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Thursday, 1 March 2012
Page: 2564


Mr ROBB (Goldstein) (10:01): I rise today to speak on the Financial Framework Legislation Amendment Bill (No.1) 2012. This bill seeks to amend four acts and repeal two acts across three portfolios. It is part of an ongoing program of updating and enhancing the Commonwealth's financial framework. This is the ninth financial framework legislation amendment bill since 2004. These bills generally seek to correct misdescribed provisions, add clarity where required and enhance acts to make them consistent with complementary legislation. They also seek to repeal redundant components of the financial framework, such as prior programs that have expired.

Schedule 1 seeks to amend the Auditor-General Act 1997 to clarify that the Auditor-General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls. This will align the act with the definitions of Commonwealth control which were made in 2008 for the Commonwealth Authorities and Companies Act 2007. We of course support this amendment.

There is though, in my view, a case for placing stronger obligations on government departments and agencies, including the minister's own department, to more strictly adhere to the Commonwealth Procurement Guidelines. We are seeing far too many instances where guidelines are being flouted. That is not conducive to achieving best value outcomes. To this end, I wrote some time ago to the Auditor-General of Australia, Mr McPhee, to seek some clarity on just what is happening with regard to the purchase of property and services, the whole procurement process and the efficiency of that process, and to ascertain whether we as a community are seeing the government and its agencies doing things in a way which best meets the responsibilities they have to handle public moneys. As part of his response the Auditor-General says:

Your letter also sought advice on whether further reform of procurement could provide savings of 5 to 10 per cent over the forward estimates without compromising the standard of property and services purchased by the Commonwealth.

He goes on:

Because our audit was only focused on direct sourcing and whether agencies were adhering to the CPGs, we did not seek to quantify the potential saving that could be achieved.

He says, though:

Nevertheless, our audit work indicates that better value for money outcomes could be achieved through improvements to the procurement practices.

He talks about the fact that direct source procurement, which may include a competitive process, accounted for 43 per cent or $10.2 billion of the total reported value of contracts for the calendar year. But among the key findings of the audit was a 'lack of documentation' of agencies' value-for-money considerations for 74 per cent of the audit sample of direct source procurements, that agencies 'did not seek multiple quotes' in 85 per cent of the direct source procurements examined and that agencies could not consistently ensure that covered 'direct source procurements examined met the limited circumstances' in the Commonwealth Procurement Guidelines which permit direct sourcing. For the Auditor-General to use this language, to be this direct and to record such significant, in my view, oversights in the procurement process suggests an area of spending that is just startling. We are talking about a contract worth $23.5 billion, and in 74 per cent of the audit sample there was a lack of documentation on how they could show value for money out of that process. I have run public companies. If you took to a board proposals for capital expenditure of sums much smaller than this which did not convince the board of a value-for-money outcome, you would not be in a job long. Yet here we have startling results from the piece of work done by the Auditor-General and, when I raised it with the government, I got a perfunctory response—no response, really, of any consequence; just politics. It is a legitimate question. We are here as an opposition to ensure the accountability of governments. An Auditor-General is prepared to write back to me and report those sorts of findings, and the minister for finance treats it as just a political act by me. It is unacceptable and it does reflect, I think, mismanagement on a much wider scale or bad supervision by a minister on a much wider scale.

It helps explain the waste that the community understands that this government has become a symbol of. This government's waste, debt and deficits have become, I think, a matter of great embarrassment to this community. It is one of the reasons we got 750,000 more votes than the Labor Party at the last election, in spite of being the first—

The DEPUTY SPEAKER ( Ms AE Burke ): The member will refer his remarks to the bill. He will be relevant to the bill before us.

Mr ROBB: The bill—

The DEPUTY SPEAKER: The bill has nothing to do with the votes at the last election. I draw you back to the bill, please.

Mr ROBB: I was reinforcing my point, Madam Deputy Speaker, about the waste, which is very much a part of this bill. These provisions—

The DEPUTY SPEAKER: Yes, and I allowed you to make comments that I think were pretty borderline on the Audit Office as well, so I would heed the warning and be relevant to the bill.

