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Thursday, 1 December 1960

Mr CLEAVER (Swan) . - The Deputy Leader of the Opposition (Mr. Whitlam.) has left himself wide open by coming into this debate and trying to make out a case that the Government is due to be berated because this bill proposes only one small amendment of the Audit Act when he, at this stage, would like to see many others. It is quite apparent that it is desirable, when an act of this kind is being amended, that all recommendations for amendments be dealt with at the one time. It is only on the rare occasion that it becomes necessary to take one amendment singly. If this were not the normal practice in the amendment of legislation we in this House, and people in other houses of legislature, would constantly find amendments being proposed singly, when preferably they should be grouped. What the Deputy Leader of the Opposition has overlooked is that the activity of the Joint Committee of Public Accounts proceeds through virtually every month of the year, and that there are recommendations going forward to the Parliament and then to the Treasury and the Government for various amendments. So whilst there have been references in the annual reports of the

Auditor-General to the fact that certain, amendments have been recommended, and that action is in hand by the Treasury for amendments to be presented to the Government, there have been additional amendments. But the point I really wanted topress at the beginning of my short contribution to this debate was the flexibility of the Government in this very amendment to which we are directing attention.

First, let me say I am concerned that my friend and colleague, the honorable member for Warringah (Mr. Bland), is not with us to-night, because I know it was his wish to make his contribution which has been valuable in debates of this kind. I am sure that every honorable member is concerned to know that our friend and colleague is again indisposed; and that accounts for his absence. But my intention was to contribute briefly to this debate because of certain important principles that are involved. The first I want to deal with is that this bill refers to outstanding claims; and perhaps it is wise for me to qualify the term " sundry creditors " which has been used because in the accounting expression, sundry creditors invariably brings tomind all liabilities at a certain point of time and all liabilities at the end of the financial year. That understanding is not linked inthis amendment which deals only with outstanding claims received by departments upto the end of the financial year. I want to underline that the intention here is only to deal, as the previous speaker said, with the amendment of two special sections of the Audit Act.

But the next principle, upon which I have already touched is this: I believe theaction taken by the Government here is a good example of the flexibility of the Government and Treasury officials. While I believe there are an accumulating numberof amendments to the Audit Act to which the Deputy Leader of the Opposition (Mr. Whitlam) has just referred and that theseare pending for attention, the particular amendment now before the House has beentaken singly due to the fact that all investigations relating to this amendment have been completed. A report has been presented to this Parliament by the Public Accounts Committee, and also it was- apparent to the Treasury officials and to the Government that there should be no further delay in respect of this one amendment; otherwise, the Commonwealth would incur unnecessary work and very considerable expense. Now, there is the justification for taking a single amendment which we now have before us. I think that indicates the flexibility that we as a Parliament at all times should be prepared to prize.

To validate the aims of this work which has always been carried out in strict conformity with the acts each year, this amendment distinctly prescribes that the act shall operate as from 30th June, 1960. The Deputy Leader of the Opposition has criticized this retrospectivity. He has suggested that this is a slur upon the Parliament. He talks of this formal repeal as being an expression which is undesirable. I want to bring an assurance that the Parliament's interests have been meticulously observed as we can demonstrate from the wording of the report presented to this Parliament by the Joint Committee of Public Accounts. It is good to see a commonsense attitude of this kind adopted. There could have easily been a decision to leave the act alone until the complete revision of the Audit Act was ready. If that had been done - and, in fact, that is what the Deputy Leader of the Opposition has asked for - there would have been unnecessary work and considerable expense incurred. But I will at least be fair and temper the praise I have given the Government by saying that a reminder is necessary about the importance of all amendments to the Audit Act. I would support the Deputy Leader of the Opposition in saying that these are matters that should not be shelved. Here, there has been a sound decision to take one amendment and implement it in this way, and I do hope that in the autumn legislative programme of the House, we shall find further amendments will be presented by the Treasurer.

But another principle attaches to the very activity which we see here in the amendment. The amendment disposes of a cumbersome piece of accounting which the Public Accounts Committee, after full inquiry, found served no really useful purpose. I do not intend to read again the two sub-sections because the preceding speaker did that. It was apparent from his reading that there was a two-fold action. There was a requirement upon all departments to prepare lists of their outstanding accounts or claims against them as at 30th June, and as a corollary there was a responsibility on the Auditor-General. These are the two sub-sections which are now repealed.

It is interesting to note that the reference to the Public Accounts Committee of this proposal was in accordance with an understanding, or an earlier agreement, that the committee's opinion might be sought in respect of any major alterations to the Audit Act. I believe that the members of the Public Accounts Committee appreciated that general understanding, for the Audit Act is constantly referred to in our negotiations with the Department of the Treasury. The Auditor-General, who comes as an observer to all public inquiries of the Public Accounts Committee, is constantly relating his actions and his reports to this important Audit Act, as we saw in the report referred to a few moments ago. I think it is a very reasonable proposition that the Joint Committee of Public Accounts might be given the opportunity, on all matters other than minor amendments, to express an opinion and to place a report before this Parliament so that the action of the Government might be in general accordance with that report.

