House debates

Monday, 18 June 2007

Appropriation Bill (No. 1) 2007-2008

Consideration in Detail

6:08 pm

Photo of Bob McMullanBob McMullan (Fraser, Australian Labor Party, Shadow Minister for Federal/State Relations) Share this | Hansard source

Regarding COAG, these are questions that could have been asked of Treasury or Finance or PM&C because they overlap, but we do not want to do it three times so, with respect to the parliamentary secretary, I will raise them here because they do relate to the responsibility of Prime Minister and Cabinet with regard to federal-state relations—federal-state relations more broadly and to some extent COAG in particular. I want to try and get from the department and the parliamentary secretary some sort of understanding of what action the government has taken with regard to the several independent reports that have come forward identifying the massive waste of taxpayers’ dollars involved in unnecessary duplication of administration and particularly in relation to the manner in which specific purpose payments are managed and the duplication that is envisaged.

Not all of the assessments provide figures. The one that does is the report by Access Economics commissioned by the Business Council of Australia, which says in its report that the cost to the federal government of administering grants to the states—that is specific purpose payments over and above the costs of either the states or the federal government directly funding and running the programs themselves—is $861 million, and overlap and duplication in areas where both the states and the federal government are operating at the same time is $913 million. And there is also an analysis of cost shifting from the states to the Commonwealth and vice versa.

Then there are some other numbers which lead to the BCA Access Economics $9 billion figure for economic costs. I do not want to refer to the $9 billion figure, firstly, because it does not all relate to costs to government—some of it is just costs to the economy—and, secondly, because I am not sure that I agree with all the analysis. But it is a very powerful estimate. Even if we say it is double, that Access Economics has doubled the actual number, the overlap and duplication cost is $860 million. Let us say it is only $400 million and the second area of overlap and duplication is $900 million. Let us say it is only $450 million—that they once again got it totally wrong—we are talking about cost to the taxpayers of about $1 billion. There is no sign of any action by the government to save any of that money.

The state heads of treasury have got together and looked at the way in which specific purpose payments are administered. They have said there are problems with specific purpose payments—lack of flexibility and efficiency incentives, duplication of roles and responsibility, costs of compliance and administration—and we have seen examples raised by Allen Consulting of specific purpose payments that cost more to administer than the value of the grant. They have had lack of consultation and blurred accountability.

Then we had the report of Allen Consulting into, amongst other things, specific purpose payment arrangements. They raised a whole series of problems about the inefficiencies generated by excessive attention in specific purpose payments for control of inputs instead of control of outcomes, which is hard to define—outputs at least. We get excessive regulation and detail at a massive cost to the taxpayers at both levels—and they are the same taxpayers—and to the economy as assessed by Access Economics. I wonder whether the department and the two associated departments engaged in this—but I will ask it in the context of PM&C—have focused any attention on this and whether they have done anything to seek to save this money. (Time expired)

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