Senator SHORT(7.40 p.m.) —I want to take a few minutes of the Senate's time tonight to progress a little on the matter I raised today in debate under Government documents relating to the Advance to the Minister for Finance. Today I drew the Senate's attention to the fact that the Advance to the Minister for Finance had been used in June to make a payment of $2m to the Government of Queensland to meet an undertaking that the Prime Minister (Mr Hawke)-apparently without any backing from his Cabinet, and in a unilateral action-had made in March of this year for Commonwealth assistance for infrastructure restoration following the recent natural disasters experienced by the State. I drew attention to aspects of that today.

I want to pursue that matter a little tonight and provide the Senate with information in relation to the action that I believe has been taken by the Department of Finance since this matter was dealt with to try to bring back better administration and greater propriety into the handling and the use of the Advance to the Minister for Finance.

Senator Michael Baume —Instead of the standover tactics by the Prime Minister.

Senator SHORT —As my colleague Senator Michael Baume says, instead of the standover tactics that appear to have been used by the Prime Minister in this instance earlier this year. To refresh the Senate's memory, on 8 May of this year the Prime Minister wrote to the former Treasurer drawing his attention to a letter that the Prime Minister had written to the Premier of Queensland on 13 March on this matter of Commonwealth assistance for infrastructure restoration. Although that letter was not tabled today with the other documents relating to the Advance to the Minister for Finance, it is clear from the Prime Minister's letter to the former Treasurer that the Prime Minister had committed a payment of $2m to Queensland for infrastructure restoration in each of 1990-91 and 1991-92. He requested of the former Treasurer that that be done by way of an Advance to the Minister for Finance under the Treasury appropriation because it related to Commonwealth payments to the States.

I do not know whether the Prime Minister thought he was going to get a better or more gracious response and acceptance of his letter from the former Treasurer because of the fact that he crossed out the words `My dear Treasurer' and wrote in `Dear Paul'. The net effect was that as a result of the letter from the Prime Minister, the former Treasurer-he obviously did not know anything about it at the time; it was prior to the receipt of the letter-then wrote to the Minister for Finance, Mr Willis, on 29 May drawing attention to the fact that the Prime Minister had recently written to the former Treasurer concerning a commitment the Prime Minister had entered into on behalf of the Commonwealth to pay a capital grant to Queensland of $2m in each of the two years to which I have already referred.

The former Treasurer, again in his letter to the Minister for Finance, pointed out that the Prime Minister's letter specifically indicated that the payment for 1990-91 should be by way of an Advance to the Minister for Finance. He then went on to say:

I understand (following consultation on this matter between our officers) that your approval for the payment to be made in this way, in writing and in response to my request, is necessary by virtue of Finance Regulations 44b. In view of the Prime Minister's specific request, I would be grateful if you would give the necessary approval.

It is quite obvious from that letter that the Treasurer was not too keen on this at all, but he had been backed into a corner by the Prime Minister and he could see no easy way out of it. Subsequently, on 7 June the Minister for Finance, Mr Willis, wrote back to by that time a new Treasurer, Mr Kerin, replying to Mr Keating's letter of 29 May. In his letter of 7 June Mr Willis said he understood that:

. . . the Prime Minister has informed the Premier of Queensland that, in view of the impact of successive natural disasters on the State budget, the Commonwealth will provide additional assistance of $2 million in 1990-91. This commitment was made after the Additional Estimates Bills for 1990-91 had been finalised.

He then went on to say that he supported the proposal to provide the additional money. He then said:

I understand that an application for funds from the Advance to the Minister for Finance will be forwarded to my department shortly for processing in the usual way.

The significance of this is that the Prime Minister entered into a commitment, apparently without the approval of his Cabinet, to pay money to Queensland and to do it by way of the use of the Advance to the Minister for Finance, without having sought to follow in any way the proper procedures that it is necessary to follow in order to obtain money from the Advance to the Minister for Finance.

That Advance is supposed to be used for unforeseen and urgent circumstances. According to the correspondence tabled today in the Senate, the Prime Minister gave that commitment to the Premier of Queensland on 13 March. Apparently, he did not write to the Treasurer-let alone to the Minister for Finance, who of course is responsible for the Advance to the Minister for Finance-until 8 May. That was almost two months after he had made that commitment to the Premier of Queensland. It then took another month or so to action. Indeed, the commitment and the approvals to use the Advance to the Minister for Finance were given before any application had been made to the Minister for Finance for the payment of those funds.

