Wednesday, 28 February 2007
Matters of Public Importance
Financial Accountability Standards of the Howard Government
The President has received a letter from Senator Sherry proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:
The weak financial discipline of the Howard Government, and in particular, the failure of the Minister for Finance and Administration (Senator Minchin) in view of:
- the recent audit office report that found more than one third of agencies administering programs had no performance indicators to address their effectiveness, quality or cost;
- the billion dollar policy announcements:
- that blow out in cost due to being insufficiently funded,
- with no public disclosure of ongoing cost or impact on revenue.
- that are not given appropriate detailed examination due to a failure to submit to Cabinet as required in the Government’s own Cabinet Handbook or Charter of Budget Honesty.
I call upon those senators who approve of the proposed discussion to rise in their places.
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
At the heart of the resolution that we have placed before the Senate is the general decline in financial accountability standards of the Howard government, particularly over the last two to three years. The issues that highlight the decline in financial management and standards of the Howard government go to matters like the accurate costings of billion-dollar promises, often turning out to be inaccurately costed to the tune of hundreds of millions of dollars; the lack of ongoing transparency and accountability; and the lack of due process—the government’s own processes that it lays down for the costings and announcements of major policies. Why has this come about? Labor would argue that at the heart of this problem, which I am going to illustrate with specific examples a little later in my comments, are the Prime Minister, Mr Howard, and the Minister for Finance and Administration, Senator Minchin.
What we have in Mr Howard—I concede that he is a very smart political operator and has been in parliament for almost 33 years—is a Prime Minister who takes short-term, knee-jerk opportunistic policy decisions when the government gets into trouble. I will illustrate this with some examples later on. We have a government that has now been in office for almost 11 years and finds itself out of touch in a number of public policy areas. The Prime Minister has decided that, in order to regain public popularity and credibility, particularly in an election year, he has to cobble together policy on the run. This government is becoming very old, tired and lethargic and it has cobbled together these policies at the last minute.
Labor is not complaining about the content of some of the policies, but we do complain about the inaccurate costings, the failure to report ongoing costings where there are cost overruns and the lack of due process. It is a real sign of decay when a government makes short-term, opportunistic decisions on the run and fails to cost them in an adequate way. It is not just me that is making this observation. A number of expert and highly regarded independent commentators are starting to analyse the Howard government’s decaying approach to financial management and responsibility, including Mr Allan Fels, formerly of the ACCC, a highly regarded former regulator who is now the Dean of the Australia and New Zealand School of Government—and I think he is an economics-law graduate; and Mr Fred Brenchley, the former editor of the Australian Financial Review, who only this week observed that this Liberal government’s financial discipline and management is in decay and that its approach to the financial framework of government appears to be alarmingly weak.
The Audit Office—thank goodness it is independent; it is one of the few statutory authorities that have not been nobbled by this government—has made some very alarming observations about financial management and the lack of discipline in government departments. When it reported this month on the outcomes and outputs framework for government spending programs, it painted a worrying picture of a very carefree attitude to where the money is going. That is a serious conclusion by the Audit Office. Whilst there can be some legitimate criticism of programs administered by departments, at the heart of this is the level of accountability of the Minister for Finance and Administration, Senator Minchin. I do not criticise or blame those hardworking, dedicated and committed officials in Treasury and Finance, whom I often see at Senate estimates. I criticise the political misdirection by the Prime Minister and the lack of political direction by the finance minister in terms of fiscal management and the costing of policies.
The Liberal government has two key bibles in its approach to the costing of policy announcements and ongoing financial management. One is the Cabinet Handbook and the other is the Charter of Budget Honesty. They set out the requirements for the consideration of policy, for the costing of policy and for the whole-of-government considerations, particularly cabinet considerations, for that detailed examination of policy. I am going to refer to a couple of examples of recent billion-dollar announcements that were not presented to cabinet. I am going to refer to a couple of significant examples of breaches of the Charter of Budget Honesty when it comes to reporting significant financial outcomes and cost blow-outs. Nowhere in either of these bibles does it say, for example, that billion-dollar commitments should not go to cabinet. In fact, it says the reverse—that policy announcements are supposed to go to cabinet. All too frequently we have had major announcements, with significant problems in terms of costing and ongoing financial reporting, that have not been going to cabinet. That is one of the failures, the decays, that have been occurring within this government in the last two years.