Mr Husic: Or just be relevant generally.

The DEPUTY SPEAKER: The member has the call.

Mr ROBB: I will restrain myself, Madam Deputy Speaker. Schedule 2 would amend the Commonwealth Authorities and Companies Act itself to ensure that directors of Commonwealth authorities and wholly owned government companies and enterprises prepare budget estimates as directed by the finance minister rather than the responsible portfolio minister. This would make the act consistent with longstanding practice.

The most significant component of schedule 2 is the new obligation on the directors of Commonwealth authorities and wholly owned companies to notify their responsible minister of decisions about significant events immediately after a decision has been taken. Significant events include forming a company or participating in the formation of a company, acquiring or disposing of a significant shareholding in a company, acquiring or disposing of significant business or commencing or ceasing a significant business activity.

I strongly support this provision. It is consistent with the obligations of public companies, with continuous disclosure required, which makes eminent sense in the case of public companies, which are responsible to shareholders and prospective shareholders to advise what really is going on with the company. There is no good reason why the minister and the government of the day should not be similarly informed about the major organisations that they are responsible for. That raises the question of accountability. I welcome measures to make the directors of government linked entities more accountable. However, they are somewhat meaningless if the Minister for Finance and Deregulation is powerless to stop poor quality spending outcomes based on what the minister could suspect in advance were bad decisions. I will provide an example. Recently, I sent the finance minister a very detailed letter seeking clarity on a number of concerns regarding government due diligence and the oversight of the wholly government owned NBN corporation. The minister responded with literally pages of bureaucratic gobbledegook, yet failed to answer the key questions. It was one of the best examples of a Yes, Minister response I have seen in all my life. There were four pages of processes which, we are led to believe or are to be convinced, show the extraordinary accountability of NBN. Yet in all of these so-called safety provisions for accountability the minister was unable to identify or outline the red flag measures she has in place to identify problematic NBN company decisions that could result in wasteful spending. There were four pages of different procedures that supposedly outlined transparency and accountability, but none of it specified her ability to red-flag measures, which is a very standard risk management procedure of any company worth its salt.

Nor could she say that she had a veto authority over the company's spending activities, regardless of how questionable they might be. The government is the sole shareholder of what is the biggest infrastructure project, at $50 billion, in the history of Australia—virtually all borrowed money. At the moment, after 2½ years, it has 4,000 customers; it has more employees than customers. At Smithton, where it started, only seven people have taken it up even though they got a free offer. The technology that was put in place there two years ago no longer connects properly to the rest of the system. It is a dynamic sector, which they were warned about.

But in relation to the financial framework surrounding the NBN project, which this bill is particularly looking to improve, the original standard was set when the government refused to subject the proposal to a cost-benefit analysis. If you have got no cost-benefit analysis, which provides some reference point against which you can judge future implementation, no wonder there is no capacity for a red flag process. To not have the potential to veto any decision, no matter how problematic or misguided activities might be, is an extraordinary situation for a 100 per cent shareholder, the minister, who is ultimately responsible for the largest project in Australian history. It is the most disgraceful example of poor governance and it is becoming a symbol around the world of how not to manage a major public project. We are becoming a laughing stock over the implementation, the inefficiency, the costs, the timing and the fact that we are the only country in the world, that I am aware of, that is now renationalising the telecommunications sector at a time when that sector is the most dynamic of any sector in any economy. It is the last sector that you would want to renationalise with a bureaucratic culture. Taxpayers' money is at risk in an area where technology is changing by the day. Schedule 3 of this bill is devoted to—

Ms Owens: Madam Deputy Speaker, I have a point of order on relevance—that is all I need to say.

The DEPUTY SPEAKER: The member for Goldstein has strayed quite a lot. I have let him get away with it, but if he does not come back to the bill I will sit him down. You cannot in any way, shape or form tell me that what you just said about the NBN was relevant to this bill. The member for Goldstein has the call.

