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Wednesday, 1 September 1993
Page: 770

Senator CHILDS —My question is directed to the Minister for Arts and Administrative Services. Is the minister aware of allegations that his department's businesses compete unfairly with the private sector? Could the minister say whether the allegations are true and, if they are not, would he outline the real situation?

Senator McMULLAN —The matter which Senator Childs raises relates to quite a complex situation because there is a range of elements in terms of benefits and disadvantages relatively between businesses operating within the department of administrative services and the private sector. On balance, the evidence suggests that DAAS businesses do not have an unfair advantage in competing with the private sector. In fact, the evidence suggests that collectively DAAS groups operate under cost structures that leave them neither better nor worse off than their private sector competitors.

  The process of commercialisation which the government started in 1987 has meant that well over $700 million in potential revenue previously controlled by the DAAS operations has been opened up to competition. In the budget we announced a review of the direction of commercialisation within the department. This will allow the commercialisation strategy to achieve its full potential in benefits to taxpayers and to the economy in general.

  Right now, fully commercial DAAS businesses operate under arrangements consistent with those prevailing in the private sector—for example, the accrual accounting requirements, the business regulations under legislation such as the Trade Practices Act, and the accountability framework consistent with the corporations law. While most DAAS businesses do not pay most taxes—this will be reviewed in the lead up to 1995—payments are set aside in lieu of Commonwealth and state indirect taxes and charges for non-Commonwealth work. Of course, some taxes are paid—for example, customs duty and fringe benefits tax.

  The most robust independent analysis of the relative position between businesses operating within the department of administrative services and their private sector competitors is that done by Ernst and Young. Ernst and Young concluded that the net effect for DAAS is that, across the board, DAAS businesses are disadvantaged by some two to three per cent of sales revenue when compared with their private sector competitors.

  As I said in my opening response to Senator Childs's question, a range of complex factors is involved and discussion of it is never assisted by simplistic assertions which we have had from time to time from, for example, the Chief Minister of the Northern Territory in his enthusiasm to have the government sack 160 of his constituents. There are pluses and minuses involved. There are advantages and disadvantages that come with operating within the public sector. More than slogans and prejudice are needed to analyse it. I have to say that all too often in the past we have had from the competitors and from some political observers nothing more than slogans and prejudice.

  The important thing is that those who seek to analyse and comment on this matter and participate in debate base their decisions on an assessment of the public interest—that is, the public as taxpayers getting a return on their investment in these businesses and getting an efficient service from these businesses. The public are the ultimate consumers of the services provided. On that basis, I think we can establish a basis for businesses operating within the department of administrative services to continue to be viable businesses competing fairly with the private sector and open to competition from the private sector which benefits enormously from that. It, therefore, has to accept the corollary that, if it gets the enormous benefits of competing for this work, it will have to accept that competition will apply.

The PRESIDENT —Order! The time has expired.