I want to go to a couple of examples to highlight this government’s decaying financial management supervision and discipline. Labor today touched on one example in question time—the recent water policy announcement by the Prime Minister, which is worth $10 billion over 10 years, or $1 billion a year. What should occur is that the detailed policy proposals in a policy announcement should be thoroughly examined by the Department of Finance and Administration. Once these policy proposals were brought together by the Prime Minister, as is his prerogative, there should have been adequate time for the department of finance to examine these specific policy proposals. What happened? A one-page brief on a $10 billion policy was provided to the department of finance 2½ days prior to its announcement. That is not what Labor would regard as a rigorous and proper financial examination of a policy announcement—and nor would the Liberal government until a few years ago—particularly for a policy that is worth $1 billion a year and $10 billion in total.
Secondly, this billion-dollar expenditure did not even go to cabinet in the normal way, whereby other ministers could discuss the proposal and contest it or argue about its merits. At the heart of the Westminster democratic system is collective cabinet decision making—and then later decision making by the parliamentary party and by the parliament itself—not prime ministerial decrees on $10 billion expenditures. We had the extraordinary contrast of a $250,000 carriage for Her Majesty the Queen—
Hear, hear to you! But at least this proposal—$250,000 for a carriage; gold, gilt and all the rest of it—did go to cabinet. It was sent to the department of finance for a rigorous costing. We do not complain about the process in this case, but a $10 billion water package did not even make it to cabinet. By the time it got to the department of finance, the finance officials—you could see on their faces that they were appalled—were expected to cost a $10 billion water package, detailed on one page, in less than three days, in just over 2½ days. Of course, they could not do that; all they could do was give it a cursory glance—a $10 billion program of expenditure!
This is the latest major example of the Prime Minister cobbling together policy at the last minute and not subjecting it to the appropriate processes, the government’s own processes laid down in its Cabinet Handbook and in the Charter of Budget Honesty. This is not small change. We then had the incredible explanation. I think the minister for finance attempted to explain it today. He was attempting irony at estimates when he somewhat frivolously said, ‘It’s only a billion dollars a year.’ He was trying to be ironic, but these are substantial amounts of public money. Minister Minchin, who is supposed to be the key guardian holding the government internally to accountability on expenditures, just said: ‘Oh, well, it’s small change. What’s a billion dollars here or a billion dollars there? It doesn’t really matter. The Prime Minister can do what he likes.’ So you had the Prime Minister, on the one hand, cobbling together policies without proper costing and proper consideration and you had the minister for finance failing to hold him accountable, as he is required to do internally within the government.
This is not the only example of where this has happened in recent times. As I said, it is particularly becoming the case in the lead-up to elections. We had the announcement of what is known as the mature age worker tax offset during the last election campaign—another billion-dollar giveaway by the Prime Minister, Mr Howard. When he announced this program, the cost of it was just over $1 billion. What happened after the election was that, before this policy was implemented, the government had it recosted. The cost blew out to $1.4 billion, so before it is even implemented there is a $400 billion blow-out in another cobbled-together election promise by the Prime Minister—
It is $400 million. What we do not know to this day is what the cost is to date. Compounding this lack of financial accountability is that when you ask, ‘What is the up-to-date cost of these inadequately costed programs that the Prime Minister has been announcing?’ the department will not tell you, even though they know the information. I don’t criticise the public servants, because the minister of the day says, ‘Don’t disclose publicly what the cost of these programs is running at; keep it hidden,’ because if they make a mistake they do not want the world—the public or the parliament—to see what the level of the mistake is.
We have seen this in other areas. We had the announcement of a utilities allowance. That was another billion-dollar cost. I do not complain about the program itself—but can we find out what that program has cost to date? We were advised it was well over $1 billion. Senator Mason, who is in the chamber, goes to estimates with me. He smiles; he knows what goes on at estimates when his minister is on the other side of the table. They have told the public servants: ‘Don’t let the Labor Party know the cost overruns on these programs. It could be very embarrassing.’ He knows what goes on. It is not that the departments—in particular, the department of finance—do not know when a program has got a cost overrun of hundreds of millions of dollars. They do know. The government do not want it out on the public record, because it would highlight this lack of rigorous financial assessment and process, the decline in standards, the decay in this area of financial management by this government.
