Senator WATSON (7:00 PM) —A number of parliamentarians have worked for years for the Auditor-General to be an officer of the parliament. In fact, the movement reached a crescendo during the latter Hawke years with significant budget cuts to the office of the Auditor-General. The domicile of the Auditor-General in the expensive rent domain of the ALP owned Cen-tenary House in Canberra also focused some attention on whether the Auditor-General was expected to be a puppet of the government.

Report No. 296 of the Joint Committee of Public Accounts highlighted the need for independence of the Auditor-General and for the Auditor to be an officer of the parliament. In an earlier report tabled in 1989, the Joint Committee of Public Accounts informed the parliament that the Australian Audit Office was in a state of crisis, that it was underresourced and that a lot of the problems stemmed from parliamentary complacency. The Joint Committee of Public Accounts also identified confusion about whether the executive or the parliament was responsible for the Auditor-General, with the result that the office was neglected by both.

Seven years later, in report No. 346, the Joint Committee of Public Accounts again considered the independence of the Auditor-General to be absolutely fundamental to public accountability in Australia. If the Auditor-General is not properly resourced—or does not have a legislative mandate—to carry out an effective and broad scrutiny of the public sector, then parliament itself is compromised in its ability to hold the executive government to account.

In 1996 the government of the day agreed for the Auditor-General to be an officer of the parliament; and that was regarded as a significant win. Additional powers were given to the Joint Committee of Public Accounts to review the budget of the Auditor-General and to have a role in approving the independent auditor to the Auditor-General's office—and that also includes the conducting of performance audits. The Auditor-General also consults parliamentary committees and has something of a coordinating role; hence that committee's extended name now to `Joint Committee of Public Accounts and Audit'.

Some people argue that this new parliamentary involvement has seen the Auditor-General being asked to examine some politically motivated areas more frequently than in the past. However, let me assure the Senate that the Auditor-General has always been a focus where the financial propriety of some public office or officer is being questioned. One may well ask: is the Auditor-General being too conservative in the new role? Too little has changed and many academics who had high expectations of greater accountability today feel somewhat disappointed. Why has the Auditor-General not discharged his wider responsibilities more purposefully and focused on identifying areas of poor system design and underperformance, particularly in circumstances where the manner of the department's discharging of its responsibilities have been limited by unwieldy administrative processes?

Recently I had the opportunity to quiz a senior officer from the ANAO about the performance audit conducted some time ago relating to the Australian superannuation guarantee system. No, we were not talking about a regulatory audit but one of those new types of audits called `performance audits'. The Auditor-General Act 1997 defines a performance audit as `a review or examination of any aspect of the operations of a person or body'. Performance audits may evaluate the economy, efficiency and administrative effectiveness of Commonwealth public sector entities and examine governance issues such as risk management and other control structures, such as resource use, information systems, performance measures, reporting and monitoring systems, probity and legal compliance.

While some have queried the Auditor-General's technical expertise to conduct such performance audits, others wonder why the ATO got such high praise for the manner in which it discharged its statutory responsibilities in that particular report. However, I remind the Senate that in my view the real issue was: why did the Auditor-General take such a narrow view of the task before him, which amounted to perhaps no more than an extended regulatory audit rather than a full performance audit? Not surprisingly, the response to some of the criticism that I raised was that the Australian National Audit Office does not comment on policy. But what I was referring to was poor administrative design, et cetera.

That sort of approach from the Auditor-General is really a well-worn excuse that I believe, in the light of his new responsibilities and mandate, really needs further evaluation. I certainly would like others, including academics, to look at this matter, because I think it deserves some attention—particularly now that the Auditor-General is an officer of the parliament and I believe he has had enough time to evaluate his new roles and responsibilities.

I will give you but one example. Government policy of both parties has been for an eight per cent employer contribution on behalf of their employees, rising to nine per cent in 2002 under the superannuation guarantee—not the absurd administrative nightmare of getting certain funds into members' accounts. So I would distinguish between the policy which has been agreed by both parties—that is, the eight per cent employer contribution on behalf of employees which we know legislatively will rise to nine per cent in 2002—and, I repeat, the absurd inefficient nightmare of getting certain funds—not all funds—into members' accounts.

I refer to three areas in respect of the superannuation guarantee certainly in need of reform which were not touched on in any way by the Auditor-General's report. Firstly, employers undercontributing are forced to lodge funds through the ATO rather than directly into the members' superannuation accounts. Secondly, contributions received after 28 July in respect of any 12-month period ending on the previous 30th day of June require the issue of an ATO voucher to be redeemed by the relevant fund, and then to find an account. Thirdly, there are the monthly monitoring requirements for employees aged between 65 and 80 years by trustees. Fancy having to report monthly when they are in continuous employment! These trustees really have more responsible duties than being engaged in such non-effective routines.

I am aware of a fund, for example, paying member benefits to a 68-year-old employee directly into consolidated revenue—this employee is currently in employment and has been for decades—in circumstances where the employer continues to make regular contributions and has done so without interruption for the past 10 years. But according to law, the fund is perfectly entitled to pay those moneys every quarter back into consolidated revenue. To make matters worse, the poor old employee has been asked when he retires to pay money to an independent investigator to get his money out—which he is rightly entitled to—of consolidated revenue. It is an absolute farce.

Most people would expect an Auditor-General to report on such an inefficient mechanism to collect and pay superannuation member entitlements, yet the Auditor-General says, `No; this is a policy issue; it is outside my jurisdiction.' Needed reforms according to such a philosophy cannot come from any other body than the agency itself—in this case the ATO— through the government of the day. And we all know that that takes years and years. It is time for the Auditor-General and this parliament, through its committees, to assess such issues, to enable parliament to fully discharge its responsibilities and for the Auditor-General to discharge his responsibilities as the community expects. I thank the Senate.