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Thursday, 10 May 2007
Page: 68

Senator MURRAY (1:56 PM) —I seek leave to incorporate my remarks.

Leave granted.

The speech read as follows—

The aim of this Bill is to improve the corporate governance of three statutory authorities in the Treasury portfolio —ASIC, the Corporations and Markets Advisory Committee (CAMAC) and APRA. The Bill is part of a broader suite of Bills which the Coalition Government has introduced since the Uhrig Report in 2004 to improve the transparency and consistency of governance arrangements for statutory authorities and office holders.

In response to the Uhrig report the Government agreed that the Financial Management and Accountability Act 1997 (the FMA Act), should be applied to statutory authorities which did not need to own assets and where it was appropriate they be legally and financially part of the Commonwealth. This Bill transfers ASIC, CAMAC and APRA from the Commonwealth Authorities and Companies Act 1997 (the CAC Act) to the FMA Act.

Under the new regime, the three agencies will hold money and property on behalf of the Commonwealth, rather than in their own right. This reflects their status as agencies that are largely budget-funded, in contrast to agencies that raise funds from commercial activities.

The agencies will have the power to enter into contracts on behalf of the Commonwealth. ASIC and APRA will retain the power to enter into contracts on their own behalf, however the intention is that this power will only be used for regulatory purposes (for example, regulatory agreements).

A number of provisions in the Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) will be amended to reflect that ASIC will now be acting as a trustee on behalf of the Commonwealth in relation to moneys and properties held on trust.

The Bill also defines the reporting requirements of ASIC, CAMAC and APRA under the FMA Act and the responsibilities of the Chief Executives of the agencies. The changes to the governance structures of these agencies do not impact adversely on the operational capabilities or the independence of the statutory bodies.

The Uhrig Review was established to identify issues concerning governance arrangements in relation to statutory bodies which impacted on the business community and to provide policy options for the Government to obtain the best from statutory authorities and office holders through the accountability framework.

I have spoken several times on the Uhrig Review, and have said I do not support its approach in all circumstances. Increased centralised ministerial or chief executive power and discretion, and decreased independent oversight and advice might inappropriately result in some situations.

However in relation to these bodies, ASIC, APRA and CAMAC, these amendments will increase the transparency in the way these entities deal with public monies and improve the consistency in their governance arrangements.

The focus of this Bill on how officials handle public money, public property and other resources of the Commonwealth, as well as the obligations and responsibilities of the CEO are all matters which the Australian Democrats support.

In passing I would like to point out that the handling of public money was an area which the Australian National Audit Office had concerns in its 2005 Report. As it pointed out, as at June 2004 investments held by Commonwealth entities were $20,20$ billion.

In its report, the ANAO found that there were several entities which held investments which were not authorised by the relevant legislation. It was conceded that although they were non-compliant with the relevant legislation, many of the investments were considered of low risk.

However, it must be of concern that even though there were legislated provisions as to how public money could be invested, departments and statutory authorities did not always comply with those provisions. It is hoped that since the ANAO’s report, statutory entities are aware that legislative provisions setting out how and where public money can be invested, are not merely ‘suggestive’, they are obligatory.

It is hoped with this change in legislation, bringing more entities—especially those reporting to Treasury - within the purview of the FMA Act that there will be less non-compliance with the legislation. Given that the money will now revert to the Consolidated Revenue Fund, (CRF) rather than be held or invested by the statutory authorities themselves, the Bill does appear to ensure that public monies are treated the same, regardless of the entity which receives it. That is as it should be.

Statutory authorities are still responsible to the Australian people and the Australian parliament. If they receive taxpayer’s money then it should be used in compliance with its governing legislation and not at the whim of the CEO, the Minister or the Board. It should not be put into investments which do not fully comply with the terms set out in the governing legislation.

I realise that changing these entities from being governed by the CAC Act, is helpful, However, I do note that the ANAO looked at entities which were regulated by both the CAC Act and the FMA Act and it found ‘that, for a number of entities, there had been shortcomings in the management of the investment of public funds.’

Simply changing the Act under which the entities deal with funds is not sufficient. As the ANAO pointed out:

“Entities require strategies and procedures that both comply with the investment parameters provided by the Parliament and optimise risk-adjusted returns.”

It is hoped that in the intervening years since the ANAO Report, that such procedures and strategies have been put in place in all the statutory authorities.

The JCPAA has reviewed a number of ANAO reports regarding financial management and reporting in government agencies and has noted a general decline in standards.

In light of that general decline, I would like to refer to the March 2007 report of the Senate Finance and Public Administration Committee on Transparency and Accountability of Commonwealth Public Funding and Expenditure.

The Committee made 19 Recommendations regarding appropriations and expenditure, all of which would help statutory authorities as well as government departments in providing information to the Parliament regarding appropriations and the use of public moneys.

I think that, although ALL the recommendations are relevant to the discussion here today, Recommendation 2 is particularly apt.

Recommendation 2

The Committee recommends that the Government implement a system of review for standing appropriations to ensure that access to the CRF is withdrawn when no longer required and to ensure that standing appropriations are subject to periodic government and parliamentary review.

With regard to standing appropriations in this bill, on an initial examination, the Special Accounts for ASIC (Schedule 1, Items 12) and APRA (Schedule 1, Items 63) do not appear to raise particular concerns. Without seeing them in operation it is difficult to determine whether they would raise the same concerns identified in the committee’s Transparency and Accountability report regarding the transparency of intra-departmental transfers.

In conclusion, Parliamentary oversight is essential in relation to the use of public moneys by any department or statutory entity.

This Bill is a step in the right direction, but it is essential that the Government respond positively to the unanimous recommendations of the Finance and Public Administration Committee on transparency and accountability as soon as possible.