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Thursday, 9 February 2012
Page: 686

Mrs D'ATH (Petrie) (12:07): As deputy chair of the Joint Committee of Public Accounts and Audit, I rise to speak in support of the committee's report 427, Inquiry into international funding agreements. I would like to acknowledge the contribution already made by the member for Lyne and chair of the Joint Committee of Public Accounts and Audit when tabling this report.

This report arises from the first major inquiry of the committee under this term of government. On 9 February 2011 the committee agreed to conduct an inquiry into the national funding agreements between the Commonwealth and the states and territories. The committee's terms of reference required the committee specifically to consider: (1) the changing dynamics of grants to states and territories, the types of grants that are made and the principles, agreements and legislation governing these grants; (2) the extent to which the current system's funding agreements satisfy the requirements of all levels of government, and any suggestions for changes to the process; (3) the need to balance the flexibility to allow states and territories to determine their own priorities, with mechanisms for monitoring and accountability, and ensuring that the objective of funding agreements are being achieved, noting the role of the COAG Reform Council; and (4) the adequacy of parliamentary scrutiny of funding agreements, noting that such agreements are typically negotiated at executive-to-executive level.

As stated in the committee's report foreword, the Commonwealth dedicated a significant proportion of its funding for 2011-12 to the states and territories, with $45.5 billion of payments supporting national agreements and national partnerships. This committee has an ongoing interest in achieving value for money for the Australian taxpayer and believes that the arrangements to distribute this amount deserve parliamentary scrutiny. With the introduction of the Intergovernmental Agreement on Federal Financial Relations in 2009, the committee thought it timely to investigate the implementation of the national funding agreements under this new approach. The states and territories are responsible for delivering services and infrastructure in key areas of our economy through federal funds. There is a community expectation that the Commonwealth will account for those funds and ensure that we are not only achieving value for money but importantly achieving the outcomes sought under the national funding agreements.

The committee found that there was overall support for the new framework and its underlying principles and intent, the key changes being the shift from an inputs based to an outcomes based framework. However, the evidence of the witnesses identified shortcomings and complexities in the performance reporting requirements. The committee found that enhancements need to be made in the area of key performance indicators, better quality data collection and meaningful interpretation of that data. In addition, the committee came to the conclusion that, despite high-level mechanisms for parliament and the public to scrutinise the national funding agreements between the Commonwealth and the states and territories, these mechanisms do not provide an adequate picture of national funding agreements. The committee has made a number of recommendations to enhance both the performance reporting and the scrutiny of the overall process. The committee made 15 recommendations, which go to the framework, implementation, performance reporting and scrutiny of national funding agreements.

In relation to the framework, the committee recommended that the Department of Finance and Deregulation examine the interaction between the new grants framework and grant payments delivered under the Intergovernmental Agreement on Federal Financial Relations. The report should propose options to remove inconsistencies and improve governance arrangements for all grants provided to states and territories.

On implementation and performance reporting, the committee made a number of recommendations that will ensure more clarity around assurance requirements and performance indicators. Although witnesses outlined the importance of states and territories having flexibility in the method of achieving outcomes under the new framework, the outcomes themselves require clarity. The committee has recommended that processes be established to ensure there is clarity on the outcomes to be achieved and that these outcomes are clearly reflected in the national funding agreements.

On enhancing the scrutiny of the national funding agreements, the committee has recommended that key reviews and reports of the COAG Reform Council and the Productivity Commission be tabled in parliament. The committee recognises that COAG and the COAG Reform Council are continuing to enhance the delivery of the Intergovernmental Agreement on Federal Financial Relations and that a range of review activity is underway. It is hoped that the recommendations of this committee will complement those ongoing reforms.

I take this opportunity to thank the chair, the member for Lyne, and all committee members for their work on this inquiry. I also thank the secretariat for their tireless work on what is a committee with a wide breadth of responsibilities and a complex workload. I also thank the Australian National Audit Office for their ongoing assistance with regard to this report and the other work of the committee. I commend the report to the House.

Debate adjourned.