Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Monday, 11 November 1991
Page: 2831


Senator SHORT (4.47 p.m.) —It has become practice in the Senate in recent years to debate the Statements of Heads of Expenditure and the amounts charged thereto pursuant to section 36A of the Audit Act 1901—namely, the Advance to the Minister for Finance in the overall context of the consideration of the Budget and the immediate post Budget. This chamber passed the Appropriation Bills last Thursday evening or early Friday morning, so this is a consequential follow-on from that.

  The Advance to the Minister for Finance is supposed to be a form of contingency fund which, in effect, gives the government of the day authority to deal with unforeseen circumstances that may arise in the course of a financial year and which cannot be provided in the appropriations that are brought before the Parliament in the budgetary Bills. Funding which is a final charge on the Advance to the Minister for Finance does not go through the usual parliamentary scrutiny processes that the Budget bills are subject to.

  This document that is the vehicle of Government Business Order of the Day No.1, the Advance to the Minister for Finance 1990, is a document which discloses those issues from the advances and their related expenditure that remained as a final charge to the advances as at 30 June 1991. That does not include, of course, all the funding that goes through the Advance to the Minister for Finance during the year. The annual Appropriation Acts appropriate funds to the Advance to the Minister for Finance to enable the Minister to, firstly, make advances that will be recovered during the financial year; secondly, make money available for expenditure where the Minister for Finance is satisfied that expenditure is urgently required and was unforeseen at the appropriate practical time or had been erroneously omitted from, or understated in, the relevant legislation; and, thirdly, make money available for expenditure, pending authorisation under section 32 of the Audit Act 1901. So the document that is the subject of debate now relates to the expenditure of only part of the use of the Advance to the Minister for Finance, namely, those issues from the advances and the related expenditure that remained as a final charge to the advances at the end of the last financial year.

  On many occasions, the Opposition has been very critical indeed of the use by this Government of the Advance to the Minister for Finance. As I said, it is supposed to be a contingency fund which has very tight provisions pertaining to it. Much of the expenditure is in that category that is supposed to be urgent and unforeseen. The Opposition believes that the Government has abused the Advance to the Minister for Finance to an increasing degree. It has used the Advance as a tool to approve funding that it seeks to shield from proper parliamentary scrutiny. As I said, funding for the final charges on the AMF does not go through the usual parliamentary scrutiny processes that the Appropriation Bills, the Budget Bills, are subject to. That comes up in the course of the next financial year after the expenditure has been incurred and after the proper processes of scrutiny have been completed.

  We have seen that process used par excellence in recent years where the Advance to the Minister for Finance has been used to fund secret deals to three Labor States over and above agreements reached at Premiers Conferences. Last year we had the disgraceful situation where deals were done with Tasmania and Western Australia, and I think South Australia, which totalled more than $70m. Those deals were done between the Government and individual Premiers at the time of the Premiers Conference but without any communication of those secret deals being made to the Premiers Conference as a whole. Therefore, the other Premiers were in ignorance of those deals until they were exposed by the Opposition here in the Senate several months later.

  So, whilst the Advance to the Minister for Finance is a necessary piece of the Government's financial machinery, I repeat that it has been abused on many occasions in recent years. The Government, in particular the Department of Finance, woke up to that when, as a result of questions in the Senate Estimates committees and in this place, it did amend the guidelines in August to emphasise the need for government departments to make a greater effort in their applications for funds from the Advance to the Minister for Finance. Indeed, the Finance minute that circulated the guidelines acknowledged that the changes have resulted from concerns expressed by the coalition at Senate Estimates committees. That was contained in memorandum 1991/24 of 25 July 1991. At the time we welcomed that change to the guidelines.

  I hope that the relevant Minister in this chamber at the appropriate time will be able to give the Committee a report on just how effective those changes to the guidelines have been, how much extra discipline they have imposed on the departments. In my criticisms before, I was being particularly critical of the Treasurer (Mr Kerin) and the Prime Minister (Mr Hawke) for their use of the Advance to the Minister for Finance. We had a classic example in June of this year when the Prime Minister, apparently without any authority from Cabinet or any consultation with other Ministers, during a spin through Queensland, approved use—or, to put it more correctly, abuse—of the Advance to the Minister for Finance for the purposes of payment of drought relief to Queensland. There was no question on our side of the chamber that it was appropriate to pay that drought relief, but we were very critical of the way in which it was done and the abuse that was made of the Advance to the Minister for Finance.

  Now that the guidelines have been changed, partly to try to shore up and prevent such abuses, I look forward to the Government providing to us, at an appropriate early time, a report on the operation of the new guidelines. Hopefully, we will see an improvement in the situation and the revised guidelines will make it more difficult for these sorts of payments to be made. The criticism, of course, extends to many departments throughout the bureaucracy. I am not suggesting that it has been a deal on the part of Ministers. There has been a lot of laxity by many departments in their accounting procedures and in their necessary notification and advance contacting, particularly with the Department of Finance in terms of its financial provisions. It is stretching a very long bow to include in the description of urgent and unforeseen many of the things that departments have claimed. Hopefully, the new guidelines will change that situation because they do emphasise the need for departments to be more specific about how a request for funds from the AMF fits in with the legislative requirements of the terms `unforeseen' and `urgent' expenditure.

  No longer will departments be able to assume that requests for funding will be automatically approved. In the past, many applications merely stated that the request was urgent and unforeseen without specifying any particular reason at all. I believe those requests should have been subject to much greater scrutiny before they were approved. The new guidelines also state that the approving delegate may request additional information in order to be satisfied that the use of AMF funds is appropriate. That is a good thing. It will assist in avoiding the invidious situation that Ministers have put departmental officials in by ordering payments to be made from the AMF without providing adequate information. In that context I refer again to the payment earlier this year to Queensland.

  I do not wish to say any more on this matter at this stage. This document is a vehicle for debate; it is not in any way a document to express opposition to. It is a retrospective document because it relates to payments in the last financial year, 1990-91. As I have said, we have been highly critical of some of the individual payments and we have been highly critical of the procedures and the laxity that has applied on many occasions. This is a useful forum today to raise some of those issues.

  To finish on a positive note, I welcome the changes that have been made in recent months to the guidelines. I look forward to seeing a report on them; hopefully, it will be positive. If it is a positive report, the Government, the Department of the Treasury, the Department of Finance and the Senate ought to look at what is the appropriate size of the Advance to the Minister for Finance. It now totals more than $300m, of which $170m is associated with Appropriation Act (No. 1) and $140m with Appropriation Act (No. 2). They are very large amounts of money for payments that are not specifically contained in the Appropriation Bills.

  That figure has not increased as much over the last decade as, prima facie, I thought from an earlier examination it could have. It has not increased as outrageously. Given the changes in the guidelines and the need for tighter financial control in government, I think the actual amount requires a review. I suggest to the Government that, when reviewing the application of the new guidelines, it takes that into account.