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Thursday, 10 May 2007
Page: 70

Senator MARK BISHOP (1:56 PM) —The incorporated speech read as follows—

This Bill sets up a new policy on the governance of government agencies. That’s recommended in the 2003 Uhrig Report.

It’s not controversial and the Labor Party supports it in principle. But there’s a contradiction in the introduction of this legislation. This legislation tries to tighten-up accountability of government agencies. That’s fine - but the bill’s drafted by a Government that refuses to account for anything. In other words, do as we say, not as we do. I’ll return to that theme shortly. There’s currently a plethora of agencies. In fact, it’s not clear how many there actually are. In 2003, for example, the Finance Department recorded 955 agencies. Just a year later that number had grown to 1153. I suppose the difference is explained by the fact the Department kept finding more! Which shows how poorly understood is the extent of this Government’s bureaucracy. And so the poor state of accountability. Whatever the number, it’s an enormous bureaucracy, with an enormous array of governance arrangements.

Such an array begs several questions. What do they all do and are they all relevant? More important, how are they accountable to the government and taxpayers? So the review undertaken by Uhrig is vital. In adopting the Uhrig recommendations, the Government’s imposed a new template. In this, all agencies should fit with respect to their legal status and accountability. The basic principle is, any agency dependent on the Budget should be accountable for its funds under the Financial Management and Accountability Act (FMA Act). Such agencies must employ staff under the Public Service Act. They should also be headed by a CEO accountable to a minister. CEOs should be issued with an annual letter from the minister. This should contain a “statement of expectations”. It’s against this which the CEO must regularly respond and report. It’s a step down from a similar charter issued by the PM to his ministers. But this is the new chain of accountability; in theory at least. I assume failure to deliver is entered on a scorecard for future appraisal purposes. But of course such failures will go unchallenged, as we’ve seen.

In this model, there’re no executive boards with decision-making powers. The CEO’s solely accountable to the minister. He or she: dominates the structure. sets strategic direction, hires and fires, and determines all budgetary allocations. So the CEO is the new supremo. Boards, councils and commissions—however titled—are only advisory, even though their powers may be statutory. This is a pragmatic model. Lines of responsibility are clear, as are roles and processes for work planning and reporting. Many board and council jobs entailing status, power and influence have been transformed. Independent boards or councils have been converted to advisory status. The CEO has become all powerful.

It’s an onerous position for him or her. In fact it’s revolutionary for those more used to consensus and consultation. With that accountability goes control. And that’s something with which the Howard Government is obsessed. Control. It means broader views can be excluded and ideology enforced. An independent bureaucracy has long been a hallmark of the Westminster system. As Sir Humphrey Appleby put it: “Governments may come and go, but we go on forever.” That was certainly the Australian way until the 1970s: a cosy relationship between a lazy conservative government and the public service. Fortunately, that’s broken down. Since 1972, there’s been a more balanced relationship between Government and bureaucracy.

The Uhrig principles of themselves don’t change the status quo. But they do allow an ideological bent to gain a foothold. The line of accountability between a minister and his CEO is now very direct. While a CEO may ignore his advisory board or council, he dare not ignore his minister. That should cause great concern with this current Government. The National Health and Medical Research Council was “Uhrigged”, as the vernacular now has it. There, research supremos lost control of the budget. To be replaced by the ideological influence of Health Minister Tony Abbott. That is one real risk of the Uhrig model. The other model of government agencies are those not budget-dependent, but commercial in their operation. These are legally and financially separate from the Government. They fall under the Commonwealth Authorities and Companies Act (CAC Act). Control depends on the legislation and so is varying. They’re governed by boards in general, and operate as corporate bodies. They’re also accountable to the minister. They’re not covered by the Public Service Act. But they have full reporting obligations. It’s these two templates that are being applied to government agencies.

This bill deals with three agencies within the Treasury portfolio:

  • The Australian Securities and Investments Commission (ASIC),
  • The Corporations and Markets Advisory Committee (CAMAC), and
  • The Australian Prudential Regulation Authority (APRA)

These agencies are budget-dependent, so they’re now covered by the FMA Act alone—and the Public Service Act. They can’t hold money in their own right. Generally, they must comply with the provisions of the FMA Act, as with all other FMA agencies. The CAC Act is no longer applicable. But there’re unique circumstances to be recognised. ASIC, for example, is the public watchdog which protects investors and enforces Commonwealth securities law. Those roles and responsibilities remain clear and unchanged. Likewise, CAMA’s role—to advise on regulatory action under corporation legislation or within the financial services industry—isn’t changed. Nor will the functions of APRA be altered. It’ll continue to regulate banks, credit unions and other financial and insurance industries. We can expect better accountability and performance. Being covered by the FMA Act doesn’t automatically improve accountability or performance. It simply makes it easier to achieve, if the Government is so motivated.

But accountability of government agencies doesn’t stop with ministers of the day. That’s supposed to be the Senate’s role—in theory at least. That’s why we have Estimates committees. And that’s why we take our responsibility so seriously. We must critically examine legislation and cut through the spin and propaganda for the public’s good.  This legislation’s far more important than the Minister would have us understand. It’s about accountability of appointed agencies; to the government, not to the people and the Parliament. That’s where accountability stops. And accountability—and the truth—is hard to come by under this Government. That’s certainly the case with Defence, where the culture of protecting information in peace time is treated the same as in war time. Defence is aptly named! Indeed, accountability is not a word in the lexicon of the current Defence Minister.  So while the legislation’s good in theory, it’s limited in practice. As I’ve mentioned, there’s another theme behind these bills.  Control.

The management paradigm over the past decade or so says “let the managers manage”. Enterprise management became the new management theme. Devolution became fashionable. In many cases, government activities were put at an arm’s length. The Finance Department was pushed aside by this government. The reason for that is political. If an agency is seen to be independent of government, then ministers aren’t accountable. There’s no political fly paper. But as we’ve seen under this Government, such operational freedom can have disastrous consequences. The scandal of the Australian Wheat Board is still before us. Here was a statutory marketing organisation set up to operate commercially, as with other government business enterprises. The sense of having it at arm’s length politically is now abundantly obvious. Not one government Minister was ever brought to account. That’s in spite of the corrupt and incompetent behaviour of the AWB, to our national shame and embarrassment. This is the risk with all government business undertakings. It’s why so many have been privatised. So it’s no surprise to see centralisation returning to the bureaucracy.

The Finance Department is resuming its controls over expenditure. The Minister and the Expenditure Review Committee are re-exerting themselves. That is, of course, with the exception of the authoritarian behaviour of the Prime Minister. In such regimes control is power. This is all relevant for the legislation we have before us today. The principles it will enact for the three agencies are valid. But they beg the question about their full implementation to other sacred cows. Where accountability remains as remote as ever, there’ll be more AWB scandals.

Good governance receives lip service, but political motive renders it ineffective. There’s more to accountability for this Government than that set out in this Bill. This is mere housekeeping and a flash of managing a large bureaucracy. It gets nowhere near the issues of

  • Accountability for ministerial negligence
  • Waste of taxpayers’ money and
  • Outright deceit

Just remember the appalling record of children overboard. And the decision to go to war in Iraq. The dishonesty was palpable and never brought to account. Ministerial accountability is a joke. Freedom of Information is almost a dead letter. And as Labor knows, answers to questions on notice are treated with contempt. To that extent this bill is window dressing. But it’s better than an empty window. We support the Bill.

Question agreed to.

Bill read a second time.