Public Finance and Audit (Treasurer's Instructions) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 12 February 2015.)

The Hon. R.I. LUCAS (16:52): I rise on behalf of members to support the second reading of the Public Finance and Audit (Treasurer's Instructions) Amendment Bill 2014. As I have indicated to the Leader of the Government and to the whip, originally I thought we might be able to pursue some of these issues through the committee stages today, but having looked at the range of questions I think it would be fairer, and certainly from my viewpoint I think it would make more sense, for me to raise a whole series of the questions at second reading which would allow the minister to get advice from Treasury in particular on some of these, and it may well significantly short circuit the committee stages of the debate. My position is that I am certainly happy to support the passage of the second reading today, but not the continuation through the committee stages today.

As the government outlined in its second reading, the bill seeks to clarify matters relating to the application and scope of Treasurer's Instructions and makes minor amendments of a statute law revision nature. The amendments the government says seek to improve the general understanding about the relationship between Treasurer's Instructions and provisions of an act providing a public authority with functions and powers.

In the general discussion we had with government advisers in relation to the requirement or the need for the legislation one particular example was given and that related to the issue of what was then known as WorkCover, and I guess it is now ReturnToWorkSA. That was a different viewpoint between the government and WorkCover in relation to its requirements.

As outlined to us, WorkCover is a public authority for the purpose of the Public Finance and Audit Act, and the government's position was that it was therefore intended to be subject to the requirements of the Public Finance and Audit Act and Treasurer's Instructions. We are advised, however, that WorkCover had obtained legal advice that indicated they believed that the provisions in the WorkCover Corporation Act meant that they did not have to comply with the Public Finance and Audit Act or Treasurer's Instructions in certain cases. We are advised that the government advised the Solicitor-General disagreed with WorkCover's interpretation and the bill was intended to ensure that WorkCover and any other public authority had to comply with the Public Finance and Audit Act and Treasurer's Instructions.

Again, the minister, on advice, may well be able to correct this, but my understanding is that the provisions in the WorkCover Corporation Act that have raised the issues related to the powers under section 14(2), which is:

The Corporation may, for example—

(a) enter into any form of contract or arrangement

The issue was whether under that act WorkCover and WorkCover alone had the authority to enter into any form of contract or arrangement, or whether they were subject to various requirements under Treasurer's Instructions in relation to needing the approval of someone other than themselves before they entered into a contract.

I seek from the government advice as to what were the particular circumstances of the contractual arrangements that WorkCover was seeking to enter into which created the problem, and the dollar value of that particular contract, because clearly the Treasurer's Instructions apply to contracts above a certain threshold. I seek some detail on the particular concerns that were being expressed: what the contract was and, I guess, more detail as to WorkCover's view in relation to that particular difference of opinion.

The government has obviously sought to correct the issue by the legislation that we have before us, so I am interested to know what WorkCover board's or ReturnToWorkSA board's view is in relation to this legislation. Is the board prepared to accept that this legislation will clarify issues in relation to their ability to enter into contractual arrangements? Has the board expressed any concerns that the passage of this legislation may well inhibit the responsible and proper operation of ReturnToWorkSA in terms of managing its business as we move forward if this legislation was to pass?

To that end, I also ask from the government whether any other public authority has expressed any concerns in relation to the bill that we have before us, whether any other public authority has expressed a concern that the passage of this bill may well inhibit the reasonable operation of that public authority in the future and in particular their ability to enter into contracts and manage their business.

I also note in relation to the bill the contribution from the member for Schubert in the lower house, who referred to the Auditor-General's Report. I am not sure whether he specifically asked questions, but he did raise some issues, and I want to indicate that, those issues having been raised, I am seeking a response specifically now from the government on the issues originally raised in the Auditor-General's Report.

