Senator SHERRY (2:45 PM) —My question is to Senator Minchin, the Minister for Finance and Administration. Is the minister aware of the scathing criticisms in the Auditor-General's report No. 15 of 2004-05, Financial management of special appropriations which included drawings by five department and entities relying on incorrect appropriations in 1998-99 to 2002-03 totalling $393 million? There was spending of $7.26 billion by one department against legislation that had not been passed by parliament. There was spending of $23 million by two entities that had not been approved by parliament, including $6.96 million in breach of section 83 of the Constitution, failure to disclose payments by two entities totalling $13.1 billion and $26.6 billion—and the list goes on. What responsibility does the minister take on behalf of his department and the government for this financial incompetence?

Senator MINCHIN (Minister for Finance and Administration) —It is not financial incompetence and Senator Sherry knows that. In fact, this government is rightly commended for its extraordinarily successful approach to the management of government accounts and, indeed, is held in very high regard. Senator Sherry will learn that when he visits organisations like the OECD who uphold Australia as one of the great exemplars of a very professional and responsible approach to the management of government finances. In relation to these ANAO performance audits of special appropriations, we welcome the audits. The ANAO is an extremely good, independent body and it has drawn attention to some very important issues in relation to the management of the special appropriations. I would stress they have absolutely no impact whatsoever on the integrity of the budget, government accounts, revenue, expenses, surpluses, net worth et cetera. The findings have absolutely nothing to do with that.

The audit reports deal largely with technical issues that go to the accuracy with which agencies' use of special appropriations has been documented in annual reports, so they are extremely technical matters that have been properly brought to our attention. My department will play a significant role in ensuring that the relevant agencies and departments do respond comprehensively and in full to the ANAO audit. But I do stress that these findings really do go to accurate reporting in annual reports and not to anything other than that. They are extremely technical. It is a proper role that the ANAO plays in acting as a watchdog for all the agencies in this way to ensure that they are properly reporting their use of the special appropriations in an accurate fashion. None were found to be illegitimate or improper in a strict sense of the word, so we will ensure, as my department has a responsibility to ensure, that all these agencies who have the ultimate authority over these special appropriations do implement the recommendations of the ANAO in relation to their management of special appropriations.

Senator SHERRY —Mr President, I ask a supplementary question. The minister will find out that it involves a lot more than he has outlined in terms of wasted expenditures. He will find that out shortly.

Senator SHERRY —Laugh if you like; it is a pretty serious situation, Minister. Given the department of finance is responsible for developing and maintaining the financial framework of the Commonwealth public sector and the oversight of the implementation of the devolved financial arrangements to government departments from 1999, why did the minister allow such financial incompetence over a period of five years? Why was the minister asleep at the wheel?

Senator MINCHIN (Minister for Finance and Administration) —As I say, I am very proud of the performance of this government in relation to the management of the budget and very proud of the performance of my department of finance. It is one of the best departments in the government in ensuring accuracy, proper control and discipline in relation to the expenditure and recording of government moneys. As I said, the findings that the ANAO has made in relation to special appropriations are extremely technical. They only go to the accuracy of reporting of agencies in relation to their annual reports. We are following up on all those ANAO recommendations. One of the agencies involved is ATSIC—which has, of course, since been abolished—and its management of the Indigenous land fund. There are issues of that kind and we will make sure that they are all properly followed up.