REGIONAL SUBSIDIARIES

The Hon. J.S.L. DAWKINS (14:51): I seek leave to make a brief explanation before asking the Minister for State/Local Government Relations a question about regional subsidiaries under section 43 of the Local Government Act.

Leave granted.

The Hon. J.S.L. DAWKINS: On 22 June of this year, I asked the minister to consider exempting regional subsidiaries from the auditing requirements forced upon the sector by the amendments to the Local Government Act 1999. From information provided to the opposition, I understand that the minister has advised the local government sector that she is currently in the process of redrafting local government financial management regulations but has not confirmed whether or not she will provide a regulatory exemption to regional subsidiaries such as the Murray and Mallee Local Government Association (MMLGA). With that in mind, I ask the following questions:

1. Can the minister explain why she believes a regional subsidiary like the MMLGA, which holds no assets, has no long-term liabilities, employs no staff, has no capital leasing commitments, holds all meetings in public, publishes its agendas and minutes as appendices on its website and has 16 very experienced delegates with intrinsic financial and local government expertise, should be required to spend between 6 and 10 per cent of its annual budget of $110,000 establishing an audit committee, when its external auditors, who have local government experience and annually review its books, state that this regional subsidiary poses no material credit risk?

2. When does the minister envisage finalising the regulations, given that the amendments to the act came into effect on 1 July, almost three months ago?

The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide) (14:53): I thank the honourable member for his important questions. It is a matter that has been brought to my attention, and I have entered into correspondence with a number of subsidiaries that have written to me about these matters. Unfortunately, it was some time ago so I cannot actually remember the details of my responses to them.

I know that I did consider these issues. I know that I was also sympathetic to the concerns they raised and did seek advice. I do not believe that I have received final advice in relation to that matter. In fact, I understand that the regulations are expected towards the end of this year. If my memory serves me well, I believe that we are still wrestling with some of these issues.

So, they have been brought to my attention. The principle around these requirements is to lift public accountability and transparency across the board, and that is a very important principle. Obviously, it would be difficult for those subsidiaries that do not have income to find the money required to meet regulatory requirements or imposts.

I have had some discussions about ways that audit committees can be formed, and we have looked at ways of simplifying the audit committee requirements to enable greater flexibility and simplicity for some of those organisations. So, I know that some work has been done on that, and work is still being done on the regulations. Clearly, we have in our mind's eye some of the effects on some of the smaller subsidiaries.