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Tuesday, 7 September 1993
Page: 1044

Senator BURNS —My question is directed to the Minister for the Arts and Administrative Services. Is the minister aware of recent reports in the Australian Financial Review, the Canberra Times and other newspapers indicating industry concerns about the government's budget decision not to go ahead with private sector financing for the Commonwealth self-drive vehicle fleet? What is the background of this decision and the reasons for it?

Senator McMULLAN —To assess this issue, one needs to look a bit at the context. It falls within the context of the overall process of commercialisation the government started in 1987. Since that time, about $700 million in potential revenue previously controlled by what are now Department of the Arts and Administrative Services operations has been opened up to competition. These issues of commercialisation and competition are very complex. They cannot be resolved simply by sloganeering and assertion, which we tend to get all too often.

  The government's obligation is to base decisions in these matters on a proper assessment of the public interest, taking into account the benefit to the public as taxpayers. In the case of Dasfleet, the government has decided that this business should continue as the sole provider of leased self-drive vehicles to Commonwealth departments and agencies. We simultaneously decided that the maintenance and servicing of the leased vehicles should be opened up to private sector competition.

  This decision was made following a substantial analysis of the options available to the government in this matter. The analysis was first of all undertaken by the Department of Finance in consultation with the Department of Administrative Services but it also involved considerable assistance from expert advisers from the private sector. This analysis showed quite clearly that the current acquisition and leasing arrangements are the most cost-effective.

  In the face of that evidence, not to have gone in the direction that we did—that is, not to have maintained the current acquisition and leasing arrangements—would have been a triumph for ideology over analysis. I know that there are those who believe that we should, in any event and irrespective of the facts, proceed to hand things over to the private sector, but in this instance the potential cost to the Commonwealth—in other words, the Australian taxpayer—of changing the existing arrangements was assessed at up to $100 million over 10 years.

  So, quite clearly, the responsible decision in this instance was to retain vehicle purchase and disposal through Dasfleet to enable the Commonwealth to maintain the benefits and savings available from its aggregate purchasing power. But something obviously needs to be done to constrain the potential for a monopoly supplier to abuse its position. In the first instance, we will be setting up a committee of the customers to monitor regularly the prices charged and to compare them with private sector charges. There will be a major review conducted under the auspices of that committee in two years time.

  The Australian Financial Review referred to the fact that some private financing groups have done deals with state governments in this area. The Financial Review got it absolutely right when it said that those bodies—state governments, statutory instrumentalities and local government—have relied on tax effective financing; that is, they have been transferring the cost to the Commonwealth taxpayer, thus saving money for the state. As the Financial Review pointed out, while savings from this source have obvious appeal to the states, they have none for the Commonwealth. All we would be doing is making fleet leasing savings in one hand which we paid through forgone tax revenue in the other. We decided not to go in that direction. We decided to pursue the course which independent advice indicated was the most tax effective for the Commonwealth.