Public Finance And Audit (Budget) Amendment Bill

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Speakers - Hannaford The Hon John; Vaughan The Hon Bryan; Jones The Hon Richard
Business - Bill, Second Reading

PUBLIC FINANCE AND AUDIT (BUDGET) AMENDMENT BILL

Second Reading

The Hon. J. P. HANNAFORD (Attorney General, Minister for Justice, and Vice President of the Executive Council) [8.25]: I move:

That this bill be now read a second time.

This Government, since coming to office in 1988, has implemented the most ambitious program of microeconomic and public sector management reforms of any government in Australia. The reforms are extensively documented in the Budget Papers and include accrual accounting and budgeting, global budgeting, comprehensive budget presentations, guarantee of service, reform of government trading enterprises and the establishment of the Government Pricing Tribunal. The key objective of the ongoing reform program is to achieve more efficient and effective financial and resource management and to improve service delivery for the benefit of the citizens of New South Wales. The reform process for the budget has now been substantially completed. The Government is currently focusing on the consolidation of the budget reforms.

I am pleased to say that the comprehensive financial reform program that has been introduced by New South Wales is now being followed by a number of other major jurisdictions. In the area of accrual accounting, for example, the Commonwealth, Victoria, Western Australia and South Australia are now following the New South Wales lead. However, we earned our reputation for financial responsibility by being a reformist Government before the recession forced other governments to pursue the same path. The purpose of this bill is to incorporate in the Public Finance and Audit Act the accepted public finance standards for budget presentation. These standards are the government finance statistics standards used by the Australian Bureau of Statistics in compiling public finance data on outlays, receipts and financing transactions and are consistent with international statistical standards.

I seek leave to have the remainder of my second reading speech incorporated in Hansard.

Leave granted.

New South Wales has in fact long been a champion of better, more uniform Budget information.

At the May 1991 Special Premiers' Conference, all Governments agreed to a New South Wales proposal to publish in their Budgets supplementary information on the Government finance statistics basis for the "General Government" and Public Trading Enterprises Sectors.

The "General Government" sector covers not only Budget dependent agencies, such as Department of Health, et cetera, which constitute the Budget sector, but also those agencies which are self-funding either from user charges or regulatory fees. Examples of self-funded Non Budget Sector agencies include the WorkCover Authority and the Motor Accident Authority.

The aggregates for the "General Government" Sector, Public Trading Enterprises and the overall State sector have been presented on the Government Finance Statistics basis in the New South Wales Budget Papers since 1988-89.

In addition to the presentation of this supplementary information on State finances, the actual Budget presentation has been substantially improved. Traditionally the Budget was presented on a narrow consolidated fund basis which did not give a full picture of the financial position of the Budget Sector.

Starting with the 1991-92 Budget, the Government Finance Statistics standards have been applied to present a comprehensive picture of the Budget Sector financial position.

Similarly the monthly and quarterly reporting of the Budget has been presented on this broader basis and this was legislated for in the Public Finance and Audit Act last year.

The intention of these proposed amendments is to now incorporate in the Public Finance and Audit Act the requirement to present the Budget on the basis of Government Finance Statistics standards, in line with our practice since 1991-92.

On some rare occasions, departures from these guidelines on presentation may be warranted for good accounting reasons but they will be required by the legislation to be explained in the Budget papers and therefore will be open to public scrutiny.

A recent example of such a departure was the decision to exclude the proceeds of the sale of the "GIO" from the Budget despite the fact that inclusion was in line with Government Finance Statistics standards. This decision was taken in order to avoid distorting the Budget result with such a large extraordinary item.

The proposed amendments were foreshadowed in the 1992-93 Budget Speech. They are aimed at demonstrating the Government's commitment to "Truth in Budgeting".

This legislation will ensure that any future Government would only depart from the Government Finance Statistics principles in a transparent way.

The issue of Budget presentation was recently raised in the public forum by Professor Bob Walker, Professor of Accounting at New South Wales University. Without wishing to go into technical detail, the essential proposition put by Professor Walker was that the Budget should present the comprehensive financial position of all Government agencies.

The New South Wales Budget presents comprehensive information on revenues and outlays of agencies predominantly funded from the Budget.

To expand the Budget to include agencies that are fully or predominantly self-funded would completely undermine the purpose of the Budget which is the means for Parliament appropriating financial support to Budget funded agencies.

It would also be totally at variance with the approach to the Budget of all other Australian Governments.

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Moreover, New South Wales has been a pioneer in presenting separate information on the overall financial position of State agencies both on a cash basis in Budget Paper No. 6 and on an accruals basis in the Consolidated Financial Statements that are released later in the year after the Budget. Hence all the information that Professor Walker proposes is currently being produced.

In summary, the amendments contained in this Bill are directed at setting in legislation appropriate standards for Budget presentation and are in accord with Budget practice since 1991-92.

I commend the bill to the House.

The Hon. B. H. VAUGHAN (Deputy Leader of the Opposition) [8.27]: The Opposition supports the Public Finance and Audit (Budget) Amendment Bill.

The Hon. R. S. L. JONES [8.27]: The Australian Democrats also support the bill.

The Hon. J. P. HANNAFORD (Attorney General, Minister for Justice, and Vice President of the Executive Council) [8.28], in reply: I thank honourable members for their support of the important budget reforms. New South Wales will continue to be the leader in terms of economic management in this country.

Motion agreed to.

Bill read a second time and passed through remaining stages.

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