The purpose of this bill is to dissolve the Homebush Abattoir Corporation on 1st January, 1992, and to transfer its assets, liabilities and staff to a new corporation to be called the Homebush Bay Ministerial Corporation. This represents the final stage of a process commenced by this Government to close down the antiquated and inefficient Homebush abattoirs. On assuming government in 1988 I immediately moved to close down the abattoirs in June of that year. I subsequently closed the underutilised and costly saleyards in May 1990. The bill is necessarily brief because it will transfer the duties and responsibilities of the corporation from a now inappropriate piece of legislation - the Meat Industry Act 1978 - to a more relevant and appropriate entity, on behalf of the Crown. All existing liabilities and actions by or against the Homebush Abattoir Corporation prior to its last day of operation will transfer to the new corporation. Importantly, all rights of those employees required to be retained by the new corporation will be similarly transferred without any loss of continuity of their rights.
The major beneficial change will be the ability of the new corporation to develop land consistent with the zoning of the Homebush Bay area. This will allow the control and delivery of the sporting facilities being constructed on the current corporation's land for Sydney's bid for the year 2000 Olympics. Also, the bill has a provision to transfer out of the new entity any such assets, rights or liabilities to the Crown or to any person on behalf of the Crown. It is intended that the new corporation will be administered by the Minister responsible for the Homebush Bay redevelopment, at present the Minister for Local Government and Minister for
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Cooperatives, my colleague the Hon. G. P. B. Peacocke. In effect, this will allow a co-ordinated approach to controlling and managing the redevelopment of the current Homebush Abattoir Corporation land consistent with the overall Homebush Bay plan, without in any way lessening the existing government responsibilities on the site.
I wish to acknowledge the efforts of the corporation's general manager, Mr Graeme Crouch, and the deputy general manager, Mr Terry Hukins, who has been a long-time employee of the existing corporation, for ensuring that the eventual goal of winding up of the Homebush Abattoir Corporation was attained. Both of these managers have ensured that the process of dissolution and transfer has been carried out in the most efficient manner possible. The bill demonstrates the Government's commitment to utilising the vast amount of land available in the Homebush Bay area in the most efficient and appropriate manner. I commend the bill.
Debate adjourned on motion by Mr Martin.
LOCAL GOVERNMENT (BUILDING APPLICATIONS) AMENDMENT BILL
Bill introduced and read a first time.
Second Reading
Mr PEACOCKE (Dubbo), Minister for Local Government and Minister for Cooperatives [9.35]: I move:
That this bill be now read a second time.
The object of the bill is to amend the Local Government Act to set in place, for the first time, legislation to implement a system of council notification of building applications to neighbours. I emphasise this point because under the bill the notification system not only gives certain persons a right to be notified by councils of the receipt of a building application and to inspect the building plans, but also confers a right for them to make a submission in writing to the council about the building application. To complement these rights, the bill provides that a council cannot determine a building application until at least 10 days after the giving of notice and that all submissions received before the council determines the building application must be considered by the council. The bill is put forward in recognition of the right for public involvement, where it is warranted, in councils' decisions on building work.
The bill has the objective also, as it must, of achieving a balance between the various interests: the building owner and building industry on the one hand, from the
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aspect of limiting delays and costs in relation to building approvals; and the public on the other hand, in relation to their perceived right for involvement in councils' building application decisions. The Government has developed these proposals in the bill as part of a broader scheme in relation to councils' consideration and determination of applications for a wide range of approvals, including building and development. In particular, senior officers of the Department of Local Government and Co-operatives, the Attorney General's, and the Department of Planning, are formulating a mechanism, as part of an integrated approval system, to ensure that councils' consideration of such applications is not delayed or otherwise frustrated by actions are frivolous or vexatious or otherwise without substance that taken either by councils themselves or by third parties. The purpose of this proposal is to protect the interests of the person making application.
The need to address the issue of notification to neighbours and to strike a balance between the competing interests through the introduction of legislation to achieve an equitable notification system arose from recent court decisions. In general terms, the judgment of the Land and Environment Court in Porter and Rosenberg v. Hornsby Shire Council, which in the Court of Appeal was confirmed but on different grounds, placed a wider interpretation on the previously understood meaning of section 312A of the Local Government Act, which states that certain persons can inspect building plans. As a result of the courts' decisions, councils found themselves with an obligation to notify the persons detailed in section 312A that they were able to inspect building plans, notwithstanding that it was clearly not the intention when the section was introduced in 1985 that they be required to do so. It was apparent also on examining the practical situation that councils certainly were not aware of this obligation prior to the courts' decisions. Accordingly, though, in accordance with their own policies, some councils did undertake a notification procedure prior to the courts' decisions, many did not, particularly those outside the Sydney metropolitan area.
Further, because there was no known legislative requirement for notification, there were differences in policies and procedures between the councils that had implemented a form of notification. Understandably, because the courts' decisions placed a new meaning on the law, a great deal of confusion and uncertainty were generated. This arose particularly from the viewpoint of the practical application by councils of the notification requirement, and resulted from the necessity, in complying with the law as interpreted by the courts, to notify all adjoining owners of every building application received. As a consequence, the Government decided to review the legislation and the whole policy issue of notification of persons by councils, with a view to proposing amendments to the legislation, which reflect its policy on the issue, and set an appropriate, efficient and effective notification system in place. In so doing, it was considered essential to set in place legislation that sets out clearly the obligations and rights of all parties concerned, as well as the complementary processes and procedures, which together comprise a complete notification system. This bill is the product of that review.
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In undertaking the review, it became apparent that the courts' decisions have far-reaching implications for councils, the building industry, and owners proposing building work, so far as delays and costs are concerned. This relates principally to the requirement as interpreted by the courts for all adjoining neighbours to be notified of the receipt of every building application, even though they may not be affected in any way and regardless of whether the building work is of a minor nature. The issue was examined comprehensively and the position reached by the Government is that such notification is inappropriate because it is totally unnecessary. A prime example of this would be where rural adjoining owners may be many kilometres from the proposed building work. Another example would be in the case of proposed minor building work, where urban adjoining owners would not even be able to see the building when built; for example, a small garden shed. If such building work is in keeping with accepted community standards and would not have any effect on one or more adjoining owners, it would be most unfair to inflict a delay with perhaps resultant additional costs on the owner proposing building work while an unnecessary notification procedure is undertaken.
It must be emphasised that the issue relates to councils' determination of building applications. Notification to neighbours of building applications should not be undertaken for the sake of keeping neighbours informed of what others are doing. It should be undertaken only in circumstances where neighbours may be affected by the proposal in order to give them a right to comment and to have their comments considered by the council before it determines the application. To accord with this philosophy, and to address the adverse impacts, practical difficulties, and unnecessary circumstances of notification arising from the courts' decisions, it was decided that it was appropriate to amend the law to restrict the extent of notification required. Accordingly, only adjoining owners who, in the opinion of the council, may be detrimentally affected would be required to be notified. This, in effect, is what is considered by the Government to be the minimum level of notification necessary. In addition, in recognition of the fact that some councils have wider notification systems in place under their own policies, and in view of the community push for public participation in councils' decision-making, it was decided as a result of the review that it was appropriate to provide in the legislation for a second step of wider notification. This second step approach requires councils to address the issue of whether additional persons should, and will, be notified, by requiring councils to adopt a policy in that regard following a required public consultation process. This requirement accords with the thrust of the Local Government Act review of councils' autonomy in making decisions affecting their area, with minimum regulation by the State Government, and accountability to the local electorate.
It was also decided that notification is unnecessary at building application stage if it has already been undertaken in relation to a development application or the building line. Such duplication is totally unwarranted bearing in mind the resultant delays that would arise. To complete the review, processes and procedures were formulated to ensure that the legislation could effectively implement the two-step approach to notification. Subsequently, the complete notification system package was
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contained in draft legislation. An exposure draft bill was released in December 1990 for public comment, in line with the Government's objective of introducing legislation that would achieve a balance between the various interests on the issue, and in recognition of its willingness to consult in that regard. More than 100 submissions were received commenting on the draft bill, which were comprehensively examined and evaluated. In general, the exposure draft bill received strong support from most quarters on the basis that it fulfilled its objective of achieving a balance between the various interests. There was, however, some criticism from members of the public and community groups, which might well be attributed to some misunderstanding about the proposal in some press articles. The thrust of the criticism was that the legislation should provide for all neighbours to be notified in respect of all building applications - that it should not be restricted to adjoining owners who may be detrimentally affected - because of concerns about leaving that decision in the hands of the council. As I have stated, such extensive notification cannot be justified as a universal practice.
Accordingly, it has been decided to maintain the two-step approach to notification contained in the exposure draft bill, but with appropriate modifications. To positively address community concerns in relation to leaving in the hands of the council the determination of whether an adjoining owner may be detrimentally affected, it has been decided to strengthen the provisions of the bill to ensure that councils efficiently and effectively implement the legislation relating to the forming of an opinion as to detrimental effect. As a consequence, two accountability mechanisms have been formulated, both of which are contained in this bill. The first is a provision detailing the heads of consideration councils are required to take into account when forming the required opinion as to whether an adjoining owner may be detrimentally affected. The second provision requires councils, in respect of forming the required opinion as to detrimental effect, to adopt a policy in that regard following a required public consultation process, and in accordance with guidelines issued by or on my behalf. These amendments to the exposure draft bill will have the effect of providing checks and balances in relation to councils' determination of whether an adjoining owner is detrimentally affected. The community will have the opportunity to participate in the development of the policy in that regard which is best suited to the needs of the particular local area.
Arising from the consultation process, a number of other changes of a procedural nature have been decided upon. For the benefit of honourable members, I will briefly explain the more significant provisions contained in the bill. First, clauses 4 and 5 of the bill contain provisions to validate certain building approvals given before the commencement of the proposed amendments. It is necessary to provide for these validation provisions because of the confusion and uncertainty arising from the courts' decisions in placing a wider interpretation on the previously understood meaning of the law. Part 11 of the Act is amended as set out in schedule 1(1) to (3). Schedule 1(1) inserts sections 312A to 312G. Proposed of subclause (2) section 312A will oblige a council to give written notice of a building application to adjoining owners who, in the opinion of the council, may be detrimentally affected
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by the proposed building after its erection. Subclause (3) provides that the notice is to be given as soon as practicable after the building application is made to the council, and at least 10 days before the council determines the application. The period of 10 days was extended from that contained in the exposure draft bill of seven days, to allow notified persons sufficient time to make a submission to the council.
The period of 10 days was also struck to provide a balance between the interests of the building owner and industry so that there is capacity for building applications to be determined quickly, even when notification occurs. It is emphasised that 10 days is a minimum. It is open to the council to determine the application at a later time, but still within the required 40-day period. Subclause (7) requires the council to form an opinion as to whether the enjoyment of adjoining land may be detrimentally affected. Subclause (8) details the heads of consideration councils are required to take into account when forming an opinion as to detrimental effect. Proposed section 312B requires councils to give notice to persons to whom notice is required to be given under a policy adopted under section 317BF. This provision effectively implements the second stage of the approach to notification, which requires councils to adopt a policy on the notification of additional persons following a required public consultation process, and in accordance with the guidelines prepared by or on my behalf.
The purpose of these guidelines, which are currently being prepared, will be to assist councils in the formulation of the required policies, and appropriate processes and procedures in that regard, and their efficient and effective implementation. In particular, the guidelines will provide direction in relation to the heads of consideration in determining detrimental effect, the form of notification, including the need to provide sufficient information to the persons notified, appropriate time frames for the giving of notice, the making of submissions and the determination of building applications, the rights of notified persons, and other procedures. In recognition of the fact that it is not necessary to duplicate a notification procedure, proposed section 312C has been included. This section provides that the council is not required to give notice of a building application to a person if it has given notice of a development application, or in relation to a building line, and the appropriate building plans were available for inspection at that time.
Proposed section 312D provides that a further notification procedure need not be undertaken if minor amendments are made in relation to the building application, which includes plans. The right for notified persons or persons entitled to be notified to inspect the building plans is contained in proposed section 312E. Proposed section 312F provides that if a council gives notice to a person under proposed sections 312A and 312B, any person may make a submission in writing to the council in respect to the building application. All such submissions received before the council determines the building application are required to be considered by the council under the provisions of subclause (2) of section 312F. Proposed
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section 312G was not contained in the exposure draft bill and has been included to restrict the time within which legal proceedings on procedural grounds can be commenced to ensure a degree of certainty in that regard, and particularly to avoid a situation where such action could be taken at a stage where building work is substantially completed.
Schedule 1(2) amends section 313(1)(o) to require the council to consider the likely effect of the proposed building work on other land and buildings, as well as adjoining land and buildings. Schedule 1(3) inserts division 4AA into part 11 of the Act. Proposed division 4AA contains provisions relating to the second step of the two-step approach to notification, which requires that councils adopt a policy following a required public consultation process in accordance with the guidelines. Proposed section 317BB obliges a council to prepare two draft policies. The first concerns the matter to which it will have regard when forming its opinion as to detrimental effect, as required in proposed section 312A. The second concerns the giving of notice of building applications to persons other than those to whom it is required to give notice under proposed section 312A.
The council is required to publicly exhibit the draft policy under proposed section 317BD, which also obliges the council to consider all submissions made to it. Proposed section 317BE allows the council to make any amendments to the draft policy it considers necessary arising from its consideration of the submissions received, and requires that the draft policy be re-exhibited if it is so amended. The council is obliged to adopt the policy within 28 days after the closing date for submissions. Proposed section 317BG requires the council to have regard to any guidelines prepared by or on my behalf in acting in accordance with the division. The provision contained in the exposure draft bill requiring the head of my department to approve council policies has been deleted because it was at odds with the approach of the Local Government Act review of greater autonomy for local government and accountability to the local electorate. In conclusion, I am confident that implementation of this bill will achieve the appropriate balance between the various competing but legitimate interests in the building application process. I commend the bill.
Debate adjourned on motion by Mr Scully.
WORKERS COMPENSATION LEGISLATION (AMENDMENT) BILL (No.2)
Bill introduced and read a first time.
Second Reading
Mr FAHEY (Southern Highlands), Minister for Industrial Relations and Minister for Further Education, Training and Employment [9.56]: I move:
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That this bill be now read a second time.
Honourable members will recall that an earlier version of this bill was passed by the House on 30th April, 1991, but subsequently lapsed when Parliament was prorogued. The bill contains various proposed minor amendments of workers' compensation provisions, namely, transferring from the WorkCover Authority to the Compensation Court responsibility for medical panels; strengthening penalty provisions for false statements connected with workers' compensation claims; streamlining the procedure applicable to the administrative levy on insurance premiums that funds the WorkCover scheme; and updating legislation covering claims against certain insolvent insurers. These are sensible proposals of an administrative nature which were supported by the Opposition when the bill was previously before the House. Since that time, on the recommendation of the WorkCover Authority, further proposed amendments have been included in the part of the original bill relating to insolvent insurers. The additional items mainly concern the Bishopsgate Insurance Australia Limited Act and the Associated General Contractors Insurance Company Limited Act and have become necessary in order to take account of recent developments in the liquidations of those pre-WorkCover companies. Both those Acts currently provide for the GIO, which administers the special funds from which claims are paid, to recover relevant amounts from the respective company liquidators. Amounts recovered by the GIO are paid into the funds under the legislation and become part of the pool of money for payment of benefits to workers and, in appropriate circumstances, for distribution to the former insurers who originally contributed to the funds. Consequently, it is beneficial for the legislation to be co-ordinated with the process of liquidation of each company.
In the case of Bishopsgate the version of the bill that was dealt with in the last session already provided for the possibility that the liquidation might be changed to a scheme of arrangement, which was then the subject of preliminary discussions between the liquidator, the GIO and other creditors. During the past few months that matter has progressed and the bill has accordingly been updated to validate the GIO's participation in such a scheme, in case the liquidator finalises the scheme before enactment of the provisions in this bill. Similarly, in relation to the Associated General Contractors Insurance Company Limited Act, the provision contained in the original bill to allow the GIO to pay claims direct to workers, instead of having to lend the money to the liquidator for payment, has been extended to provide for a further arrangement that has been proposed by the liquidator of that company. That arrangement is on the basis that the liquidation of Associated General Contractors Insurance itself would be completed in the near future and the fund under the Associated General Contractors Insurance Company Limited Act would become directly liable to make further payments on claims. In return the liquidator has agreed to expedite payment of significant dividends to the fund. The fund's present rights as a creditor of AGCI would also be replaced by rights against Palmdale Insurance Limited, a more substantial company that was associated with AGCI and which also is in liquidation.
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The result of these practical arrangements will be advantageous to the functioning of the schemes under these Acts. Lastly, minor provisions have also been inserted in the original version of the bill, to update three other obsolete Acts that established similar special funds, namely, the Northumberland Insurance Company Limited Act 1975, the Riverina Insurance Company Act 1971 and the Standard Insurance Company Act 1963. The bill provides for the WorkCover Authority to assume responsibility for remaining claims under those Acts, as well as the Bishopsgate Act and Associated General Contractors Insurance Company Limited Act. This is consistent with amendments previously enacted to the Workers' Compensation Act 1987, by which administration of the Insurers Guarantee Fund - which is a standing fund to cover any further insolvencies of workers' compensation insurers - was transferred from the GIO to the authority. Other proposed amendments of an ancillary nature are also included. I commend the bill.
Debate adjourned on motion by Mr Knowles.
COURTS LEGISLATION (CONTEMPT) AMENDMENT BILL
Bill introduced and read a first time.