They raised in particular some concerns in relation to the purchase of an artwork or painting by the Art Gallery Board. The Auditor-General—and I will not repeat the detail of the Auditor-General's Report——raised some concerns in relation to the purchase of this particular artwork, their entering into the contract, and whether or not it was consistent with Treasurer's Instructions. The questions that I seek a response to are as follows:

Are the matters that have been raised in the Auditor-General's Report in relation to the Art Gallery Board matters which the government believes will now be clarified and resolved by the passage of this bill?

If so, how will that impact on what occurred in relation to the example given by the Auditor-General of the purchase of this particular artwork; that is, how will it clarify where responsibility lies?

Will the Art Gallery Board, for example, need to seek the approval of someone else other than itself in relation to the purchase of expensive artwork above a certain contract value if this bill is now passed?

I seek specifically a response from the government in relation to the impact of this bill on the issues raised by the Auditor-General in relation to the Art Gallery Board's purchase of an expensive piece of artwork. I also ask specifically whether either the Auditor-General or a government agency has raised any issue in relation to a potential conflict between Treasurer's Instructions and the powers of the Festival Centre Board in relation to various contractual issues. I ask the government to indicate whether or not any issues have been raised and, if they have, what was the nature of those issues and how will they potentially be impacted in the future by the passage of the bill?

When I first had the briefing from government officers I had some concerns which I think have probably been resolved but I seek confirmation of that in relation to how this particular bill would operate in relation to specific examples where the parliament has taken the view that an independent board should have the power and that a minister should not have the power. The example I give is in relation to the operation of Funds SA.

Under section 21 of the Superannuation Funds Management Corporation of South Australia Act 1995, direction of the minister, it outlines that ministerial directions can be made in a number of circumstances, provided that certain things are done but that a ministerial direction must not include a direction to the corporation in relation to an investment decision dealing with property or the exercise of a voting right.

It makes it clear that the Treasurer, for example, cannot direct the Funds SA board to invest in a certain property or not make a certain investment decision; that they are completely independent of the minister in relation to decisions of that particular nature. The concern I had was whether the passage of this bill might have allowed a new Treasurer's Instruction to be issued which, in some way, overrode the power in an act like that.

There are many other acts where boards are given the absolute right to make certain decisions and ministers cannot interfere or intervene. That was an expression of the parliament—that that was an appropriate position to be adopted. Certainly the concern I had initially was that Treasurer's Instructions have no parliamentary oversight at all, they are just decisions taken by a treasurer of the day based on the advice of Treasury. Frankly, it does not even have to be on the advice of Treasury in the end, it can just be a decision taken by the Treasurer, but most sensible Treasurer's, I am sure, would do it on the basis of advice from Treasury.

There is no parliamentary oversight at all. It is not subject to disallowance, such as a regulation. It does not require legislative amendment, so the parliament has no say at all. So, if, for example, the Funds SA act where the parliament says a minister cannot intervene in an investment decision and if this bill was to allow a Treasurer's Instruction in the future to say that ministers could intervene in some way, then I was, obviously, very uncomfortable that we were potentially being asked to support a device to override the clear intentions of parliament in certain circumstances. The advice of government advisers and the discussions I have had with parliamentary counsel is that that is not the case. The wording in the legislative amendment is:

It is only if it is not possible to comply with both the instructions and the authorities act that the instructions give way.

So, the (sort of) initial concern I had would not eventuate; that is, the act would prevail. I want on the public record an assurance from the minister and the government that that is indeed the case, that in the example I have given of Funds SA, and many other examples, the clear intent of the parliament in the legislation would prevail even if a treasurer, at some stage, sought to implement a new Treasurer's Instruction which sought to override a provision of the act. Certainly, having listened to the advice of parliamentary counsel and government advisers, I am of the view that that is indeed the case, but I seek a statement or an assurance from the minister on the public record that that is indeed the government's understanding and advice on the situation.