Let me give you another one. We have had the recent package of superannuation bills, which passed through the parliament with Labor support. They were announced in the budget—$6.2 billion. But when we asked the minister and the department—and I do not blame the public servants, who knew the cost; I could tell from their smiles—‘What is the cost to tax revenue of these particular measures within the budget announcement of $6.2 billion?’ they refused— (Time expired)
When I received the standing order 75 notice as to a matter of public importance and noted Senator Sherry citing ‘the weak financial discipline of the Howard government’, I thought that Senator Sherry had all of a sudden become very courageous or desperate—or perhaps both. It reminds me of an episode of The West Wing that I saw the other day. There was a political adviser talking about the forthcoming presidential election. He said: ‘Left-wing and centre left parties should always talk about health, education, welfare and the environment. Conservative political parties should always talk about national security and the economy. When centre left parties start talking about economics, financial rectitude and financial discipline, they are either very desperate or’—in Australia we might say they are becoming rather full of themselves. That confidence, moreover, is not borne out by the record or by the history of the Australian Labor Party—and that really is the point of the debate here this afternoon.
More times than I can remember since I have been in this place, we on this side of the chamber have recited the history of Labor’s last effort in government. You will recall, Mr Acting Deputy President Lightfoot, the $96 million budget blow-out—the Beazley black hole. You will recall that the interest rate on that deficit alone ran into the billions of dollars per year. You will also recall the 17 per cent interest rate under the Hawke-Keating Labor government, the 10 per cent unemployment rate, the high inflation and the septic economic performance of the Australian Labor Party by 1996—worse than septic; it was also dishonest because they did not tell the Australian people the full story of their mismanagement.
Without labouring that point too much, I think that Mr Rudd is increasingly becoming a very worthwhile heir to that appalling legacy of financial promiscuity and fiscal profligacy. Mr Rudd wants to be all things to all people—just like the government in the Hawke-Keating years. Recently, Mr Rudd went to Queensland and promised $408 million for the Western Corridor Recycled Water Scheme. Then he went to Perth and promised $30 million for various water projects there. I have also heard that he promised to hand out $100 million in resource royalties to the scandal-plagued Western Australian government. In Adelaide, he promised $160 million for the Spencer Gulf desalination plant. In Canberra, he promised a $500 million clean coal fund and $25 million more for the CSIRO. In Townsville, he promised $95 million for a road project. In Sydney, he promised money for a Penrith fast rail project and other Sydney infrastructure. Mr Rudd believes that he can go around Australia and just throw money hither and thither and that will buy votes. He is like Tintin on a binge. He does not seem to get that, in the end, it is Australian taxpayers who pay for the binge. The history of the Labor Party when it was last in government was appalling, and Mr Rudd is picking up that great legacy very well.
I have spoken about the history of the Labor Party and I have spoken about Mr Rudd, but what about state Labor governments at the moment—in other words, Labor governments that are in power? What is their economic legacy? What are they doing? What is their performance like? Of course, it is appalling. The coalition government is in net surplus—and I will say more about that in a minute—but the incompetent state Labor governments in every state have run up an effective cash deficit of $50 billion. My friend and colleague Senator Fierravanti-Wells will be saying a little bit more about this. State Labor governments have in unison and collectively cobbled together $50 billion in deficit. That is at the same time as there are record GST payments being made to them. God knows what it would be like without those GST payments. I hate to think what it would be like. They would not only be in deficit; they would be in penury, as would the people of those states.
We had a shocking history in the Hawke-Keating years, we have Mr Rudd running around spending money like a drunken sailor and, finally, we have state Labor governments with economic policies and an economic record that are atrocious, with a collective $50 billion deficit. How does that compare with the coalition? We have no net debt—none. There was $96 billion, but we have paid it off. We did not get much credit for it. In fact, I seem to recall that every time we tried to bring in savings measures, we were opposed by the Labor Party, the Greens and the Democrats. If we had adopted their approach to economic management we would still be in deficit. But we are not. Fortunately, we have a coalition government and we are in net savings at the moment and doing very well.
Interest rates are relatively low. That has spurred homeownership and jobs and economic growth. Ordinary Australians can afford to buy homes with confidence because interest rates have remained low. Inflation remains low. What does that enable? It enables businesses to invest with confidence. When businesses invest with confidence, they employ more people—the very people the Labor Party say they look after and stand for. They say that they are their guardians. In fact, the economic growth under the coalition over the last 11 years has delivered very low inflation and an unemployment rate that is the lowest in 30 years. Most importantly, that means that the most vulnerable Australians, those who want jobs, now have jobs. That is not because of the Labor Party; it is because of the coalition’s economic management. There are international comparisons I could make. Over the last few years there has been a huge rise in GNP per capita. Wealth in this country has grown by 50 per cent in the last 10 years. Again, that is no thanks to the opposition. There has been huge growth in wealth in this country, great investment growth and great jobs growth.