Second Reading
Mr GRIFFITHS (Georges River), Minister for Justice [10.1]: I move:
That this bill be now read a second time.
The purpose of this bill is to standardise the penalties for contempt in courts presided over by magistrates, and to provide the District Court with limited power to imprison persons guilty of contempt in the face of the court. Courts are empowered to summarily punish contempts committed in the face of the court. The court has this power in order to vindicate the integrity of the court and to preserve its authority when that authority and control is threatened. The court's contempt power has traditionally been used sparingly, and only as a last resort. Its existence, however, acts as a strong deterrent to contumacious acts. Nevertheless, occasions do arise in which a court must use its summary power to quell a threatened disruption of the court. To do so effectively, courts must have available the power to impose a substantial fine as well as the option of imprisoning the contemnor for a limited period of time. A recent stated case to the Supreme Court highlighted the inadequacy of a magistrate's power under the Justices Act 1902 to penalise a person guilty of contempt in the face of the court. Section 152 of the Justices Act currently provides for a monetary penalty of $4 or imprisonment of 14 days. Apart from the conversion to decimal currency, this penalty has remained unchanged since 1909 when it was first inserted into the Justices Act.
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The current provision places magistrates in a difficult position. As a result of the inadequacy of the monetary penalty there is little choice but to imprison a person guilty of contempt of court if a realistic penalty is to be imposed. The Government proposes to rectify this problem by increasing the monetary penalty for this offence to the more realistic maximum of $1,000. In addition, the need to standardise the penalty that may be imposed by a magistrate for this offence under Acts other than the Justices Act has been recognised. At present, the monetary penalties in other Acts for contempt in the face of courts presided over by magistrates vary from Act to Act and all but the Local Court (Civil Claims) Act 1970 provides for imprisonment. In order to have consistent penalties for the same offence, the Government proposes that all the relevant provisions in the lower court jurisdiction be standardised and provide for a fine of $1,000 or 14 days' imprisonment. This is the penalty for contempt that currently applies in the Liquor Licensing Court, which is presided over by magistrates. It should be noted, however, that this penalty will not extend to contempt committed before a registrar under the Local Court (Civil Claims) Act 1970. The penalty for that offence will remain a monetary penalty of 10 penalty points, being $1,000, and no power to imprison will be available.
Section 199 of the District Court Act 1973 currently provides for a maximum monetary penalty of $2,000, with no power to imprison. In the result, a District Court judge is unable to impose a custodial sentence in circumstances which would allow an inferior court to order up to 14 days' imprisonment. To address this anomaly and take into account the gravity of proceedings determined by this court, it is proposed that a maximum penalty of 28 days' imprisonment should be included as an alternative to the existing $2,000 fine for contempt before the District Court. This proposal has the support of the Chief Judge of the District Court, His Honour Judge Staunton. It should again be emphasised that the summary punishment for contempt committed in the face of the court is a power which is used sparingly and only in serious cases. The contempt power is exercised to vindicate the integrity of the court and its proceedings. It is not a power to be used to vindicate the personal dignity of the judge or magistrate concerned. Moreover, in most cases, merely the threat of its use will serve to restore the authority of the court, when that authority is threatened, without need for further action. I commend the bill to the House.
Debate adjourned on motion by Mr Knowles.
GOVERNMENT INSURANCE OFFICE (PRIVATISATION) BILL
Second Reading
Debate resumed from 23rd October.
Mr RUMBLE (Illawarra) [10.6]: After the performance of the honourable member for The Hills last night in this debate, all I can say is that I would prefer to
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have him against me than for me. When we have a used car dealer supporting a bill such as this, in everyone's mind the whole bill is thrown into suspicion. We have to ask why the GIO is being privatised - why is it being flogged off? One of the reasons is the waste and mismanagement of this Government. I give a brief background to the Parliament as to why GIO is being flogged off. We were told prior to the last elections that we would have a balanced budget. We had an election because the Government could not get its industrial relations legislation through. Quite obviously, the Premier and Treasurer misled this House on 10th April, 1991, when, in response to the Deputy Leader of the Opposition, he stated:
I am able to tell the House that the Government will maintain the goal of a balanced Budget and will achieve a balanced Budget in 1991 and in subsequent years.
Later, he expanded on this by saying:
I am very pleased to say to the House that in 1991-92 there will be a balanced Budget in New South Wales under my Government and that over the next term of the Government there will continue to be a reduction in the gross State product debt ratio.
We now have a deficit of a billion dollars and an anticipated deficit of a billion dollars for the ensuing year. The Premier tells us that his action is an example of fiscal restraint and that he is an example for the rest of Australia in his administration of the finances of this State. The reality is that hundreds of millions of dollars have been wasted in this State since March 1988 on such projects as Eastern Creek, where there has been $90 million squandered; on the payout of $400 million on consultants; and on payouts to wealthy egg producers. To use the adjective of the Premier, one of the most asinine decisions ever made by this Government was to hit on the head the casino prospect for Darling Harbour. The Government told the people of New South Wales that there would not be a casino in New South Wales. That decision deprived this State of millions of dollars that could have gone to assisting the health services budget. We have to give serious consideration to the GIO privatisation before it is put in the hands of the public of New South Wales. Shareholders' funds amount to a billion dollars. The total funds amount to $8 billion. There are approximately 130 business offices and there is a work force of approximately 3,100 persons.
The Opposition is of the opinion that stringent conditions should be attached to the sale of this enterprise. Since March 1988 we have seen the fiascos of previous attempted asset sales, for example, the schools fiasco and the attempt to flog off the McKell Building. Those attempted asset sales were detrimental to this State. In my electorate there is a particular example of gross mismanagement in respect of the sale of public assets. Notwithstanding that in 1989 the previous Minister for Minerals and Energy stated that the Huntley colliery and the Tallawarra power station would not be closed, both of those establishments were in fact closed. That was another broken promise of this Government. However, the Government has been unable to sell either the Huntley colliery or the Tallawarra power station. It must now attempt
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to flog off the machinery and equipment from the Huntley colliery. After examining the Budget Papers it is my understanding that the cost of clearing the Tallawarra site will be $19,330,000. That is an example of the waste that occurs when a government enterprise is closed down. The figure of $19,330,000 is twice as much as the cost of the new Wollongong police station. To give honourable members another example, it is half the cost of the proposed clinical services block at Wollongong Hospital. That is one example from my electorate of mismanagement when attempting to sell an asset that has been closed down. It demonstrates that the Government is unable to flog off assets which should be retained as going concerns.
The GIO is certainly a going concern. It generates $100 million profit per annum for the State. It is essential that stringent conditions attach to the sale of this asset. For that reason the Opposition will move an amendment to provide that prior to the float the Auditor-General must certify to the Parliament that he is satisfied that the accounts relied upon for the prospectus represent a true and fair statement of the financial position of the GIO and that the proposed sale price exceeds the retention value. As a member of a particular parliamentary committee, I, together with my colleagues on that committee, have had discussions with the Auditor-General. He is a competent person who reports only to the Parliament; he does not report to the Government. The Government expects to obtain approximately $1.75 billion from the sale of the GIO and it is therefore absolutely essential that an independent, competent person such as the Auditor-General should certify to the Parliament that the calculations put forward by the Government accord with the value of the asset. I have been reliably informed that the Minister for Sport, Recreation and Racing and Minister Assisting the Premier was a member of the committee of which I am a member. He also has a great deal of confidence in the Auditor-General of New South Wales. The Opposition does not want the GIO flogged off if it is shown that its sale price does not exceed its retention value. The Opposition seeks to amend clause 31 to provide that the memorandum and articles of association are to provide that no individual -
Mr SPEAKER: Order! I must restrain the honourable member from reading the amendments. They have already been read on to the record by the Leader of the Opposition, and it is dubious whether that procedure was within the scope of a second reading debate. The honourable member may refer to the amendments generally but may not reread each amendment.
Mr RUMBLE: Were the amendment I just read to be agreed to, the effect would be that no one person or industry representative would be able to take over the asset. The Opposition is concerned that people and companies in the insurance industry could get a substantial shareholding in the GIO and so obtain inside information to assist in the running of their own companies. The Leader of the Opposition has already spelt out the other amendments the Opposition proposes to move. One of those amendments seeks to restrict the number of board members to nine. It has already been stated in this House that there is evidence to suggest that the Government wants to put some of its mates on the GIO board. It is for that
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reason that the Opposition proposes that the number of board members be no more than nine and that a staff-elected member should serve on the board.
The Opposition acknowledges that the GIO is a valuable asset to this State. If this asset is to be sold to balance the budget of New South Wales following the mismanagement of this State's finances, a proper return must be received for that asset. The Opposition appeals to the Government to accept these amendments. If the Government is fair dinkum about wishing to get a proper price for the asset, bearing in mind what we know about the value of this asset, its reserves and earning capacity over the past few years, it is essential that this House be given independent certification by the Auditor-General that the retention value of the GIO is not less than the sale price. The Opposition hopes the Government will accede to these amendments.
Mr CRUICKSHANK (Murrumbidgee) [10.18]: I am pleased to have the opportunity to speak in this debate. So far the debate has been in two parts: the first part was merely a lead-up debate and the other was a ritual exercise, very much like yesterday's exercise - a last hurrah. Yesterday the Leader of the Opposition spoke in terms that I found quite objectionable, in particular because he did not believe what he was saying himself. One could picture the Leader of the Opposition treading the boards in Bondi or Maroubra practising his thespian arts, because that is all he was doing. He did not believe what he was saying. He loves using such expressions as "raiding the GIO" and "flogging off the GIO", and saying that this Government has no commitment and that the GIO is only a milch cow. I ask honourable members why the Commonwealth of Australia and the States have their current problems. Those problems are being experienced less in New South Wales than in any other State, except Queensland. They all hinge around matters of finance and what the various governments did with the taxpayers' dollars that they were supposed to spend on behalf of the people.
As an example of what happens when politicians are involved in private enterprise, in particular the GIO, the $48 extra everyone pays at car registration renewal time is attributable solely to the totally unwarranted, base, wrong - every other negative description one can think of - interference by the eminent previous Premier, Mr Neville Wran to try to achieve a political advantage. That extra payment is to pay off the debt which blew out to something like $3 billion, if my memory serves me correctly. It is now down to about $1 billion. The Leader of the Opposition talks about the dreadful things that we are doing to the GIO. The employees of the GIO are happy about what the Government is doing because they know that in future the insurance industry will be very competitive and companies will require expansion and the acquisition of market share, and the GIO will have to compete in that market.
Mr Crittenden: Tell us about how competitive you made the fish market.
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Mr CRUICKSHANK: Do not blame this Government for the fish market; look at the previous Labor Minister for Agriculture and Fisheries. We never wanted a fish market. Have a look at the State Marketing Authority and the pack of crooks that were running that place by government fiat - political appointees.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Wyong to order.
Mr CRUICKSHANK: Political interference in private enterprise in the Commonwealth area and in every State has been a total failure. GIO employees are happy about the privatisation because they know that they will get a share in the company. The future of insurance will belong to the fit and those who are up earlier than everyone else. The GIO could be said to have done reasonably well as an insurance company previously but we are looking to the future. The future will have no place for the civil servant in the hurly-burly of the private market. We have known that for years. Civil servants who can operate successfully in the private market have not been invented yet. It has always been a hypocritical sham to put such people into the private area. The GIO started out 60 or 70 years ago to provide workers' compensation insurance - a good way for it to have started - and it has since expanded into all areas of general insurance. Despite the political interference the GIO has performed quite well. The Government no longer has a social obligation to this institution. I do not believe Opposition members understand the meaning of the word "privatisation". Privatisation really means going public. The Government is taking this institution out of the political arena and is offering it for sale in the market-place.
Mr Souris: Publicisation.
Mr CRUICKSHANK: We could call it publicisation as well as privatisation. It is the social obligation of any government in using taxpayers' dollars not to take risks. This institution is being given back to the Australian public. The largest proportion of shares that any person will be able to buy in this float is 10 per cent. All employees know that they will not receive any special dispensation in respect of the proceeds of the sale; they will be in the same situation as everyone else. The GIO has offices throughout the Commonwealth of Australia and I think it has offices or connections in London, Hong Kong and parts of South-east Asia.
Mr Bowman: You did not want to float it, did you?
Mr CRUICKSHANK: I do not know what the honourable member is talking about. We have always wanted to get rid of the assets.
Mr Bowman: Oh yes, you have always wanted to get rid of the assets.
Page 3338
Mr CRUICKSHANK: We have always wanted to give these assets to the public.
Debate adjourned on motion by Mr Cruickshank.
Mr SPEAKER: Order! It being 10.28 a.m., pursuant to the resolution of the House debate is interrupted for the ringing of one long bell.
PETITIONS
St Joseph's Hospital
Petitions praying that the Minister for Health Services Management intervene to save St Joseph's Hospital from closure and that the necessary funding and support staff be provided to allow it to continue to operate as a public hospital, received from Mr Nagle and Mr Shedden.
Canterbury Hospital
Petition praying that the House take action to ensure that the Canterbury Hospital is upgraded to allow it to satisfy the present and future health needs of the Canterbury area, received from Mr Davoren.
Lidcombe Hospital
Petitions praying that the House reject any proposals to close down or cut back services or staffing at Lidcombe Hospital but instead support an increase in services and staffing at the hospital, received from Mr Nagle and Mr Yeadon.
Royal Agricultural Society Showground
Petition praying that the House will prevent the sale by the Government of foreshore and public parklands, including the Royal Agricultural Society Showground, the E. S. Marks Athletic Field and part of Moore Park, and that residents be included on their administrative bodies, received from Ms Moore.
Sydney Harbour Foreshores
Petition praying that the House stop the sale of publicly owned land on the foreshores of Port Jackson and its waterways, including that currently leased from the Maritime Services Board, and retain such land in public ownership; acquire for the public foreshore land whenever the opportunity arises; and optimise public access to the foreshore, received from Ms Moore.
Page 3339
Walker Estates
Petition praying that the Government preserve the Walker estates, including Yaralla, for public use, received from Ms Moore.
Cooks River Pollution
Petition praying that the House take steps to restore the Cooks River to its original condition, received from Ms Moore.
Woollahra Traffic
Petition praying that the House take all necessary steps to reduce the traffic volume in Ocean Street, Woollahra, and that Ocean Street be returned to a safe and pleasant street consistent with residential neighbourhood values, received from Ms Moore.
Paddington Traffic
Petition praying that the House remove clearway conditions from Oxford Street, Paddington, received from Ms Moore.
Chaelundi State Forest
Petition praying that the proposed logging of the Chaelundi State Forest not be proceeded with and that the area be declared an extension of the Guy Fawkes River National Park, received from Dr Macdonald.
Illawarra Housing for Developmentally Disabled
Petition praying that the House as a matter of priority allocate sufficient funds to build or acquire additional group homes for mature developmentally disabled persons in the Illawarra region and immediately allocate additional respite and day care resources for developmentally disabled adults and their carers in the region, received from Mr Markham.
Royal National Park Walking Tracks
Petition praying that immediate funding be allocated for the urgent restoration and regeneration of the coastal walking tracks between Bundeena and Otford in the Royal National Park, received from Mr McManus.
Abortion
Petition praying that because more than 100,000 unborn children die in Australia each year by unnatural means, and because of the confusion about the legal
Page 3340
status and rights of the unborn child, the Parliament should support the foreshadowed private members' bills, received from Mr Sullivan.
Warrawong Police Foot Patrols
Petition praying that police foot patrols be provided for the Warrawong and surrounding areas, received from Mr Sullivan.
Unanderra Police Station
Petition praying that the Government and Minister for Police and Emergency Services reappraise the staffing formula for Unanderra police station and upgrade the staffing-manning level to at least six officers, received from Mr Rumble.
F4 Freeway
Petition praying that the House not proceed with the implementation of a tollway charge on any section of the western Sydney F4 Freeway, received from Mrs Lo Po'.
Reef Beach
Petition praying that the nudist classification for Reef Beach be revoked and that the beach be returned to general public usage, received from Dr Macdonald.
Engadine-Heathcote Police
Petition praying that foot patrols be introduced and police numbers increased in the Engadine and Heathcote areas, received from Mr McManus.
QUESTIONS WITHOUT NOTICE
______
HONOURABLE MEMBER FOR NORTH SHORE AND EASTERN CREEK RACEWAY
Mr CARR: My question is directed to the Premier, Treasurer and Minister for Ethnic Affairs. In view of the Premier's vigorous defence yesterday of Eastern Creek Raceway, has he seen a letter from the Assistant Treasurer of New South Wales describing the raceway as a "black hole out of which the Government now finds it impossible to climb"? Is this the view of Treasury?
Mr GREINER: The answers are no and no.
Page 3341
Later,
Mr GREINER: At the beginning of question time the Leader of the Opposition asked me a question concerning a letter purportedly written by the honourable member for North Shore. The honourable member advises me that the letter, like the Leader of the Opposition, is a complete fraud. It raises a serious question. This is about the fifth occasion in recent times that people have placed totally fraudulent press releases or letters in the press gallery boxes. That is, of course, totally unfair to the members of the media and to the person who has purportedly written the letter or made the press release. Mr Speaker, it is a situation which I suggest you and the Government ought to look at.
Mr Whelan: Let us hear from the member.
