomorrow by any means.

Senator ROBERT RAY —And there is no estimate of the pay-out of redundancies, the up-front money needed for redundancies, in the first year or two?

Mr Evans —There are estimates.

Senator ROBERT RAY —Could you tell us about the estimates?

Mr Evans —As to what they are, I am not sure whether there was a figure in that document Managing the Parliament. We are not able to give you a specific estimate on that.

Senator ROBERT RAY —The normal rule of thumb, isn't it, is that a redundancy usually comes to the totality of a year's payment to that individual?

Mr Evans —Yes.

Senator ROBERT RAY —That is the reason why you try to have any redundancies early in July so you do not have to double pay out. One presumes the payment for redundancies may not be as high as $2 million but probably as high as $1 1/2 million, so you would have to spend money early over and above any savings.

Mr Evans —That is certainly true.

Senator ROBERT RAY —I want to ask you about the two-department proposal. There would be a board of management consisting of the President, Speaker and the two clerks. Do you have any view on that?

Mr Evans —That was suggested as a way of managing the joint functions which would be absorbed into the two departments to ensure that they remain joint functions and that decisions about them are made jointly.

Senator ROBERT RAY —Can you think of any other example in government circles where, if you like, the chief executives sit with their ministerial equivalents in a decision making body in government?

Mr Evans —No, I do not know of any exact equivalent of that.

Senator ROBERT RAY —There is not one really, is there?

Mr Evans —Not as far as I am aware.

Senator ROBERT RAY —I cannot think of one. I am playing devil's advocate here, but you are aware of the argument, are you not, that that board of management is in the gift of government--normally three-to-one, almost four-nil?

Mr Evans —That would be a significant potential problem for this structure. I referred in the covering note to the submission that under the proposed break-up of functions the Senate department would get the joint functions which would probably require a fair bit of money in the future because of asset replacement particularly.

Senator ROBERT RAY —So when they read the will out you are not going to be delighted?

Mr Evans —The potential problem that I am drawing attention to there is that at some stage in the very near future when those joint functions need a lot of money the answer will come back, `The Senate department has a lot of money; you can finance those joint functions out of the money the Senate department has got.' That is not the way the system is supposed to work. There would be a rational allocation by the board of management of the resources available to the joint functions. I am sounding a warning note there that if the board of management does not work in the way it is supposed to there could be a potential problem for the Senate department in particular.

Senator FAULKNER —I want to ask Mr Evans a little about how this particular proposal for amalgamation appeared to get legs. I take you back to the submission that you have made in relation to this matter and the reference to the memorandum that was received from the senior advisers of the Presiding Officers. There have of course been proposals for amalgamation of parliamentary departments around for a number of years.

Mr Evans —Yes, that is correct.

Senator FAULKNER —This particular proposal was, as I understand it, kicked off with a memorandum in June of last year. Is that fair to say as far as you are concerned?

Mr Evans —Yes. My original paper to the President refers to the fact that there was a memorandum on 27 June from the senior advisers to the Presiding Officers asking for position papers on proposals for amalgamation. The paper which I presented and which you now have was in response to that.

Senator ROBERT RAY —Before we go any further, can we have the Hansard of the Senate hearings where we asked questions on amalgamations? I had not realised it predated that. I think 16 September is a relevant date. I think I remember asking questions about whether there were any proposals for amalgamation and the answer was no. Therefore, I would like to know why, if that is the case. I am only going on memory.

Mr Evans —At any time after 27 June I am sure I would not have answered that question by saying no.

Senator ROBERT RAY —I do not think the question was directed to you. You may not have kept everyone well informed.

Senator FAULKNER —I am very interested in the genesis of the most recent proposal. In relation to the Department of the Senate, I assume therefore that you as Clerk did not provide any advice to Madam President in relation to this particular matter prior to your receiving the memorandum of June 1996?

Mr Evans —This paper was the first formal written advice on the subject. I could not say that there was no advice before that. As you said, the matter of amalgamation has been discussed over a long period. Certainly this was the first formal written response to proposals that we had done since the 1993 one.

Senator FAULKNER —I am aware of the National Commission of Audit, and I would like to come back to that. I am interested in focusing on whether this most recent proposal for amalgamation was generated by the Presiding Officers. Is that fair to say?

Mr Evans —In the very first paragraph I quote the memorandum from the senior advisers to the Presiding Officers saying:

There is widespread support within government circles for some sort of amalgamation of the parliamentary departments.

