Senator HOGG (2:19 PM) —My question is to Senator Hill, representing the Prime Minister. Why did the government completely disregard the Auditor-General's best practice guidelines for government grants programs in its administration of the $906.8 million major projects component of the Federation Fund? On what basis does the Prime Minister claim, as he did in a letter to the Auditor-General, that ministers should not be bound by the same processes which apply to officials administering discretionary grants programs? Is the minister aware that the Auditor-General has stated the complete opposite: that where ministers are assessing competing projects and subsequently making decisions, the same standards of rigour, transparency and due process that apply to any departmental assessment should also apply? Who is right—the Prime Minister or the Auditor-General?

Senator HILL (Minister for the Environment and Heritage) —In a way they are both right. The government did not completely disregard the guidelines. The government took into account all the guidance the Auditor-General has given, over a range of reports, on the issue of discretionary grants. But the point the Prime Minister was making was that in the case of some very large grants—and in that instance we are looking at grants of the size of $100 million for the Alice Springs to Darwin railway or $148 million for the National Museum of Australia—there are national interest matters that a government may well wish to take into account that might not completely fit the detail of the guidance that is given by officials. Certainly, the starting point is the guidelines that are prepared but it is the view of the government that in relation to certain specific large grants it is legitimate to take other matters into account as well.

Senator HOGG —Madam President, I ask a supplementary question. Does the minister agree with the Auditor-General that `the public interest is in assessing whether the processes provided confidence in the manner in which decisions were taken in order to achieve demonstrably the greatest public benefit from the expenditure of in excess of $900 million in public funds'? If so, how does he respond to the finding by the Auditor-General that the public can have no such confidence, and that the lack of documentation surrounding the ministerial appraisal process and reasons for decisions precluded the ANAO from forming an opinion as to whether the proposals that were selected were likely to represent best value for money'?

Senator HILL (Minister for the Environment and Heritage) —The Auditor-General was referring to the dilemma where, in instances other than a cabinet decision, if it is a decision by a minister, the minister has to have reasons which are stated and which may be published. In the case of cabinet, we run into the conflicting principle of cabinet confidentiality. I understand the issue. The Auditor-General understands the issue as well and he has brought it to the attention of the parliament through this process. He basically says that this is something that the parliament is going to have to resolve. Thank you for reminding me of what I have already read in the report. It is an issue that we as a parliament are going to have to wrestle with in the future, and no doubt we will do so.