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Thursday, 25 September 1997
Page: 6973

Senator MURRAY(1.04 p.m.) —You are right, Senator Sherry. It would make the consideration of these bills relatively entertaining if Senator Ian Campbell did explain that hypocrisy.

Few bills in this place have had a longer history than these particular bills. They represent an essential reform. I am pleased they finally made it to the Senate and I want to congratulate the government for bringing them forward. The four bills in front of us will replace the Audit Act 1901, which was amongst the very first acts of the new federal parliament after Federation.

The Democrats have strongly supported this overhaul of the audit bills. We have long supported a strong and active mandate for the Commonwealth Auditor-General and for all auditors-general. Accountability is essential to democracy, but we must recognise that accountability does have a cost, and that cost includes a range of measures to ensure that all spending of the government is legal, authorised, efficient, transparent, open and honest. That is why we have an audit office and why this package of bills is so long overdue.

I wish to commend the coalition government for bringing the bills forward, although I should note that I was disappointed that the government was unable to give the bills sufficient priority to allow them to be debated and passed prior to the commencement of this financial year.

Senator Ian Campbell —For Christ's sake!

Senator MURRAY —Giving all that time to a private member's bill to overturn territory legislation, for instance, might have been sacrificed in this cause.

Senator Ian Campbell —We wanted to. But we could not get agreement to sit for another few hours last year.

Senator MURRAY —That is not my fault.

Senator Ian Campbell —It is not mine either; it is not the government's fault.

Senator MURRAY —And you would know it is not mine. The government's attitude to financial accountability after 18 months in power can be contrasted with the previous government, which took five years to develop a package of audit bills. Even then, the draft Labor legislation was a poor replacement, we thought, for the original set of bills.

It was the determined intervention of the Democrats in 1994, following the outrageous lack of accountability by then minister Ros Kelly in the sports rorts affair, that forced the government to revise its auditing approach, rejig this package and provide a proper and comprehensive mandate for the Auditor-General. I should note and approve the contribution of the then finance minister, Kim Beazley, in moving quickly to improve the legislative package and the financial accountability measures then in place. I should also note and approve the strident defence of the role of the audit office by the then Auditor-General, John Taylor, who publicly reiterated the importance to our democracy and all democracies of proper accountability regimes.

But even then, the Labor government, when this package of bills was last before the Senate in 1995, refused to agree to a range of amendments moved by the Democrats and the coalition designed to close the gaps still left in the Auditor-General's mandate. I would like to particularly acknowledge the resource of Senator Cheryl Kernot and Senator Brian Gibson in working to improve the legislation at that time.

I am pleased that, in the resurrected legislation before us, the government has accepted the vast bulk of the amendments pursued by the Democrats and the coalition two years ago. I am disappointed that the coalition has changed its mind on the importance of ensuring that the Auditor is able to report fully to parliament and not be restricted by executive interference. This was an important issue in the 1995 debate and has been again identified by the Scrutiny of Bills Committee as a vital issue. I will be moving amendments in the committee stage of the bill to ensure that the Auditor-General does preserve a full mandate to report to parliament on financial accountability issues and be unrestrained by ministerial executive interference.

As I said, this package of bills does have a very long history. It dates back to a 1989 Public Accounts Committee inquiry into the office of the Auditor-General. That inquiry found that the office of the Auditor-General was understaffed, subject to unnecessary interference by the executive arm of government and needed stronger legislation and parliamentary support. This call seemed to be ignored for many years, despite repeated calls from the Auditor-General for a stronger statement of his role as a servant of the parliament and for adequate funding arrangements.

It took the dramatic events surrounding the Ros Kelly sports rorts affair for Senator Cheryl Kernot and the Democrats to break open the log jam holding up the bill and set these bills on the path of providing a more comprehensive mandate for the Auditor-General to audit all government departments, authorities and business enterprises. Once again, the role of the coalition in advancing this cause is much appreciated.

This is provided for in the new Auditor-General Bill 1996 . But the mandate of the Auditor-General has been expanded in this bill as opposed to the 1995 bill, picking up issues raised by the Democrats, the coalition and others in 1995. These include strengthening the relationship between the Auditor-General and the parliament by establishing the Joint Committee of Public Accounts as the audit committee of parliament, with a role in setting the audit priorities of the audit office and with the ability to direct the Auditor-General to conduct performance audits of government business enterprises; extending the term of the Auditor-General to 10 years and giving the Joint Committee of Public Accounts a say in the appointment process through a veto right on the appointment of the Auditor-General; confirming that the Auditor-General has unfettered access to intelligence and security agencies reports and matters of confidentiality; and strengthening the Auditor-General's position with regard to the potential for unwarranted interference by the executive.

