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Tuesday, 18 November 1986
Page: 2439


Senator SHORT(10.31) —Tonight I want to raise again a matter which I have already raised twice during adjournment debates this year, on 13 February and 20 March, namely, the Footscray Swim Centre community employment program project in Victoria. I raise it again tonight for several reasons: Firstly, the receipt of totally unsatisfactory answers on the matter when I raised it during the hearing of Estimates Committee C on 24 September; secondly, the failure of the Minister for Employment and Industrial Relations, Mr Willis, to respond ad- equately to the matters I raised with him in a question that I asked in the Senate on 11 February and in my speech during the adjournment debate on 13 February, and his total failure to respond at all to additional questions I raised in my speech during the adjournment debate on 20 March; thirdly, the failure of the Minister to release the report by an independent auditor which he commissioned in March and which was completed six months ago, in May, following my raising of this matter in the Senate; fourthly, serious criticism of aspects of the project raised by the Footscray City Council's own auditor-criticisms which were acknowledged by the Council's director of finance; and, fifthly, the fact that the people of Footscray are now faced with an enormous and vastly costly white elephant, on the one hand, and no swimming pool, on the other.

I do not wish to go into too much detail on the facts that are already contained in my speeches during the adjournment debates on 13 February and 20 March. But it is necessary to outline the situation very briefly. It is an issue which goes to the heart of the administration and the morality of the Hawke Labor Government. It is an issue which, to quote the Footscray City Council, is a tragedy. It raises important questions of principle that the responsible Minister, Mr Willis, has refused to face ever since I first brought this matter to his and to public attention nine long months ago. Regrettably, because I have always had respect for Mr Willis until now, it is a story of gross dereliction of duty, to put it at its best, by a senior Minister of the Crown.

In the latter half of 1983 the Footscray City Council saw the newly established community employment program as a potential source of funds to enable it to upgrade its swimming pool. The cost of the project was put at between $2m and $3m. To cut a long story short, the Council, for reasons which have never been adequately explained, managed to get the Cain Labor Government in Victoria to support a CEP application, which resulted in a grant of $1.97m from the Federal Government, to be supplemented by a contribution of $850,000 from the Footscray Council and therefore, ultimately of course, from the ratepayers of Footscray. For a detailed outline of the project, I refer interested persons to pages 327 and 330 of the Senate Hansard of 13 February 1986.

In a nutshell, the project has been a disaster. There has been a major cost overrun. Total spending to date has been $2.7m of Federal taxpayers' funds and up to $850,000 by the Footscray Council which, in the end, as I said, will have to be met by the ratepayers of Footscray. In other words, there has been an expenditure to date of $3.5m on a project which was to cost $2.8m and which is nowhere near completion. The project was due to be completed by August 1985 at the latest. Now, in November 1986, it is, as I said, nowhere near completion, despite the expenditure of approximately $3.5m, compared with the original total cost of $2.8m. I was told months ago that under existing CEP guidelines the project could not be completed if $10m was spent on it.

In my earlier speeches and questions that I have asked in this place, between February and May 1986, I raised a number of very serious questions about this project-its nature, its administration, the part played by the Footscray Council and by the project manager, Trojan-Owen and Associates Pty Ltd. None of those questions has yet been satisfactorily answered, even though the Minister was sufficiently concerned about the matters I had raised to convene personally and chair a meeting of all involved parties on 5 March 1986, as a result of which he or his Department commissioned an independent audit report on the project. The independent auditor from the firm of K. M. G. Hungerfords reported to the Minister six months ago, in mid-May 1986. Despite constant requests from me to the Minister's office, that report has not been made public; nor have any decisions been made on the basis of it. The Minister even neglected to announce publicly its specific terms of reference.

I raised the issue with officers of the Department of Employment and Industrial Relations during the hearing of Estimates Committee C on 24 September. Let me refer to just a few of the responses that I received to my questions. I asked whether nowadays such a project would get approval from the Government. The answer was no. I asked whether the project had yet been completed. Of course, the answer to that was no, and it was nowhere near completion. I asked why the project, despite the fact that it was due to be completed at the latest by August 1985, had not been completed. I was told that that was due to `the unavailability of skilled tradespersons since the project was approved'. I was told that it was due to considerable disruption by the Builders Labourers Federation.

