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Thursday, 17 December 1992
Page: 5409

Senator MacGIBBON (8.49 p.m.) —I would like to speak on the Auditor-General's report—an efficiency audit into the Department of Defence's new submarine project. It is terribly important for public life in Australia that there is an independent auditor. The Parliament raises taxes, which is never a pleasant obligation on the members of this Parliament. The payment of taxes, despite the legislative backing for it, is largely voluntary. It depends on the goodwill of the community to pay them. There is a contrary side to that. It puts an obligation on the Parliament to account very clearly for the way it spends that money. One of the ways of reassuring the public that the money has been spent properly and honestly is by having an independent auditor. In the last 48 hours we have seen the great problems that the Civil Aviation Authority got into because it did not recognise—

Senator Schacht —Where was the Auditor for that?

Senator MacGIBBON —That is a very good point. I am glad Senator Schacht raised that because, instead of messing around with this sort of nonsensical efficiency audit, if the Auditor-General had inquired into the expenditure of the Civil Aviation Authority and the loss of several hundreds of millions of dollars through maladministration cumulatively over the years, we would all be better off.

  It is important that we have an independent auditor and it is important that that auditor is not an instrument of the Executive Government; it is important that the auditor is answerable to the Parliament. His purpose ought to be to prevent fraud, theft and other malpractices in a financial arena in relation to the expenditure of public funds.

  In recent times the Auditor-General, for reasons that I do not follow, has gone into this concept of efficiency audits. It may well be possible to run an efficiency audit if one has a chain of fish shops, hardware stores or something like that where there are volume sales and some pattern by which one can assess efficiency. But when it is applied to the Department of Defence—which by any standards is a notoriously uncommercial body where we have to have reserve capacity, where we have to provide for unforeseen contingencies and where it becomes increasingly difficult to buy missiles and equipment other than being part of a block purchase that we hold for years—the efficiency audit is really quite nonsensical.

  I have said on many occasions when these efficiency audits have come up that the Auditor-General ought to back off from the efficiency audit. By all means, he should go into Defence and assure everyone that the money has been properly spent. But let us keep away from the efficiency side of it where the Auditor-General simply has no methodology that is competent to assess the situation.

  In recent years we have seen glaring examples of the inadequacy of an efficiency audit. We had the recent audit on training areas. The Department of Defence, 10 or 12 years ago, bought a very large area of land for a very low price at Yampi Sound as a training area. That was bought for the next 100 years. The Auditor-General got very indignant about the fact that the land, for which $600,000 or $1.2m million was spent—I forget the figure, it is irrelevant, but it was a relatively low sum—has never been used. No-one has ever been on the land. The Auditor-General is totally incapable of understanding that it is for the future.

  The Auditor-General's report on the ADF reserves was absolutely legendary for its misdirection and the false conclusions that resulted. I come back to the important point: that the Auditor has to be seen to be independent and objective. My great fear is that the Auditor is debasing his reputation by getting into nonsensical areas.

  Most of the report that is before us deals with the contract that was set up between the Government and the Australian Submarine Corporation. I have very great difficulty in agreeing with anything the Auditor says about that. It is a matter of public record that the Australian Submarine Corporation, based in Adelaide, was set up as a pork-barrelling political exercise by Mr Beazley—not Senator Ray. I will put that to one side because I do not wish to embarrass Senator Schacht. The fact remains that a legally binding contract was drawn up between the Commonwealth and the Australian Submarine Corporation.

  While it might be of interest for the Auditor-General or any other element of the Department of Finance to look at the terms of the contract with the benefit of hindsight and see how it could be improved in the future, the fact is that it was a contract that was freely entered into between the ASC and the Commonwealth. If the Commonwealth is now being taken down in the eyes of the Auditor-General because he thinks the payments are extravagant, I am afraid that is just too bad. Let the Commonwealth Government, the present government in power, wear the blame for writing an ill-advised contract. It is not fair, as the Auditor-General has tried to do, to hang the blame for the contract on the Australian Submarine Corporation.

  In conclusion, I come back to the point that I started on. The Auditor-General ought to back off from efficiency audits. If he persists with this path, he will debase the high prestige that his organisation has because he is applying methodology which is totally inappropriate to a department such as the Department of Defence and its contractors.