There is a saying in parliament: ‘A million here, a million there, and pretty soon you are talking about real money.’ Mr Rudd may think he has some sort of Midas touch, but the Labor Party has no such gift. The economic record of the ALP clearly demonstrates a talent for producing not gold but a rather smellier product. The Leader of the Opposition is on a bender. He is on a spending spree that is clearly designed to purchase the next election. But the money that the member for Griffith is so cavalierly throwing around the community rightly belongs to other people. It belongs to the people who have earned it. It belongs to the taxpayers of this country. The hundreds of millions that his own party leader is splurging, albeit in theory, puts the lie to Senator Sherry’s claim to, and appeal for, fiscal discipline. In the words of Shakespeare, my colleague from Tasmania ‘doth protest too much, methinks’.
What we have here is nothing more than a transparent attempt to score very cheap political points. The Australian Labor Party is trying to have it both ways. Senator Sherry talks the talk of economic responsibility, but at the same time his party leader walks the walk of a big budget blow-out. Let us not forget, the only thing standing between the member for Griffith and the Treasury of this country is the ballot box.
The ancient Roman god Janus was portrayed as a figure with two faces, each pointing in the opposite direction. For this reason the term ‘Janus faced’ came to signify hypocrisy. I am confident that the Australian people will see through the Janus faced economic platform of the Australian Labor Party. With an appalling legacy under the Hawke and Keating Labor governments, with the profligacy of Mr Rudd over the last couple of months and the absolutely appalling display from state Labor premiers, and with a $50 billion deficit in total among the state Labor governments, there is no hope for the Labor Party if they ever get hold of the Treasury benches of this country—indeed, there is no hope for the people of this country.
The problem with the submissions from both the parties here is that they have narrowed their view to who is best in terms of announcing programs and then carrying them through, counting dollar returns. But we live in a world where social and environmental effects have to be taken into account, where there should be triple bottom line accounting and not single bottom line accounting.
Let me give an example of that. We now have predictions that by mid-century the Great Barrier Reef is likely to be 95 per cent dead. With it will go 33,000 jobs and billions of dollars of tourism income. There is no accounting for that in the failure of government policy and programs which is occurring at the moment and contributing to that outcome. By that I refer to the indictable history of the Howard government in neglecting its policies which have not only not addressed climate change—and therefore the direct impact on the Great Barrier Reef, which is coming down the line—but worsened it. This is the government that refused to ratify the Kyoto protocol. This is the government which has put huge amounts of taxpayers’ dollars, hundreds of millions, into the coal industry in pursuit of technologies—which are far from being proven and which even the industry says will not be available for a decade or more—while it continues to foster the burning of coal, the expansion of coalmines and the export of coal. Australia is the world’s biggest coal exporter and we contribute two per cent to the global warming problem through greenhouse gas emissions each year.
Nicholas Stern, the former chief economist of the World Bank, brought out that startling report last year which says that climate change is in effect the biggest market failure in human history. But here we have a government and an opposition which are not prepared to address that market failure. They want to continue to promote Australia as the biggest exporter of coal in an age when we do not have technologies which do anything other than convert that coal into a massive, million-tonne pollutant of the earth’s atmosphere, leading to an enormous economic, social and environmental deficit for the next generation and the generation after that. There is a total failure to account, outside narrow economic confines, for the impost on coming generations. If you look at the Stern report figures, just that two per cent of coal being exported out of this country converts to something like $186 billion damage per annum—
It is not a matter of closing it down; it is a plan for conversion away from that problem. The Prime Minister and the Leader of the Opposition say, ‘We will not plan for that.’ This unites the government and the opposition very rapidly. That is the problem: they will not look at it.
Senator Joyce opposite says, ‘Jobs.’ What is he going to do about the 33,000 jobs on the Great Barrier Reef? Where is his program for ameliorating this massive assault on one of the great wonders of the world with all the jobs that are consequent on that? He has no answer. All he wants to do is to continue to fire the problem.
