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

Second Reading

Adjourned debate on second reading.

(Continued from 19 March 2015.)

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (15:34): I wish to thank all honourable members for their second reading contributions to this important bill. The Hon. Rob Lucas has asked a series of questions which I have answers for so I will do that at this stage rather than under clause 1.

I am advised that in relation to the question about specific circumstances of the contractual arrangements that WorkCover was seeking to enter into, the issue arose due to amendments made to the WorkCover Corporation Act 2008 which had the effect of WorkCover becoming a public authority and accordingly subject to Treasurer's Instructions. The written opinion from the Solicitor-General is silent on any specific contractual arrangement.

Based on the Solicitor-General's advice, an immediate practical solution to remove ambiguity between sections 5(1) of the act and the TIs was implemented through the minister amending the WorkCover Charter to require compliance with TIs. The Solicitor-General also suggested that amendments to the Public Finance and Audit Act 1987 be made at some point in the future to properly clarify the matter.

During the course of the above, WorkCover continued to work with the Department of Treasury and Finance to obtain an understanding of all TIs and also to implement their requirements within the entity. This included requesting variations or exemptions to the TIs where appropriate.

In relation to the question about WorkCover's view in terms of the legislation, I am advised that WorkCover has implemented a compliance program/governance regime to ensure that TIs are complied with, and is able to request variations/exemptions where appropriate. As a result, DTF does not believe the bill impacts WorkCover's current financial management arrangements.

In relation to the question about other public authorities expressing any concerns relating to the bill, I am advised that DTF is not aware of any public authority expressing concern with the bill. If a public authority was of the view that there was a TI requirement that should not be complied with due to the equivalent procedure already being implemented, cost versus benefits, or other justifiable reasons, the application for a variation or exemption can be made to the Treasurer via Treasurer's Instructions 1.

In relation to the question about the Auditor-General's Report and the Art Gallery board, I am advised that the Art Gallery board scenario is one that will be clarified by the amendment. I am further advised that in these scenarios the entity will comply with both the act and the Treasurer's Instructions unless it is not possible to comply with both. The advice of the Crown Solicitor's Office on the Art Gallery board scenario was that:

…although the remainder of TI 8 applies to the board, it may execute contracts without the authorisation of the minister or cabinet. As long as the board had properly authorised the director to incur the expenditure and execute the contract. The minister may consider that it would be consistent with existing government policy establishing sound practices for public sector financial management and accountability if the board were required to seek external contract authorisations for purchases over $1.1 million. That is of course, a matter for the minister. If he agreed, he could either request that the board apply TI 8.11 as if it were bound to comply with it. Alternatively he could direct it to comply…

In relation to the question about approval to purchase expensive artwork, I have been advised yes, unless an exemption or variation to TI 8 is sought from the Treasurer. In relation to the question raised about conflicts between Treasurer's Instructions and the powers of the Festival Centre board, I am advised that neither DTF nor the Adelaide Festival Centre is aware of any issues.

In relation to the question about issuing a new TI, I have been advised that Treasurer's Instructions are subordinate legislation, and a public authority's enabling legislation will prevail. If it is not possible to comply with both the public authority's enabling legislation and a TI then the TI gives way. TIs state that where the governing legislation of a public authority has alternative arrangements that are inconsistent with a TI, the governing legislation will prevail. TIs are intended to be compliant and consistent with general provisions, e.g., contracting in other states.

In relation to the question about CE contract disclosures, I am advised that the requirement for copies of executive contracts to be made available for inspection is outlined in Premier and Cabinet Circular 27. The Premier and Cabinet Circulars are not a binding force/policy; however, there is an expectation that agencies will comply. For the requirement to be binding on the agency, the minister would need to provide a direction to comply. DTF is not aware of any advice provided by the Solicitor-General on that matter.

In relation to the question about proceeding with the legislation, I am advised that the driver to amend or proceed with the legislation was based on the advice of the Solicitor-General at the time of the original WorkCover issue. The Solicitor-General's advice was that it was prudent to pursue legislative amendment to put the position beyond doubt, the position being the intention underpinning Treasurer's Instruction 8. With those responses, I commend the bill to the council and look forward to dealing with it expeditiously through the committee stage.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: I thank the minister for the answers that were provided on behalf of the government to the questions I asked during the second reading and indicate that, whilst I will make some general comments, the opposition will be pleased to support the passage of the bill through the committee stages this afternoon.

