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Wednesday, 8 August 2001
Page: 29434

Mr TANNER (2:32 PM) —My question is to the Minister for Finance and Administration. Have you seen last week's report by the Commonwealth Auditor-General on the government's fire sale of 56 Commonwealth buildings? Didn't the Auditor-General find that the fire sale was so badly mismanaged that more than $100 million of taxpayers money was wasted? Minister, if it were not for your incompetence, wouldn't Australian taxpayers have an extra $100 million to invest in their hospitals, schools and universities?

Mr FAHEY (Minister for Finance and Administration) —I thank the honourable member for Melbourne for his question. I would first like to congratulate the member for Melbourne on a personal event that occurred during the break. I extend my best wishes to him on his recent marriage. I will come to the question, which is of course what the honourable member for Melbourne wants me to do, and I am happy to do so.

I think we should see this report from the Auditor-General in its true perspective. That report indicated that the government's program was very successful. In terms of value, the sale of government properties exceeded forecasts by some $131 million. In other words, the return was 15 per cent above the forecast. A number of other successes were acknowledged by the Auditor-General, including the fact that most of the properties were sold at or above their market value.

The Auditor-General did raise a number of points, and I do not say this lightly, because it would be on the record that I was the minister responsible for bringing about some significant reform to the audit acts after some eight years. I think my predecessor in Finance had a bit of a go at that, and I picked up the ball and we ultimately delivered some additional support for the Auditor-General. I have a high regard for the institution of the Auditor-General as an officer of the parliament and for the role that the Auditor-General plays in terms of the management of the government's expenditure and revenue.

Having said that, there were some highly inaccurate comments made in that report and, dare I say, in some very lazy reporting on that report. Let me take you to some. It is a big statement, and I am happy to back it up. There was a reference to the AGSO building in Canberra. That building was sold by the government. An exercise was done by the Auditor-General and, over the life of the lease—some 20 years—the Auditor-General suggested that if the rental went up in an incremental way, as it tends to do in leases, at a rate based upon CPI of 5½ per cent or more per annum, then, on a net present value factor after a 20 year lease, you would lose $265 million. If you go back over the past 10 years, there has been only one occasion when CPI exceeded 10 per cent. In fact, in 1997-98, I think it was, there was negative CPI. If you take what has been in the forecasts of the government for some years as well as is in the current budget, and is generally accepted by most analysts—a three per cent increment—and if you take away the second factor that the Auditor-General put into the exercise, which is that the agency would have to borrow money to pay for this increased rental, you come out on a net present value after 20 years with a $57 million positive.

The second one is the R.G. Casey Building. The Auditor-General did an exercise which said that that lease contained a two per cent incremental lease payment per year—not nine per cent compounded, like Centenary House—and it also contained a provision for a market review every three years. At the current time, there is a market review. There is an ask of 38 per cent by the owner of that building. I have the utmost confidence in the Minister for Foreign Affairs and the Minister for Trade to say that none of the people in DFAT will pay a 38 per cent increase on their rent. There has not been that sort of an increase in Canberra, with the exception of one building. We know that building: it is the building that houses the Auditor-General. It is called Centenary House, and it has built into it a nine per cent compounding interest rate. In fact, its rental is currently way above the most prestigious high-rise rental of Sydney. It means $36 million of losses to the taxpayers of Australia.

I come back to what the Auditor-General found. There was $131 million more achieved for the Commonwealth and the taxpayers, which retired Labor's debt—$131 million more than was ever forecast. The examples were inaccurate. I did not say it lightly, and I proved my point in terms of just where it was inaccurate. This government takes its responsibilities very seriously. We had a debt—you heard the Treasurer today, in no uncertain terms, point out just what that debt was—and we had to do something about it. One of the decisions we took was to put the scarce capital into education, into health and into welfare and not into bricks and mortar.

If we really want to get serious about the Auditor-General and the Auditor-General's reports, let me finish on the 1995-96 Auditor-General's report on the government management of real estate in the years leading up to 1995-96. There is one out there at Tuggeranong Park—a decision taken by the Labor government in 1989. With Tuggeranong Park, some very interesting figures have been pointed out by the Auditor-General. Firstly, there is a financing arrangement that makes noodle nation look like a very sensible proposal. When the audit was done in 1995-96, the Auditor-General found in respect of Tuggeranong Park that there was a liability in the Commonwealth's accounts of more than $75 million on this creative accounting process of financing. Further, the Auditor-General went on to say that, during the life of the lease on that alone, the shortfall would be more like $195 million—significantly more. We have managed that better. We have got it down to a $115 million shortfall. That is Tuggeranong Park.

We know about Centenary House; I have already referred to that. On the management of the government's property, I will conclude by simply saying this: that same report said that, just to bring the existing government property up to proper standards, there was a need to spend $900 million. Most of the buildings that were being looked after by the Labor government did not pass occupational health and safety standards. I can say very clearly there has been a proper management of the sales of the government's properties. That has reduced Labor's debt. A number of the examples that the Auditor-General has provided do not stand up.