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Wednesday, 11 December 2002
Page: 7724

Senator CONROY (2:09 PM) —My question is to Senator Minchin, the Minister for Finance and Administration. Does the minister recall that, when the government implemented its new accrual and outcomes based financial framework in the 1999-2000 budget, the Treasurer loudly heralded the changes in the House, claiming they would ensure:

Australia's public finances are reported and presented on a world class basis ... This puts Australia at the forefront of transparency in the conduct of fiscal policy.

Can the minister therefore explain why the government has decided, in the words of the Financial Review, to `unwind' and in some cases `reverse' these reforms 3½ years later? Given the Treasurer's trumpeting of the transparency benefits of accrual accounting, why has the minister for finance or the Treasurer not even put out a press release announcing the unwinding and reversal of these reforms?

Senator MINCHIN (Minister for Finance and Administration) —One of this government's greatest claims to fiscal responsibility, economic reform, honesty and transparency was the introduction of accrual accounting, a matter pressed upon federal governments for many years to ensure proper, transparent revelations of the true picture of the federal government's financial affairs and to ensure that the opposition, the community and the financial public can fully and truly understand the full impact of the federal government's very significant impact on the economy. The federal government is the biggest financial entity in the Southern Hemisphere, with a budget of $170 billion, and it is appropriate that we ensure that the reporting of that is by the highest possible standards and in the most transparent fashion to ensure that that impact is properly recorded.

We, unlike governments before us, did respond to the constant propositions that the federal government should have accrual accounting like everybody else, and we introduced it. It was a massive change, a very significant change. I guess that is why previous governments failed to respond to the call for accrual accounting. It is true that the rest of the world has looked on in awe at what we have done. We get visits from most Western countries, coming to see how we have done it, because we are seen as the benchmark in true and transparent accounting. Indeed, in my visit to the OECD in July, they all said to me: `We proclaim Australia as the standard-bearer in accounting for government finances. You are the country that we point others to when they come to reform their accounting. We regard Australia as the trendsetter and pacesetter.' That is something that Australians on both this side and the other side should be duly proud of. Of course, when you introduce such a massive change to government accounting procedures, there will be—

Senator Conroy —Finetuning!

Senator MINCHIN —to take Senator Conroy's words, finetuning of the process. He took the words right out of my mouth! In fact, after the last election, one of the injunctions from Prime Minister Howard to me as the new finance minister was to review the budget estimates framework to assess whether any finetuning was appropriate to ensure that the government received appropriate and timely advice on the estimates process. It is really about the estimates process.

I was happy to bring to cabinet a submission which suggested some minor revisions to the process. They involved some increase in the resourcing of the finance department and, may I say, I have always taken the view that one should be modest about these things. I did not go out and blurt to the world that the finance department had received, through the cabinet, a significant increase in its resourcing. I do not believe in that sort of thing, so it was out of modesty that I did not put out a press release about this matter. But, if Senator Conroy would like me to be more proud of the achievements in ensuring the finance department has renewed strength and vigour under my ministry, I will think about it.

Senator CONROY —Mr Deputy President, I ask a supplementary question. Minister, isn't it the case that, as a result of your finetuning and backflips, the budget will no longer be reported on a full accrual basis, outcome reporting by agencies will be substantially reformed and Finance will be taking back control of spending from agencies? Will the minister now admit that the government has quietly taken its new financial framework out the back and shot it?

Senator MINCHIN (Minister for Finance and Administration) —I know that is what happens in the Labor Party—they take their malcontents out and shoot them—but we do not operate like that. We tend to operate in a more civil fashion. It is a complete and utter overstatement of what the government has done to suggest that there is any move away from accrual accounting. The government remains totally committed to accrual accounting. We present so much information that the opposition is completely confused by it. We have offered to give them a course in Accounting I, and will do so. All we have done is make sure the finance department has a very good finger on the movement of moneys within the department so that we can ensure that the Prime Minister, the cabinet and others have a very immediate finger on the movement of the financial affairs of the government. That is most appropriate.