Mr GREINER: We will hear from the member. This has happened not only to the honourable member for North Shore but also, in my memory, to the Minister for State Development and Minister for Tourism, Reverend the Hon. F. J. Nile and to me - suggesting that I was going to ban the Labor Day holiday. It is one thing for the Leader of the Opposition to crawl out of his rat-hole after 48 hours of self-imposed silence; it is another thing for him to rely on a letter which is a fraud. This practice has obviously occurred. I do not know where it stems from. Wherever it stems from, it ought to cease. It undermines the whole process of parliamentary democracy in this State. It has very serious implications and is totally unfair to members from both sides of the House and indeed to members of the press gallery.
HAZARDOUS MATERIALS TRANSPORT AND STORAGE
Mr DOWNY: My question without notice is to the Minister for Industrial Relations and Minister for Further Education, Training and Employment. Has the Government received reports following the investigations into fires at Diversey Chemicals, Seven Hills, in December 1989 and the Boral plant at St Peters in April 1990? If so, when will the reports be released and what action is to be taken?
Mr FAHEY: In recent years there has been growing concern about the adequacy of regulation of the manufacture, use, transport, storage and disposal of chemicals in the community and industrial safety in the chemical industry. This issue was highlighted by the serious incidents that occurred at the Diversey industrial chemical plant in December 1989 and the Boral liquefied petroleum gas storage site in April 1990. In response to these incidents the Government established a wide-ranging inquiry into the storage, transportation, manufacture, use and disposal of chemicals in this State. The Ministers with relevant portfolio responsibilities nominated senior officers from government agencies. In all, 14 government departments were represented on the inquiry committee and 10 working parties were established to provide expert advice on each of the terms of reference. The inquiry
Page 3342
met with representatives of industry, interest groups and senior State and local government officials to discuss the emerging issues and options for improvement of the framework of regulation and protection.
The inquiry report has identified both immediate and long-term issues for consideration. Its findings and recommendations on the Diversey and Boral incidents have been consolidated into volume 1 of the report, and outlined in volume 2 are the many other issues raised, together with suggestions for improved practices. The recommendations cut across many portfolios and the majority of issues in public submissions focused on environmental concerns. Accordingly, the Government has decided that the chemical inquiry report should be taken up by the Minister for Planning and Minister for Energy. Already the Minister has responsibility for administering the development and implementation of the State's planning policy for new industrial developments and for the expansion of existing developments. This siting and associated land-use questions relating to hazardous industry were recognised by many participants in the inquiry as being critically important to the protection of public health and safety and environment.
In the past, governments have not taken a fully co-ordinated approach to chemicals. Government agencies involved have concentrated on implementing the legislation concerning their areas and developing appropriate skills and response mechanisms within the existing framework. For example, through combat experience the police and fire brigades officers have developed a range of skills and resources. The inquiry noted that a primary aim of any new arrangements should be to enhance existing skills and resources within the emergency services. The inquiry makes recommendations for immediate improvements in legislation and administrative practice in a number of key areas: prevention of major disasters; control of smaller hazardous sites; improvement of emergency management; access to information; protection of the environment; and the safer use of chemicals at work. The inquiry identified five basic principles that should be adopted as guides for the reform of legislation and administration in New South Wales. These principles are: to consolidate and streamline legislation; increase co-operation between State Government agencies; strengthen industry's awareness of and commitment to its responsibility for safe practice, starting from the premise that appropriate practice should be encouraged and comprehensively implemented without total reliance on external regulation; adopt national and international standards and strategies; and to develop legislation, administration and industry practice that promotes the availability of and access to information on chemicals and in addition progressively remove legislation and administrative obstacles to information access.
A number of the inquiry's recommendations are specifically designed to prevent incidents such as those that occurred at Boral and Diversey. The need for increased regulation of small and medium-size plants, such as Diversey, was also identified by the inquiry. It recommended that safety at smaller plants would be improved with the expansion of dangerous goods regulations and the adoption of a hazardous substances regulation. I wish to draw attention to the outstanding efforts and contributions made by inquiry members. I note that the inquiry was co-ordinated
Page 3343
by the Workcover Authority and I express my appreciation for its commitment to facilitating the considerations undertaken by the committee. I should also like to express the Government's appreciation to members of the community, industry and environmental groups in providing detailed submissions to the inquiry on issues relating to the storage, transport, manufacture, use and disposal of chemicals in New South Wales. In announcing the release of the report of the chemical inquiry I also wish to place on record the total commitment of the Greiner-Murray Government to proper and exhaustive implementation of the recommendations contained in the report.
The various government agencies with responsibility for implementation of the wide-ranging findings have commenced their implementation and, in many cases, much has been achieved already. This important phase, which complements the Government's initiative in establishing and conducting the inquiry, will, as I have indicated, be co-ordinated by my colleague the Minister for Planning and Minister for Energy. However, though the Minister and the Government accept responsibility for this important implementation phase, responsibility rests also with industry in regard to the many practical aspects of developing and adhering to proper and effective codes of practice. The Government seeks the co-operation of industry in the implementation phase and looks forward to working hand-in-hand with relevant private sector enterprises in this important task. This report, released today, is a giant step forward; the implementation of its recommendations will, like so many of the Government's initiatives, be a model for the rest of Australia and will ensure that New South Wales is clearly recognised as the safe State. I lay upon the table volumes 1 and 2 of the report of the chemical inquiry. In so doing I inform the House that a third volume is not to be tabled, as it contains working papers involved in pending legal proceedings.
SYDNEY HOSPITAL GOLDEN STAPH OUTBREAK
Dr REFSHAUGE: I ask the Minister for Health Services Management whether there has been a recent outbreak of penicillin-resistant and methicillin resistant golden staphylococcus at Sydney Hospital. Has a senior orthopaedic surgeon warned that funding cuts have threatened other patients with this virulent infection? Will the Minister restore services to Sydney Hospital before more lives are endangered?
Mr PHILLIPS: I am unaware of the matter raised by the Deputy Leader of the Opposition.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Cabramatta to order.
Page 3344
Mr PHILLIPS: I am unaware of the incident raised by the Deputy Leader of the Opposition and I am certainly unaware of any accusations made by a doctor.
[Interruption]
Mr SPEAKER: Order! The House will come to order. The time for asking questions is being wasted. The Minister will answer the question.
Mr PHILLIPS: It is important that I re-emphasise some matters relating to Sydney Hospital. A decision was made to redefine the role that Sydney Hospital should play in the delivery of health services to ensure that in the future the hospital will be both effective and productive. For more than 20 years previous administrations, including Labor governments, have attempted to close Sydney Hospital. I have made no such attempt. Sydney Hospital, the Rum Hospital, because of its location - in Macquarie Street, Sydney - has a vital role to play in the provision of health services. I have redefined the role of that hospital so that future administrations, regardless of their political persuasion, will not be faced with having to decide whether or not the hospital should close. Because of its location and the direction in which health care is heading, Sydney Hospital has no future as a general hospital.
Approximately 60 general purpose hospital beds have been removed from the hospital. The services that were previously provided at the hospital will be provided at a range of hospitals within minutes of Sydney Hospital - including three of the world's leading hospitals. In the future Sydney Hospital will concentrate on supporting the city with accident and emergency services and providing accommodation for such specialty units as the hand unit, the minimal invasive unit and day surgery, which is the fastest growing area of the health care system. Discussions are proceeding at present about how and when the eye hospital will relocate to the site. It will accommodate all specialty services appropriate for a hospital of its type. The hospital has an important role to play with regard to community health services for the people of Sydney. Members of the Opposition and the honourable member for Bligh attempted, by way of a moratorium, to delay the restructuring of the health system. The Government released $30 million to fund health services. The decision taken by the Government with regard to restructuring stands.
SYDNEY TRAFFIC CONTROL SIGNAL SYSTEM
Mr BECK: I ask the Deputy Premier, Minister for Public Works and Minister for Roads a question without notice. What progress has been made with the worldwide marketing of the Sydney traffic signal control system and what new markets are forecast for the system?
Page 3345
Mr W. T. J. MURRAY: The honourable member for Murwillumbah is au fait with problems caused by traffic congestion in the Tweed district, especially during the summer months and holiday periods. The system that operates in Sydney could have a role to play in the future management of traffic in that area.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Londonderry to order.
Mr W. T. J. MURRAY: The interjections from the Opposition are quite amazing. With regard to traffic control management the previous Labor Government, for 12 years, sat back and did nothing. Because of its incompetence, the previous Government used $200 million it collected from petrol taxes to fund its incompetent management of this State. Members of the Opposition should, first, shut up and, second, acknowledge that at last New South Wales is getting a fair return from petrol taxes.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Riverstone. to order.
Mr W. T. J. MURRAY: The people of New South Wales are getting back money that for so long they have paid in petrol taxes. It is a pity that members of the Opposition could not persuade the Federal Government to provide additional funding. Obviously their influence in that regard amounts to nil.
[Interruption]
Mr W. T. J. MURRAY: The honourable member for Londonderry would have no problems with traffic. There is room enough to drive a bus through the vacant lot in his head.
Mr Carr: Back to the script.
Mr W. T. J. MURRAY: The joy is that at least this side of the House has a script; the Opposition has not.
[Interruption]
Mr SPEAKER: Order! There is far too much interjection.
[Interruption]
Page 3346
Mr SPEAKER: Order! I call the honourable member for Cabramatta to order for the second time.
Mr W. T. J. MURRAY: Sydney has one of the most advanced traffic control systems in the world. It was developed by the Roads and Traffic Authority. The Sydney co-ordinated adaptive traffic system, known as SCATS, combats road and traffic congestion around this city. SCATS has been so successful that it now controls about 5,300 intersections in 29 cities around the world. Australia leads the world in the development of road traffic management systems, especially with regard to technology. All major cities in Australia, with the exception of Brisbane, have SCATS technology. The system is used also in New Zealand, China, Singapore, Malaysia, the Philippines and Ireland.
[Interruption]
Mr SPEAKER: Order! There is far too much audible conversation in the Chamber.
Mr W. T. J. MURRAY: I am pleased to inform the House that SCATS now has a foot in the door in the United States of America. A $2.7 million contract has been signed with Oakland County, a major area in the Detroit-Michigan complex. The contract involves the sale of Roads and Traffic Authority computer software, while AWA will supply the equipment to install SCATS at 28 intersections. Oakland County is just one part of Detroit and officials say that the SCATS project could develop into a $125 million program for the remainder of Detroit. Detroit is just one city. The system has the potential to be adopted by many other cities in the United States. For many years the Roads and Traffic Authority has been pushing SCATS in the United States and this first sale is very encouraging and opens the way for many more lucrative sales. RTA research and development is enabling the private sector to become involved in this multi-million dollar contract.
I am pleased to inform the House that negotiations for a multimillion dollar contract for the installation of SCATS in Hong Kong are reaching the final stage. The RTA is involved in two tenders, one from AWA and the other from Philips. The RTA is very confident of winning this lucrative contract. Negotiations are continuing with authorities in a number of other major cities around the world and I look forward to being able to inform the House about future sales. Most people would not realise the complexity of the systems that control Sydney's traffic lights. Each set of lights in Sydney is linked via a network of computers to the traffic control centre in Brisbane Street in the city. From there controllers can monitor any problems that occur and adjust the timing of the signals to suit traffic flows or emergency service vehicles. Systems such as SCATS effectively improve traffic mobility in congested areas as they are much cheaper alternatives to the building of new roads. SCATS is a winner for Sydney and New South Wales. It proves that we in this State and country can match, if not lead the way for, the rest of the world.
Page 3347SYDNEY HOSPITAL RESTRUCTURING
Ms NORI: My question without notice is to the Minister for Health Services Management. Do Sydney Hospital doctors claim their hospital would be better closed than having the Minister halve its budget? Is the hospital pathology unit being moved to Prince of Wales Hospital? Why is the Minister transferring resources to Sydney's east?
Mr PHILLIPS: The hypocrisy of the Opposition astounds me. I want to know what the Opposition's health policy is. Does the Opposition not believe that resources need to go to western Sydney, southwestern Sydney, the Central Coast and North Coast, where people are crying out for resources to provide health care? That is where the people are. Do members opposite believe that eastern Sydney and central Sydney, which have seven beds per thousand people, should keep all those hospital beds, while people out in the west, southwest and Central Coast areas have fewer than two beds per thousand in some cases.
Mr Nagle: Why did you close St Joseph's Hospital?
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Londonderry to order for the second time.
Mr PHILLIPS: That is another outright lie that the Opposition continues to tell. St Joseph's Hospital, about which the Opposition lies by saying it has been closed, has in fact been redesignated - more evidence that the Opposition does not have a coherent health policy. What would the Opposition do for the people of the Auburn-Lidcombe area in terms of health? That part of Sydney has about seven beds per thousand people. One kilometre up the road from St Joseph's Hospital is Auburn District Hospital, which provides acute care.
[Interruption]
Mr SPEAKER: Order! I call the Leader of the Opposition to order.
Mr PHILLIPS: In the other direction is Westmead hospital, one of the leading hospitals in this State. St Joseph's Hospital has already taken on and will concentrate on a role in palliative care, aged care and psycho-geriatric care. Over the next few years it is expected that the number of aged people in that part of Sydney will increase by 60 per cent. Is the honourable member for Auburn telling me that St Joseph's Hospital, which will provide specialist care for the aged -
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Auburn to order.
Page 3348
Mr PHILLIPS: - is providing second-rate care for the aged in that area? If he is saying that, it is absolute nonsense. St Joseph's Hospital has a proud 105-year history -
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Port Jackson to order.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Port Jackson to order for the second time.
Mr Gibson: Tell us about Hawkesbury hospital.
Mr SPEAKER: Order! I call the honourable member for Londonderry to order for the third time. Yesterday a number of members, including the member for Ashfield, complained about the lack of questions that are asked from time to time in this Chamber. Although 16 questions were asked on Tuesday, but only five were asked yesterday. One reason for paucity of questions is continual interjections. It is a tradition of this House that Ministers when answering questions respond to interjections. Members who continue to interject and give a Minister opportunities to expand on an answer, have only themselves to blame if they thereby lessen their chance to ask a question. I ask all members to co-operate in the interest of giving the maximum number of members the opportunity to ask questions.
Mr PHILLIPS: I assure the honourable member for Londonderry that we will build Hawkesbury hospital, unlike the former Labor Government. In terms of Sydney Hospital, on many occasions we have made it quite plain in this place and in public exactly why the restructuring needs to occur. No one - especially those on the other side - has been able to give good reason for treating that hospital differently. Nor have they come up with a plan to show how resources can be found to fund services in their electorates in western Sydney. I will obtain information on the detail of the concerns raised by the honourable member for Port Jackson. But the restructuring of Sydney Hospital stays.
Later,
Mr PHILLIPS: Earlier the honourable member for Port Jackson asked me a question about Sydney Hospital. I have some further information for the honourable member. Considerable work has been undertaken between the area health service, the management of Sydney Hospital and staff to frame its new role to service the inner city and the central business district. This work is continuing, and the budget and staffing profile has been agreed by the hospital management and the area health service within the parameters of their new role. Eastern Sydney Area
Page 3349
Health Service has advised that active negotiations are taking place on the support services required for the new role of the hospital. Pathology services are one of the areas being reviewed. The options for delivery of pathology services to the hospital are under active consideration but there is no doubt that the services of Sydney Hospital should be supported by those provided at the major teaching hospitals nearby.
COMPULSORY THIRD PARTY INSURANCE
Mr LONGLEY: My question without notice is to the Attorney General, Minister for Consumer Affairs and Minister for Arts. Is the Minister aware of recent developments relating to compulsory third party insurance? If so, are motorists now benefiting from significantly cheaper premiums?
Mr COLLINS: I thank the honourable member for Pittwater for his most timely question. One of the major benefits coming this year from the Government is the substantial change to compulsory third party insurance. It is now really starting to benefit motorists throughout New South Wales. From the start the new scheme has provided substantial reductions in third party insurance premiums available to all motorists in New South Wales. From the outset savings of up to $100 on the average family sedan have been achievable. The 14 or so licensed insurance companies in this State now providing compulsory third party insurance can and do compete on price and the level of service they offer to policyholders and claimants. When premiums were first set in March this year the base premium rates for the Sydney metropolitan area ranged between $305 and $255. These rates were subject to a possible loading or discount up to a maximum of 10 per cent.
In the run-up to the election in May this year the Leader of the Opposition did not want to be outdone. He could see that the Government was making a major impact in benefits for every motorist in New South Wales by getting those premiums down. The compulsory third party policy of this Government was seen as benefiting every household in the State. So the Leader of the Opposition came up with a scheme promising $120 off car registration. The Daily Telegraph Mirror reported "Carr pledges $120 off rego". The only problem was that within hours of delivering his policy speech about cutting $120 off car registration he had to change his pledge and make an adjustment. Within hours of making that policy speech he had to take back his statement about the $120 reduction and he dropped it to just a $100 reduction on car registration in New South Wales. On 11th May the Sydney Morning Herald reported that the Leader of the Opposition strongly rejected suggestions that a $20 cut was minuscule. The Leader of the Opposition was reported as saying that $20 was an insignificant amount. The Sydney Morning Herald also reported him saying:
I think about $20 will be a big help for those families in New South Wales who have been hit by increases in State taxes and charges.
Page 3350
The Leader of the Opposition, after changing his election promise within hours of making it, said that $20 would be a big help. Under the scheme introduced this year by the Greiner Government compulsory third party insurance premiums have plummeted. This will benefit every motorist in this State. The Government has not stopped. It did not begin and end with the initial benefit. The benefits will continue because the insurance companies providing compulsory third party insurance have reduced their premiums further. Commercial Union Assurance Company of Australia Limited has reduced its premium from $285 to $275. The FAI Insurance group has reduced its premium from $275 to $260. Mercantile Mutual Insurance (Australia) Limited has reduced its premium from $285 to $250, a saving of $35. Honourable members should remember that the Leader of the Opposition said that even $20 would be of major benefit to families hard hit in New South Wales. NRMA Insurance Limited has reduced its premium from $295 to $260, another $35 saving.
