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Thursday, 30 June 1994
Page: 2505

Senator GIBSON (5.57 p.m.) —As I said earlier, one of the key strategic problems that Australia faces is the vertical fiscal imbalance between the Commonwealth and the states. That imbalance leads to many problems both in terms of state management and indeed in the Commonwealth. In the end we in Australia must face up to that situation.

  Moves were afoot back in 1991 by Prime Minister Hawke and Premier Greiner and arising out of the Premiers Conference of that year that resulted in an initiative to look at the sharing of the taxes, particularly the income tax base, with the states as a means of redressing this very serious problem. I see no evidence to date of any wish on the part of the government to do anything about the position. Until something is done, we are left with this serious problem and a lot of inefficiency of administration between the Commonwealth and the states.

  Also relevant to this legislation and the financial relations between the Commonwealth and states is the operation of the Loan Council. I wish briefly to refer to the work of the Senate Select Committee on the Functions, Powers and Operations of the Australian Loan Council whose report was made available to the chamber in December last year.

  In essence that committee recommended that there should be increased accountability of the loan council to parliaments—not just to this parliament but to all parliaments in Australia. That included an expanded role for auditors-general. Again that was not only related to the Commonwealth but the states. The committee strongly recommended the adoption of accrual accounting throughout the government. I know that the federal government has given notice that it is still considering the committee's report. Because this bill deals with the Loan Council, I feel that it is worth bringing this matter to the Senate's attention in urging the government to give due consideration to the report and hopefully adopt its major recommendations.

  The fundamental thing behind the recommendations of that select committee is to aim for transparency in reporting of financial agreements. By that I mean we require full disclosure by all entities, by the state and federal governments, of their accounts, not just in simple cash accounting terms, which has been the tradition, but in terms of separating the capital accounts—what is spent, if you like, by way of investment—from the operating accounts. Hence this move to adopt full accrual accounting through all governments, including government business enterprises.

  If that were done, if the same standards were adopted throughout all governments and we had full transparency of reporting of those accounts, we would have a much better administration, I believe, throughout Australia. I urge the government to move hastily and to work cooperatively with the states to adopt full accrual accounting and also to push for full disclosure in the accounts.