The minister's replies on behalf of the government clarify a number of issues. I think importantly it clarifies the key issue, which was, as the minister has indicated, the government's intention that it would not be possible for the Treasurer to issue a new Treasurer's Instruction that would in some way undermine or override the provision of a particular clause in a statute because that would obviously be wrong in principle.

Where the parliament has clearly expressed a view on a particular issue in relation to either the powers of the board or the powers of the minister and how they might relate, it would be inappropriate for any Treasurer to be in a position to be able to issue an instruction which in some way could override the intention of parliament. So, the minister's reply on behalf of the government, and based on legal advice, is that the Treasurer's Instructions could not be used in that way, and I welcome that confirmation.

Clearly from the replies that have been provided, there is no detail, as I sought, of the particular contractual dispute in relation to WorkCover that potentially caused this issue. It is possible to read the minister's replies to indicate that there was no particular issue, that it was more a general principle, and possibly that is the case. Nevertheless, I do not intend to delay the proceedings of the committee this afternoon on that particular issue. If I want to pursue that issue, I guess I have the opportunity under question time or freedom of information legislation to seek to clarify that particular issue.

The minister has made it clear that the issues in relation to the Art Gallery that the Auditor-General has raised in his annual report will be covered by the amendments that we have before us and, specifically, the minister has replied, based on advice, to the question on the Art Gallery board. The question I put was:

Will the Art Gallery board need to seek the approval of someone other than itself in relation to the purchase of expensive artworks above a certain contract value if this bill is now passed?

The government's reply is:

Yes, unless an exemption or variation to Treasurer's Instruction 8 is sought from the Treasurer.

So, as the government has indicated, that clarifies the issue that had been raised by the Auditor-General in relation to the powers of the Art Gallery board. We will obviously follow that with interest as to whether or not the Art Gallery board does seek an exemption from Treasurer's Instruction 8 on that particular issue.

The minister has clarified that there have been no issues that they are aware of in relation to these potential conflicts with the Adelaide Festival Centre board, and I welcome that indication from the minister on behalf of the government.

The minister also indicates that what prompted this particular piece of legislation was not the concerns raised by the Auditor-General but was the advice of the Solicitor-General at the time of the original WorkCover issue, which again comes back to what exactly the original WorkCover issue was and, if indeed it was a dispute in relation to a particular contract, what that contract was and what the value of that contract was, and, as I indicated earlier, I will not delay the debate this afternoon on that particular issue.

Finally, I note that the minister has replied in relation to chief executive contract disclosures and my question about whether or not the WorkCover board had to comply with the Commissioner for Public Sector Employment guidelines. The minister has indicated on the behalf of the government that:

The Premier and Cabinet circulars are not a binding force or policy. However, there is an expectation that agencies will comply.

I think that is intriguing and it might be an issue that chief executives in a number of departments and agencies may well take note of. The minister says:

For the requirement to be binding on the agency the minister would need to provide a direction to comply.

This eventuated as a result of WorkCover's refusal to provide a copy under Premier and Cabinet Circular No 27 of the contract of the chief executive officer for inspection, as had been required by that particular Premier and Cabinet circular. What the government is indicating here is that, given that WorkCover has refused to be transparent and accountable about the contract to the former CEO on this issue, there is the capacity for the minister to provide a direction to comply.

I indicate publicly that I will write to the new minister and see whether or not in the interests of transparency and accountability he is prepared to direct the WorkCover board to comply with the requirements that every other department and agency complies with, that is, to release under Freedom of Information legislation for inspection the contractual details of the chief executive officer, as it would relate to the former chief executive officer and the current chief executive officer of WorkCover.

So the government has clearly indicated here that that is a power the minister has, and I guess it will ultimately be a question for him as to whether he is prepared to support transparency and accountability by issuing this direction to the WorkCover board. With that, I thank the minister for the answers that have been placed on the public record and indicate the Liberal party's willingness to support the committee stages of the debate.

Clause passed.

Remaining clauses (2 to 5), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (15:51): I move:

That this bill be now read a third time.

Bill read a third time and passed.