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Thursday, 22 September 2011
Page: 6867

Senator MARK BISHOP (Western Australia) (15:40): I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Auditor-General Amendment Bill 2011 is intended to implement various recommendations in report 419 of the Joint Committee of Public Accounts and Audit (JCPAA) following its inquiry into the Auditor-General Act 1997.

In its unanimous report, the JCPAA noted that there is a 'glaring gap' in accountability of Com­monwealth grants to states and territories and supported changes to the Auditor-General Act 1997 to enable the Auditor-General to access information and records relating to the use of Commonwealth funds under National Partnership payments and SPPs and auditing of that information under certain circumstances.

The JCPAA also recognised that there is an increasing use of contractors to implement government programs and services. While the JCPAA acknowledged that this practice has benefits for service delivery, it expressed concern that it has the potential to undermine Ministerial responsibility and Parliamentary oversight. The JCPAA wanted to see more accountability in this area and for the Auditor-General to have the power to audit external entities including contractors delivering government programs and services.

The bill was originally introduced by the Member for Lyne and Chair of the Committee, Mr Rob Oakeshott MP. The Member for Petrie and Deputy Chair of the JCPAA, Ms Yvette D'Ath MP moved amendments to the bill on 12 September 2011, which were agreed by the House of Representatives.

The bill, with one exception, implements the recommendations of the JCPAA report as intended by the Bill introduced by the Member for Lyne. That exception relates to the performance auditing arrangements for Government Business Enterprises.

The Auditor-General Act currently provides that GBEs can only be audited by the Auditor-General at the request of the JCPAA, the minister responsible for the GBE or the Finance Minister. The JCPAA report recommended that the Act should be amended to give Auditor-General the authority to initiate audits of GBEs.

Successive governments have taken the view that the Auditor-General should not have the ability to audit GBEs of his on motion. GBEs are subject to competitive pressures and disciplines that do not apply to other Commonwealth bodies and, to the greatest extent possible, they should be subject to the same audit arrangements as their competitors.

The Government considers that audits of GBEs should be requested by the Parliament in response to genuine public interest concerns about aspects of their operations, rather than as an incidental part of an annual work program. The JCPAA, which comprises members from across the political spectrum and can conduct hearings in private, is the appropriate body to consider whether a particular GBE should be audited.

Accordingly, the bill would allow the JCPAA alone to request an audit of a GBE by the Auditor-General. As is currently the case, the Auditor-General could ask the JCPAA to request an audit of a particular GBE.

The most important change that would flow from the implementation of the JCPAA' s recommendations will result in the Auditor-General having the power to 'follow the money'. That is, the Auditor-General would be able to undertake audits of Commonwealth partners—private sector and state and or territory entities that receive Australian Government funds to implement an Australian Government program.

The Auditor-General's powers are limited at present to an assessment of the way that Australian Government bodies implement government programs. This means that the Auditor-General is unable to assess the extent to which the individuals or entities that receive Australian Government funds achieve the purpose for which those funds were provided.

The amendments implement that unanimous recommendation of the JCPAA report that the Auditor-General be given the authority to undertake audits of Commonwealth partners, whether they are state or territory entities or other individuals or bodies.

The Bill as amended contains appropriate restrictions on the extent of these powers, particularly in relation to state and territory entities, and the Government anticipates that they will be used sparingly. For example, the Auditor-General will be able to assess the operations of a state or territory entity only after a request by the JCPAA or the responsible minister and only to the extent that they relate to achieving the purpose for which the funds were provided.

The provisions of this bill will ensure that the Auditor-General has the tools to respond to today's auditing challenges.

The remaining measures would make relatively minor changes to clarify the way that the Act operates. They would, for example, pro­vide clear authority for the Auditor-General to undertake assurance reviews and audits of perfor­mance indicators audits, which are currently carried out as audits by agreement under section 20 of the Act; and clarify that the Auditor-General's powers to require the production of documents that are the subject of legal professional privilege.

In conclusion, I would like to thank the members of the JCPAA for their report and the Member for Lyne, who originally introduced the Bill, for his cooperation in the development of the Government amendments to ensure that the amendments to the Auditor-General Act 1997 contained in this bill would operate as intended.

I commend the bill to the Senate.

Senator MARK BISHOP: I seek leave to continue my remarks later.

Leave granted; debate adjourned.