The most recent effect of major insurers slashing premiums by almost up to $40 for city motorists will lead to further increased competition among insurers. The cheapest available compulsory third party policy in 1991, under this Government, is $229. Even bigger savings are available in rural areas, where premiums have been reduced by $48. The Leader of the Opposition said that $20 would be a major benefit, that $20 was not a minuscule amount. Premiums for country motorists have fallen by $48 to $199. The tangible benefit introduced by this Government will benefit every motorist in New South Wales. Whether people live in the city or the country, they know that these benefits are flowing through to them because of the Government's logical policy of not ripping off - as the Opposition's amended election pledge would have done - the $50 million to $60 million that goes into road construction in this State. The Leader of the Opposition glossed over that in his election policy speech, as revised. His first pledge would have taken about $60 million out of road construction. As revised, it would have taken out $50 million. This Government has left the money in there for the roads of this State to be rebuilt. It has also been able to pass on a tangible benefit to every motorist.
I have every confidence that those benefits - that downward trend - will continue, that increased competition among private insurers will increase and accelerate and that every motorist in this State will feel the benefit. The constituents of the honourable member for Pittwater who live on the peninsula in the Manly-Warringah area will benefit from the decrease in third party premiums. That is obviously why I was asked the question by the honourable member for Pittwater. But even in places like Londonderry every constituent will receive a substantial benefit. The honourable member for Londonderry will be able to take the message back to his constituents after today. I noticed his head nodding - obviously in agreement with the point I am making. Every motorist, whether in Londonderry or Pittwater, will benefit from this decision. The community has just seen the beginning of these benefits. I thank the honourable member for his question.
Page 3351EASTERN CREEK RACEWAY MOTOR CYCLE GRAND PRIX
Mr FACE: I direct a question without notice to the Minister for Sport, Recreation and Racing and Minister Assisting the Premier. Did the Premier tell the House on 26th September, in reference to the motor cycle grand prix, that:
. . . the Government of New South Wales is not involved in any negotiations as to who should be promoting or not promoting.
Is it a fact that before 19th September Mr John Stathers was in Europe conducting negotiations with Ecclestone? What discussions took place?
Mr SOURIS: The question asked by the honourable member for Charlestown refers to the question of just who is contracting with whom in the Eastern Creek affair. The promoter of any grand prix event, or any event for that matter, would have a contractual relationship with the owner of that event, not necessarily with the owner of the track. I requested Mr Stathers of the Department of Sport, Recreation and Racing to go to London -
[Interruption]
Mr SPEAKER: Order! I call the Minister for Industrial Relations and Minister for Further Education, Training and Employment to order.
Mr SOURIS: - because at that time the Government became aware that a rival, breakaway group was forming that would itself contract with International Road Racing Teams Association, and it was important from a government point of view in relation to the ownership of the track at Eastern Creek that it knew precisely what was happening about the existing federation grand prix and the proposed world series grand prix. No negotiations occurred with Mr Ecclestone or Mr Vassen, the respective owners of those two events, in respect of promotion. Communication was purely to indicate that the Government was interested in the outcome of their negotiations rather than to enter into any negotiations of itself. I can only emphasise that yesterday's announcements and those of the night before referring to the world series grand prix and IRRTA's position were simply to inform the public of arrangements of which the Government was aware between Mr Ecclestone's world series group and IRRTA's group, arrangements that those two groups have between themselves, that is, the contractual arrangement that will exist. This Government, as the owner of the Eastern Creek Raceway, stands ready to host all leading international events, as it has already done and is continuing to do. That is a matter of fact. That has nothing to do with the identity of the promoter. The identity of the promoter of the world series grand prix is unknown to the Government. Negotiations are probably occurring between prospective promoters and the world series group, but certainly not with the Government.
Page 3352HYDROFOILS SALE
Mr PETCH: I address my question without notice to the Minister for Transport. Has the Government sought tenders for the purchase of Sydney's old hydrofoils? Has a buyer been found and will the proceeds be used to improve ferry services to Sydney's western suburbs?
Mr BAIRD: I thank the honourable member for Gladesville for his question. He obviously takes great interest in ferry services and is looking forward to the RiverCat services to Gladesville, when he will be able to travel at high speed and in comfort from the city to Gladesville in 15 minutes. Today we are talking about the passing of the hydrofoils. Some people will feel nostalgia because the hydrofoils occupied a unique role on Sydney Harbour. But they have outlived their usefulness. The number of breakdowns that the hydrofoils regularly experienced meant that they were unable to provide a regular and reliable service. To run a double hydrofoil service it was necessary to have a fleet of between six and seven hydrofoils. Their reliability became poor. During the 1980s hydrofoil operation sank to a low of 67 per cent reliability. The highest level of reliability achieved was 92 per cent. In view of the new technology available with the purchase of the JetCats, at less cost - about one-third of the price of new hydrofoils - hydrofoils have become redundant. A broker was appointed to find a potential buyer for the hydrofoils. His task did not prove easy, as many parts of the world have moved to the new JetCat-type technology. Denmark has ordered the same equipment as Sydney - new JetCat ferries.
I can report today that a firm offer of about $3.35 million has been accepted from an Anglo-Swiss consortium for the hydrofoils. The firm will take the two larger hydrofoils, the Sydney and the Manly, the two smaller vessels, the Curl Curl and the Long Reef, and the supply of spare parts. This means that the hydrofoils will disappear completely from Sydney's waterways. Honourable members may remember that when the Manly was introduced it spent most of its first 13 months under repair. The JetCats are an outstanding replacement. They carry commuters from Circular Quay to Manly in just 13 minutes. The JetCats have been operating at a 98 per cent level of reliability. That compares more than favourably with the hydrofoils, which operated at a level of reliability of between 67 per cent and 92 per cent. Since all the JetCats have been in service patronage has increased by 11 per cent over last year's figures. The hydrofoil era has ended but the proceeds of the sale of those vessels will contribute to the purchase price of the new low-wash JetCats which will operate on the Parramatta River service. I am sure the honourable member for Ermington and the honourable member for Gladesville will enthusiastically welcome the arrival of the new JetCats next year.
PRISONER RAYMOND JOHN DENNING
Mr WHELAN: My question without notice is directed to the Minister for Justice. Is he aware that the notorious criminal and perjured police informer, Raymond John Denning, will be released with this Government's sanction in November this year? Will the Minister guarantee public safety and defer Denning's
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release until after the Independent Commission Against Corruption has concluded its report on police informants?
Mr GRIFFITHS: I am absolutely astounded that a member with the legal qualifications of the honourable member for Ashfield would ask such a stupid question.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Ashfield to order.
Mr GRIFFITHS: It is not a matter for the Government to determine when Raymond John Denning will be released. A member of the judiciary made that decision. Unlike members on the other side of the House, the Government respects the independence of the judiciary. It is an absolute disgrace for the honourable member for Ashfield to try to give the impression to members of the public that it was a Government decision.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Illawarra to order.
Mr GRIFFITHS: The Government is not the judiciary. Does the honourable member for Ashfield oppose the independence of the judiciary?
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Keira to order.
Mr GRIFFITHS: Denning will be released in November in accordance with the direction.
Mr Whelan: Shame.
Mr GRIFFITHS: Is the honourable member for Ashfield opposing the judge's decision?
[Interruption]
Mr SPEAKER: Order! I have already warned members that interjections only prolong the length of answers. I ask the honourable member for Ashfield to contain himself and the Minister for Justice to complete his answer.
Mr GRIFFITHS: Clearly the decision as to when a person shall be released is one for the judiciary. It has nothing to do with the Government. It is offensive that the honourable member for Ashfield could make any other suggestion.
Page 3354MENTAL HEALTH SERVICES
Mr SMITH: I direct my question without notice to the Minister for Health Services Management. What action is the Government taking to improve mental health services throughout New South Wales?
Mr PHILLIPS: As this is Mental Health Week, I thank the honourable member for Bega for his timely question. As a member of the Government's health services advisory committee, he has clearly shown a great capacity to understand health needs and the direction in which health care should go. The Government has a proud record and a well-documented commitment to the mentally ill. Despite the difficult economic climate, this commitment has been demonstrated by a $179 million capital works program and the further development of community-based services. Since 1989 a number of new or expanded extended hours services, child and adolescent mental health teams, psycho-geriatric outreach services and special inpatient units have been developed. Recurrent funding for 1991-92 is $262.7 million which includes additional growth money of $4.2 million provided in line with the recommendations of the Barclay report on mental health. This represents a real increase of 1.6 per cent on the previous year. Since 1989 new or expanded extended hours services have been established in the western Sydney health area, two in Wentworth, and in southwestern Sydney, southern Sydney, eastern Sydney, North Coast, New England and southwest regions. Child and adolescent mental health teams have been established in the southwestern Sydney and western Sydney areas and in the North Coast region.
An adolescent psychiatric consultative service in the Central Western region also has been funded. Psycho-geriatric outreach services to the New England, North Coast, Orana and Far West regions have been established. New 30-bed psychiatric admission units have been opened at Gosford and Nepean hospitals. Special purpose units for the confused and disturbed elderly, CADE units, have opened at Tamworth and Long Jetty. The Long Jetty CADE unit, which is located in the electorate of the member for The Entrance, was established as a result of his strong representations. He has a clear understanding that health care services are much more than just hospitals and beds. He understands that health care provides a range of services to the community, including CADE units for the disturbed elderly. Units for the confused and disturbed elderly have been established also at Wagga Wagga, Wingham and Goulburn. A 20-cottage rehabilitation facility has been opened at Cumberland Hospital and a special psychiatric suite has been commissioned at Broken Hill hospital. In the last financial year more than $43 million was allocated for the acquisition of community mental health facilities and accommodation in the southern Sydney, southwestern and western areas of Sydney and in the Wentworth area and in the southwestern and North Coast regions.
This year $28 million has been provided for mental health capital works. Those funds will be spent on either the refurbishment and construction of new facilities at Cumberland Hospital, Blacktown District hospital, Bloomfield Hospital,
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Gladesville Hospital, James Fletcher hospital, Kenmore Hospital, Lottie Stewart Hospital, Macquarie Hospital, Manly District hospital, Morisset Hospital, Mount Druitt Hospital, Rozelle Hospital, Shellharbour hospital and Westmead hospital, that is, Redbank House. As a further demonstration of the Government's commitment, four major new facilities will be completed and opened during 1991-92. These are a 40-bed psychiatric admissions unit at Blacktown District hospital, CADE units at Lottie Stewart Hospital and Mount Druitt Hospital and a 20-bed psychiatric rehabilitation unit at Shellharbour hospital. When the coalition parties attained office in 1988, the previous Minister for Health, the Hon. Peter Collins, clearly demonstrated the Government's commitment to improving health services for the mentally ill in New South Wales. The Government will continue that commitment. Following in the footsteps of the previous Minister, I will continue to ensure that there is further development of better facilities and services for the mentally ill in New South Wales.
SYDNEY HOSPITAL GOLDEN STAPH OUTBREAK
Mr PHILLIPS: I have a supplementary answer to a question asked by the Deputy Leader of the Opposition concerning Sydney Hospital. The deputy chief executive officer -
[Interruption]
Mr SPEAKER: Order! The Minister for Health Services Management has the call. I am becoming extremely concerned about the gross degree of disorder shown by members of this House to their fellow members on many occasions during the conduct of the business. One of those occasions is at the end of question time when members desire to leave the Chamber before the specific matters before the House are concluded. Members have the opportunity to enter or leave the Chamber at any time quickly and quietly if they so choose. However, it is grossly disorderly and unfair to the member who has the call for members to leave the Chamber as a cacophonous rabble, with interjections and social chit chat which are totally out of keeping with the decorum of this Chamber. If that sort of behaviour continues in future I will have no recourse but to call individual members to order, because it is a practice that should cease. I have given members ample warning that such disorderly and disgraceful behaviour will not be tolerated by the Chair in the future.
Mr PHILLIPS: As this is a supplementary answer to a question asked by the Deputy Leader of the Opposition I would hope that Opposition members will listen. The deputy chief executive officer of the Eastern Sydney Area Health Service has advised that the issue of golden staph has been raised by orthopaedic surgeons because of the accommodation for orthopaedic patients in shared wards in the Travers block. There are few isolation beds in that ward to accommodate golden staph patients. However, following discussions between Sydney Hospital management and the area health service, a new configuration of beds in the south
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and centre blocks - 52 beds - will be introduced on 4th November. It is understood that this will overcome the concerns expressed by the orthopaedic surgeons.
SOUTH COAST TRAINS
Mr BAIRD: I wish to give a supplementary answer to a question asked by the honourable member for South Coast on 16th October. The honourable member for South Coast asked me to confirm that the new explorer trains would be operating on the South Coast line by 1994. He also asked me to guarantee the safety of the old diesel trains until that time. I am happy to confirm that explorer trains for the South Coast line will be included in the forward capital program for 1994. I assure the honourable member that the old diesel motor units that provide services to Nowra will be maintained to a high level of safety until their anticipated replacement in 1994. I believe $1.5 million has been allocated for that very purpose this year as part of the capital works budget. The honourable member mentioned a concern that one of the DMUs had sustained a broken wheel earlier this month. That incident has been investigated thoroughly. All wheels on all DMUs serviced by the Port Kembla maintenance depot have been examined and certified as safe. Maintenance procedures have been strengthened and will continue to be monitored by rail safety auditors.
HONOURABLE MEMBER FOR NORTH SHORE AND EASTERN CREEK RACEWAY
Mr Smiles: Mr Speaker, I rise on a matter of privilege. The matter contained in the question of the Leader of the Opposition today is of considerable concern to me, raising as it does a comment attributed to me concerning Eastern Creek being a black hole. I raise the matter because I am very concerned that two weeks ago I was the victim of two bogus press statements released in my name on the Monday and Tuesday. One concerned Eastern Creek and made a comment to the effect that I regarded Eastern Creek as good value regardless of the cost. The second related to the industrial relations legislation currently before the Parliament. Both were apparently widely distributed. A number of journalists in the press gallery received copies of those two bogus press releases. The one on Eastern Creek achieved publication. Mr Bernard Lagan, a journalist from the Sydney Morning Herald, wrote an article on the matter. On the subsequent day Mr John Laws, during his morning show, referred to the article. I enjoyed the embarrassment of a statement from Mr Laws, understandable in the circumstances, that I had a cavalier attitude or had made a cavalier statement.
Mr Laws, to his credit, entertained me by way of interview on his program in which I attested to the fact that the bogus press release on Eastern Creek was not of my making. I am pleased to say that Mr Laws, also to his credit, had Mr Lagan on the program and was satisfied and indicated to his listeners on that day and the
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following day that the press release plainly had not come from me. I reported the incident to the president of the press gallery and to the Premier. I am now concerned that other written material, not only the letter alluded to by the Leader of the Opposition this morning, is now circulating in my name and may not necessarily represent my views. I am concerned because the worries I have are compounded by a recent break-in at my electorate office at Mosman in the Spit Junction area. Files were tampered with and stationery was disarranged. In consequence I simply alert the House to my overall concern that written materials may well be circulating which, I repeat, do not necessarily represent my views and may not have emanated from my office.
Mr Whelan: Mr Speaker, I wish to speak on the matter of privilege.
Mr SPEAKER: Order! The honourable member for North Shore rose on what he said was a matter of privilege. It is for the Chair to determine whether prima facie it is a matter of privilege. As he did not move any motion at the end of his statement I deemed that it was more in the nature of a personal explanation and accepted it on that basis. I have been advised by the Clerk, and I advise honourable members, that if in future they rise on a matter of privilege and intend to proceed to move a motion they should make clear during their speech that that is what they intend to do, otherwise I would not necessarily accept that they intended to do this. It has been indicated to me that the honourable member for North Shore intends to move a motion. It is in the interests of the House that the text of that motion be available to the House if the matter is to proceed to debate.
Privilege
Mr SMILES (North Shore) [11.23]: I indicate to the House that I wish to move:
That the House notes the matters concerning the privilege of honourable members raised by the Honourable Member for North Shore on Thursday, 24 October, 1991, concerning the privileges of all Members and deplores the forgery of documents circulated purportedly in the name of the Honourable member for North Shore.
Mr WHELAN (Ashfield) [11.24], by leave: As the honourable member for North Shore said, this is a very serious matter. The honourable member for North Shore and every other member should realise that the question raised by the Leader of the Opposition this morning was predicated not on rumour, not on speculation, but on a document called a parliamentary letter. It is headed "Parliament of New South Wales", just like the letterhead that every other member has in his or her parliamentary office. The letter is dated 9th October, 1991. As it has been circulated, the constituent's name is no longer a secret. It is addressed to Ms V. Niblett, 7/6 Boronia Street, Wollstonecraft. Ms Niblett alleged she received the letter from the honourable member for North Shore. The veracity of the claims by the honourable member for North Shore will simply rest with whether Ms Niblett
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communicated with the honourable member for North Shore. What appears to be the signature of the honourable member for North Shore is on the document.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Ermington to order.
