Mr HAWKER(10.01 p.m.) —I am very keen to join in this debate on these four bills: the Auditor-General Bill 1996, the Audit (Transitional and Miscellaneous) Amendment Bill 1996, the Commonwealth Authorities and Companies Bill 1996 and the Financial Management and Accountability Bill 1996. I was somewhat mystified by the member for Bruce (Mr Griffin) when he started to complain about question time in this parliament. If there is one thing this government ought to be praised for it is the accountability that it has brought to question time. It really is quite a contrast when you look at the previous government, of which he was a member, and when you remember how difficult it was to even get the former Prime Minister to come into the chamber, let alone answer questions. We had this ludicrous situation where the part-time Prime Minister and members of the frontbench were fronting for only half the time the parliament was sitting and, at the same time, the number of questions that they were prepared to answer was becoming progressively fewer.

I congratulate the Prime Minister (Mr Howard) on setting the record, as he points out, for letting 20 questions get up each day. That is the best performance we have seen in the parliament for 20 years. I think that is something that this government ought to be congratulated for rather than being criticised, as the previous member did in his contribution to this debate.

It is important to see that these bills modernise some of the controls over Commonwealth finances and I think, as we move along, that is an important development. It is important to see that they are very much involved in modernising the controls over businesses owned or operated by the Commonwealth.

Turning to the Auditor-General Bill, it is indeed, as the member for Bruce said in his speech, similar to one that was introduced by the previous government. But the reason it was held up was that the then government, the Labor government, rejected some opposition amendments and it lapsed because of the election. It is important to remember that the amendments that were to have been put forward by the opposition in the previous parliament would have allowed the parliament to have a greater say in the appointment of the Auditor-General. They would have also allowed the Auditor-General to conduct performance audits of government business enterprises and allowed the Joint Committee of Public Accounts to act as an Audit Committee of Parliament.

This bill on audit amendment acts on our commitment to establish a completely independent Auditor-General, and that is very much in contrast to the previous government. Who could forget the way that the former Prime Minister, Mr Keating, got in such a rage over the Australian National Audit Office's powers to conduct an efficiency audit of the National Media Liaison Service, otherwise known as aNiMaLS, which was employed by the Labor Party as its method of instituting an almost Goebbels type attack on the opposition of the day?

Likewise, who could forget the role that the audit office played in the sports rorts affair, which led to the demise of the then minister, Ros Kelly. Who could forget—we still have the evidence before us today—the way that the previous government used the audit office to assist it in its finances with Centenary House, where it pushed the audit office into a rental scheme that is still an embarrassment to the Commonwealth today?

The Auditor-General Bill provides for the re-establishment of the Office of Auditor-General under the proposed new accountability regime. It more clearly defines the roles and powers of the Auditor-General and it strengthens the function of the current office beyond the level of current laws and, at the same time, protects the office from interference from the executive or the parliament by providing a statutory safeguard in line with the government's commitment to confer genuine functional independence on the Auditor-General.

To put it another way, the bill re-creates the audit office as an independent statutory body, something that I believe all Australians would normally expect—unfortunately they did not always get it from the previous government, but certainly they are getting it from this government. Together with the transitional provisions of the bill, it provides for a wider role for the parliament in selecting the Auditor-General through what will be the Joint Committee of Public Accounts and Audit as well as monitoring the performance of the Auditor-General and the audit office. In addition, it re-establishes the parliament's auditor of the Australian National Audit Office as the Office of Independent Auditor.

I pay tribute to the fact that many of these provisions arise from the work of the Joint Committee of Public Accounts. In fact, in 1988, the JCPA inquiry into the operations of the Auditor-General produced the report headed The Auditor-General: ally of the people and parliament, in which it recommended major changes to the Auditor-General's operations, particularly that the Audit Act be replaced with more modern legislation.

It may have taken nine years, but this government has acted on that recommendation. The government has accepted the joint committee's recommendation that it assume the additional role of Audit Committee of the Parliament. Changes to the Public Accounts Committee Act 1951 to that effect are included in the Audit (Transitional and Miscellaneous) Amendment Bill 1996 and are complemented by provisions in the Auditor-General Bill.

The bill also details the processes of appointment and conditions of the office. It also outlines that, as a statutory office holder, the Auditor-General will continue to be appointed by the Governor-General and that this appointment be on the recommendation of the appropriate minister. The administrative arrangements and orders are expected to continue to specify that the Prime Minister will be the appropriate minister.

Under the Auditor-General Bill, the minister must seek the JCPA's endorsement of the proposal prior to advising the Governor-General of the proposed appointee. The parliament, through the Joint Committee of Public Accounts, will have the right to veto over the government's choice of the Auditor-General.

Contrary to what the previous speaker, the member for Bruce, has said, this does give the parliament a say through its veto rights in the appointment of the Auditor-General—which, I think all honourable members would agree, shows that this government does recognise the important role that the parliament plays, not just the government, in ensuring that the Auditor-General is someone who is truly independent.

At the same time, the safeguards are maintained for the removal of the Auditor-General by the Governor-General—a petition of both houses of parliament through the same session being the necessary requirement. Again, that is a very important safeguard.

