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Friday, 28 June 2013
Page: 4440


Senator SINODINOS (New South Wales) (11:10): It is a pleasure to give this speech while you are in the chair, Madam Acting Deputy President. There are some of us who hope you may in fact return at some stage.

The ACTING DEPUTY PRESIDENT ( Senator Crossin ): Thank you.

Senator SINODINOS: The Public Governance, Performance and Accountability Bill 2013 proposes to replace the existing model for Commonwealth financial management established through the Financial Management and Accountability Act 1987—the FMA Act—and the Commonwealth Authorities and Companies Act 1997—the CAC Act. It would consolidate under one piece of legislation the governance, performance and accountability requirements for the Commonwealth and relevant entities, which are covered currently under both the FMA and CAC acts. The bill would introduce a new framework for the finances of the Commonwealth, impacting on some 195 entities and around 300,000 individuals who work with them.

So this is not a reform to be taken lightly or a reform to be driven by undue haste. Yet, in the dying days of this parliament—for the benefit of those in the gallery—we are being asked to approve a complex bill on which we are provided with a framework but no rules as to how the bill will actually impact, in practice, on the operation of Commonwealth entities. We are talking about entities that cover the management and accountability for revenue and expenses of over $350 billion—that is your money, taxpayers' money—as well as assets of over $390 billion, which are your assets, and liabilities of over $640 billion—liabilities that we have rung up in your name. This type of reform is precisely the sort of reform that should be covered by a new parliament regardless of its colour or stripe.

Most appropriately, this bill has been subject to an inquiry by the Joint Committee of Public Accounts and Audit. Two fundamental concerns have been identified: the lack of detail as to how the new financial framework would actually be applied, and the unnecessary haste with which it is being brought before this parliament and the need for additional consultation. One of the great problems that this government has had and one of the reasons their governance and their policy process has been so fraught and so mistaken is that they have not consulted properly with stakeholders, business, the private sector, non-profit groups and the community on important pieces of reform.

The major issues the bill largely represents are the direction and principles of reform, with much of the detail to be set out in future rules tailored for individual entities. We agree with the broad principles behind the bill; they are not objectionable. The Commonwealth should operate as a coherent whole. These are public resources, and a common set of duties should apply to all resources handled by Commonwealth entities. Performance of the public sector is about more than the finances. And engaging responsibly with risk and managing risk is a necessary step in improving performance.

It is true that the current framework is pretty complex and fragmented, so reform is needed. A single act would, as far as practicable, apply a consistent set of principles based on a framework for all Commonwealth entities. It should also be compatible with specific enabling legislation which mandates the establishment and functions of public entities. There is greater emphasis, appropriately, on risk management, something that is said to be deficient in the existing framework. This should be applied in a way that accommodates both autonomy and personal responsibility, and that would be welcomed.

According to the explanatory memorandum, the bill seeks to bring about cultural change by placing a duty on entities to establish their own appropriate systems of risk oversight and management and by introducing the principle of earned autonomy. You can earn lesser oversight if you have a track record of dealing well with risk. This would draw on the better-practice principles for regulators identified by the Productivity Commission.

The existing framework—the one that we are seeking to replace—is also described as very linear and focused on straight lines of vertical authority, which create hurdles to what we call citizen-centric service delivery. In other words, there are too many silos in government dealing with services that go to you as a whole person. This is something that is important for policy in the future to recognise so that it is less fragmented and less complex for Australian citizens to navigate in getting services out of government.

None of this is objectionable. But what is objectionable is not knowing how, or if, these principles will in fact be satisfactorily applied. This detail will only be revealed in a specific set of rules, the legislative implements, which is yet to be drafted let alone sighted. The general consensus is that this will be developed over 12 months. What the bill does afford is quite substantial power and discretion for the finance minister, under sections 101 to 105, to make rules necessary or convenient to be prescribed in carrying out, or giving effect to, this act. And the government has agreed to subject these future instruments to the scrutiny of the Joint Committee of Public Accounts and Audit, as it should.

We believe the draft rules should have been prepared for public exposure so that there would be consultation. We have until 1 July 2014. There is time to do this properly. There is no need to rush the process. The Auditor-General, Ian McPhee, told the recent Joint Committee of Public Accounts and Audit inquiry that he would be more comfortable with this legislation if the bill had been subject to a more open exposure process given the number of entities and officials affected by it and because of the fundamental importance of the legislation, as indicated earlier. He said: 'We also have no visibility of the complementary rules which, together with the legislation, will establish the Commonwealth's financial management framework and contribute significantly to it. So our support for the legislation is more measured than it may have been under different circumstances and with more time.' That is the Auditor-General, the chief auditor to the Commonwealth, putting up not an amber light or a green light but a red light and saying let us consider this further, let us consider this properly.

His views were supported by the Australian Public Service Commissioner and even the Chief Operating Officer of the Australian Broadcasting Corporation—no friend of some on this side of the House—who said: 'I guess the reservation we have about the haste is around clarity on the rules that sit underneath the legislation and the detail that flows with them. That would be our one caution around the timing and haste of this.'

So we have a series of people, not necessarily partisan individuals—I do not know how some of them vote but in a couple of cases they are statutory officers—and they are saying we need more time. In conclusion, delay seems prudent given the lack of imperative for this bill to be passed by this parliament. If it is not passed, nothing will change. It will be business as usual and the entities covered under the existing framework will continue to function without any negative impact on taxpayers and the broader community. It is for these reasons that the coalition stands opposed to the Public Governance Performance and Accountability Bill 2013 in its current form.