The Democrats particularly welcome the changes to the role of the Joint Committee of Public Accounts to establish it as an audit committee of parliament. The establishment of an audit committee of parliament was first recommended by the JCPA in 1989 and has long been supported by the Auditor-General to better reflect the role of the Auditor as the servant of the Commonwealth parliament.

As a result of the Democrats' accountability measures agreed to with the previous government in 1994, the former government moved to establish an audit committee by resolution. It was our view that the function of the audit committee should be reflected in legislation, which was one of the items of disagreement in 1995.

I note that not just has the JCPA formally been given an audit oversight role in this legislation, but the Public Accounts Committee Act is to be amended to expand the number of senators on the committee by one, to be filled according to the practice of the Senate. What that means to us is that a senator from the crossbenches will be appointed to the JCPA, thereby reducing the government majority on that committee. I note, however, Senator Sherry's caution on the committee structure, and I look forward to hearing his views on that in the committee stage of the debate.

Undoubtedly, the biggest disappointment in this 1997 bill is clause 37, which does have the effect of unilaterally and absolutely restricting the ability of the Auditor-General to report to parliament if the Attorney-General certifies that the matter is sensitive. The list of reasons for what is sensitive is simply too long, and the power of the Attorney-General—a politician—to nobble the Auditor-Generals' reporting to parliament is absolute. In particular, clause 37 could be used to prevent the Auditor-General reporting on Commonwealth-state financial relations on any matter involving contracting out, tendering, government business enterprises, payments to private companies or on the basis that the information may `unfairly prejudice the commercial interests of any body or person'.

Section 37(3) then goes on to limit the privileges of the Senate by stating that the Auditor-General cannot be compelled by parliament to override the Attorney-General's direction. This device will allow governments to avoid public scrutiny of potentially all of their relations with the private sector and prevent any embarrassing little shady deals or improper actions coming to public light. For the Senate to allow such a provision to pass into law would be an absolute outrage and a travesty of accountability, and I for one will mark very carefully the actions of the Labor Party when that matter comes to debate.

The finance department, through the current government as it did through the former government, argues that this provision largely replicates subsection 48(5) of the current Audit Act. The department claims that this provision has not been controversial and that no certificate under those provisions has ever been issued—in which case, why do we need it? That may be the case, but the level of contracting out, of commercialisation of government services, of tendering for government services and of general commercial relations between the government and the private sector has risen dramatically in the last three years under competition policy reforms, particularly since the change of government. This provision, we believe, is now a potentially massive hole in the accountability regime, and it could easily be used to avoid scrutiny on a wide range of deals.

Such a provision that the government is suggesting in this act would have prevented any public reporting of any audit reports on WA Inc. style deals within the government sector. As a Western Australian, I am well aware how often the commercial-in-confidence and the secrecy defence was wheeled out in parliament during those debates. It is disgraceful, disgusting and unacceptable to lack that kind of accountability. Once again I say to Labor, `Be careful that you don't let something through in the idea that you might end up in government yourselves and want to participate in that kind of larking.'

I am extremely disappointed by the coalition's backflip in government on this issue. In 1995, Senator Brian Gibson and Senator Jim Short were very strong opponents of these restrictions to the parliament's powers to receive reports, and I will be interested to see whether Senator Gibson turns up in the committee stage later on. There are senators from all sides of the chamber, including the major parties, who are very disturbed indeed about clause 37.

The Australian Democrats will also be making a financial accountability amendment to the Financial Management and Accountability Bill 1996 . The Democrats recently proposed amendments to the States Grants (General Purposes) Amendment Bill 1997 which were designed to have the effect of guaranteeing accountability through an independent Auditor-General to the public of Victoria, and to the public of all the states and territories. Those amendments were designed to maintain what we regard as the desirable status quo in terms of safeguarding the independent auditing functions currently in place in the states.

The Labor Party, despite strong support in some sections of the party, wimped out on our amendment despite indicating in the debate how uncomfortable they were with the Victorian review of the Audit Act, and the consequential diminution of the Victorian Auditor-General's position. They also indicat ed how uncomfortable they were with the removal of the Victorian Auditor-General's direct control over his department, and the ramifications of this change in terms of public accountability. But their executive side got the better of them, and they overturned our amendment.

However, Senator Sherry indicated during that debate that the Labor Party would support such an amendment to this package of audit legislation. I regard it as second best, and I do not regard it as an appropriate way to amend this set of bills. I am looking forward to seeing if they adhere to that undertaking when I put up that amendment to this bill.

We need to ensure that the Auditor-General has the full powers to investigate and report on all commercial dealings involving government money. To allow a member of the cabinet to prevent him reporting on such matters must be vigorously and stridently denied by any member of the Senate who believes that government accountability is important.

In closing, Minister, I again congratulate you and your government on presenting this package of bills to the parliament. We are delighted to see it before us. Our amendments will be relatively few and will all focus on accountability and the few issues you know are dear to our hearts.