Mr WHELAN: If the member is wrong in his claim that he has not communicated with the constituent concerned, the real issue is whether this is an authorised letter arising from the office of the honourable member for North Shore and whether that is his signature. I therefore propose an addendum to the honourable member's motion to the effect that in view of the seriousness of this matter the original of this letter be referred to the Commissioner of Police with a request that the signature and documentation surrounding and arising out of this matter be investigated. Because the matter is so grave I want the House to understand what we are doing. I would not want the police to become involved in the day-to-day machinations of any member of the New South Wales Parliament, because I do not think that is proper.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Monaro to order.
Mr WHELAN: This matter should be handled within and by the House itself. But because it is of such a serious nature the addendum which I have suggested should be accepted by the honourable member for North Shore. In conclusion, I point out that this is an original letter. It is not a copy. The honourable member's veracity will rise and fall on the decision of Ms Niblett as to whether she communicated -
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Myall Lakes to order.
Mr WHELAN: The Government may be upset about the consequences, but if, for argument's sake, there is the retention of a letter and if the constituent communicated with the honourable member - perhaps she had an appointment with the honourable member - the honourable member will be in great difficulty - assuming, first of all, that he did not write the letter; secondly, that it is not his signature; and, thirdly, that he has had no communication from the constituent concerned.
[Interruption]
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Mr SPEAKER: Order! I call the Leader of the Opposition and the honourable member for Ashfield to order. I rule that there is a prima facie case of privilege. In view of the seriousness of the matter mentioned by the honourable member for North Shore and the honourable member for Ashfield, it would be inappropriate to proceed with any debate on this matter at this stage, because there should be opportunity for sober consideration, as is the case with most matters of privilege which are raised in this House. The motion moved by the honourable member for North Shore will be placed on the business paper as an item of business for next week. The avenue will be open to the honourable member for Ashfield, or any other member, to move an amendment at that time in the course of the debate.
PUBLIC SECTOR LEGISLATION (SENIOR EXECUTIVES) AMENDMENT BILL
Second Reading
Debate resumed from 15th October.
Mr FAHEY (Southern Highlands), Minister for Industrial Relations and Minister for Further Education, Training and Employment [11.37]: I lead for the Government on this bill and indicate at the outset that the Government opposes the legislation. The bill proposes to change the senior executive service in three main areas. First, it proposes to reduce the number of senior executive service positions to 800 over a three-year period. Second, it seeks to put a limitation on the availability of employment benefits. Third, it proposes that the Industrial Commission determine remuneration instead of the Statutory and Other Officers Remuneration Tribunal. When introducing the bill the Leader of the Opposition indicated his intention to change the senior executive service packages, to bring them into line with those applicable by Federal senior public servants. Debate on this bill will show that all of the proposals put forward have been ill considered and will in fact cost the New South Wales taxpayers additional moneys.
I turn first to the proposal to reduce the number of senior executive service positions. That proposal is nothing less than nonsense. It proposes an arbitrary reduction in senior executive service positions, which would dramatically affect all areas of government service to the community, including those areas that are vital to the interests of the Parliament, such as the operation of the Auditor-General's Office, the Office of the Ombudsman and the Office of Equal Employment Opportunity. I ask Opposition members whether they would be happy to see the number of senior management positions in the Auditor-General's Office reduced by about 50 per cent? Would they be happy to see the number of senior personnel in the Ombudsman's office reduced by about 50 per cent? Would they be happy to see those areas which on numerous occasions they have argued are vital to ensure that there is accountability of government, accountability of those in the public sector,
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reduced to a mere shell of an operation that would not be capable of serving either this Parliament or the community in this State?
The Opposition seeks to portray the senior executive service as a group of administrators and bureaucrats, but it fails to recognise that the senior executive service is not confined to clerical positions. It extends over all sectors. It includes doctors, nurses, senior police officers, senior lawyers, senior officers in the State Emergency Service and in the Department of Bush Fire Services, financial managers, specialist economists, financial investors, information technology specialists, senior engineers, scientists and educationalists, to name a few.
I acknowledge that prior to my becoming an member of Parliament in 1984, and indeed during the time that I was a member of the coalition Opposition between 1984 and 1988, I did not have a healthy regard for public servants generally. I held a view similar to that which is now being expressed by the Opposition, that public servants did not serve the public. With the taking of office came the revelation that without any doubt the members of the senior echelon of the public service are the equal of leaders of the business community and other walks of life outside the public service. They do not pale in comparison in terms of their commitment, ability and dedication. The senior executive service has proved to the Government and every other body that has sought to analyse it objectively that the real expertise is in the public sector, not with the high flyers, the entrepreneurs and the so-called success stories in the private sector. The recruitment program for senior members has demonstrated that fact clearly. One has to ask what is the logic in seeking a reduction in the number of senior executive service appointments. The only argument offered by the Leader of the Opposition in his extraordinary contribution was that the proposed reduction would save taxpayers about $30 million a year. That claim is false. The proposal will cost New South Wales taxpayers up to $14 million in the first year alone. No savings will be realised; there will be an additional cost of $14 million.
The Opposition may wish to adopt a cavalier approach to strikes, it may wish to support lawlessness - as it demonstrated clearly this week by going behind the labour movement in relation to that strike - and it may be willing to accept that workers and families should sacrifice $100 each in the name of a political protest, but to suggest that taxpayers should pay an additional $14 million is to go past the point where the Opposition can claim any credibility at all. There are no guarantees of any savings in any years in the future. To meet the objectives of the Opposition is it suggested that the Government should halve the number of senior police officers, senior medical staff - including doctors and nurses - senior fire brigade officers? Given that the Government is already implementing extensive rationalisation at head office and administrative levels, the savings trumpeted by the Opposition would require even tougher and more extensive cuts than those initiated by the Government, which the Opposition has opposed. In recent months the Opposition has been squealing about the downsizing of government, which has, in
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many instances, included a reduction in the number of senior executive members in the public sector. Though the Opposition has said that it does not support those
reductions, it puts forward a proposal that will, if implemented, halve the number of senior executive appointments; it will cut 700 senior executive positions. There will be additional costs because the workload does not disappear merely because positions are abolished.
Acceptance of the Opposition's proposal would mean that a new middle management group will need to be created. That would result in a return to the old system in which there were 31 different classifications and pay points at the senior level. Consequently an officer whose position is abolished - which would mean that a legal contract will have been breached - would be entitled to compensation. Officers who are redeployed would maintain their present levels of income for 12 months, in line with the redeployment policy established by the previous Labor Government and left in place by this Government. Most of those remaining in the senior executive service under this proposal would receive a pay increase, if Commonwealth provisions are applied - and that is what this bill proposes. An additional cost would be involved to establish new award-based positions below senior executive service level. The bill proposes to abolish 700-odd senior executive positions. However, the holders of those positions will have to be re-employed immediately, after they have received massive compensation because their contracts were breached, to another position at middle management level on a salary rate that would be linked with Commonwealth rates of pay. That would result in more money being outlayed with regard to the payment of salaries, quite apart from the massive compensation that would have to be paid.
The assessments I have referred to represent the only responsible approach to costing and the implementation of the proposal. If the Government approached the issue with the same degree of cynicism as the Opposition has by introducing the bill, a reduction of 700 senior executive positions could be achieved merely by shifting the numbers to corporatised or privatised bodies so that they would no longer be regarded as senior executive service. That would mean that the same number of positions would exist but at higher than existing rates of pay. However, there would be no need for these arrangements to be disclosed. This is what has happened in the Commonwealth public sector. Positions in Commonwealth statutory authorities, including Qantas and Telecom, are not included in any calculation of Commonwealth senior executive service positions. Their senior managers receive large packages, but the number of positions and the detail of those packages are not disclosed and are not subject to parliamentary scrutiny. The New South Wales Government could have taken the same approach. Had the Government excluded such government trading enterprises as Elcom, the Water Board and the Maritime Services Board, the senior executive service would have had approximately 1,000 positions from the outset. Apparently that would satisfy the Opposition, but it would have been completely artificial. It would have meant that there was little or no parliamentary or public scrutiny of senior management arrangements in those authorities.
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The senior executive service is responsible to Ministers for managing 13 per cent of the work force of New South Wales. It is responsible also for $21,000 million annually. The New South Wales senior executive service includes only positions that pass a stringent assessment of work value. The number of senior executive service positions is about the same as the number of senior officer positions that existed during the term of the previous Labor Government. Moreover, senior executive service positions are declining as agencies restructure and rightsize, and they are expected to reduce by about 100 positions this financial year. That shows the hypocrisy of the Opposition. I invite honourable members to examine the number of positions that exist today and the number of positions that existed before 1988. The numbers are approximately the same. Why was this bill not thought of by the Leader of the Opposition when Labor was in government before 1988? Why was it not brought forward when he had an opportunity to do something about it? He had no intention to do so at that time. The only reason he has done so on this occasion is his belief that some political mileage is to be gained from knocking fat cats, as they have been described so often by the Leader of the Opposition and members of the Opposition. He believes that if he can create that impression, some brownie points can be gained by the Opposition. He is not fair dinkum. He is tampering with a serious part of government that provides magnificent service to the people of this State.
The Leader of the Opposition queried why the senior executive service is maintained when 16,000 rank and file public servants have been sacked by the Government. First, there have not been any sackings. Second, the phased reduction of 12,500 staff over three years is well on target and is being met by voluntary redundancies. That rationalisation process includes a number of senior executive service positions which I have indicated. The Leader of the Opposition either fails to grasp the fact of the situation or is deliberately misleading this House and the community - and this would not be the first time. The Opposition is quite wrong when it asserts that the New South Wales senior executive service is bloated; it is in fact proportionately smaller than most other senior executive services in Australia. Comparison of profiles of senior executive services in Australia is of interest: in the Commonwealth it is 1 per cent of the public service only, not including bodies such as Qantas or Telecom; in New South Wales, it is half that proportion, or 0.5 per cent of the entire public sector including declared authorities; in Victoria, 0.8 per cent of the public sector; in Queensland, 1 per cent of the public service only; in Western Australia, 0.5 per cent of the public sector; in South Australia, 0.4 per cent of the public service only; and in Tasmania, 1.1 of the public service only.
New South Wales is among the leanest of all Australian senior executive services excluding those in the Territories of Australia. Where does this great hue and cry come from to cut back senior executive service numbers? That hue and cry must be taken for what it is - nothing but a farce. The Northern Territory is planning a contract-based system for its senior officers. To prescribe by legislation the size of the senior executive service would substantially reduce the capacity to
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manage the public sector efficiently. I am not aware of any public sector anywhere in the world in which staff numbers are prescribed by legislation without regard to the changing circumstances in the community. Such an arbitrary and prescriptive approach which is not based on any rational analysis of need would not only reduce the ability of this and future governments to manage as administrative requirements vary, but also would create inefficiencies and reduce accountability as future governments would be forced to seek ways around the limitations by distorting the facts or introducing artificial arrangements.
A primary objective of introducing the senior executive service two years ago was to enhance efficiency. The size of the senior executive service is already reducing naturally as agencies achieve their goals. For example, over the last three months State Transit has reduced from 30 to 20 the number of its senior executive service positions. State Rail is also planning a phased reduction from 99 to 82 positions. The New South Wales senior executive service has been in operation for only two years but it has already shown remarkable savings. Our statutory authorities have shown a 35 per cent increase in efficiency and all our senior managers are continuing their efforts to trim for a more efficient service. The integrity of the New South Wales public sector is firmly based on the principles of openness and accountability. A full report on the numbers and profile of the senior executive service is included each year in the annual report of the Premier's Department. Inclusion of this information reflects the recognition by the Government of the legitimate need of the Parliament to be fully informed.
If the Parliament requires further information, the department would be pleased to modify or enhance the report of the Premier's Department to ensure that this occurs. To arbitrarily prescribe the limits of one area of the public sector work force will not achieve the objectives of the Opposition, it would have the opposite effect. All members should oppose this bill because it is nothing more than a stunt. The bill aims to limit the flexibility available to the senior executive service and remove the Government's prerogative to determine benefits by requiring these benefits to be determined by regulation. The New South Wales approach to executive pay and conditions is part of an international trend as governments around the world seek to improve the performance and accountability of senior managers. In December 1989 the Organisation for Economic Co-operation and Development reported on trends and remuneration for senior civil servants and noted:
A growing trend is towards greater flexibility and the remuneration of senior public servants. Common features which are developing include more flexible and personalised remuneration packages for individuals, particularly top managers and key specialists, moves towards performance related pay arrangements whether for groups or individuals, increased use of contract employment, less job security, senior managers compensated by more generous remuneration arrangements, and widening of pay differentials to improve the relative rewards offered to senior personnel and key specialists.
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Governments across Australia are facing enormous challenges. Reform is essential if they are to cope with providing proper levels of service to the community while resources continue to shrink. A critical factor is the quality and responsiveness of senior public servants. As scarce as money is, the public sector's scarcest and most valuable resource is its talented and committed people. The senior executive service is enabling New South Wales to recruit and retain top flight managers and change agents to implement major reforms. The New South Wales senior executive service was designed as a performance based system with severe sanctions for non-performance and incentive rewards related to standards common in the private sector. If you do not perform, you do not stay. There are examples of that and I have been involved in some of those incidents. The initiative was and remains essentially to encourage new blood in what was a technically proficient and centrally controlled but managerially unmotivated senior management. Government now has the capacity to remove officers for unsatisfactory performance.
The whole agenda of the Government for the public sector was to give responsibility and reward responsibility on an agency by agency basis. Centralised agencies such as the Public Service Board, which had been in place for many years, were taken away. Each agency has been asked to manage its people, to communicate with its people, and to deal with the problems that occur daily and that will occur in the future by having an interface with those in each public sector agency and not pass the problem on to a centralised agency such as the Public Service Board. Unlike the position in every other senior executive service scheme, New South Wales senior executive service officers have no job security. Traditionally, public service tenure does not exist and continuing employment depends on performance. When the service was introduced 21 per cent of former senior officers did not win their positions on merit. Over the last two years a number of officers have been removed for non-performance or placed on short-term probationary contracts as an indication that they need to lift their performance. These sanctions did not exist when Labor was in government in this State. Knowledge that these sanctions are available and have been used since introduction of the senior executive service is a powerful motivator.
The scheme has proved a model for all other governments, and their officers have been briefed. They have come to us from the other States and the Commonwealth admiring the system that is in place here and the dividend it is delivering for the people of this State and asking the questions, "How did you do it? How can we copy what you have done because we can see that it is working?" The New South Wales scheme focuses on outputs and outcomes rather than process. It motivates officers strongly to continually seek further ways of improving service delivery. In the light of the New South Wales experience, the Commonwealth, Victoria and the Northern Territory are moving to introduce progressively contract-based employment at the senior level. They have taken the New South Wales example and are implementing it. Before the senior executive service was introduced
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the Opposition's shadow cabinet was fully briefed and all conditions of the senior executive service were spelt out, including the fact that remuneration would be by way of total cost to employer package and market related. It was pointed out also that no senior executive service officer would enjoy secure tenure. Not only did the Opposition raise no objection, but it was enthusiastic in its support for the amending legislation.
The bill passed with the full support of all members of both Houses. Where has it gone wrong? Two years down the track, when not a word was uttered against the proposal when it was debated in this House and in the other House by any member, be they Opposition members, crossbenchers or members of parties other than the Labor Party, the opportunists on the other side get hold of an idea and say, "Let us kick the public servants because we think there might be votes in it". The package represents the total cost to the employer or the taxpayer. This is much more than the employee receives in his hand. It cannot be compared to salary alone, as employees receive many other benefits that must be counted. Under the package all the costs of those benefits, including the employer's contribution to superannuation and any tax on those benefits, is met by the employee from the package - a gross figure - and everything below that, including the fringe benefits tax, comes out. The traditional approach of separating the salary and other benefits effectively hides the real cost of those benefits. When the Australian Labor Party was in office no one knew what the senior public servants of this State received. They had a salary, but the former Government never disclosed the superannuation benefit, the car and the travelling allowance.
Mr W. T. J. Murray: Two cars.
Mr FAHEY: There were not two cars. The former Government never disclosed those benefits. The present package is totally disclosed in such a way that the entire State can see what is happening. When the senior executive service was introduced the Leader of the Opposition specifically expressed support for two of the features of the arrangement that he now attacks. Speaking in this House in the debate on 3rd August, 1989, the Leader of the Opposition said:
The implementation of a more market-related package has advantages and disadvantages, but, on balance, the Opposition supports it on the ground that it will bring more flexibility to the public sector. It will help to stem departures from the service.
In relation to the issue of flexible benefits in the same debate the Leader of the Opposition said:
One aspect that is fundamentally attractive is the flexibility that will be provided to appointees. This flexibility relates to the mix of components in the remuneration package, which is welcome.
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The Opposition is now seeking to use the senior executive service as a political football. Apparently, the Leader of the Opposition no longer supports flexible options for officers wishing to provide for child care, child education expenses, aged care, mortgage repayments, health fund contributions, transport expenses or travel. Two years later, Opposition members have decided that all that flexibility no longer applies but all their colleagues in the other States are jumping at the opportunity to follow the example set by this State and bring in the same processes. Apart from the inconsistency of approach of the Leader of the Opposition, the proposal would clearly frustrate the social policy advantages of this initiative, which are recognised throughout the world. It should be remembered that these are not free benefits; nothing is given away. All the costs of employment benefits are met by the employee from the total package. This change would not save the New South Wales Government any money. All taxes are met from the employee's package, and the packages themselves are discounted to offset any benefit arising from the fringe benefits tax arrangements on options.
