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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-10-28 Daily Xml
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BUDGET AND FINANCE COMMITTEE

The Hon. R.I. LUCAS (16:04): I move:

That the report on the operations of the committee, 2008-09, be noted.

In moving this motion, I intend to speak relatively briefly. At the outset, I thank the members of the committee for what has been a rigorous work program over the past 12 months, and I thank the staff members who assisted the committee. I know that I speak on behalf of all members of the committee when I indicate our concern for our part-time research officer who, for much of this year, has suffered significant health problems. I know that all committee members wish her the best in terms of tackling and managing the implications of her health issues.

The committee's annual report is a brief summary of the workload of the past 12 months. I am sure that, whilst some members of the committee may not be prepared to concede this publicly, when they see some of the evidence given by some of the chief executives and senior finance officers in relation to their stewardship of the taxpayer' dollar, and some of the examples we have seen over the two year period of this committee, even in their most private moments I am sure they shake their heads as to how the many examples of waste of taxpayers' money could have been allowed to continue in the way they did.

We have had evidence of IT schemes, like maintenance works in the housing development, in the families and communities department, which is strapped for money, and up to $5 million being wasted on a new software program, which in the end had to be scrapped and nothing could be salvaged at all—a tragic waste of resources in an area where all of us would support improvements in services. We have seen similar examples—I know that the IT area is a difficult one—of extraordinary blow-outs in terms of the costs of programs in the Treasurer's own Department of Treasury and Finance, and I refer to the Ristech scheme. Since the original conception, the delay has been some seven or eight years and still will not be concluded for another couple of years. The cost has more than doubled from around $20 million to now well over $40 million in terms of total cost. The committee has taken evidence of a significant number of examples.

Whilst I would not expect government members to join in the public criticism of their own ministers, I would hope that in their private moments they are prepared to look at the evidence and take up these issues with their ministers and, should they be re-elected, hopefully pressure some of those ministers to take much closer control of what is going on within their departments and try to prevent some of the gross waste of taxpayers' money that we have seen in terms of a range of projects.

I will not spend my time this afternoon going through all the examples, because clearly there are too many to address. In a couple of general themes, I refer to the committee's early attention to the significant waste going on within the Shared Services project, and we are delighted to see that in the past two annual reports of the Auditor-General his officers have started to report on this issue. I remind members that it was the early work of the Budget and Finance Committee that shed public light on the scandal emerging within Shared Services in South Australia. Essentially the claimed savings of $60 million a year have not materialised at all and the Treasurer has had to recast his budget to acknowledge the fact that the savings that were claimed will not be achieved.

The embarrassment of the Treasurer in this regard is exacerbated by the fact that his own department investigated the Shared Services concept back in 2003-04 and spent hundreds of thousands of dollars on consultants to look at it, and in the end Treasury, his own department, recommended strongly against proceeding. The government at that stage accepted that advice. But in 2006 the treasury white knight from interstate, Mr Smith, arrived to look at this area. He recommended that Shared Services would save hundreds of millions of dollars, and the Treasurer ignored the advice and the investigation that was being conducted locally by Treasury. I think that the Treasurer is probably rueing the fact that he has accepted Mr Smith's advice, because it has been a source of major embarrassment to him in relation to his management of his own department now that Shared Services is within his portfolio area.

The second broad area that I canvass is the issue of savings. The government in each budget since 2006-07 has listed in bold numbers the aggregate amount of savings that will be achieved by all the departments. The government continues to maintain that 93 per cent of the savings outlined in 2006-07 over the next four-year period have been achieved. Again, when the Budget and Finance Committee has gone to the departments and said, 'Okay, you were going to save this amount of money in this particular area; have you achieved it?', in a significant number of areas departments such as Health and Families and Communities have had to answer that, no, they have not achieved either any of the savings or all of the savings that the Treasurer has been claiming.

The Under Treasurer at the last meeting was unable to dispute the evidence of the CEOs of Health and Families and Communities when they had admitted that they had not achieved the savings. The 2006-07 budget claimed that there was going to be a reduction of 1,571 full-time equivalent persons in the public sector in South Australia. When we asked the Under Treasurer whether he had evidence to prove that that had occurred, he indicated that, no, they did not have any evidence that that particular reduction in full-time Public Service numbers had been achieved.

In fact, the Under Treasurer conceded in recent evidence that Health did not know how many people it employed, and neither did Treasury. This is a portfolio area where more than 30 per cent of the total budget is being expended, and that department and Treasury had to give evidence to the Budget and Finance Committee to indicate that they did not know how many people were employed. It was so bad that in last year's budget papers they had to upgrade the estimated number of health employees by around 800. That was how far they were out in terms of the estimate of the number of people they had employed.

