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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2010-11-10 Daily Xml
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DISABILITY EQUIPMENT AND SERVICES

The Hon. J.M.A. LENSINK (12:26): I move:

1. That a select committee of the Legislative Council be appointed to inquire into and report upon:

(a) Disability equipment payments made to non-government organisations raised in the 2009-10 Auditor-General's Report;

(b) The appropriateness of one-off funding commitments for disability services in comparison to increased recurrent expenditure; and

(c) Any other related matter.

2. That standing order No. 389 be so far suspended as to enable the chairperson of the committee to have a deliberative vote only.

3. That this council permits the select committee to authorise the disclosure or publication, as it sees fit, of any evidence or documents presented to the committee prior to such evidence being presented to the council.

4. That standing order No. 396 be suspended to enable strangers to be admitted when the select committee is examining witnesses unless the committee otherwise resolves, but they shall be excluded when the committee is deliberating.

This proposal—for which, obviously, I would appreciate the support of my honourable colleagues—is for a committee to look into a matter that the member for Bragg has termed 'stashed cash No. 2'.

Many members would be familiar with the issue that was raised in relation to Kate Lennon, the former chief executive of the justice department, who was accused of diverting unspent funds into the Crown Solicitor's Trust Account at the end of the financial year. Ms Lennon was alleged to have transferred the funds into that account to avoid scrutiny by Treasury under the Treasurer's carry-over policy. There was extensive investigation into the transfers, and it has been a very high profile media matter. There was an investigation by the Auditor-General, who concluded that money should not have been deposited into the Crown Solicitor's Trust Account. In reference to that issue, the Treasurer made the following statements in parliament concerning the conduct of that act. He said:

It is a message to any CEO under this government's administration that, if they want to fiddle the books, if they want to falsify [documents], if they want to shift money around, they will be dismissed.

The history of that matter has been well documented, and I refer members who are interested to examine that for themselves. We have recently received the 2009-10 Auditor-General's Report and, in relation to the Department for Families and Communities, which has responsibility for disability funding, I quote from Part B, Volume 2, of Agency Audit Reports, pages 446-7, as follows:

In June 2007 and May 2008 Cabinet approved grants to a number of NGOs to facilitate the purchase of disability equipment for the benefit of the community. The Cabinet submissions were specific as to the recipient of the grants and the amounts to be paid. The equipment grant monies were approved as additional one-off expenditure initiatives around budget time in those years. The monies were to be expended prior to 30 June in each year. One-off grants were subsequently paid to NGOs prior to the end of the relevant financial years. As part of these grants, the department paid JFA—

which is the Julia Farr Association—

$2.92 million in June 2007 and $2.15 million in June 2008. JFA had no role in managing, prescribing or providing disability equipment.

I must say that I find these circumstances quite bizarre. The report continues:

During 2007-08 to 2009-10, JFA was invoiced to recoup the grant monies and recover the cost of disability equipment the department ordered and purchased. Of crucial importance, it is acknowledged that the grant funds allocated to the department were used to facilitate the purchase of disability equipment, as was approved by cabinet.

The cabinet approved funding for disability equipment was received too late in each of the financial years to provide the manageable opportunity for the orderly purchase of disability equipment before the end of the year. It is understood that this factor, together with the risks either of not receiving the funds or not retaining the funds through an approved carryover process, were the motivating factors for the practice of one-off grants to JFA and their subsequent recovery. The payments to JFA achieved expenditure and outflow of cash to the non-government sector prior to the end of the particular financial years to meet budgetary and financial reporting outcomes....

While these matters more fully explained the motivating factors for the use of the funding/reimbursement practice for JFA, the practice nonetheless did not meet the principles and responsibilities expected of public sector agencies in relation to financial administration and accountability process. There can be circumstances sometimes where those responsible for decision-making may consider that the benefits of certain actions outweigh the adherence to generally accepted processes for good management and accountability. In this case, the department was able to secure additional funding available to achieve reductions in the adult disability equipment waiting list by making grant payments to JFA. However, the maintenance of adequate and appropriate financial accounting standards must prevail. The grant payments, initially by the department to JFA in 2007 and in 2008 and subsequence recovery from JFA to the department, did not meet these standards.

I find those words fairly condemning and would suggest that the motivation behind avoiding Treasurer's Instruction 8, which is quite clear, was to avoid having to return those funds.

The minister who was responsible for disabilities during budget estimates confirmed that all grant payments that are over $1.1 million must be authorised by the responsible minister. The point to make is that, given the stashed cash first round, the government at the time must have known that using funds in this way was in breach of the rules. As we know, a departmental CEO lost her job and her career as a result of undertaking a comparable action.

The problem, if I can paraphrase what audit says, is that, once you transfer money out of the government with particular procedures and controls, you lose control of that money. If the minister did have appropriate controls in place, that raises even more questions as it means that the government documented the use of a non-government organisation which is not a bank as a holding account.

The money was intended to be spent in the 12 months after it was granted, but Julia Farr accounts show that this did not occur. In July 2008, there was $4.18 million sitting in the accounts of Julia Farr Association, and that shows that only $930,000 of the $2.92 million deposited in the account in June 2007 was spent within the space of a year. Further, the Julia Farr annual report reveals that $1.8 million of the $5.1 million transferred out of government control was still in that account as of July 2009.

One of the policy matters I think the committee ought to closely examine is this issue of the government's continual reference to one-off funding. I think that one of the things within the greater community that is not well understood is the difference between one-off funds and recurrent funds, and it is easy to make one-off funds sound like a big hit that is going to provide great benefit to people with disabilities who are waiting for equipment. I quote from a media release from the Premier dated 22 May 2008 entitled 'Waiting Lists for Equipment to be Cleared.'

The media release refers to a figure $5 million in state government funding for equipment for children and adults with disabilities. I think the government has rather cynically used that particular amount of funding to imply that equipment problems had been solved. I will be interested to hear the contribution of the Hon. Kelly Vincent as to whether it has been the case that, as of May 2008, suddenly there are no problems for people waiting for disability equipment.

I think we do need reform in this area because it is a dishonest way for the government to continually drip-feed every time the matter of disability funding arises. We would prefer to see that funding made recurrent so I think it is an opportunity for us to reform the system. I also think that the issue of one-off funding slows down the funding as we have seen quite grossly in this particular case. The way in which the money was transferred into the Julia Farr account and then transferred back has actually led to delays for people receiving their equipment. I note that there were two questions from Dignity for Disability and also Family First on this very issue.

It is a concern in the community. It provides us with an opportunity to look more closely at this issue and make some reforms that may be of great benefit in alleviating the way funding may currently be getting stuck in the system, certainly as it has under this government in those financial periods that I referred to. I would urge all honourable members to support the reference to a select committee.

Debate adjourned on motion of Hon. J.M. Gazzola.

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