The committee naturally turned to the history of the existing legislation. It was informed that the section which is now being repealed was taken from the New Zealand legislation. A second-reading speech on the Audit Bill in 1901 in this Parliament included the following explanation by the Treasurer of the day: -

In this Bill therefore we have adopted what is called the cash system, by which accounts are absolutely closed on the 30th June. But to prevent a practice which might be adopted of carrying forward payments to the next year, so as to avoid having too heavy an expenditure in any one year, it is provided in a clause taken from the New Zealand Act, that any claims outstanding at the end of the financial year must be shown to the Auditor-General by the Treasurer. The various Ministers have to furnish the Treasurer with the information, and that information is put before Parliament by the Auditor-General in his annual report. So that Parliament has an opportunity of knowing whether the Treasurer is endeavouring to hide a deficit by carrying forward considerable payments to the following year . . .

Thus it can be seen that the two reasons for this provision in the act which will face repeal were to prevent a practice which might be adopted of carrying forward payments to the next year so as to avoid having too heavy expenditure in any one year and, secondly, to disclose to the Parliament whether a deficit was being hidden by carrying forward considerable claims to the following year. It was also revealed in the inquiry by the Public Accounts Committee that varying interpretations as to what constitutes claims had been given from time to time. This, no doubt, was mystifying to the various departments of the Commonwealth.

The committee, in its forty-sixth report on this particular subject, presented some of the actual evidence and the views of the departments, lt is interesting to note various test checks carried out by Audit Department representatives had disclosed a considerable difference between correct claims outstanding on 30th June and the figures revealed by some departments to the Treasury in accordance with these particular provisions. I believe, therefore, that I am justified in saying that evidently many of the lists which had been produced at the cost of many hours of work by many of the clerical staff, supervised no doubt by senior personnel, were not an accurate record and reference to them could have been most misleading by those who may have sought the information.

It is important, Mr. Deputy Speaker, to recognize, as we face this amendment repealing this provision, that all the authorities consulted by the Public Accounts Committee were unanimous that this particular provision in its existing form was unnecessary. It was unnecessary because no one had sought the information. The Treasury observer came before the committee and could give no evidence at all of any inquiries made to the Treasury as to those lists submitted by all departments and referred to by the Auditor-General in his annual report.

The Treasury observer also advised the committee regarding the keeping within departments of registers of accounts. We were interested to find that the registers of accounts maintained, which were always under the scrutiny of the Auditor-General's representatives, were, in effect, a list of every account or claim made upon a department. It is interesting to quote from the report of the committee on this point. It says, referring to the representative of the Treasury -

He did not think that the departmental statements of outstanding claims had any value administratively and explained that departments were required to keep a Register of Accounts which contained, in chronological order of receipt in the department, claims received for payment;

The evidence that we received on that point indicated that here, in a standardized form, was the information which virtually was being repeated at the end of each financial year.

The Deputy Leader of the Opposition (Mr. Whitlam) spoke as if the interests of the Parliament were not being fully considered. In the forty-sixth report of the Public Accounts Committee the specific interests of the Parliament were stressed. I think it should be recognized by the House that this statutory committee is a parliamentary committee and that its reports, in every case, must be tabled in this House. Perhaps it is wise for it to be enunciated again that this committee is the custodian of the Parliament's interest in many fields of activity. In chapter V. of its report, setting out its conclusions, and particularly and specifically referring to this amendment, the committee said -

Your committee have shown . . . that the Treasury and other departments consider that sections 36 (2.) and 51 (f) might, with advantage, be repealed. But this is the outlook of the administration only and it remains to be considered whether the interests of the Parliament - one of whose functions is to exercise a control over the administration on behalf of the people - will suffer by the deletion of those clauses.

The committee went on to say that it did not think that they would. It stated -

We consider those interests can be protected as effectively by other means without the administrative effort involved under the existing legislation.

Continuing further it said - it reasonably can be expected that there will be a substantial number of claims on hand in departments which cannot be paid before the close of the financial year. But this is unimportant and of little interest to the Parliament. What is important and, what should be disclosed, is any large-scale and deliberate withholding of payments at governmental or departmental direction: there could be occasions when it would be advantageous to a government or a department to defer payments . . . But any such action on a substantial scale by governments or departments would, we suggest, be apparent to the Auditor-General and his officers in the course of their normal check and we would expect that they would be disclosed to the Parliament in the annual report of the Auditor-General. Any such report could then be pursued further by the Parliament or your committee.

I do not think, therefore, that I need to stress any further the importance of what is a very small piece of legislation but a piece of legislation which is based upon those important principles to which I have referred. The measure may be small but it is of great import because of the principles upon which it is constructed. I therefore support the bill for the reasons I have indicated.

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