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Wednesday, 11 December 2002
Page: 7736


Senator COOK (3:05 PM) —I move:

That the Senate take note of the answers given by the Minister for Finance and Administration (Senator Minchin) to questions without notice asked by Senators Webber and Conroy today relating to accountability and accrual accounting.

It is not for nothing that accounting procedures induce yawns and glazed eyes among most of the population. Unfairly, I think, the stereotype of an accountant is of a boring, white-bread, vanilla type personality that you would not want to corner you at a party. I think that is unfair because, while the numbers may not thrill some of us, what those numbers illustrate is vitally important in terms of our national wellbeing.


The ACTING DEPUTY PRESIDENT (Senator Lightfoot)—Order! Could those on my right who are holding their meetings here do so outside? It is exceedingly hard to hear the person on his feet.


Senator COOK —We have now seen a breathtaking bungle by Mr Costello and Mr Fahey—supported, it would seem, by the now finance minister, Senator Nick Minchin—namely, the change from cash accounting to accrual accounting by the Commonwealth. We all remember when the budget came down in 1999-2000 that Mr Costello hailed that budget as a major `reform of the Howard government'. The so-called reform was a transition from cash accounting to a form of accrual accounting and that budget laid out three key principles of what that reform was about. There is no question that it was a major shift in the accounting procedures of the Commonwealth. There is no question that this change was at a major cost to Australian taxpayers—a cost in the hundreds of millions of dollars. There is no doubt either that this so-called reform was announced with a public flourish of trumpets. It is therefore odd in the extreme that on 15 November, with no announcement and with no flourish of trumpets, a 12-page memo was issued by Mr Phil Bowen of the Department of Finance and Administration Budget Group reversing many of the changes that the so-called Costello reforms introduced.

We know from MYEFO—the mid-year economic review—that the cost of reversing these changes, which cost hundreds of millions of dollars of taxpayers' money to install in the first place, is estimated to be $80 million. We know as well that this has been a move totally panned by the Australian financial media. On 25 November, the Australian Financial Review called it `The quiet counter revolution', drawing attention to the secretive way in which the department reversed these public announcements. The Canberra Times describes it accurately, I think, in its headline `Billions missing amid the confusion', and here is the rub. This is not just a major bungle in terms of the application and introduction of an unthought-out, ill-considered, inappropriate accounting structure; this is a major cost to taxpayers as well. Those two things ought to be sufficient to create widespread public outrage about what has been done. But they are topped by a third and more important serious problem.

The method of accounting that the Commonwealth has introduced makes it very difficult for parliament to exercise its constitutional obligation to Australian taxpayers to properly scrutinise budget estimates. In fact, the newspaper reports by the financial specialists emphasise this point particularly. The method of accounting makes it very difficult, in the way in which the government applies that method, to actually track the so-called hollow logs that the government has hidden money in, to make departments accountable for their proper expenditure and to allow the parliament to fulfil its proper role—a role of due diligence and public oversight of the proper management of the accounts of the Commonwealth—as required by the Constitution of Australia. In fact, it can be fairly said—and the financial press supports this contention; it is not just from me—that this accounting process has subverted the public scrutiny of the accounts of the $170 billion Australian budget. If people in Australia are not concerned about that, then they have no interest in the proper governance of this country. It is a matter of public outrage. (Time expired)