One of the great problems here is the failure of the democratic system. Yes, $10 billion was announced by the government recently without even reference to cabinet. It is not only a failure of triple bottom line accounting; it is a failure of proper vetting by the democratic system. This government is making its decisions in the Prime Minister’s office—massive decisions which are muddle-headed and not thought through—without reference to the cabinet, without reference to the House of Representatives and without reference to the Senate. We would be getting far better outcomes if this parliament were treated as the centre of democracy and review that it once was before this government got the numbers to treat both houses of parliament as a rubber stamp. (Time expired)
I rise today to speak on this matter of public importance—the increasing lack of financial discipline being shown by the Howard government. The fundamental obligations of government, national security and economic management, require sober and diligent toil. They require government to be constantly vigilant in its responsibilities to the electorate. Australian taxpayers demand that their government be constantly watchful of the efficiency and effectiveness of government spending. Not only is this an economic imperative—wasteful government spending can only fuel inflation, driving up interest rates; it is also a moral imperative. The money that ministers spend on government programs is not their own. It is taxpayers’ money, which needs to be spent with the utmost care and attention.
Unfortunately, in recent times the Howard government has been complacent about its responsibility for financial management. In recent times, the Howard government has frequently betrayed its obligations to manage taxpayers’ money attentively and soberly. The most shocking example of this dereliction of duty in recent times is the shambolic process that led to the Prime Minister’s announcement of the government’s $10 billion water plan in January this year. Through the Senate estimates processes Labor was able to discover that the Department of Finance and Administration was told about this water plan late on the afternoon of Monday, 22 January, less than three days before its public announcement—that is right: just three days. Departmental secretary Ian Watt stated that the department of finance was only asked to ‘run an eye lightly over the costings’ of the package. Similarly, Treasury was not asked to prepare costings for this plan, nor was it asked to model the economic impact of the plan.
To top it all off, neither the Minister for Finance and Administration nor the Treasurer was able to fulfil their fiscal responsibilities with respect to this plan at the cabinet table, because the water plan was not taken to cabinet—$10 billion and it did not go to cabinet. I am not surprised, Senator Joyce, that the National Party have been up in arms behind the scenes. For all the minister for finance knew, the Prime Minister was running to save the Murray-Darling with a water bucket that was full of holes. Shoddy behaviour like this is how Third World countries run governments. It is how tin-pot dictatorships exercise financial control.
I will take that interjection. I want to make sure that both Senator Joyce and Senator Fierravanti-Wells get credit for that. It is how banana republics run their financial controls. Throw out the Cabinet Handbook; forget financial checks and balances; the Howard government can do just what it pleases.
And what was the minister for finance’s justification for this abandonment of good financial practice? What did the minister who is charged with ensuring taxpayers’ money is properly spent have to say about this kind of shoddy behaviour? I know he tried to justify himself in question time today, but let’s go back to what he said on the record. He told Senate estimates it was no big deal because it was ‘$1 billion a year, which is less than half a per cent of Commonwealth government expenditure’. It is just a billion dollars, he said; it does not have to go through those processes. According to the minister, unless a government program is worth more than $1 billion a year, it does not need financial scrutiny. What sort of banana republic is this government delivering to this country?
Of course, the Howard government’s decision to spend $350,000 on a gold- and jewel-encrusted stagecoach for the Queen was important enough to warrant cabinet consideration. I bet they were sitting there with their diagrams and little pretty pictures and models and having a big debate about the sort of jewel-encrusted carriage we were going to send the Queen—but a $10 billion package to save the river system in this country? No, that just gets the flick. That just gets pushed through without so much as a cabinet consideration. I suppose it was a special case! Talk about a government that has lost touch with reality. We have cabinet debates about royal coaches, and $10 billion expenditure programs do not even go to cabinet. And here comes the chief government apologist: Senator Ronaldson, I welcome you to the chamber. John Howard and Nick Minchin—
Thank you, Mr Acting Deputy President, I accept your admonishment. Mr Howard and Senator Minchin think that a gold-plated horse carriage for the Queen of England is more important than the proper management of $10 billion of taxpayers’ money. What would your mother say about that, Senator Ronaldson, if she were listening today? There was a cabinet discussion about the royal carriage, but, for a $10 billion program to save the river system in this country, nothing.
Maybe there was a time when Australia dropped everything to tug one’s forelock and swoon before the Queen. I thought most people would agree Australia got past that in the 1960s, but the living embodiment of that era is on the other side of this chamber. Today, Australians struggling to pay off mortgages are far more concerned about responsible economic management. Talk about a government that has got its financial responsibilities completely upside down. I have got a message for the minister for finance: the $1 billion per year that he so arrogantly dismissed is taxpayers’ money. It is money he has taken from working Australian families and he has an obligation to treat that money with the utmost respect. I would like to see the minister look a working family in the eye and tell them he does not need to watch over $1 billion worth of spending, tell them he does not need to carefully account for every cent that he spends of their hard-earned money.