What this paper to the President says is that if you feel you have to undertake some form of amalgamation this is the plan which we believe to be if not the best then the least worst.

Senator FAULKNER —Have you explored this issue of the level of `widespread support within government circles' for amalgamation? I understand because of your letter to Madam President that that statement was incorporated in the memorandum. But have you got to the bottom of that at all?

Mr Evans —No, not really.

Senator FAULKNER —How widespread is it? You are the clerk of the Senate; can you inform us of this?

Mr Evans —I think I can say that it has been an article of almost religious faith in government circles, in the widest sense, that the parliamentary departments must be inefficient and must have great waste, duplication and overlap, et cetera, because there are five of them. That has been, as I said, almost a dogma of faith around for many years.

Senator FAULKNER —Is it fair to say that until 27 June, as far as you are aware as the clerk of the Senate, this was something that was on the backburner? Would it be fair to say that or not?

Mr Evans —Yes, but we hear rumblings that it may be moving towards the front, so to speak, from time to time. But that has been the case over a period of years.

Senator FAULKNER —I want to ask about the involvement of the National Commission of Audit, which took a view in relation to this matter. I am not clear as to whether the Department of the Senate was either asked for or gave a submission to the National Commission of Audit. Was there any submission?

Mr Evans —No, neither asked nor gave one.

Senator FAULKNER —It is a matter of public record; I am aware of that. I just have not had an opportunity to check those submissions, but are you aware of any of the other parliamentary departments--

Mr Evans —I am not aware of any other submissions to that body, no.

Senator FAULKNER —You make the point that the Department of Finance largely staffed the National Commission of Audit. Am I reading between the lines correctly in thinking there might be a convergence of views between the National Commission of Audit and the Department of Finance in relation to this?

Mr Evans —Yes, I believe that is so. I said in my submission that it is not a new source but an old source in a different guise.

Senator ROBERT RAY —Are you aware of who led the charge in the House of Representatives in 1988 against amalgamation of departments--who basically sunk it?

Mr Evans —Who led the charge? Well, the then Speaker, I suppose.

Senator ROBERT RAY —No, against.

Mr Evans —Against, I'm sorry.

Senator ROBERT RAY —There were proposals in 1988. I will give you a hint: he came from Sydney, he is about five foot eight and he is now holding a prominent position.

Mr Evans —I cannot imagine who Senator Ray is referring to, but resistance to the idea came from the then non-government parties.

Senator ROBERT RAY —Can I raise a slightly different question? It has to draw on your experience, Mr Evans. When change comes, managing change is not always easy, especially when it involves job losses. You have had to go through that sort of management process, I would imagine, quite substantially in the last five years. Does there come a point of time where you have to equal the cost of all that human change, et cetera, with the amount of savings made and make a decision?

Mr Evans —Yes, that is certainly so. You are presented with proposed changes and you say, `Well, why should these changes be undertaken?' The answer is always to save money. You then ask, `Well, are there any other aims of these changes?,' and you get the answer, virtually, `No, not really. It is just to save money.' That is a justification in itself. Certainly, there is always a cost involved in these changes. Savings never work out to be as large as they were initially calculated to be. There certainly does come a point where you have to say, `Are we really saving money anyway? Or are we getting to the point where it is not really worth it in relation to the cost of those savings and the effect on the services that are being provided? Is it economical in the widest sense of the word?'

Senator MacGIBBON —But you do not understand, with respect, what is going on. We have to have change, because the forecasts of these great savings never arise, so we are in a state of perpetual change, getting a new plan the whole time for everything.

Mr Evans —That is certainly so. We have something of a culture of change for change's sake.

Senator ROBERT RAY —But you have done it differently. You have not hired consultants who have not come back with a report simply changing the name and logo and reprinting all the office stationery, so you have done well.

Mr Evans —That is quite correct. We have not been into that sort of change.

Senator ROBERT RAY —I know it is not directly relevant, but are you aware of proposals to amalgamate the Department of Finance and the Department of Treasury into one department?

Mr Evans —I have heard vague stories about such proposals of recent times but have no real knowledge of it.

Senator ROBERT RAY —Are you aware that a lot of members of the Department of Finance are vigorously opposing this proposal?

Mr Evans —That would not surprise me, Senator.