This bill will cement the Auditor-General's mandate in legislation. Under existing arrangements, the Auditor-General's mandate was partly derived from legislation and partly from government policy. The Auditor-General will now have the mandate to audit financial statements of all government bodies and it will also be able to conduct performance audits on them.

Under the bill, the Auditor-General will conduct performance audits on government business enterprises only if it is requested to do so by the parliament or by the minister. Of course, it is important that they are subject to accountability, at the same time recognising the importance that a government business enterprise is required to pursue maximum market performance.

It is also significant to note that, if a body were a partially privatised Commonwealth company, it would not be subjected to a performance audit. And the reason for this would be simply that such a decision would be taken in consideration of the interests of private shareholders, recognising that such a report would receive publicity which could be detrimental to shareholders. In order to avoid this, the Auditor-General's role in such circumstances will be as the mandated external auditor of their financial statements.

It is also significant to note that the bill will permit the Auditor-General to enter into an arrangement with any person or body to conduct financial statements audits or performance audits for them and to provide them with services of a kind that are normally performed by auditors. This provision would be at the discretion of the Auditor-General and it would occur only if it fell within the Commonwealth's constitutional power to do so and the Auditor-General considered that there was a benefit to the Commonwealth.

In effect, this would mean that under the bill the audit office would be the statutory authority with the exclusive functional responsibility of the Auditor-General, and this would then demonstrate the government's commitment to the independence of the Auditor-General.

For the Auditor-General to fulfil his obligations to the parliament, the bill would allow the Auditor-General and authorised officials full access to information and documents needed to perform the role. It is important to note that these powers are accompanied by strong secrecy and penalty provisions for any person performing this role. Again, that does provide the sorts of safeguards that people would expect under such a bill, and the government is very keen to ensure that we continue to provide those sorts of safeguards.

The bill re-establishes the office of an Independent Auditor, and this would be the parliament's auditor as part of the audit office. But this office would mirror the role of the Auditor-General in relation to the Commonwealth. Clearly, this Independent Auditor would be a part-time statutory officer appointed in much the same way as the Auditor-General. It would mean that the appointment would be made by the Governor-General on the advice of the appropriate minister. As I said earlier, this would be expected to be the Prime Minister in this case. Again, the Joint Committee of Public Accounts would have the same right of veto over the government's choice of nominee.

Clearly, this bill provides the Auditor-General with a great deal of freedom to get on with his task and at the same time it offers the Auditor-General an excellent statutory environment for performing the role required and expected of the Auditor-General of the Commonwealth.

An area in which I have a particular interest is Audit Report No. 6, which was conducted by the Australian National Audit Office. It was looking into the Commonwealth guarantees, indemnities and letters of comfort. This report was tabled in September last year and has since been referred to the House of Representatives Standing Committee on Financial Institutions and Public Administra tion, which I have the honour to chair. I think this report outlines in one way just the sheer scale of the task that the audit office often has to undertake.

Quite significantly, in this report the office found that most portfolio departments were unable to provide timely advice regarding their exposure to the instruments listed—in other words, looking at the level of Commonwealth guarantees, indemnities and letters of comfort. I think all Australians would be a little bit disturbed to find that this accountability was not as great as we would like to see.

This report showed as a result of the audit census that some of the departments were slow to come in with their reports and, when they did, there was often an absence of adequate records on the level of exposure of the Commonwealth to these risks. What was rather disturbing to note was that the audit felt it was unable to provide a definitive statement of overall Commonwealth exposures.

It is significant to note that the audit office has estimated the level of Commonwealth exposures in the departments to be of the order of $222 billion. I just repeat that: two hundred and twenty-two thousand million dollars. Of course, this does not include many exposures on which it is very difficult to put a dollar value. While I do not wish to unnecessarily concern people, it is a significant amount of money. Nonetheless, it is well known that in the vast majority of these guarantees, indemnities, letters of comfort and so on the risk is very, very low. But it is a very significant amount of money.

The audit office in its report to the committee actually showed that there are a number of exposures there which really do raise very serious questions about the operation of some departments, particularly under the previous government. One such case is the indemnity, which the Commonwealth still carries, out of the sale of Aussat to Optus. When Aussat was sold for $800 million, of which $500 million was paid up front, there was also found to be a series of promissory notes issued for payment in subsequent years. These promissory notes represent bearer securities, but when it came time for the surrender, it was found that the relevant department no longer had them.

So, in order to cover this, the Commonwealth has had to carry an indemnity issued to Optus so they could guarantee the payment. In other words, what this means is that if these notes happen to turn up at some time in the future, the Commonwealth has a liability of $300 million. I would have thought that most Australians would be rather disturbed to learn just that one example of the sorts of indemnities that the taxpayers, in the end, could be held liable for, should that risk be realised.

It was also interesting to note that the audit office, in looking for the number of indemnities, guarantees and letters of comfort, identified 144,000 instruments in relation to this—not an insignificant amount—which shows, I think, the significance of the amount of guarantees that the Commonwealth is bound to. Mr Deputy Speaker, there are a number of other things I would like to get on to, but as time seems to be running short—

Mr DEPUTY SPEAKER (Mr Nehl) —I am sure you are right.

Mr HAWKER —I would like to just say that I have much pleasure in supporting these bills and I am sure they will get a speedy passage through the parliament.