Since the independent audit was commissioned in March 1986, no additional Commonwealth funds have been allocated to this project, but work on the project has continued, apparently with Council funds. But the Council funds were fairly limited, I am absolutely intrigued as to how work has been able to continue for six months, without any additional Commonwealth funding-as the Minister claims and as his Department claims-just on the basis of Council funds. During the Estimates Committee C hearing I was told:

The Federal funds that have been provided for the project were exhausted some time ago . . . and no further funds have been provided.

The independent audit conducted by K. M. G. Hungerfords apparently found-I say apparently because the report has not been released-`that there was no impropriety in terms of the use of CEP funds'. I obtained that quote from the minutes of the Footscray Council meeting. I again stress that the report has not been made public. Even the Council claims that it has not seen it, so I do not know how on earth it can make that statement on the basis of the report. I have been requesting the Minister, as I said, through his office, for the release of this report ever since its completion in mid-May. The Minister has persistently refused to release it.

Why has the Minister refused to release such an important report on what is probably the largest CEP project that has been undertaken in the, now, almost four years of its existence? I can only come, very sadly, to one or two conclusions: Either there is a cover-up somewhere and/or there is some impropriety involved by some party or parties in this whole exercise. Nor has the Minister released the feasibility study which he also announced in March he would have undertaken by the Victorian State Public Works Department into the feasibility of the project. It was an extraordinary decision to have a feasibility study in March 1986 of a project which was approved in August 1984 and which was due to be completed in August 1985. Why has he not released the feasibility study report? Why have that study at all?

I asked the departmental officer during the Estimates committee hearing whether he knew as yet whether realistically the project could be completed. The reply that I got was:

I think that is a matter for the Minister's judgment . . . I am not sure that it is right for me to cast a judgment on whether I think a large and complex building project such as that can be completed under CEP.

I can answer the question, as the answer is quite obvious from reading between the lines of the officer's statement. Such a project cannot be completed. The departmental officer also said:

I am not able to say to you what the final cost of that project might be if one did that-

that is, completed it-

under the CEP program.

How else can such a program be completed? The suggestions given are that that would be up to the sponsor. The sponsor, of course, is the Footscray City Council. If it is up to the sponsor, I presume it means that the sponsor is to find the funds from somewhere other than government sources; but how much, where and what will it cost the ratepayers of Footscray and, ultimately, the taxpayers of Australia? We still do not even know when a decision is going to be taken as to the future of this project, let alone who is going to pay for it. That story, I submit, is bad enough, but it does go much further. Some months ago the Victorian Government's Municipal Auditor, Mr B. H. MacKenzie of the firm of Haines Toner and Co, audited the swimming pool project to the end of September 1985. His audit comments were contained in the Footscray Council notice paper of 8 September 1986-only eight weeks ago. In respect of the swimming pool project, Mr MacKenzie had the following to say:

The accounts of the project as submitted to me in the draft statement of accounts for the year were significantly incorrect in many respects and reflected a lack of understanding of the nature of the project and of the presentation required under normal accounting standards.

. . . .

I was not made aware of the existence of the company Footscray Swim Centre Pty Ltd until well after 30 September 1985, a period of over 12 months since its incorporation.

For further details on that one perhaps needs to go back to my February adjournment speech on this matter. The sheer setting up of a company to handle a CEP project like this is almost unprecedented, and the reasons for doing so have never been satisfactorily explained. Mr MacKenzie added that the documents relating to the incorporation of this company were deficient in several ways, although again these deficiencies were subsequently rectified. Mr Mackenzie also said in his report:

It appears to me very doubtful whether the formation of Footscray Swim Centre Pty Ltd and the beneficial ownership by Council of the three issued shares in that company is permissible under the Local Government Act 1958.

. . . .

Certain contracts entered into by the project managers, Trojan, Owen and Associates Pty Ltd, do not appear to have been advertised and tenders called in accordance with the provisions of the Local Government Act.