Senator ROBERT RAY —But surely the amalgamation of corporate services between these two great institutions would bring about savings?

Mr Evans —Undoubtedly.

Senator MacGIBBON —I have observed that, irrespective of which party is in power, the executive government always follows the most sophisticated management techniques when they want to make savings; that is, they institute a percentage cut across the whole board. It seems to me that we are faced with much the same pattern here. Those percentage cuts are almost never prioritised with respect to functions. The pain is shared equally. Has there ever been a ground-up or bottoms-up study as to what services are required to make the parliament function as a democratic institution? What are the basic things we need to provide to the members of parliament and what would be the cost of them? Has that ever been looked at?

Mr Evans —There has been no such study to my knowledge, Senator.

Senator ROBERT RAY —But you have the senators' needs study in which some of these matters would come up.

Mr Evans —Yes. I am talking about a study of the whole parliamentary operation which Senator MacGibbon was talking about. Certainly, we have done that sort of thing in the Senate department, and do it all of the time of course.

Senator MacGIBBON —But the basic approach year in, year out is to take four per cent off for an efficiency review or something, whatever it is. It is always slicing down. It is never looking at it with a clean sheet of paper and saying, `These are the functions we require or the services we need to have to provide an efficient, effective parliament.'

Mr Evans —There has been no such study of the parliament as a whole, certainly. You are quite right. That is the way that governments seek to save money. That is what happened in the last financial year with the percentage cut and then the $10 million cut.

Senator MacGIBBON —I am going off at a tangent a bit. One of the difficulties we face in the Senate is the eternal comment from the House of Representatives that it costs as much to run the Senate for half the numbers as it does for the House of Representatives. Why are the costs similar for the two divisions?

Mr Evans —Obviously, there are certain basic costs for running a house of the parliament and its committees. You would never be in a situation where a house which is half the size of another house would cost half as much to run. Basically, that situation has come about because of the very tight executive government control of the House of Representatives.

The House as a house really has no-one to speak for it. The Senate has done better because it does not have that tight government control and it does have someone to speak for it--namely, the President and the Senate Standing Committee on Appropriations and Staffing. But the House as an institution has nobody that is looking after its interests as an institution.

ACTING CHAIR (Senator Bourne) —How do you feel the Senate Appropriations and Staffing Committee would fit in with the new board of management?

Mr Evans —I envisage that committee still considering the appropriations and staffing of the Senate department and dealing with everything concerning the Senate department. The original plan of course was that there would be a similar committee in the House of Representatives and, for joint functions, the two committees would come together and consider the joint functions.

That has never happened because an appropriations and staffing committee has not been established in the House of Representatives. That would be the ideal advisory and policy making accompaniment to this proposal, but whether it would come about is another matter. I would envisage, and certainly hope, that the Senate appropriations and staffing committee would continue, and continue to do the job that it has been doing.

ACTING CHAIR —If this happens.

Senator ROBERT RAY —Can I just say that I have read the Hansard of 16 September. I think that the evidence the Clerk has given is totally consistent with the evidence of last year. Madam President said that she had not seen any submissions that she thought were compelling. That is not to imply that she had not seen any submissions. So that is totally consistent, Mr Clerk.

Senator MacGIBBON —Can you identify any discrete areas of power cells or little areas in the place in the whole of the parliament where people have their own empires and the rest of it that would be a barrier to amalgamation?

Mr Evans —A barrier to amalgamation?

Senator MacGIBBON —In so far as they would wish to preserve their existence. Apart from the five departments themselves, they all have subsets within them. Are there any significant subsets there that would cause an amalgamation to have problems?

Mr Evans —Not with amalgamation as such. I again stress that in my submission to the President, I said, `If you feel you have to amalgamate, this is the least worst way of going about it.' Under this proposal, basically it would mean that the joint functions would be shifted into the house departments as they are with their existing staff and existing functions and would continue to perform their existing functions.

There is a further problem down the track of considering whether and, if so, which services should be contracted out and whether there are any gains to be made by contracting out some services. That is where you will run into the sort of problem that you are talking about. The amalgamation as such envisages those functions moving departments and continuing to perform their existing functions under their existing structures, except, as I said, in relation to corporate services.

Senator MacGIBBON —Thank you.

ACTING CHAIR —Thanks very much, Mr Evans.

Mr Evans —Thank you, Senator.

[9.36 a.m.]