Mr ROBB: This bill—

The DEPUTY SPEAKER: The member for Goldstein went off the track. I let him. If he does not come back, I will sit him down.

Mr ROBB: Schedule 3 of this bill is devoted to correcting two misdescribed provisions in the Financial Framework Legislation Act 2010, which are contained in section 27a of the Commonwealth Authorities and Companies Act that is replacing references to 'at common law and inequity' and 'at common law or inequity' with 'under the general law'. Schedule 4 relates in part to the special accounts appropriation under the Financial Management and Accountability Act 1997. This provision applies to special account appropriations which relate to either the COAG Reform Fund Act 2008 or a special account established under the Nation-building Funds Act.

Determination for such appropriations are done by way of disallowable instrument. As it stands, such a determination takes effect after the five sitting days in which the parliament can move to disallow pass. Such appropriations may be used by new government agencies once they are established. For the purpose of practicality this amendment allows the minister to prescribe a date in the instrument for which the appropriation takes effect. This allows a future date to be set which corresponds with the establishment date of a new agency. It has no material effect and serves to add clarity to the act to confirm such an instrument can come into effect at a nominated date beyond and immediately after the expiry of the disallowable instrument. At is a sensible measure.

Offsetting debt—the other key feature of schedule 4—is the provision to give the finance minister the discretionary power to offset debts owed to the Commonwealth by an individual or entity against payments owed to the same individual or entity. As it stands, Commonwealth payments must be paid in full regardless of debts owing. This new section provides a mechanism for the Commonwealth to recover debts in a cost neutral way and more efficient manner than allowed under current provisions. It is a sensible measure given the budget's vulnerability on account of this government's mismanagement and spiralling debt.

I have sought assurances from the minister, however, that this authority will not be used in a way to unreasonably disadvantage business whether big or small. For example, if a business has an arrangement in place with the ATO in relation to paying off a taxation debt, I was seeking comfort that the minister would honour such agreements. In other words, not override them but denying a business payments owed as a means of accelerated settlement of payment to the Commonwealth, because, by definition, if they sought an arrangement they have got a cash-flow problem. If this measure was used to recover the Commonwealth debt more quickly, it cuts across what has already been a decision to help that company meet its financial taxation commitment to the Commonwealth, but also not put itself in the position where it has a cash-flow problem and might face receivership or other difficulties. I do thank the minister for assurances that this measure would not lead to such eventualities.

Schedule 5 of this bill also proposes to repeal two redundant special appropriations to clean up the statute book. These include the Appropriation (Development Bank) Act 1975 and the Car Dealership Financing Guarantee Appropriation Act 2009.

The process of ongoing maintenance and enhancement of the Commonwealth's financial framework commenced under the coalition. We support this endeavour in principle, including the changes outlined in this bill. However, we do feel in many respects it is a missed opportunity. I have taken the opportunity during my comments to point out some of those missed opportunities, which I think are highly relevant to the Commonwealth's financial framework, and in particular that NBN example. There has been $100 billion of public works, of infrastructure projects, that have been authorised by this government, none of which have had a benefit-cost analysis and certainly none which has been published. That was despite the assurances when the infrastructure Australia was set up. When infrastructure Australia was set up, the government said that it would publically conduct benefit-cost analyses that would be released. It is another example of where promises have been broken with the most blatant and brazen examples.

The DEPUTY SPEAKER: The member is straying.

Mr ROBB: Madam Deputy Speaker, it goes very much to the financial framework, the financial management, which is at the heart of this bill. It is a missed opportunity. To avoid a benefit-cost analysis on $100 billion of infrastructure when it was promised and promised and never delivered is absolute disgrace.

Mr Husic: You talk the talk and you don't walk the walk.

Mr ROBB: I support the bill, but I do not support the dereliction of duty and the mismanagement of this government in regard to infrastructure.

The DEPUTY SPEAKER: The member for Chifley is not helping the situation.