Tuesday, 22 November 2011
Report No. 13 of 2011-12
That the Senate take note of the document.
In commencing my remarks on the Auditor-General's Report No. 13 of 2011-12: Performance audit: Tasmanian freight equalisation scheme, I note the history of this scheme. It was instigated by the Howard government and improved by the Howard government over a number of years. The Tasmanian Freight Equalisation Scheme is of significant importance to the Tasmanian economy and contributes something like $100 million per annum to equalise the cost of transporting goods to and from Tasmania, particularly in the manufacturing sector.
There are a number of points in the Auditor-General's report that I want to note. One of those concerns the increased complexity of the scheme that has developed over a number of years. I recall the Productivity Commission review that was undertaken in 2006 and the government's response that it would retain the scheme in its current form but conduct a parameter review. The parameters are basically the rules under which the scheme operates. It was my view that there needed to be some modifications to the parameters under which the scheme operated at that time, but unfortunately the opportunity was not formally taken up by the current government. I do understand that the operation of the scheme is very sensitive in Tasmania. It is a sensitive issue because of the important role it plays, particularly in supporting a number of the food processors and also some of the key manufacturing industries in Tasmania. But there are some elements of the parameters that need to be reconsidered and I think that is an important part of the process.
One really concerning element that came out in the audit was the number of times that Centrelink actually met its 15- and 30-day processing targets. They were only met nine times between July 2009 and June 2011. That is a pretty concerning statistic because what we are talking about is providing assistance back to industry in Tasmania. For Centrelink to only meet the monthly targets of 15 and 30 days nine times in that period of time is a concern. I do note, however, that the government has since made a one-off contribution to the operations of Centrelink in managing the Tasmanian Freight Equalisation Scheme. Those statistics on processing its claims in less than 15 days increased from 57 per cent to 79 per cent. I would have to say I think there is significant room for improvement there. I think that the government paying its bills within its target time only 79 per cent of the time is disappointing. I recall from the government's procurement guidelines that the target rate for those sorts of figures is somewhere in the early 90s—93 or 94 per cent. I think that would be a more ideal target. It is obvious that the management of this scheme needs to focus much more on meeting its obligations within the targeted time frames set by this government.
The concerning thing is that, rather than looking at the detail and working with industry on the parameters, what we effectively get out of this is yet another review of the scheme, which is due to commence in 2011-12. Far from looking at it and working closely with industry, we are just going to go through another review process. One of the things that concerned me about the way the scheme was operated in the past, even under our government, was that when the annual cost reviews were completed they were not necessarily put into place. You got into a situation where every five years or so the changes in costs around the freight task had moved by four or five per cent. So then trying to redesign and adjust the scheme and the rates that were being paid under the scheme became a major exercise. It seemed to me that dealing with the cost increments on an annual basis as they were calculated was a much better way for the scheme to operate, regardless of which way those cost increments moved. I think that there is a real opportunity for some very positive changes to the scheme, bearing in mind that some of the companies that are supported by the Tasmanian Freight Equalisation Scheme are major contributors to the Tasmanian economy.
About 20 companies are major claimants under this scheme. When you look at the number of businesses that actually do operate under and take advantage of the scheme, it is quite significant. There are some 1,500 or 1,600 companies that take advantage of the Tasmanian Freight Equalisation Scheme in a range of scales, and 1,074 of those businesses only claim between $500 and $10,000 a year. Two hundred and twenty-four, or five per cent, claim from $10,000 to $50,000 a year; four per cent, or 51 companies, claim $50,000 to $100,000 a year; and 75 companies, or 22 per cent, claim $100,000 to $1 million a year. As I said, the majority of the funding goes to some of our major food processors, paper manufacturers and other companies that make a major contribution to the Tasmanian economy. About 20 of those claim more than $1 million, or 67 per cent of the funds claimed under the Tasmanian Freight Equalisation Scheme.
As I said, I am more than proud to have played a significant role with my Tasmanian Liberal Senate team colleagues in the initial implementation and certainly the improvement of this scheme over recent years. I note that it was at the 2007 election that both the coalition and the Labor Party included the Bass Strait islands in this scheme. It has made an important contribution to the trade of those particular businesses on both Flinders Island and King Island.
I recommend to the government that they look very closely at ensuring that Centrelink have the resources available to them to make sure that their targets for payment processing and paying the claims under the Tasmanian Freight Equalisation Scheme are actually met. I think that a success rate of only 57 per cent is pretty poor. I acknowledge that there has been some additional work and that has raised it to 79 per cent, but I think that we ought to be targeting a much higher processing compliance rate.
As I have said, this is an important scheme for the viability of a lot of business in Tasmania and so we want to make sure that that work continues. I commend the Auditor-General for the report. It is important that the way the government's money is used in supporting Australian business and, in this particular case, the taxpayers and businesses in Tasmania is properly scrutinised. It is good to see that many of the provisions that Centrelink have in place are actually meeting the requirements of good expenditure of Australian taxpayers' funds. I seek leave to continue my remarks later.
Leave granted; debate adjourned.