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Tuesday, 28 June 1994
Page: 2063

Senator KEMP —My question is directed to the Minister representing the Minister for Finance. I refer to the Auditor-General's report released yesterday which outlined the abuse of the government credit card system. Among other things, the report indicated that the credit card had been used to buy sunglasses, watches, flowers, golf lessons and nightwear. Is it not a fact that, despite heavy warnings from the Auditor-General in his first report last year, the government has done nothing to rectify the inadequate control systems revealed by the Auditor-General in that report? What action will the government now take as a result of this scandal revealed in the latest Auditor-General's report? Is the government considering abandoning the credit card system?

Senator COOK —I did not catch all the so-called scandalous items that Senator Kemp referred to, but I caught the name of at least a couple. One of them was sunglasses, which he cited as a misuse of the credit card. I can tell him the sunglasses, which were bought from Sunglasses World, were quality eyewear used by a detachment of troops in the Sahara Desert. So they were purchased—

  Honourable senators interjecting

The PRESIDENT —Order! Senator Ray and Senator Kemp! Senator Kemp, you have asked your question.

Senator COOK —I have quite a long list of other items which have attracted the attention of journalists and which similarly have a quite reasonable—indeed, quite praiseworthy—reason for their purchase but which, at first glance, attract the sort of attention exhibited by Senator Kemp. There is a need to distinguish between credit card fraud and the misuse of the government credit card. It may be that some of the items that have been referred to colourfully in the press have been wrongly purchased but not in a fraudulent manner. They fulfil a particular need of government procurement in a particular department. The way in which the credit card was used was the wrong way of buying those goods, but those goods would have always had to have been bought by the department. I distinguish that type of practice from actual fraudulent use of the credit card.

Senator Campbell —Were the sunglasses bought from Sunglasses World?

Senator Robert Ray —They are back in stores now. They have been returned for future use. They are not for personal use.

Senator COOK —I recognise the interjection of my colleague the Minister for Defence for the purpose of getting his remarks in Hansard. It is important to note that they are back in stores, although they were purchased initially for military use.

  The government, of course, views very seriously any misuse of the government credit card. From that point of view, no doubt the particular departments of the government will take specific action in order to ensure that best practice use of credit cards is followed. There has been an edict issued along these lines, the departments are advised to follow it and they are doing so. Therefore, improper use of the card should cease.

  As far as fraudulent activities are concerned, in a huge organisation like the Commonwealth there is always the risk that somewhere someone might misconduct himself and, indeed, conduct himself in an illegal way. The report found that since 1987 there have been 46 reported cases of fraud using the credit cards, a misuse totalling between $1.8 million and $2 million. But it should be noted that over the same period 2.7 million transactions took place, totalling $1.6 billion. There is no element of acceptable fraudulent use, but I quote those figures to illustrate that what we are talking about here is a very small element of the total overall transaction.

  Therefore, the government does not believe that the credit card itself is at fault. The government certainly is constrained to ensure that the card's use is properly managed and that it is used as a flexible means of government purchasing in an appropriate way, and to deal with fraud when and if it occurs.

Senator KEMP —Mr President, I ask a supplementary question. The minister has given an absolutely hopeless answer. The minister referred to the sunglasses. Let me read what the Auditor-General said. The report states:

At the time of the audit the precise location of the sunglasses . . . was unknown. The department has subsequently advised that it believes the items are held at a location in New South Wales. However, despite conducting some enquiries, the ANAO has been unable to confirm that advice.

The minister's answer, in effect, amounts to an attack on this report. I ask the minister specifically: why did the government not insist when the Auditor-General's first report came out last year that the procedures outlined in that report and its recommendations be adopted?

Senator COOK —Nothing that I have said is an attack upon the report, although particular ministers in particular departments think that the views of their departments have not been adequately reflected in the report. The Department of Finance has issued guidelines entitled Best use of government credit cards as an immediate reaction to the Auditor-General's report.

  There is a whole list of things. For example, the fact that flowers were bought from a florist. It turns out, on inspection, that they were bought because a wreath was needed to lay at an Anzac Day celebration. A purchase occurred from a jeweller's shop in Townsville. This was to buy batteries in order to run a particular item of equipment necessary in the Taxation Office at that time in the case of an emergency. One could go down this list and highlight elements that are starkly interesting but their explanations are banal in the classic way of this being a controversy. (Time expired)