We have had considerable debates in this chamber, in Senate Estimates committees and in other committees associated with the Senate-including the Joint Committee on Public Accounts-over recent times about the propriety of the use of the Advance to the Minister for Finance. We on this side of the chamber have drawn attention time and time again to this Government's quite improper use of the Advance to the Minister for Finance to make payments, particularly to State governments and particularly to State Labor governments, for purposes which are never, ever perceived to be the proper purpose of the Advance to the Minister for Finance.

One of the reasons why that has been done is undoubtedly that using the method of the Advance to the Minister for Finance very largely disguises the fact that the payment has been made. It comes to light only after the event and it normally only comes to light buried in a huge mass of papers which may be tabled in the Parliament, or subsequently buried in some of the background papers to the Budget.

But that is all after the event. It is not subject to the normal appropriation processes that a Budget has, whereby the expenditure is scrutinised before it is approved by the Parliament. All we are doing by using the Advance to the Minister for Finance is allowing the Parliament to see what has happened after the money has been committed and actually paid out. It is done in a very hidden, secretive way.

I am delighted to see that-as a result of the Opposition's pressure in relation to this matter, the attention it has drawn to this matter in recent times and, no doubt, importantly, the quite flagrant breach of the use of the Advance to the Minister for Finance which the payment to Queensland that I have outlined tonight exemplifies-the Department of Finance on 25 July issued a new statement on the use of the Advance to the Minister for Finance and the guidelines to be applied to it. That was in the form of Estimates Memorandum 1991/24. I seek leave to have the memorandum incorporated in Hansard.

Leave granted.

The document read as follows-

Department of Finance

Newlands Street, Parkes, A.C.T. 2600

Telephone: Canberra (06) 263 2222

Telex: 62639

Fax: (06) 273 3021

6 Aug 1991

Reference: 87/2025

Contact Officer: Stephen MacLeod

Telephone: 263 3551

Estimates Memorandum 1991/24

ADVANCE TO THE MINISTER FOR FINANCE (AMF)-GUIDELINES

Guidelines for the use of AMF were originally issued in September 1988 as Estimates Memorandum 1988/29. They have been slightly revised for clarification and are being reissued now in order to remind departments and agencies of the relevant requirements. Only those applications which conform with the attached pro-forma will be processed.

2. Application for funds from AMF must be made in advance of the requirement for those funds, and there should be no presumption on the part of departments and agencies that applications will be approved by the Minister for Finance's delegate. It is the responsibility of departments to ensure that expenditure does not exceed appropriation at any time. Finance Circular 1991/12 of 8 April 1991 also addresses this issue.

3. The delegate may request additional information in order to be satisfied that the requirements set out in the Appropriation Acts and the Guidelines have been met. This may cause delays in the processing of applications. To avoid this, departments should ensure that the Guidelines are strictly adhered to, and that adequate explanatory material is provided. Details of all issues from AMF are provided to the Parliament on a monthly basis, together with supporting applications. As a result of recent Senate Estimates Committee hearings, information relating to unsuccessful applications will, from 1 July 1991, also be collected on a trial basis for later provision to Parliament, if required.

I. McPhee

First Assistant Secretary

Financial Management Division

25 July 1991

Senator SHORT —I thank the Government and the Minister. I draw attention to the fact that one of the key reasons that has been given for the issue of the memorandum, as contained in the document, is as follows:

Application for funds from AMF must be made in advance of the requirement for those funds, and there should be no presumption on the part of departments and agencies that applications will be approved by the Minister for Finance's delegate.

In other words, if those guidelines had applied before the example of the payment to Queensland that I mentioned, the Prime Minister would have been even more in breach of the proprieties of the Advance to the Minister for Finance than he was. I congratulate the Department of Finance on at least making this step, which should, hopefully, at least go some way to reducing the quite flagrant breaches of the use of the Advance to the Minister for Finance that have been occurring increasingly over the life of this Government.

On behalf of the Opposition, I can assure the Senate and the Government that we will be continuing to monitor this matter very closely indeed. It goes to the heart of the propriety of government in the use of public moneys. I welcome the guidelines and put the Government on notice that we are going to be very diligent indeed in ensuring that those guidelines are followed.