Though the transitional provisions provide for existing benefits to be retained in the current contract, will the officers seeking promotion be denied a continuation of these benefits merely because they have to negotiate a new contract? The proposal contained in this bill would mean that officers would not apply for new positions or promotions as the benefits would not be available to them. That would effectively block the career paths of those in the senior executive service and of talented people - and there are many of them - below the senior executive service level. Does the Opposition really intend to create a powerful disincentive to promotion? There is a real reason for introducing a range of flexible benefits to the package. Everyone has different needs, depending on their age and personal circumstances, and these needs vary over time. A younger person has less need to invest in superannuation but a greater need to pay the mortgage and to pay for child care.
The Opposition's proposal would not only make the senior executive service less attractive for recruitment, but it would effectively discriminate against younger people in the public sector. Is it all about an age barrier before one can enter the senior executive service, because there are no benefits for those members who are still able to have children and those with mortgage payments, which tend to dissipate at a later time in most careers. As we get older, the children go off our hands. I shall make it as simple as that. The Opposition's proposal would impact most severely on women in the senior executive service. Not only would they be disproportionately affected by the reduction in positions at the lower levels of the senior executive service but they would also be significantly affected by the loss of flexibility, especially those who are single family bread-winners. Women now hold 12.6 per cent of senior executive positions compared with 8 per cent before the inception of the senior executive service when the Australian Labor Party was running the State. Every effort is being made to increase that percentage.
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Determination of employment benefits by regulation would be cumbersome and inflexible. It would further erode the Government's capacity to respond to the needs of its employees generally or to negotiate in individual cases and to encourage lateral recruitment within the total package which is fully disclosed.
The Government as the employer must have the right to negotiate with its employees. The Parliament is not the employer of the public service. The average package in New South Wales is 3 per cent higher than in the Commonwealth, though at the base level Commonwealth pay is higher, yet the cost of living, particularly accommodation, for the New South Wales senior executive service is far higher than for other States and Canberra. For that reason, the New South Wales contract conditions are flexible. Over the past couple of years a number of appointments have been made from the Commonwealth that have required senior managers to move from Canberra to take up accommodation in New South Wales. The current flexible processes enable officers to focus on housing and on the other areas of superannuation, child care, education costs or transport to meet each of their individual circumstances. This measure is an important aspect in maintaining external recruitment.
A move to Sydney to take up work is one thing, but if one happens to reside in another part of Australia where the value of housing and the cost of renting are much less than in Sydney, one is blown out of the water by the prospect of obtaining a comparable home or endeavouring to pay rent at the city rates that apply. The New South Wales senior executive service does not allow any conditions or options other than those which are in normal use in the private sector. The Government has been scrupulous in ensuring that senior executive service pay arrangements meet the highest standards of probity and accountability and comply fully with taxation requirements. Appropriately, the Government's requirements are more stringent than those required by some large and reputable companies. For example, the senior executive service officer meets the full cost of the fringe benefits tax from his own package. That does not always apply in the private sector. In contrast, members of the New South Wales Legislature, including the Leader of the Opposition, receive a number of fringe benefits including gold passes and subsidised meals. The cost of the fringe benefits tax for members of Parliament is met by the taxpayers.
The Government categorically opposes the proposals in the bill. They represent a retreat to an award mentality. The role of the Industrial Commission in pay determination will take us back to those dim dark days of the past in an area that was never designed for control by any outside body. The employer-employee relationship between the Government and members of the senior executive service must be fully accountable. The Government will welcome any suggestion the Opposition wants to make about accountability. The bill will transfer the responsibility for pay determinations for the senior executive service from the Statutory and Other Offices Remuneration Tribunal to the Industrial Commission. Such a proposal is inconsistent with the practice under the Labor Government when
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it was in office before 1988. It is inconsistent with the practices of most other States.
In this State senior officers' pay was determined by the former Public Service Board and the pay of chief executive officers was determined by the Statutory and Other Offices Remuneration Tribunal. The Industrial Commission has never been regarded as the appropriate mechanism to determine the pay levels of senior officers. There is no justification for such a proposal, nor has any been advanced. The Statutory and Other Offices Remuneration Tribunal provides independent determinations based on all relevant considerations. The present chairman of the tribunal, Mr Ron Fry A.O., M.B.E. has served for many years under the previous and present governments. He is a highly respected member of the industrial relations community. Does the Opposition express a lack of confidence in Mr Fry or in his decisions? The Leader of the Opposition should apologise for his slur on the tribunal's independence and capacity. Is it the next step that Mr Fry's role in determining judicial remuneration and that of tribunal and court officers and other statutory positions will also be transferred to the Industrial Commission?
A fundamental cornerstone of the New South Wales senior executive service is that it is market related. That does not mean that the Government sets market equivalent rates but that it seeks to make the senior executive serve more attractive and competitive in return for the highest standard of performance and the loss of tenure. The remuneration levels determined by Mr Fry as chairman of the tribunal follow detailed analyses from private sector specialist firms. By private sector standards the determinations are conservative. The determinations are further reduced to offset any benefits arising from fringe benefit tax arrangements on options. So far as the Government is aware, the New South Wales senior executive service is the only group in the public sector in Australia which has not received a pay increase in the last 12 months. The effects of this bill have not been properly researched. Another major concern is that implementation of the proposals in the bill to move the New South Wales senior executive service on to Commonwealth senior executive service rates will not achieve a saving for the New South Wales taxpayers. As I have said before, in the first year there will be an additional cost of up to $14 million. Why does the New South Wales Opposition not propose some beds for hospitals instead of suggesting that the Government should splurge $14 million? That is what the measures in the bill will do in the next year. The sum of $14 million has been costed by Treasury.
Mr Rogan: On false assumptions.
Mr FAHEY: If the honourable member for East Hills wants to object to that figure - and he will have the opportunity to do so in this debate - he is objecting to figures prepared by Treasury. Not only is the Opposition casting a slur on Mr Fry, it is also casting a slur on Treasury officials of this State who have served both this Government and the former Government well. More importantly, they have served the taxpayers of this State well, irrespective of which government has been in office.
Mr Rogan: It has been done on wrong assumptions.
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Mr FAHEY: The facts are as I have stated. Under the measures proposed, the additional costs will be reduced to $3 million in the third year. There is no guarantee of savings in future years and the maximum that could be achieved is $600,000 per annum if award-based salaries remain static. There are many imponderables between now and then. The proposals in the bill to take the senior executive service into a comparable wage justice process through Industrial Commission rulings will lead to it being linked to the Commonwealth. Therefore, those figures do not mean a thing. They are based upon present assumptions, not on what might occur in the future. That situation arises because Commonwealth senior executive service packages for a large proportion of its senior executive service are higher than those in New South Wales. Commonwealth rates are likely to increase a further 6 per cent during the next 12 months. Those Commonwealth rates do not reflect the true cost to the employer of benefits or the correct assessment of fringe benefits tax. By contrast, all New South Wales rates are totally transparent. There is absolutely no hidden cost to the taxpayers of this State in the system that is in place in New South Wales.
The non-award, non-industrial nature of the senior executive service is a major element in the process of cultural change to improve accountability of senior public servants. Determination of pay in an award environment will encourage a return to the days of hidden travel perks. Many of those perks were available when the Labor Party was in government. I refer to flexi-time, meal allowances and all the features of the old culture. For example, the award and determinations which apply to the Commonwealth senior executive service provide specially for senior executive service officers to travel first class on official business in Australia. Every time I move from one State to another on ministerial business, which is invariably only when ministerial conferences are held, I walk through first class to economy class and pass Commonwealth senior executive service personnel. They travel in first class. Senior executive service personnel in this State travel in economy class, the Ministers of this State travel in economy class, but the perks in the Commonwealth system allow their senior executive service personnel to travel first class. I understand that applies also in other States. These are the hidden costs of the proposals in the bill.
A return to the award-based system of tenure will encourage the old attitudes of lack of responsibility and accountability and no incentive to perform. Determination by the Industrial Commission will increase the cost of State senior executive service positions and lead to an automatic flow-on of national wage case decisions, which the senior executive service does not receive at present. The senior executive service has not received a pay increase this year. Parliamentarians did, but the senior executive service did not. Application of the Commonwealth conditions would involve not only award-determined first-class official travel but other similar perks at taxpayers' expense such as spouse travel. Is that what the Opposition wants? That is what this bill will lead to. Not only will senior executive service personnel be able to travel first class but their spouses will be able to travel first
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class also at taxpayers' expense. It must also imply a return to tenure which will inhibit the removal of non-performers and create a lack of incentive to perform.
The achievements of the first two years of the senior executive service speak for themselves. In the first year 21 per cent of senior executive positions - one in every five - were filled by external applicants from the private sector or from other governments. That is about as fast as external recruitment can responsibly progress given the need to preserve corporate memory in a period of immense change. External recruitment, with few exceptions, has been very successful and the resultant cultural change is progressing well. There is absolutely no sense in the Opposition's proposals in this bill. They will cost the taxpayers money and will destroy many of the incentives for lateral recruitment and high standards of performance so essential to the public sector. The Leader of the Opposition has grossly misinterpreted the findings of the Coopers and Lybrand study into the effectiveness of the senior executive service. In his statement to the House when introducing the bill he said:
The Government's own report commissioned last year by the Office of Public Management has slammed the operation of the senior executive service.
This is simply not the case. In fact, the reverse is true. The Coopers and Lybrand report states that the implementation of the senior executive service has been highly successful. The Leader of the Opposition fails to mention that the majority of Ministers expressed positive views about the senior executive service. They perceived it as a vital part of the Government's program. The Coopers and Lybrand report clearly shows that both the implementation and the operation of the senior executive service have been highly successful. The Leader of the Opposition continues to attack the level of external recruitment to the senior executive service. A significant percentage of senior executive service officers have been recruited from the private sector, as I have indicated. Again, according to the Coopers and Lybrand report, eight per cent of senior executive service members surveyed were recruited from the private sector, while another three per cent came from other, non-profit organisations and 10 per cent from other governments. Most positions had an incumbent, so these figures alone demonstrate that a significant number were replaced by outsiders through the merit selection process.
It is easy to target one or two individuals who have been unsuccessful. Again the Leader of the Opposition fails to mention the many success stories of talented people who have been recruited to the senior executive service and have been quiet achievers. Under the former system individuals who did not measure up were moved sideways. They were retired on the job and they continued to be a drain on New South Wales taxpayers. They were given an empty office, very little to do, maintained their position and cost the taxpayers of this State a considerable sum. The Leader of the Opposition continues to misrepresent the comparison between the New South Wales and Commonwealth rates of pay. He has also understated the remuneration package received by the former secretary of the Premier's department. There is a lot of talk around that this bill was drafted by the former secretary of the
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Premier's department, Mr Gleeson. If that is the case, one has to question why he would get involved in a blatant political exercise when the ethics and rules of the public sector require that senior public servants be apolitical.
Attempts have also been made by the Leader of the Opposition to mislead members by drawing attention to their salaries and seeking to compare these with the total cost of employer packages in the senior executive service. The cost of Federal department head remuneration on a total employment cost basis is, on average, approximately $160,000 per annum. It is understood that before October 1992 the amount is likely to increase by the 6 per cent I referred to. This does not include the value of tenure, which at that level is estimated to be 20 per cent, resulting in a more realistic total of $196,000 average per annum. It should be noted, however, that by comparison the average package of department heads in New South Wales is $155,000, $40,000 less than the Commonwealth. The Federal Government recently commissioned an independent study to establish the market relativity of senior executive service remuneration. The study found that on average Federal senior executive service positions were paid 18 per cent less than equivalent positions in the private sector.
The package of the head of the Department of Prime Minister and Cabinet as stated by the Leader of the Opposition does not include any allowance for the value of tenure, estimated by all independent assessors to be 20 per cent. Independent advice has estimated the value of tenure in some instances to be less than 20 per cent but around that figure. It must be remembered that the Commonwealth senior executive service has permanency and none of the performance requirements or sanctions of the New South Wales senior executive service. Yet the Opposition wants to take us back to the Commonwealth position. Although the maximum New South Wales senior executive remuneration is $219,000, three years ago the former secretary of the Premier's Department had total remuneration of his $113,000 salary, superannuation, a car, a driver for commuting purposes, and a leave loading. This totalled $211,000 in 1991 dollars. In fact, there is practically no difference in total remuneration between the former secretary's total package and the remuneration paid to most senior public servants at a comparable level in New South Wales today.
In any case, the package of the former secretary of the Premier's Department, to be correctly assessed in today's environment, would require inclusion of the cost of the former chairman and members of the Public Service Board as their functions are now largely incorporated in the Premier's Department. As I said earlier, there has been a great deal of devolution to individual agencies. With that devolution comes responsibility. Many of the functions of the Public Service Board in the days of Labor are now being performed by the secretary of the Premier's Department. After the bill was introduced the office of the Leader of the Opposition sought advice on whether compensation was payable to senior executives whose positions are abolished. One would have thought that it was perfectly obvious that someone on that side of the House would have been able to give advice on a very basic legal
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matter: legal contracts carry damages when they are broken. The compensation arrangements under the Act are not affected by the bill in its present form, so the bill is flawed. The contracts will remain in force and cannot be broken without paying dearly. If the Opposition now seeks to remove or downgrade the compensation provisions, this would be seen as a denial of natural justice. It would be indefensible for any employer to breach the current contracts on such a scale. The impact of the Opposition's proposals on external recruitment to the senior executive service has been drawn to the Government's attention by a major executive search firm, Spencer Stuart and Associates. In a letter to the Premier Mr David Pumphrey of Spencer Stuart has commented:
The continuing debate about the senior executive service, both in terms of its structure and status, is causing considerable uncertainty. Senior managers from both the private and public sectors are unwilling to come forward as they fear the positions will be downgraded and will lose autonomy and authority.
That statement is in line with the Opposition's deliberate approach to undermine the confidence of all sections of the community, and a deliberate approach to destroy some sections of the community, as was demonstrated yesterday and has been demonstrated on numerous occasions. The bill will not achieve the objectives espoused by the Opposition. It is a sham - political opportunism of the worst kind. The proposal is hypocritical and has already severely weakened the confidence of the public sector and the Government's capacity to recruit. Rather than create a more efficient public sector, the bill will return this State's public sector to the past at an increased cost to the taxpayers of New South Wales. The senior executive service has been deemed a successful initiative by Ministers, chief executive officers, senior executive service members and by leading private enterprise managers who sit on government boards, and who have often participated in the selection process. Despite the Leader of the Opposition's statement to the contrary, this bill will destroy the basis of the senior executive service by taking away the competitive flexible packaging, by retreating to an award-based environment for remuneration determinations, by arbitrarily setting a limit on the number of senior executive service positions, and, most importantly, by eroding the morale of senior managers though unfounded attacks on their competence and right to remuneration which is competitive and related to the value of the work that they perform.
Many of the officers recruited have been attracted to working for the New South Wales Government because of its modern flexible approach to management and remuneration. Because of the bipartisan support given by both Houses of Parliament two years ago they have relocated their families and homes and have entered into financial commitments believing that their contracts would be honoured. The Opposition has tried to destroy the faith that those people have placed in the parliamentary process. When honourable members on both sides of the House do not utter one word in opposition to a bill that goes through this Chamber, one has reason to believe that both sides will honour the position they took. The Government opposes this bill. If Opposition and Independent members have something
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constructive to offer in the accountability process they should come forward with it. If members on the Opposition benches or the crossbenches are of the view that there should be better accountability than the Premier's annual report, better accountability through the process of the Annual Reports Act, or that we need a system whereby some report is tabled in this House, they should come forward and say so. They should not come up with political opportunism or a bill that would destroy so much that is working well in this State - at a cost of $14 million to the taxpayers. They should come up with constructive suggestions.
The Government has already indicated that it is downsizing the New South Wales senior executive service. I can give figures in my own area of responsibility to demonstrate that. That downsizing will continue as efficiency improves and programs are completed. That direction is based on the performance contracts between Ministers and the chief executive officers of each agency, and it will continue to happen. The attrition rate will continue. The cost and the numbers will diminish but to enshrine that in legislation, to go back to the bad old days, to a system that is linked to the Commonwealth when the Commonwealth will probably move in the direction that the New South Wales Greiner-Murray Government took, is just a farce. Other States look to New South Wales as the role model, yet the Opposition wishes to go back to the past and destroy talented and dedicated people for cheap political points, in order to gain votes at some future time. The Government will not accept this bill. It is destructive rather than constructive. I hope that Opposition members will see the error of their ways and that in the course of debate some constructive, objective accountability mechanisms will be suggested. However, there can be no mechanism that artificially ties a number of people in the public sector. No other country in the world has done it, so why should New South Wales choke itself with such farcical processes?
Mr ROGAN (East Hills) [12.37]: With the Minister leading for the Government in this debate one would have expected to hear some robust defence of what the Government has done and the great attributes, if there are any, of the senior executive service, yet what we heard was a host of what I might call mistruths, without justification for the position that the Government is taking on this measure. I suggest that if a dozen people were plucked from Macquarie Street and seated in the gallery to listen to the debate, the senior executive service, which is on trial, would be found wanting. The senior executive service would not be able to survive public scrutiny. What the Minister has said in debate shows how out of touch with reality, with public opinion, this Government really is. Before addressing the bill, I wish to deal with a few of the matters the Minister raised.
The Minister asserted that the proposed legislation would cost the taxpayers money, yet no details have been provided to support that argument. The Minister spoke about accountability. The public demands accountability and increasingly this Parliament must reflect accountability in the laws that it passes, and in the behaviour of its members and those who hold high office in the public service throughout this State. However, there is not that accountability in the provisions that govern the
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conduct and conditions of the senior executive service. Accountability is simply not there and I shall deal with that in detail later. The Minister said that he did not have a healthy regard for the public service. That attitude is typical of Government members. They do not have a high regard for the public service because they are anti public sector and are doing everything possible to destroy a great service to the people of New South Wales. The Minister qualified his statement by saying that once he understood what public servants were doing his attitude changed. However, my point is that the Government's view, which was reflected in the Minister's speech, is anti public service.
