Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I thank all honourable senators for their contributions to the debate on the Auditor-General Amendment Bill 2011. I just want to make a few comments in response and also make some general comments that go to the amendments that have been circulated by the opposition. Probably when we go to the committee stage, I will adopt those comments again. The background to this bill is well known and well understood, as shown by the contributions here today. There has been a full committee inquiry by the Joint Committee of Public Accounts and Audit and the report of that committee has been tabled. Customarily, the government considers reports and recommendations of committees and, if it accepts those recommendations and they require a legislative response, brings forward amendments to the relevant bills at the appropriate time. In this case the chairman of the committee, an Independent from New South Wales, Mr Oakeshott, the member for Lyne, took things in hand and had the Clerk of the House draft legislation he thought appropriate to give effect to the recommendations of the JCPAA. The government indicated its general support for that proposition but became involved in the drafting because it wanted to make the necessary amendments that would come before both chambers precise, exact and internally consistent with the current policy prescriptions in the act. The principal purpose of the amendments before the chair have been identified by all speakers. The Auditor-General will no longer be required to consult with the minister or JCPAA, it will simply need the approval of the JCPAA to go about business as authorised under the act.

I have closely listened to the comments senators have made concerning the money trail, the role of subcontractors and the role of private sector entities. For reasons that will become quite clear, the government is committed to extension of the powers of the Auditor-General to examine non-Commonwealth entities, whether they be state or private sector. The government is also committed to maintaining its position of following the money in the audit trail. I will put some advice on the record as to what the position of the Auditor-General is in respect of both of those proposals.

Senator Ryan in his comments significantly addressed the role of private sector entities in terms of the auditing process, more particularly small and medium sized businesses, and put the view quite forcefully that it was inappropriate for government to be auditing those private sector entities. He reflected on amendments that were put in the House and defeated. I note that the amendments that have been circulated in this place in substance are almost the same as the amendments that were previously moved and defeated in the House. Although the wording of those amendments is significantly different, the purpose behind the amendments in both places is the same.

In respect of those amendments I put on the record that the JCPAA in its deliberations recognised that there is an increasing use of contractors to implement government programs and services. The committee acknowledged that this practice has benefits for service delivery. The committee was also concerned it had the potential to undermine ministerial responsibility and parliamentary oversight. The committee wanted to see more accountability in this area and wanted the Auditor-General to have the power to audit external entities, including contractors delivering government programs and government services. The government response to the committee report supports this proposal and the bill currently before the chair gives effect to that recommendation.

I do note Senator Cormann's comments and Senator Ryan's comments about a possible increase in the regulatory burden that this might impose on small business. The bill does contain appropriate restrictions on the extent of these powers. More importantly, the purpose of the audit will be limited to an assessment of how the operations of the private sector entity contributed to achieving the purpose for which it received Australian government funds. So it is not a frolic on its own by the Auditor-General; it is not able to cavalierly go and investigate near and far. The audit is limited to an assessment of how the operations of the private sector entity contributed to achieving the purpose for which it received Australian government funds.

The Auditor-General's primary client is the Commonwealth parliament. We say it is entirely appropriate that the parliament be able to assure itself that public funds provided to private sector entities have been spent on the purpose for which they have been provided. Really, when one thinks about the proposition, it is absurd in this day and age, where the Commonwealth government is increasingly covering off shortfalls, shortcomings and deficiencies in state government provision of services, particularly in terms of infrastructure, construction and the like, that if billions of dollars are allocated via Commonwealth interests to state agencies or state departments and then on funded to private sector interests to carry out the work they contract to do, the money trail cannot be followed and audits cannot be conducted by the Commonwealth to ensure that the money that was allocated for purpose A is spent only on purpose A. Accordingly, I do not consider that the amendments to the bill that have been circulated by the opposition present an excessive regulatory burden on small businesses. Nor should they be regarded as an impediment to businesses seeking work delivering Commonwealth activities. On that basis, when the matters do come before the committee stage for decision, the government's position will be maintained.

Finally, in response to comments raised on this argument about independent contractors, subcontractors or private sector entities contracting for the receipt of Commonwealth funds to deliver work for Commonwealth purpose, I can advise that the Auditor-General expects to use the power to audit private sector entities only when the performance of a contractor would be significant in the context of the delivery of a government program. The Auditor-General has advised the Commonwealth that it would be very unlikely that this would ever be the case for a small business. The concerns or fears that have been raised by the opposition in their contributions to the second reading debate, and referred to somewhat obliquely in passing by Senator Xenophon, are directly addressed in the comments of the Auditor-General that it would be very unlikely that this would ever be the case for a small business. With those concluding remarks, I commend the bill to the chamber.

Question agreed to.

Bill read a second time.