. . . .

My concern is that the procedures laid down by the Act do not appear to have been implemented.

. . .

It is noted that your previous auditor-

the previous Footscray Council municipal auditor-

made a specific reference to a similar omission in relation to the construction of the Community Arts Centre in Footscray.

These are very serious comments made by the Council's auditor who, I might add, is a man of high reputation and total integrity. What has been the Council's response to these damaging comments? One should remember that they are comments contained in a Council notice paper four months after the receipt by the Federal Minister for Employment and Industrial Relations (Mr Willis) of the independent report from K. M. G. Hungerfords, a report which the Minister refuses to release but which is said to have found no impropriety.

The Footscray Council's Finance Director, in response to the municipal auditor's comments, thought that they were `somewhat harsh', but he did not explain why. Indeed, everything he did say appears to have supported the auditor's comments. For example, he said that there had been `a lack of expertise in the compilation of such accounts', and that this required what he quaintly described as a `learn by experience approach'. He also said:

While the auditor's comments that the beneficial ownership of the three issued shares may not be permissible under the Local Government Act, it should be realised that Council had no other option at the time, if it were to accept the $1.95m CEP grant for the Swim Centre.

In other words, the Footscray City Council Director of Finance said that the Council had to act illegally, relative to the Local Government Act; otherwise it could not grab the grant it had applied for and had been angling for for months. The Director of Finance also admitted that there had been instances `where contracts were entered into and not advertised and tenders called in accordance with the provisions of the Local Government Act'. But he has given no reasons for these illegal actions and expressed no concern about them.

The Council has received advice from its solicitor, Arthur Secomb and Company, questioning some of the municipal auditor's claims. But the auditor's serious allegations have not been adequately refuted and, indeed, the Council's own Director of Finance, as I have just pointed out, appears to actually support them. There is no doubt that this whole issue has an increasingly rotten smell to it. Why will the Minister for Employment and Industrial Relations not release the independent auditor's report which he has now had for six months? Why have the serious allegations of the Council's own official municipal auditor not been formally investigated? How can serious breaches of the Local Government Act be condoned, as has been the situation to date? When will decisions be taken on the future of the still incompleted Swim Centre project? Who is going to foot the additional bill, and how large will that bill be over and above the $2.7m of Federal taxpayers' funds and up to $850,000 of Footscray Council ratepayers' funds already expended? Presumably the additional money can come only from those two sources yet again.

The Minister for Employment and Industrial Relations stands condemned over his conduct of this appalling matter. It is important to ask why he has acted in this way. Is it because the project is in his own electorate? Is he trying to protect some person or persons associated with the project? How can he and the Footscray City Council treat the taxpayers of Australia and the ratepayers of Footscray in this quite appalling manner? If there has been any impropriety on anyone's part in this matter, it is imperative that it be uncovered and dealt with. It can only be dealt with and the facts brought out into the open if the Minister is prepared to release the independent report which he commissioned following my earlier questioning on this subject and which, for reasons that are totally unexplained, he has to date refused to release, despite the fact that he has had that report now for half a year.

For the reason of its being imperative that this whole matter be cleared up and dealt with, I will be raising it with the Victorian Government as a matter of urgency. I have delayed doing so until now in order to give the Minister for Employment and Industrial Relations an opportunity to study the report of the independent auditor, to release it and to take appropriate decisions. As I said, he has refused to act, despite having had the report for six months. It is now totally obvious that Mr Willis will not be taking the necessary steps to attempt to clear either his own name or the names of others involved in this shameful episode. I am therefore forced to take steps to seek justice for the taxpayers of Australia and the ratepayers of Footscray by other means.

Finally, to give a little light relief to this very sad and, I believe, disgraceful saga, I inform the Senate that the Footscray Council recently wrote to me demanding that I pay the $18,500 account which it received from K. M. G. Hungerfords for the cost of the audit commissioned by the Minister for Employment and Industrial Relations in March 1986. I have not yet responded to this demand from the Footscray Council but when councillors read tonight's Hansard-I will forward it to them very shortly-they may obtain some idea of the nature of what my response will be.