I reject the claim by the Minister for Industrial Relations that the proposal of the Opposition will cost an additional $14 million. When I interjected on the Minister he asked me whether I disputed the Treasury's figures. That is not the argument here. The figures produced by Treasury are based on a false premise. I shall say more about that later in my contribution. In passing the Minister referred to yesterday's general strike. I put to him that the strike was the result of a decision and actions of this Government. Its industrial relations legislation shows that it is out of touch with public opinion. I remind the Minister that almost daily groups protest outside the Parliament about decisions made by the Government. The Government is out of touch with reality. The Minister said that there has been a 35 per cent increase in efficiency in statutory authorities. I shall not refer to every statutory authority but I make an observation about the so-called jewel in the crown of this Government: the Electricity Commission. It seems that whenever the Premier or Government supporters speak, they talk about the Electricity Commission. The figures presented to support this claim of improved efficiency are also false. The Government has used figures that cannot be given much credence. It has sought to divide electricity output in gigawatt hours by the number of Elcom employees. The staff of the commission has been reduced by 4,000 positions and because of that an improved rate of productivity and efficiency is claimed. The reality is that the employment of contractors is not taken into account in the figures. If they were, the figures would be altogether different and would not support the Government's claim.
Mr Schipp: It was a claim by Treasury.
Mr ROGAN: For the benefit of the Minister for Housing, I was referring to the claim by the Minister for Industrial Relations of improved efficiency in statutory authorities, and I was making particular reference to the Electricity Commission. The Minister for Industrial Relations said that senior executive service members had to travel economy class, not first class. Members of Parliament have to travel economy, so why not the senior executive service? Those at the top of the pile in that service are able to travel with their respective spouses. That is part of the package. They are able to take holidays overseas at the taxpayers' expense. There is no accountability and no disclosure of that. Many have not one motor vehicle but two at their disposal, one for themselves and another for their spouses. Even without the benefit of being able to travel first class I suggest they are doing very well indeed. This Government was almost tossed out at the last election, after
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only three years in office. It would have been tossed out had it not pulled the rort of the ticks and crosses. It cheated its way back into government. The coalition occupies the Government benches because it cheated and denied people the right to vote.
The Minister for Industrial Relations said in his contribution that the public sector does a good job. He said that the Government will continue with its overpaid and highly-politicised senior executive service appointments. The Premier asserts that he wants to manage New South Wales better by putting people first. The people that are being put first, however, are his own ministerial advisers, those in privileged positions. It is obvious that New South Wales is being mismanaged. The senior executive service is one of the most glaring examples of government waste and mismanagement. During the last election campaign the Opposition identified the Government's excessive use of consultants, despite the many millions of dollars outlayed in salaries for the senior executive service.
In discussion with some members of middle management of the public sector I asked for views about the senior executive service. I asked them, "Has it worked? Should we continue with the service as it exists as the moment?" They informed me that invariably, when senior executive service people are asked to make a decision, consultants are employed to provide advice. The senior executive service does not make the decisions, the consultants do. They have set themselves up as an elite part of the public sector. They have isolated themselves from those with whom they need to be in contact to ensure that they carry out their responsibilities properly and efficiently. Public servants with whom I have spoken have said, "When the system was introduced we did not like it, but we thought we would give it a try and see how it went". I suggest that members on the Government side of the House communicate with middle management of the public sector to ascertain what its impression is of the senior executive service. The concept has been trialled and it has been found wanting. It has not achieved what the Government claimed it would when it was introduced. In what used to be a united body capable of delivering the necessary services to the public there now exists a them and us syndrome. I can understand how that has happened. At one end of the scale people are being given privileged treatment and considerable lurks and perks.
[Extension of time agreed to.]
Is it any wonder that a them and us syndrome has developed in the public sector? The motor vehicles that are supplied to senior executive service people are supposed to be used by the service as well as themselves. Yet the transport people employed to look after these vehicles are given the instruction, "No one else is to use that car. That is for my use only". At the other end of the scale public servants see what is going on and resent it. Is it not any wonder that so far as they are concerned the senior executive service is a complete failure? The Opposition was constructive and did not object to the Government's innovative scheme when first introduced because it wanted to ensure that it received a fair trial. That scheme has been trialed
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and found wanting, and is now overdue for reform. That is the purpose of the Opposition's bill.
I shall now deal with the false assumptions conveyed to Treasury by the Premier's Department that led to Treasury circulating a document to Independent members. That document was prepared by Treasury based on costings that were supplied by the Premier's Department but not attached to the document. The document examines the Opposition's proposals to reduce senior executive service numbers. Based on those extraordinary assumptions provided by the Premier's Department, Treasury has been able to conclude that, far from reducing costs by reducing the number of senior executive service positions and benefits over time, the Opposition's bill will actually increase them. That was the line the Minister pushed just before he resumed his seat. I would like to put on record the response of the Opposition to that document. It is not difficult to see how the Treasury was forced to its untenable conclusion - the Premier's Department provided Treasury with untenable assumptions. The Treasury paper points out that the Premier's Department calculated the annual remuneration bill based on New South Wales senior executive service personnel being placed on Commonwealth senior executive service rates.
There is not one clause line or word in the Public Sector Legislation (Senior Executives) Amendment Bill, introduced by the Opposition, that even mentions the Commonwealth, let alone the Commonwealth senior executive service rates. The bill makes no attempt to tie New South Wales senior executive service rates to Commonwealth senior executive service rates. In fact, the clearly stated intention of the bill is to provide that SES remuneration be determined by the New South Wales Industrial Commission instead of the existing secretive tribunal. The Premier's Department makes the assumption that the existing SES will be reduced by 100 positions in 1991-92 as part of the Government's restructuring initiative. The fact is that Treasury was unable to verify the figure of 100; nevertheless, it thought it was a reasonable assumption. Accepting that it is a reasonable assumption that the SES can be reduced by 100 in the current financial year totally undermines the next assumption of the Premier's Department:
To provide the same level of service, no further net loss of positions can occur. Where positions are reduced from the SES, a comparable number of positions would be created below the SES structure . . . no more positions can be lost.
This is an assumption based on the arrogant notion that only the Greiner Government can reduce the waste it created in the SES and, that having been done in this financial year, no further savings will be possible. It should be noted that there is not a scrap of evidence, support or justification for that proposition. In the current economic climate a responsible government should be committed, on a case by case basis, to continuing to search for efficiencies and productivity reforms in all authorities in the public sector year in, year out. The Opposition totally rejects the notion that in all cases abolished SES positions would have to be replaced by a comparable number of positions below the level of the senior executive service in
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order to provide the same level of service. In some authorities this may well be true but it is totally defeatist to assert that further productivity gains are not available in any circumstances.
Further, the Premier's Department assumes and asserts that any new-sized SES would have the same distribution by band as the Commonwealth SES, weighted for a fixed number of chief executive officers. That is an outrageous assumption. As I have pointed out, there is no linking of the New South Wales SES structure - salaries or distribution of SES officers across bands - with the Commonwealth SES structure mentioned, suggested or implied in the Opposition's bill. Even the Treasury document is honest enough to point out that details of how the Opposition would implement a policy of "placing SES officers on Commonwealth rates" are not available. Details are not available because no proposition to adopt the Commonwealth SES band distribution for the New South Wales SES has ever been suggested by the Opposition. It would be an absurd idea in any event, given the different size, programs and responsibilities of the Federal and New South Wales government sectors. Such an assumption is pure fantasy and insults the intelligence of both the Opposition, which is supposed to have proposed it, and the Independents, who are supposed to believe it. Most of the Premier's Department's other assumptions summarised in the Treasury document are irrelevant, as they are based on the untenable assumption about Commonwealth-New South Wales linkage or on other questionable assumptions in relation to the valuation of Commonwealth and New South Wales SES remuneration packages. The Government is embarking upon the big lie because it is feeling the heat and it must justify the elite senior executive service it has created.
[Interruption]
Mr ROGAN: The Premier's biggest lies were told before the last election about balancing the Budget; if I were a Government member I would not want to interject about any other suggested lies. Government members are part of an orchestrated attempt to denigrate the Leader of the Opposition, but that will not work. The citizens of this State will tell the Government who is telling lies. Before the last election deliberate lies and false statements emanated from the Premier; and the Budget revealed all.
Madam DEPUTY-SPEAKER: Order! The honourable member has exhausted his time for speaking.
[Madam Deputy-Speaker left the chair at 12.57 p.m. The House resumed at 2.15 p.m.]
Mr ZAMMIT (Strathfield) [2.15]: I speak against this bill, a bill that members on the treasury benches believe is poorly researched, will increase costs to New South Wales taxpayers, will encourage a return to the unsavoury previous practices of special arrangements that invariably go largely undisclosed, and no doubt
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will destroy the morale of the public service - a public service that the Government believes is as good as any in the world. I wish to refer briefly to the contribution of the honourable member for East Hills. It is staggering that he had the audacity to say that the Opposition does not propose linkage between the Commonwealth senior executive service remuneration and the New South Wales remuneration. The honourable member clearly was asleep or, worse still, chose to ignore the statements made by his leader, Mr Carr, in introducing the bill as an irrelevancy. Mr Carr is recorded in the Legislative Assembly portion of Hansard of 15th October as saying:
. . . the Government will argue before the commission that these packages should be reduced to bring them into line with those received by the Commonwealth senior public servants.
The Government did its costings on that basis. It was entitled to do so because that was the clear statement of the Leader of the Opposition. I respectfully suggest that the honourable member for East Hills check his facts in the future. The other glaring misunderstanding is in relation to travel. The Minister in his speech pointed out that Ministers and senior executive service officers in New South Wales travel economy class on official business. Their Federal counterparts, as part of their award conditions, travel first class. The travel to which the honourable member for East Hills referred is not travel paid for by the taxpayer but by the officers out of their own packages together with full fringe benefits tax, as is the case with every other benefit option, including cars. The honourable member seems to be fundamentally unable to understand the simple concept that these officers are forgoing salary in their total package for benefits. The benefits are not provided at the taxpayers' expense.
All governments are facing enormous challenges to cope with reform and shrinking resources. A critical factor is the capability and responsiveness of their senior public servants. When the senior executive service was established in New South Wales in 1989 the State was at the vanguard of a growing national trend towards greater flexibility in remuneration of senior public servants. Even the small island of Malta is introducing a senior executive service program almost identical to that of New South Wales. The honourable member for Riverstone and the honourable member for St Marys, who are of Maltese background, as I am, may be interested to know that when the Maltese Prime Minister, Dr Fenech-Adami, visited New South Wales 18 months ago he said to me that the Maltese Government was interested in introducing a similar scheme to the New South Wales senior executive service and asked me for copies of the New South Wales Act and all the other documentation and regulations that went with it. I recall going to see Harry Eggleton, the Deputy Director-General of the Premier's Department, who gave me the documentation and a copy of his personal notes to assist the Government of Malta.
Prior to my election to this Parliament in 1984, I, like the overwhelming majority of people in New South Wales, had little regard for the public service.
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Public servants had an image of being bloated fat cats, inefficient, lazy, rude and unresponsive people who hid behind the cloak of permanency of employment. In reality, that was not the case. It was not the people who were at fault; it was the system that was wrong. They had no incentives. The best public servants invariably left to enter private enterprise, not only for the higher pay but also for the challenges that private enterprise provided. A major change had to be made, and the senior executive service provided that opportunity as the key instrument in the change in the attitudinal and cultural framework surrounding the public service as well as raising the morale of public servants through greater job satisfaction. At the time that the senior executive service measures were being introduced the entire shadow cabinet was briefed in detail on the scheme. That briefing was carried out by the current Director-General of the Premier's Department. Mr Carr was present at the briefing and was strongly supportive. I am reliably informed that several of his colleagues expressed surprise that the packages had not been better. Detailed consultation occurred, something that took place on few, if any, of the machinery of government changes whenever they were proposed by the Wran and Unsworth governments. In August 1989 when the legislation was introduced into the New South Wales Legislative Assembly Mr Carr gave it strong support. He said:
. . . it will bring more flexibility to the public sector. It will help to stem departures from the service.
Mr Carr's bill rather than stem departures is likely to increase the flow of people out of the public service because of the uncertainty and instability the measures would create in that service. Mr Carr said also:
One aspect that is fundamentally attractive is the flexibility that will be provided to appointees. This flexibility relates to the mix of components in the remuneration package, which is welcome.
The Public Sector Management (Executives) Amendment Bill was passed two years ago with the full support of the Carr-led Opposition. Now the Opposition is seeking to restrict the range of benefits and options of the senior executive service, although it supported that same flexibility two years ago. What has changed? I am sure that under the senior executive service arrangements honourable members would have noticed an increase in the morale of public servants, with an equally important increase in their confidence and the pride they take in their work. Additionally, the lower echelons of the public service are secure in the knowledge that they are being led by some of the best available management. The senior executive service has enabled New South Wales to recruit and retain topflight managers and change agents to implement major reforms. In the first year, 21 per cent were recruited from outside - 9 per cent from the private sector, 12 per cent from other governments. That is as fast as the Government can reasonably go, given the need to retain corporate memory. In addition, the continuing employment of New South Wales senior executive service officers depends on job performance. In other words, they
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have no job security. They are remunerated by package, which ensures full disclosure of all benefits.
The Commonwealth and some States are progressively implementing similar schemes. As I said before, the Opposition shadow cabinet was fully briefed when the senior executive service was introduced two years ago and the bill passed with the full support of members of both Houses. Why is there a change in attitude now from the Opposition? The Government can only assume that its motives are driven by tactics of the most base type, aimed at destroying something that is working well for the people of New South Wales. The senior executive service is responsible to Ministers for the management of 13 per cent of the entire New South Wales work force and $21 billion annually. In the past two years, as a result of the establishment of the senior executive service, operating efficiency in statutory authorities has increased 35 per cent. Senior executive service managers have continuing incentives to enhance their effectiveness under the performance-based scheme. The integrity of the New South Wales public sector is firmly based on openness and accountability. The number and profiles of the senior executive service officers are included already in the annual report of the Premier's Department. The Opposition wants to destroy all that. Why?
I oppose the bill for two additional major reasons. The first is that I, together with other Government members, strongly oppose any move by the Opposition to return this State and its public sector to an era of special deals, hidden perks and privileges. The second is that the senior executive service has been one of many major reforms which the Government has had the courage to introduce to an unresponsive and reactive public service, a public service which reflected the politics of the day. I have examined carefully the motives which have driven the Australian Labor Party to put forward a bill which has been poorly researched, inadequately costed and the consequences of which will be detrimental to the good management of this State. I am concerned also about the blatant misrepresentations of both the Leader of the Opposition and the shadow minister for finance, the Hon. Michael Egan, in another place. I can conclude only that they either have no understanding of the concepts and facts of the senior executive service and total cost-to-employer packaging or they totally lack professional advice. I am concerned also because this bill will adversely affect opportunities for certain people, especially women and talented people from ethnic groups, to achieve promotion to top executive positions in senior public sector management. These concerns are shared by all my colleagues on this side of the House. If the Independents and members of the Opposition are committed to integrity, openness and transparency in public sector administration and remuneration -
Dr Macdonald: All of us.
Mr ZAMMIT: Do you agree?
Dr Macdonald: Yes.
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Mr ZAMMIT: - they too should be concerned. The memories of some people are short but I and my constituents recall very well that one of the reasons this Government was elected to office in March 1988 was that the Wran and Unsworth governments were continually wracked by allegations of corruption and the public service was totally controlled by one man with a reputation for delivering special deals and privileges. The same governments and public service control opposed greater accountability to this Parliament and openness of public administration in this State. The Government has been outstandingly successful in rooting out corruption. New South Wales now has a senior executive service which is free of the secret deals for which its predecessors were well known, a senior executive service which is appointed on merit and whose promotion is performance based. The senior executive service has been one element in the reduction of perception that New South Wales was the State of corruption and special deals.
Several important points should be made about the structure and introduction of the senior executive service. The first is that the senior executive service was the first major change in the structure and remuneration of senior management in New South Wales for about 70 years. It was the first serious attempt to put in place an open system of rewards and sanctions. It was introduced after careful study of senior executive service arrangements operating in the Commonwealth and in some countries overseas. As the Minister said earlier in the debate, the numbers to be included were relatively small, less than one per cent of a total public sector work force of more than 300,000. A proper independent assessment of work values, accountability and responsibility was undertaken by a firm appointed on the basis of highly competitive open tender and the ultimate results were openly and publicly disclosed. It was made clear that the remuneration package would be total cost to employer and not salary plus on cost. That means that for the first time Parliament and the taxpayers know exactly what it costs to employ a public servant. It is not surprising that the Hon. Michael Egan objects to the same disclosure for politicians because the public would quickly see that in his case they are not getting value for money. The report made clear also that although the packages would be market related, full market rates would not apply. That was in spite of the fact that tenure was removed and effective sanctions for non-performance were introduced, something which had never existed under the Labor administrations. In his second reading speech the Leader of the Opposition purported to quote from the Coopers and Lybrand report, and he did.
[Extension of time agreed to.]
