Nigel Scullion (NT, Country Liberal Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator Murray’s speech.

Leave granted.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

The incorporated speech read as follows

The purpose of the Housing Loans Insurance Corporation (Transfer of Pre-transfer Contracts) Bill 2006 is to enable the Commonwealth to transfer its ownership of any residual mortgage insurance contracts written by the Housing Loans Insurance Corporation prior to its restructure and abolition in 1997 to another person and following on from that is the Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Repeal Bill 2006 which is to repeal the Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Act 1996. Much of that Act is now redundant and the operative provisions in the repealed Act are included in the accompanying HLIC (Transfer of Pre-transfer Contracts) Bill 2006.

These two Bills bring to a conclusion the selling off of a well performing government asset by the Coalition Government. The Democrats opposed the sale of the Housing Loan Insurance Corporation at the time, as they have opposed the sale of a number of other well-performing government assets before and since.

The Housing Loan Insurance Commission insured home loan lenders against losses secured by mortgages, and aimed to increase home loan affordability for low and middle income earners. It was a successful and profitable statutory authority. However, this Coalition Government did not see its role as continuing to provide such a service to low and middle income earners and sold it off in 1997.

It has to be said that the Opposition’s track record in this respect is not commendable either, as the initial legislation to sell the HLIC was introduced by the Keating Government and that Government oversaw the sale of several quality government assets into the private sector during its tenure. Many would argue that Labor began the trend to privatisation of government assets which has been so thoroughly embraced by the current Government.

Even though the Democrats opposed the legislation which sold off the HLIC we are not opposing these two bills as they are simply administrative in nature and clean up the financial loose ends that were left behind from the sale of the asset.

One of the reasons I wanted to speak on these Bills is the presence in them of special appropriations. As the Senate is aware, this is a matter of ongoing concern to me and many others, and I have spoken on it several times in the past.

It is also a matter upon which the Auditor General has reported in Audit Report No. 15 2004-05 Performance audit—financial management of special appropriations and is of concern to the Scrutiny of Bills Committee which in 2005 prepared a report on Accountability and Standing Appropriations.

As I have pointed out in the past, the number of special appropriations has increased steadily during the life of the Commonwealth. In 1909-10 they were only 10% of the total Commonwealth expenditure and by 2002-03 they accounted for 80% of it.

Every year we are presented with the annual appropriations for the year. However those figures do not represent the full annual expenditure of the Government because tucked away in bills, like these two bills, are special appropriations which commence with the passage of the legislation and have no fixed end. They could represent a bottomless pit of taxpayers’ money going out from consolidated revenue with little accountability to the Parliament.

This brings into play issues of transparency and accountability, a matter which was raised by the Auditor General in his report. And I quote:

The sound governance, management and reporting of appropriations requires certainty, clarity and consistency in the application of the Commonwealth’s financial management framework. The audit findings indicate that the manner in which the financial framework has been interpreted and implemented has not been consistent with those characteristics. While many of the issues are quite technical, in a legal sense there are important considerations of appropriate accountability, including transparency, in relation to the Parliament. Overall, ANAO considers that there have been significant shortcomings in the financial management of various Special Appropriations. Given the fundamental importance of appropriations to Parliamentary control over expenditure, changes need to be made to secure proper appropriation management in the Commonwealth. In particular, there has been inadequate attention by a number of entities to their responsibility to ensure that a correct, valid appropriation to support a particular payment has been identified before spending funds from the CRF, and to accurately disclose their use of Special Appropriations.

Some of the concerns raised in that report have been addressed, but there is still some way to go.

The Scrutiny of Bills Committee identified concerns regarding appropriations. I would draw the Senate’s attention to the paragraph in that report which pointed out that allowing the executive government to spend unspecified amounts of money for an indefinite time into the future might infringe on the Committee’s term of reference relating to delegation and exercise of legislative power. Not only that—it is not a transparent or accountable way in which to govern.

Of course that is not to deny that special appropriations are sometimes necessary, unavoidable and desirable, but they need to be much less of a general rule than they are at present.

The Committee called for the inclusion of an explanation in a Bill’s Explanatory Memorandum as to the reason for an appropriation and why it was more suitable for it to be included as a special appropriation rather than as an annual appropriation.

I am pleased to see that the EMs for these bills do provide such an explanation and in all the circumstances outlined in the EM, the reasons for the appropriations seem, on the face of it, to be reasonable. The EMs also confirm that the accountability to Parliament will be met through the Treasury Portfolio Budget Statements and the Treasury Annual Report.

However this still leaves the fact that there is no end date for these appropriations. The presumption is that they will lapse when payments under any agreements have been made, or when transfer of all assets is complete. Given the attention that special appropriations have received from the Scrutiny of Bills Committee and the Auditor General, I think it would be proper for an end date to be articulated in the Explanatory Memorandum or confirmed by the Minister in his second reading speech, and if that cannot be forecast now, for a periodic review to confirm the status of the standing appropriation.

As the Committee pointed out, it remains for the Senate to determine whether, in the circumstances of the legislation, special appropriations are suitable for the purposes for which they are proposed.

After scrutinising the relevant paragraphs of these Bills, these particular appropriations appear to be suitable for the purpose intended. We do not seek to amend the Bills. We do, however look forward to receiving reports in the Treasury Portfolio Budget Statements and the Treasury Annual Report as to how the money appropriated has been spent and a report as to when they are finally completed. Accountability must be observed

I ask the Minister for an assurance that the special appropriations will be repealed as soon as they are exhausted and not left lying on the statute books for some creative/illegal/improper use of them in the future, in the light of the Auditor-General’s report, and some real worries that have emerged in terms of the use of some standing appropriations.

Sandy Macdonald (NSW, National Party, Parliamentary Secretary to the Minister for Defence) Share this | Link to this | Hansard source

In anticipation of reading your contribution, Mr Acting Deputy President Murray, now that it has been incorporated, I thank you for your contribution and I thank Senator Scullion for moving the incorporation. It will be up to your usual standard, Mr Acting Deputy President, which is much higher than the standard of most speeches either given in this place or incorporated.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

You are too kind.

Sandy Macdonald (NSW, National Party, Parliamentary Secretary to the Minister for Defence) Share this | Link to this | Hansard source

These bills provide the framework for the government to divest ownership of the Commonwealth residual mortgage insurance contracts to an acquirer at such time as an agreement to do so has been reached. The need to wind up the Commonwealth involvement in the lenders mortgage insurance business has long been recognised by the government. These bills enable the government to achieve this and I commend the bills to the Senate.

Question agreed to.

Bills read a second time.