If this kind of complacency and arrogance were just an isolated incident, it would be worrying enough. But, unfortunately, the water policy debacle is just one example of the government’s recent financial mismanagement. When you start totalling them up, the Howard government is starting to accumulate quite a tally of financial debacles. We have got the 2004 election promise to introduce a $50 billion mature-age worker tax offset. Fine—except for the fact that the cost of the program blew out by over $380 million before it was even introduced. We have got the grossly inaccurate costing of the government’s 30 per cent childcare rebate program. Then there is the utilities allowance, a program that the government has failed to publish updated costs for. Given recent history, we can only speculate on why the government is keeping mum about this program. Forget about the Charter of Budget Honesty; this government tallies up a few numbers on the back of an envelope and then announces billions of dollars of policies.
In my own portfolio area we just recently exposed that a $50 million metropolitan broadband black spot program had only actually issued $200,000 nearly 18 months since the announcement, and the cost of managing the program is over $1 million—to administer $200,000. It is a Commonwealth record, a gold medal performance. It is like that episode of Yes, Minister: it is a great hospital because there are no patients; it is running smoothly! The mob on the other side are running a $50 million program; in 18 months they have spent $200,000 and it has cost over $1 million to run so far. And they claim to be the party of economic management. No wonder that a few years down the track their costings are consistently out by hundreds of millions of dollars, because they are not doing the job, they do not want to do the job and they are not up to the job.
On top of that we have the Australian National Audit Office reporting that more than one-third of agencies administering government spending programs had no performance indicators to assess their effectiveness, quality or cost—no performance indicators. (Time expired)
We always welcome a debate with the Labor Party on financial management and, yet again, Senator Conroy, that was another entertaining performance from you. I would remind Senator Conroy that this is the same Labor Party that under Paul Keating gave us the ‘recession we had to have’, 17 per cent interest rates for homeowners and 22 per cent for business, and record unemployment. That is the record of the Labor Party in government. Labor’s idea of financial management was to leave a budget deficit of $10 billion and a whopping $96 billion net government debt. Sobriety, Senator Conroy? Labor spent like drunken sailors and you have the temerity to come in here and castigate us for a lack of sobriety.
I could go on—high inflation, 0.2 per cent real wages growth, downgrading of credit rating, twice; that is the appalling record of Labor in government. So do not come in here and criticise us. Look at your own dismal failure. It was the coalition that had to fix the appalling mess that the Labor Party left, and then those opposite proceeded to oppose every substantial measure to return the budget to surplus and reduce debt. Now that we have returned the budget to surplus and eliminated Labor’s debt, the Labor Party come along here wanting to claim the current strong financial position as their starting point.
But let’s look at Labor’s actions rather than their words. This is a party whose leader has so edifyingly set out his economic views in an essay entitled ‘Howard’s brutopia’. This is the Labor Party whose members seek inspiration from none other than the President of Venezuela, Hugo Chavez. His ALP admirers in Australia have written an open letter to him, inviting him to come to Australia, which says:
We have watched developments in Venezuela with great interest. We have been impressed by the great effort that your government has taken to improve the living standards of the majority of Venezuelans.
… … …
Although we are on the opposite side of the globe we feel that our shared ideals of social justice and democracy bring us close together.
The Leader of the Opposition may be a Christian socialist by his own admission, but many of his backbench are Bolivarian socialists. What sort of influence will they have over economic policy in a future Labor government? The Treasurer was absolutely right when he told members in the other place:
We are entitled to know where this motley, ragtag left-wing crew would take this country if they ever got their hands on the levers of power and brought the Bolivarian dictator’s ideas for inspiration to Australia.
This motion accuses the government of weak financial discipline. This is sheer hypocrisy from the Labor Party. Senator Mason has given us examples of multimillion-dollar promises that the Leader of the Opposition has made wherever he goes. This is a man who indeed wants to be all things to all people. Wherever Mr Rudd goes, he tries to buy popularity by showering the local community with promises worth hundreds of millions of dollars—no details, no specifics. Talk about cobbled together! Senator Sherry accused us of cobbling policies together; well, this is cobbling in its best form. And those opposite have the temerity to criticise one of the most economically successful governments of our time.