One would have thought that it is not beyond the wit and wisdom of the Treasurer and ministers if you ask the simple question, 'Well, how many people are you currently employing,' that at least at some point they could indicate how many people the taxpayers are paying for. The Treasurer is incapable of providing a response, the Minister for Health is incapable of providing a response and, indeed, a number of ministers and CEOs also are unable to provide responses.

I think that savings is an area, again, where we should have higher expectations on our Auditor-General and his staff. I have to say that, in recent years, I have been disappointed at the quality of the overall audit reports that we receive when one compares them with, for example, the quality of reports in other states. I think that is a challenge for our new Auditor-General and his staff if the government continues to make claims about savings—for example, the claims about savings on future ICT.

We have flagged in the Budget and Finance Committee on a number of occasions that those claims were spurious, and evidence from departments such as Health indicates that the claims were spurious. I would have thought that, as most other audit officers in other states are doing, our audit office here should consider those sorts of claims being made by government and, in the end, it may well be that the audit office agrees with the government; and, if that is the case, so be it.

We can have a healthy debate about what evidence is brought to bear but, at the very least I would have thought, the government should not be allowed to get away with making claims that it is delivering savings, whether it be cuts in Public Service numbers or budget savings in total, or making claims that the Future ICT Program is saving $30 million a year, when one health finance officer told us that, instead of saving money, it would actually cost $51 million extra over four years.

Surely, that is something an audit office ought to look at of its own volition and provide information to us on as members of parliament. All members of parliament rely to a significant degree on the quality of the audit reports we receive in the parliament. All members of parliament are not expert on matters of public finance and budget, and members rely on the advice of the audit staff.

In some of these areas, I think that the audit staff could do worse than look at some of the issues that have been raised in the evidence to the Budget and Finance Committee and, of course, collect their own evidence and make their own judgment in relation to those issues. However, I think the issues are too important just to be ignored.

Through the year, I was delighted to see the interest in the operations of the committee from other members of the Legislative Council. In particular, I acknowledge the almost 100 per cent attendance of the Hon. Mr Darley. Although not a member of the committee, he attended most meetings.

Whilst I do not propose to speak on his behalf, as a former chief executive officer with some experience in public administration, I would be very surprised if he does not shake his head at some of the evidence he hears from chief executives these days who are earning certainly significantly more than he did in his time and, I note, significantly more than members of parliament and even ministers and the Premier. Clearly, one hopes that there would be higher expectations in terms of the quality of their performance.

In addition to the Hon. Mr Darley, a number of other members of the Legislative Council also attended on occasions in areas of interest to them. I know that the committee welcomes their attendance and interest and that it will welcome, over the next 12 month period, or however long this committee continues to operate, their continued involvement in and attendance at the meetings.

My final point is one I have made a couple of times over the past 12 months. Again, I indicate to the council that I believe the Budget and Finance Committee has demonstrated the importance of such a committee in our Legislative Council. Now that we have saved the council from the damage proposed to be wrought upon it by the Rann Labor government, long may the work of the upper house committees continue.

As I have said, and I will say again because we have an election coming up in March: I hope that future governments, whether they be Labor or Liberal, will have to confront the operations of a budget and finance committee operating in the Legislative Council. It is my wish that the Budget and Finance Committee will move to be a standing committee of the Legislative Council.

It is certainly my very strong view that, for it to be effective, it should continue to be constituted in such a way that it reflects the numbers on the floor of the chamber. It also ought to continue to be chaired by a member of a non-government party in the Legislative Council. Even if the committee does not become a standing committee, it is my strong view that, if it is established again as a sessional committee in the new session, it ought to be supported by the Legislative Council with the provision of permanent and ongoing staffing.

I repeat something I have said before: we cannot expect that all members of the Legislative Council in the future will be expert in the area of public finance. However, if this committee is to be effective, it should have permanent and ongoing staff who can provide not only detailed analysis of the budget of the government of the day and but also advice to members on possible questions that should be asked. It is then obviously up to the individual members of the committee whether or not they want to ask those questions.

However, there should be a permanent and ongoing resource available to the members of the Budget and Finance Committee, through its staffing, to assist them in keeping the executive arm of government to account by monitoring the expenditure of taxpayers' money. With those words, I ask other members of the chamber to support the motion noting the report of the committee.

Debate adjourned on motion of Hon. I.K. Hunter.

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