The other issue I wanted to raise, which I suspect is not covered by this, is an example of a set of circumstances in relation to WorkCover. Perhaps if I outline the background and then I can put the question. Under the Commissioner for Public Sector Employment guidelines the government has to allow the inspection of chief executive officer contracts of departments and agencies. Again, these are different to Treasurer's Instructions but, similarly, they are not guidelines which are disallowable by parliament. They are not legislated for either; they are issued by the Commissioner for Public Sector Employment, and there are provisions under the freedom of information legislation, so it is slightly different here.

On a regular basis my office inspects—one is not allowed to take a copy of them—the contracts of chief executive officers and one can see the remuneration package, the termination provisions and all the other details of the contractual arrangements between the government and the chief executive officer of the agency, and my office, over many years, has done that on a regular basis. The only agency where they, frankly, just thumb their nose at this process has been WorkCover. Under the previous chief executive officer (I think it is Mr Thompson—I forget his name now) I sought to see a copy of his contract and the Commissioner for Public Sector Employment's office advised that WorkCover refused to comply with the Commissioner for Public Sector Employment's guideline and the freedom of information request and would not provide a copy of the WorkCover CEO's contract for my office to inspect.

I was intrigued by this, that here we had a significant agency of government refusing to comply with a Commissioner for Public Sector Employment guideline on freedom of information legislation. I am assuming, as we see in the background to this particular legislation, that WorkCover must have taken legal advice which said it did not have to comply with Treasurer's Instructions in certain circumstances. I am assuming that they may well have taken advice that they do not have to comply with Commissioner for Public Sector Employment guidelines either.

Having been unsuccessful in seeing the WorkCover CEO's contract, I wrote to the then minister saying that that was unacceptable and asking whether he was prepared to do something about it, to make the contract of the WorkCover CEO available. The then minister, minister Snelling, was not interested in assisting the opposition in relation to that course of action and said that nothing could be done or would be done in relation to those circumstances.

The reason I raise this issue is because I asked the government whether its position or advice is that the WorkCover board is equally in a position to thumb its nose at Commissioner for Public Sector Employment guidelines. That is, the government is seeking to resolve the issue in relation to Treasurer's Instructions in this legislation because the WorkCover board is saying that it does not have to comply in certain circumstances; is it the government's understanding that the WorkCover board also does not have to comply with Commissioner for Public Sector Employment guidelines? Does the government have different advice from the Solicitor-General that indicates otherwise?

The circumstances of this bill are that WorkCover had its legal advice and the government had its legal advice, and they differed. I am asking: does the government have different legal advice in relation to whether or not the WorkCover board, or the Return to Work SA board, has to comply with Commissioner for Public Sector Employment guidelines as well?

The remaining broader issue that I want to raise (and I referred earlier to the Auditor-General raising some concerns in relation to purchases by the Art Gallery board) is: has the Auditor-General raised concerns in relation to the actions or behaviour of other boards which has prompted the government's decision to proceed with this legislation? So, we have had the WorkCover board issue raised and potentially there is the Art Gallery board being covered by this (and I have sought advice on that), but has the Auditor-General or his office raised issues with the Treasurer in relation to the need to clarify issues with legislation such as this?

With those questions being put on the record of the second reading, as I said, is it possible to get those answers back in the minister's reply? I just forewarn the minister that I would like to have an opportunity, having received the government's reply, to at least consider and consult on that reply before we move immediately into the committee stage. If it is possible to get the government's reply before we sit next week that would assist the committee stages to proceed on Tuesday. If it is not possible to get the government's reply until next Tuesday, I will be proposing that we report progress on Tuesday.

If the minister is proceeding to a vote on the second reading today, and she is going to answer at clause 1 whenever we next consider the matter, I think that we should report progress for at least 24 hours to allow me to consult with one or two people. From my viewpoint, I would hope that we would be able to manage the remaining stages of this bill before the end of the next sitting week.

Debate adjourned on motion of Hon. G.A. Kandelaars.