If we want evidence of how Labor would manage federal finances, we need only look at the state Labor governments. The facts are these: while the federal government is running a $10 billion cash surplus this year, the states will run a combined cash deficit of $3 billion. This is despite the almost $40 billion of GST revenue—$40 billion that the states will get in 2006-2007—and this is expected to grow to almost $47 billion by 2009-10. While the federal government is running an $11 billion fiscal surplus, the states are running a combined fiscal deficit of $6 billion. When you add in state government businesses like water and power utilities—
and over the next four years will borrow a total of $50 billion. While the federal government has eliminated net debt and is placing money in the Future Fund, the Labor states are out there running up debts of $50 billion. The borrowing binge is being led by New South Wales, which will borrow $6 billion this year; Queensland, which will borrow $4 billion; and Victoria, which will borrow $2 billion.
The question for the federal Labor Party is whether they support this borrowing binge by their ALP mates in the states. Do Labor senators opposite support the substantial cash and fiscal deficits being run by the states? Is this an example of sound financial management? If not, why doesn’t Labor condemn the deficits and heavy borrowings being undertaken by state Labor governments? For example, do Labor senators support the financial management of former Premier Carr and current Premier Iemma and of ministers Michael Costa, Frank Sartor and Joe Tripodi in New South Wales? New South Wales have doubled their general government sector net debt since the last election and on their own figures will double it again by the time of the election. This year the New South Wales government will run a $2.4 billion fiscal deficit and a $3 billion cash deficit.
A $2.4 billion fiscal deficit and a $3 billion cash deficit, Senator Joyce. The reason for this deficit is the fundamental problem that each year over the last five years spending has grown on average by one percentage point more than revenue. Any household knows this cannot continue indefinitely without ultimately resorting to borrowing. New South Wales has gone from being the engine room of the Australian economy to the most underperforming of all the states. The latest growth figures in New South Wales of just 1.4 per cent are the lowest of all the states. It has amongst the highest unemployment of all the states. This is a state that has received record GST—$10 billion in 2007. It is a lot better off than it would have been without the Howard government’s tax reforms.
So why the low growth rate? As Tony Abbott wrote in the Sydney Morning Herald today, it is due to the New South Wales tax rate—the highest in the country. Labor has repealed the vendor tax and imposed 24 increased tax measures, 53 rises in government charges and nine fare increases. The New South Wales opposition leader is spot-on when he asks: ‘Where has all the money gone?’ This is financial mismanagement at its worst. This is Labor’s specialty. This is the record at federal and state level. So do not come into this place sanctimoniously preaching to us about financial management. With your history at state and federal level—(Time expired)
Sometimes these debates remind me of debates when people say, ‘Your husband is ugly,’ and you then start debating how ugly the other person’s husband is. I think of our great Australian cricket team: if they can be criticised and asked to lift their game, so can the Howard government. Nobody should be immune from criticism. Having said that, I think some of the criticism is somewhat misplaced. There are four considerable items on this notice for debate, and I have only five minutes to deal with my views on them, so I doubt I will get through much more than item 1.
Under item 1, ‘the weak financial discipline of the Howard government and in particular the failure of the finance minister, Senator Minchin,’ the minister is criticised because:
The recent audit office report that found more than one third of agencies administering programmes had no performance indicators to address their effectiveness, quality or cost.
Frankly, I think that is unfair to Senator Minchin. His real problem is that he lacks power. He lacks the power to tell the portfolio ministers to put performance indicators against their programs. He lacks the authority to do that. The minister for finance exists in an advisory capacity in those matters; he cannot tell another minister or another agency, because of the devolved nature of the system, to put in performance indicators and other matters such as that, unless he is given that authority by the cabinet or it is specific to the powers that he has.
One of the things people do not appreciate enough about the public sector is that there is no regulator. The Australian National Audit Office is an auditor, not a regulator; the Department of Finance and Administration is not a regulator. Neither of those bodies can require ministers and their departments to provide such things as performance indicators. In the private sector we do have a regulator—the Australian Securities and Investments Commission. When you have a problem with, for instance, the public accounting or reporting in specific areas where ASIC has responsibility, the regulator is able to go to the company concerned and ask it to ensure that its market announcements are correct, that its share dealings are up to scratch if it is interacting with the ASX, or that the prospectus is true and fair in its pronouncements.
I have argued for a long time that, if any government wants to improve its ability to require the financial officers and the chief executives of government agencies to fulfil their remits, you need a Public Service regulator with the powers to do so. I have raised this issue over a number of years with the finance department. They understand what I am on about and are interested in the concept, but it is a very difficult one to get around because, in the end, it means that ministers and their chief executives will, to some extent, be under a system of enforcement and not under a system of sole responsibility.
