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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-09-10 Daily Xml
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BANKS, AMERICAN

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (15:24): My question is again to the Treasurer. What exposure does the government or its agencies (including Funds SA, the Motor Accident Commission and the WorkCover Corporation) have, if any, to US Banks Freddie Mac or Fannie Mae?

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (15:25): I am just trying to think how we would. We may. I do not know whether through some hedge funds there are. I think Fannie Mae and Freddie Mac have been bailed out by the American government. So, I think they are in pretty good shape—I think they are in very good shape. I do not know the specific answer to that. I will get—

An honourable member interjecting:

The Hon. K.O. FOLEY: I know. Freddie Mac is now Uncle Sam. Freddie and Fannie are now in bed with Uncle Sam.

Mr O'Brien: Thank God they are.

The Hon. K.O. FOLEY: Thank God they are; exactly. The world economy would be in a poorer shape if dear old Uncle Freddie and Aunty Sam—Aunty Mac, or whatever—Fannie and Fred—had gone down the gurgler. I will check what, if any, exposure we have to those entities. I would be surprised, but I will certainly check that out.

When I came to office I was appalled not only by the fact that the Liberals were incapable of tough financial decisions to restore a AAA credit rating but also that they had an incredibly sloppy financial management approach. Let us have a look at what we as a government have put in place to improve the quality of financial management and financial reporting since we came into office.

Ms Chapman interjecting:

The Hon. K.O. FOLEY: Yes, WorkCover; fixed. Who fixed that? This government fixed WorkCover. Not only did you not have the courage to fix WorkCover, but your spokesman went out there and said that you would never ever do it. But you crumbled under the pressure from the business community. You folded like a pack of cards.

This is what we have done: monthly financial reporting. They did not have that. Do you know what used to happen? The government departments would get their budgets at the beginning of one financial year and they did not have to report their outcomes until the end of the financial year. What did we do?

The Hon. J.D. Hill interjecting:

The Hon. K.O. FOLEY: Hilly wants to go back to it, yes. Agencies report year to date budget outcomes on a monthly basis and their expected end of year outcomes. That information is reported to the ERBCC (Expenditure Review and Budget Cabinet Committee). It allows cabinet and me to monitor under-spending or over-spending by agencies. The carryover policy, about which former CEO Kate Lennon ran into difficulty with the government (I had better be careful what I say there), identifies under-expenditure by agencies and allows either carryover to a following year or redirection to a higher expenditure priority. It is claimed that this encourages end of year spend-ups, but it is monitored through monthly reporting. Categories of carryovers are deemed automatic and provide clarity to agencies to manage their budget—a new initiative.

What else have we done? The much-lauded, appreciated and highly respected cash alignment policy. Unspent cash is returned to the Consolidated Account, and this ensures that agencies do not build up excessive cash balances. And we have end of year reviews. Treasury and agencies review the agencies' financial performance. From 2008-09, chief executives of government will present this information to the Expenditure Review and Budget Cabinet Committee. This clearly helps to identify any deficiencies in the past year and possible improvements for the following year. What else have we done?

The Hon. M.D. Rann interjecting:

The Hon. K.O. FOLEY: Yes, that is right. Chief executive accountability. This requires chief executives to advise their ministers and the Treasurer when it appears that they cannot constrain expenditure within their annual budget. CEs are required to provide options on amendments to programs or other funding redistributions to avoid over-expenditure. But what else have we done, you ask.

Ms Portolesi: Tell us.

The Hon. K.O. FOLEY: Oh, good. We are only now up to No. 6. We have what is called initiative monitoring: we monitor initiative—I get very worried when departments and ministers show initiative. Agencies report progress on implementing all new expenditure, revenue and savings initiatives. This ensures that new initiatives are implemented as approved and any issues are identified. But there is more. Never before has there been a proper regime, in my opinion, for monitoring agencies' capital expenditure. We have a capital monitoring program. Agencies report progress on implementing—

The Hon. M.D. Rann: CMP.

The Hon. K.O. FOLEY: That is correct. I am prepared to give you credit for that. The capital monitoring program will now be known, after the Premier's interjection, as the—wait for it—CMP. That is why you are Premier: you are just that level above us on that.

The Hon. M.D. Rann: Helicopter view.

The Hon. K.O. FOLEY: Helicopter view. Under capital monitoring or, as the Premier now refers to it, the CMP, agencies report progress on implementing capital projects. This, of course, enables identification of delays and consideration of reprioritising. Finally—and I could go on—we have full-time equivalent monitoring, that is, the FTEMP. Agencies report FTE numbers against their cap. It enables early identification of potential overspending where agencies are recruiting more FTEs than they can support within their salaries and wages budget. We have a holistic, very involved, very complex, detailed, highly regarded system, and respected around the nation by other treasurers and—

The Hon. M.J. Atkinson: Profound.

The Hon. K.O. FOLEY: Profound.

The Hon. M.J. Atkinson: Transcendental.

The Hon. K.O. FOLEY: Transcendental. What has 'transcendental' got to do with it?

The Hon. P.F. Conlon: Bathos and pathos.

The Hon. K.O. FOLEY: Bathos and pathos. I probably should wind up at this point. However, I say that we have an exceptionally well run system of accountability financially. It is not without its mistakes: it is not without its errors. Once we in Treasury find out who has made the mistake, we are on to it. Maybe I even make the odd blue. I am worried about these other microphones. I get into enough strife when people can hear me, imagine how I am going to go when they can hear what I am saying quietly to people. For Mike Smithson's benefit—he has gone—I will start every day with a 'sorry', sorry for what has been said by me the day previous and sorry for what I will say throughout the course of the day. At that point I will sit down.

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