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Tuesday, 10 December 2002
Page: 7535

Senator MARSHALL (2:14 PM) —My question is to Senator Hill, the Minister for Defence. Can the minister confirm press reports that his bid for an additional $1.5 billion in defence funding was recently rejected by cabinet? Didn't cabinet agree with the recent Australian Strategic Policy Institute report which stated that Defence should not get any more money unless they can actually show they can spend it appropriately? Didn't the report rightly note that the qualification of Defence's accounts this year, and the massive accumulation of cash at hand at a time when Defence is supposed to be short, suggest that the financial problems of the portfolio go very deep? Haven't ASPI stated that more effective Defence reform is the most urgent long-term defence policy challenge the government faces? Minister, haven't six years of your government's so-called reforms left Defence in an absolute financial mess?

Senator HILL (Minister for Defence) —Quite the contrary. I invite the honourable senator to attend estimates committees in which these matters are examined in depth. They were duly examined in depth at the last meeting, and the outcome was that the committee was informed that the standard of reporting of the financial accounts has considerably improved in recent years. If the honourable senator, instead of taking a question from the questions committee, referred back to the Auditor-General's report, he would see that that was acknowledged by the Auditor-General. It is true that there was one minor qualification to the accounts this year. That was explained in detail as well. It related to deficiencies in systems in the past by which values were not adequately recorded.

Senator Faulkner —What are you doing about this crisis?

Senator HILL —That was dealt with as well in the estimates committee. You might like to attend next time, as well. The bottom line is that the financial accountability of the department is improving, as its financial reporting is improving.

Senator Conroy —Three years ago you introduced accrual accounting.

Senator HILL —This Department of Defence is further advanced in terms of accrual accounting than any other defence department in the world. Instead of just knocking the bureaucrats, I suggest to the Labor Party that it treat the issue seriously, read the Auditor-General's report, look at the improvements that have occurred in recent years, recognise that the money being spent by Defence for defence purposes is being spent well and recognise that the services that are provided by our Defence Force within that spending are first-class and in the national interest.

Senator MARSHALL —Mr Deputy President, I ask a supplementary question. Minister, this is the first time the Audit Office has qualified the Defence financial statements. Doesn't this raise serious questions about the management of over $6 billion in assets? Why has financial management in Defence deteriorated to the point that its financial statements have to be qualified?

Senator HILL (Minister for Defence) —If the senator had read the report, he would have understood that the threshold was further reduced. Do you know what the level is? No, you did not read the report before you asked the question. If you understood the level of reduction of the threshold, you would know why it might have occurred on this occasion. The Auditor-General said that the accounting of Defence has significantly improved in recent years. That is what is important, and I suggest to senators on the other side that, rather than just passing the questions around, they go back to the source material, learn what is the basis of the issue and then come up with a more useful question.