I think that in many respects the finance minister and his department produce some superb guidelines, guidance notes and directions which are not capable of enforcement and are not internalised in the agencies’ culture. All the Audit Office can do is draw the government’s attention to them. I think that if there is a failing of the finance minister it is that he has failed to find a solution to this particular problem.
When you look at items 2, 3 and 4, which refer to cost blow-outs, lack of public disclosure and not being properly approved by cabinet, the responsibility for those rests with the chief executive. It is ultimately Mr Howard’s responsibility to ensure that his government does not fall into those failings. If there is criticism to be raised by the Labor Party with this motion, it has to be directed primarily at the Prime Minister for these shortcomings and not at the finance minister. In the end, blaming the finance minister would be equivalent to ASIC—(Time expired)
When the whip rang today and said the Labor Party had a matter of public importance on the weak financial discipline of the Howard government, I giggled and said, ‘Come on, what’s it really about?’ She said, ‘No, I’m quite serious.’ There is almost something lovable about the Labor Party when they talk about financial matters. You feel as though you want to go across and give them a bit of a cuddle and make them feel better, because for them to talk about weak financial management is a bit like the bank robber rolling up to chair a Neighbourhood Watch meeting, isn’t it? It is just beyond belief that they are prepared to talk about it.
Yes, that is right. A lot of my colleagues have spoken and given the chamber a lot of facts and figures and I fully endorse all of that. But I find it interesting that they have plucked out the $10 billion Murray-Darling Basin funding; that is apparently the cause of some financial concern. Just so I am absolutely sure, is this the same package that all the states bar Victoria have signed up to? Is it the same one?
Yes. So presumably, the states are all in agreement with the bona fides of this package, but the federal Labor Party is not, which really does beggar belief. For a party that has learned absolutely nothing in the last 11 years and that left this country with a debt of $96 billion on the credit card, with a budget deficit in its last year of $10 billion, to come in here and lecture this government about weak financial discipline is quite utterly bizarre.
There will not be one person listening to this debate who believes a single word of it. You know what they do not believe? They do not believe you have changed. That is the first thing they do not believe. The problem the members of the Australian Labor Party have is that your new leader has committed himself to the principles of weak financial management by his enthusiastic embrace of the way his state colleagues are managing their economies. On the public record, he has talked about the way he supports their management of their states. This is the man who Senator Fierravanti-Wells said has been going around Australia spending money like a drunken sailor.
I thought it might be of interest to the chamber—I thought it would be worth while—to go through some of the facts and figures about how good these states, which Mr Rudd is so spectacularly supportive of, are, and why everyone listening to this debate today would be deeply concerned about Mr Rudd setting the benchmark because he has tied himself to those state governments in his public commentary about the way they are operating. I will just go through some material. Between 2000-01 and 2004-05 state Labor governments have consistently blown their forecast spending. Across all the states and territories during this period, extra recurrent spending has exceeded forecasts by more than 13 per cent. In New South Wales, that spending exceeded the forecast by 14.8 per cent. In Victoria, it exceeded it by 13.3 per cent; in Queensland, by a massive 19 per cent; in Western Australia, by 12.6 per cent; in South Australia, by 12 per cent; in Tasmania, by an almost unbelievable 31.6 per cent; in the Northern Territory, by 15.7 per cent; and in the ACT, by 21.4 per cent. So, in every state and territory around Australia, the Australian Labor Party has shown its economic credentials when it comes to managing spending. This is the same group of people who are supported by the Leader of the Opposition, Mr Rudd, who he says are good financial managers and who he has publicly supported as examples of the way the financial management of this country should be run.
To make it worse, state and territory governments have blown their own forecasts over five years by more than 13 per cent, the equivalent of $66 billion. So, if you want an indication of what Mr Rudd’s benchmark is, you need look no further than the state and territory governments, because they are the ones that he is holding up as the shining lights of financial management in this country. For no better example of weak financial discipline, look at those figures.
In the short time left to me, I actually want to have a chat about the Audit Office—
Thank you very much, Mr Acting Deputy President. It is entirely appropriate that the Audit Office should investigate the application of the framework we put in place eight years ago, where we shifted the emphasis on budgeting and financial reporting away from an exclusive focus on dollar inputs to place more emphasis on outcomes—what has actually been achieved for the money—and we did that. The Audit Office is quite rightly looking at the success of that, but what we should be told is—(Time expired)