Unfortunately he must be either illiterate or unintelligent, or his adviser is similarly afflicted, because the sections he quoted from are in appendix A of the stage one report which says in big headlines, "Lessons From Other SES Systems". Let me repeat that in case it has not sunk in - "Lessons From Other SES Systems". The Leader of the Opposition has grossly misrepresented the findings and conclusions in that report. One of the reasons why the senior executive service has been effective in other States and overseas is noteworthy and had been anticipated
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by the Government. Additional measures had to be taken to overcome the problems which have obviously not been taken into account by the Opposition. The Minister for Industrial Relations and Minister for Further Education, Training and Employment has accurately repudiated the Opposition's misrepresentations of the true cost and I will not elaborate on that except to say that the bill will lead to an increase, not a lowering, of the cost to taxpayers.
If sackings are to occur and contracts are to be broken, the cost in the first year alone will be at least $4 million more than the present cost. If the Commonwealth senior executive service arrangements are introduced, a substantial increase will be automatically awarded to senior executive service officers on levels one and two. Apparently the Opposition's adviser on the senior executive service failed to point out that 70 per cent of senior executive service officers are at the lower levels. In addition, it is relevant to point out that senior executive service officers, in accordance with the market related principles of the scheme, have received no increase in remuneration this year. I noticed Mr Egan in the gallery a little while ago, but he has left. He adopted the populist approach of talking about fat cats and implying that a large number of senior executive service officers are at the top levels. That is demonstrably wrong. Only four senior executive service officers are at the top level of remuneration and relatively few are at levels seven and six. Because the senior executive service was such a major change, the Government sought an independent professional evaluation of a major component of its reform program. Because the Government had bipartisan support for the introduction of the senior executive service, it hoped that the Opposition might treat this evaluation professionally. Clearly it is not doing so, and does not intend to.
If changes were needed, the sensible course of action was to introduce them quickly. This is good management practice, which was foreign to the Labor Government. There was nothing secret about either the evaluation project undertaken by Coopers and Lybrand or the report. It was to be done in three stages. The first two stages have been completed. A key area was performance agreements and their review. Unlike the position under the Wran and Unsworth governments, every chief executive officer has a written performance agreement with his or her Minister and every SES officer has a performance agreement which ultimately supports that of the chief executive officer. At the beginning of each calendar year the Premier professionally reviews the performance of each of his Ministers and chief executives. I suspect the concept of a performance agreement and annual ministerial and chief executive reviews terrifies the Leader of the Opposition and his Cabinet colleagues. The measure put in place by this Government means that if objectives and targets are not being met sanctions can quickly be put into place. It puts meaning into the performance agreement and SES remuneration systems. I wish to correct the misrepresentations by the Leader of the Opposition of the Coopers and Lybrand report. The executive summary in stage two is entitled "Evaluation of the Effectiveness of the New South Wales Senior Executive Service". It was presented in February 1991. It states:
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Although in its infancy, there are good indications that the SES is achieving one of the prime objectives - to develop the performance based management culture in the New South Wales public sector.
This contrasts with the statement by the Leader of the Opposition that the Coopers and Lybrand report slammed the SES. The executive summary went on to say:
In particular, there is support for:
1. The way SES positions were filled.
2. A job evaluation process to ensure fairness and equity.
3. Remuneration arrangements, including flexibility of packages' dollar value and information on packaging options.
4. The code of conduct and the application of sanctions for non-performance.
5. Performance management and performance agreements.
I repeat: none of these things existed under the previous Labor Government. It was also significant that there was strong support for extending SES types of arrangements to incorporate certain levels below the SES. There is very strong pressure from within the public service of New South Wales to extend the SES to levels well below those under the current arrangement. That support comes from officers who are keen to lose tenure and be put on performance based contracts because those arrangements provide motivation, make the system open and accountable, and remove the capacity for special deals and favouritism which were so much a feature of the previous system. In a system the size of the New South Wales public sector undoubtedly there will be problems. However, compared with the problems the Commonwealth has experienced with remuneration it is surprising that the New South Wales system was so smoothly put into place and that it has attracted as much support as it has from other public services around Australia. It is now the model for many Australian States, and overseas. The SES should be seen as part of a general scheme for the improvement of the public service which basically is aimed at making New South Wales both a good place to work in and an honest place to do business in. Both these characteristics have the support of electors, customers and commentators, and the public service at large. It would be unfair of me or any other member to expect members to be in the Chamber at all times. However, it is the height of arrogance, the likes of which I have not seen in almost eight years in this place, that the Leader of the Opposition should move a private member's bill, have it listed for debate and not even turn up in the Chamber, and the debate has been going on for nearly two hours. It proves what a stunt the Leader of the Opposition has pulled and confirms that he believes governing New South Wales is a joke.
Dr METHERELL (Davidson) [2.34]: It was disappointing to hear the honourable member for Strathfield end on that note. This is a much more serious issue than simple petty party point scoring. There is a great deal more common
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ground between the Government and the Opposition and the Independents on this issue than a number of members who spoke in the debate have appeared willing to concede. If we had an intelligent debate on that basis we would end up with a better senior executive service and a great deal more efficiency and effectiveness from the public service generally in New South Wales. That is the way in which we should all be approaching this issue. Following my negotiations with the Opposition, the bill as it will be amended will set very responsible targets for the phased and flexible reduction of the total size of the SES. I should make it clear at the outset that it will not abolish the SES, reduce flexibility or attack the SES concept as a number of speakers tried to give the impression it will. It will simply balance certainty on the one hand - there will continue to be an SES with a certain number of members - with a flexibility within global limits. This is clearly similar to the Government's approach to such issues as productivity savings on the one hand - it has set a percentage reduction for productivity savings for departments - and global budgeting on the other, in which a global budget is set three years out and departments are expected to live within the global figure. That provides a degree of flexibility. That is what this legislation is proposed to achieve.
The bill in its amended form, after my negotiations with the Opposition, will preserve SES contracts. It will be absolutely clear that no breach of contract will be involved, and neither should there be. But it will set out to limit the potential for the abuse in future contracts which is taking place under present contracts. This will be done by limiting the percentage of the salary package that can be applied for tax minimisation purposes. At the moment that figure is 50 per cent of the entire salary package. The bill will also restrict the elements to which that reduced percentage can be applied. It will take out things like tax free overseas holidays for the family and the payment of children's private school fees. It will set a figure which will achieve a reasonable balance between flexibility, in setting a package, as one incentive factor, and the reduction of abuse. A number of members of the SES are setting an appalling example to other members of the public sector who do not enjoy such salary benefits. In the event that the amendment that I have just circulated is carried, the bill will preserve the role of the Statutory and Other Offices Remuneration Tribunal subject only to a duty to consider advice from and recent determinations of the Industrial Commission in other public sector wages cases. In other words, it will seek to balance the right of the independent tribunal to make the determination with the assurance that it will consult widely with private sector consultants about comparable private sector salaries but with the Industrial Commission about what is happening with salary increases in the public sector. I would have thought that was a reasonable balance to strike.
These are all significant improvements on the original bill, which I described as being far too cute. It was simply not thought through. The amendments will make a substantial improvement and their aims are absolutely attainable. The figure of 1,100 has already been admitted by senior officers of the public service to be eminently attainable. A hundred will be the reduction this year. This shows how significant the reductions to the SES can be when pressure is put upon it for greater
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efficiency. Of course the process could be carried on year by year in the targets being set by the legislation. Added to that is the factor of corporatisation, of which the Minister is well aware. That too will take significant numbers outside the SES. He knows as I know - and indeed the head of the Premier's Department knows - that figure of 1,100 is attainable, be it by 1995 or 1996.
Mr Fahey: It does not need legislation to happen.
Dr METHERELL: We will see what the Minister is offering as an alternative to meet the target. Even with that interjection the Minister is not denying that figure of 1,100 can be met. That very admission shreds most of the content of the Government speeches just delivered, including the pathetic effort by the honourable member for Strathfield, a speech prepared for him by the Premier's Department. He did not even have the knowledge of this area or the preparedness to do the work to make his own speech. Having summarised the bill, I turn to the reasons for the legislation. Whether one is concerned - for the supporters of Menzies - with the forgotten people, as Menzies described them, or whether one is concerned for the people Chifley described as the common people, what is wrong with the current operations of the SES, the current salary packages and the current numbers is the appalling example being set to the great bulk of the public sector who are seeking to serve to the very best of their ability the people of New South Wales.
The senior executive service is simply bloated, and the Government acknowledges that by reducing its numbers by 100 this financial year. It is bloated in size. The fat cat syndrome, best represented by the nature of the salary packages that the senior executive service has been given, has a corrosive effect on public sector morale, which I will go into in a little more detail later. Honourable members on both sides of the House ought to admit - every Minister would privately concede it though they cannot do so publicly - that the senior executive service has failed abysmally to attract significant numbers of outside applicants beyond public services in other States or the public service of New South Wales. For that reason alone it needs the most serious and systematic review. One only has to look at the revolving door of permanent heads in such departments as transport, housing and TAFE. The Minister for Industrial Relations and Minister for Further Education, Training and Employment knows that the senior executive service in its present unrefined form is simply not attracting top talent from the private sector. Indeed, it could be argued that it is not attracting much top talent from public services elsewhere.
Mr Fahey: You appointed 49 of them.
Dr METHERELL: I accept that. We have all had our failings. Ministers have had their failings and I share those along with the Minister for Industrial Relations, who is presently in the Chamber. No doubt future Ministers and permanent heads will have their failings. But the system itself has failed to attract many of the best people. What I would say, in fairness to the senior executive service, is that it has worked better in the commercial undertakings of the
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Government, in government trading enterprises, than it has worked in the core service departments. A quick measure of it would reveal that it has been a reasonable success in those areas that are commercial undertakings and an abysmal failure in education, health, transport, technical and further education and several other areas that are the core service departments - those service departments that really matter to the community of New South Wales and that spend some three-quarters of the State Budget. That is where it really matters and that is where it is not working. That is where the example being set by the senior executive service is so poor.
The other point I wish to make at this stage is the inappropriate value system that is being established merely by saying that the senior executives of the public service in New South Wales, or indeed anywhere else, are there to do the same job as a private management in private enterprise. Once that notion is accepted, and so much of that has underwritten what has been said by Government members, the notion of public service is lost - the notion of a committed public service with public servants wanting to serve the public good is lost. It is not the same to manage health or education in New South Wales as it is to manage Broken Hill Proprietary Company Limited or some other major corporation. That is something fundamentally wrong with what the senior executive service has done to the culture of the public service and the practice of public service in this State, and why it needs to be looked at constructively with a view to significant reform.
There is disquiet and Government members should not suggest otherwise. I know, and I suspect everyone in this Parliament knows, that there is substantial disquiet right throughout the Government, as well as on the Opposition and Independent benches, about how the senior executive service is operating, about many of the personalities who have been selected, and about this new culture. Government members are not able to admit it in this debate but I assure honourable members that they have said so on many occasions privately. The best of them do want significant reform but, because of our adversarial system, they cannot accept a piece of legislation such as this bill. They must try to knock it over and come up with another proposal of their own to try to achieve the same end by government means, to say that it represents something better and score a political point. It is a question of balance. It is a question of finding a middle way.
I return now to this question of the distortion of the salary package. What sort of example are we setting to the great bulk of public servants of this State when freebie overseas holidays are being taken as part of the salary packages of all senior executives in the senior executive service? It is true that those holidays are costed into their salary package, but what sort of example does that set when it is all done pre-tax, when other public servants must pay for whatever holidays they have after tax has been taken from their income. The pre-tax benefits that are enjoyed by the senior executive service include private school fees and the disappearing car trick, which is the issue that most annoyed me when I was a Minister. At that time a value of $30,000 was put on the car and driver given to a permanent head. Most of the
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permanent heads have pocketed that money, which now has a value of $40,000. They have pocketed that money as part of their salary package. Because of a loophole in the guidelines that allows them to use a car and a driver from the car pool of their department if they are attending official functions. Having pocketed the money, they are now using an official car and chauffeur day in and day out, going home from functions at night and attending meetings in the early morning, all at taxpayers' expense. They have pocketed the money that was attributed to that perk. It is not good enough for the Government to try to cover up that fact.
[Extension of time agreed to.]
So the disappearing car trick is another part of the salary package fudge which is giving the poorest impression about the senior executive service - perhaps unfairly in some cases as many senior executives are not availing themselves of these privileges and are not abusing their salary packages. The latest abuse - discovered by the Opposition, and not denied by the Government - is that certain officers in the senior executive service have awarded themselves a living away from home allowance in addition to 50 per cent of their salary package that they can now take in the form of perks. Before debate on this bill began few Government members would have known that many senior executive service officers are taking 50 per cent of their enormous salary packages in this pretax format. In addition to that 50 per cent, this living away from home allowance rort has been added. It is wrong and it should be dealt with. The Minister for Industrial Relations should be heading the move to deal with it because the message that is being sent to the public service is not one that is given to an improvement of morale.
Mr Fahey: You are wrong again.
Dr METHERELL: The Minister will get a chance to answer. I assure the Minister that a number of these things are occurring. I have spoken about the inappropriate value system, and that is part of that inappropriate value system that is being created. I want to say something more about the purpose of public service and the way in which the senior executive service needs to be reformed in its culture, even at this early stage, to focus on that commitment to the general good. It needs to be re-established that the senior executive service is an integral and vital part of the public service and not some bunch of corporate raiders transplanted to the top of the public service, there to gouge as much out of it as they can, there to do the Government bidding, to force redundancies, cut costs and to generally do all they can to diminish the size of the public sector. The message, right or wrong, that is sent to many other public servants is that they are there to undo the public service itself. That cultural question is of fundamental importance. I do not believe that sufficient of the new members of the senior executive service understand, particularly those outsiders from the private sector - few though they be but significant as they are in a number of the large trading enterprises - understand that their first commitment has to be to serve the general good and not necessarily to do the
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Government's bidding in a cost-cutting exercise. They need to be motivated by, and committed and dedicated to, provision of leadership in public service.
The prime motivation of a public servant should not be financial reward. It should be to identify and serve the general good as each envisages it as the chief or senior executive in an organisation. Their conduct in leadership must be and be seen to be - of equal importance is what one is seen to be doing - caring and sharing the special pressures, challenges and constraints of the public service environment. How can it be that we have a bloated senior executive service at the moment? Even the Government now concedes that in this financial year alone 100 positions can be cut from that service. It is bloated at a time when 20,000 public servants in New South Wales have been made redundant; many of them put on the scrap-heap at a time when they will not be able to obtain fulfilling employment during the latter stages of their lives, after what payment, as little as it is, has been made to them. These are fundamental issues. What lies behind this bill is the example that is being set to the rest of the public service by the success of senior executives. It is this desire to say to the rest of the public service: There will be equal constraint upon senior executives as there is upon you; they will share your pressures; cost cutting will be even handed. Privately the Government concedes that the targets referred to in the legislation can and will be met, albeit by another means. If that is so, this example can be set for the public service. Let us do it clearly by legislation. Let us show some leadership through the Government accepting the lead of the Parliament.
In summary I shall recapitulate a number of matters. The legislation in its new form, as it is proposed to be amended, sets reasonable targets for a phased, flexible reduction of the size of the senior executive service. It will preserve existing contracts and bring about restraint in the lurks and perks that have now crept in and are expanding rapidly in senior executive service salary packages. It will preserve the role of the Statutory and Other Offices Remuneration Tribunal, while acknowledging the role of the Industrial Commission and seeking its advice as part of the general information gathering process. If this legislation is carried it will ensure a more harmonious and unified public service with a common sense of direction and a sense of sharing the challenges and hardships that are necessary at a time of public expenditure constraint. So that there is no doubt I wish to inform the House of the terms of the amendments I shall be moving in Committee. I shall move:
1. Pages 3 and 4, Schedule 1. Omit Schedule 1(3) and (4).
2. Page 5, Schedule 2. Omit Schedule 2(3) and (4).
3. Pages 5 and 6. Schedule 3. Omit Schedule 3(1), (2) and (3) and the transitional provision to Schedule 3, insert instead:
Section 24E (Directions by Minister et cetera):
(a) From Section 24E(1), omit "The Minister may give the Tribunal directions", insert instead "The Minister may make submissions to the Tribunal".
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Mr Fahey: On a point of order. The standing orders clearly provide that it is in order for a member to refer to an intention to move amendments, but a member should not refer to them in detail until the appropriate stage is reached, which stage is in Committee.
Madam DEPUTY-SPEAKER: Order! I uphold the point of order. It is in order for members to foreshadow amendments during debate at the second reading stage of a bill, but it is not in order for members to state them formally.
Dr METHERELL: I was doing it in that way to ensure that my amendments would be known lest the gag prevented my moving them in Committee.
Mr Fahey: There will be no gag. The honourable member might do me the courtesy of providing me with a copy of his proposed amendments.
Dr METHERELL: The amendments have been circulated. The Minister is too lazy to get out of his seat. The proposed amendments are right in front of him. The remainder of my amendments refer to the way in which a remuneration package should be determined and advice sought in relation to it. There has been a mischievous misinformation campaign put around by the Government that much of the content of the bill - its direction and motive - is shared commonly by members on both sides of the House. If we can achieve the goals set out in this legislation, it will have done a great public service to this State.
Madam DEPUTY-SPEAKER: Order! The honourable member has exhausted his time for speaking.
Mr MOSS (Canterbury) [2.54]: I support the Public Sector Legislation (Senior Executives) Amendment Bill. I give notice that the Opposition intends to move six amendments in Committee. The first amendment relates to a reduction in the number of senior executives. The amendment will prolong reductions in the service by spreading them further. The proposition is that ultimately there will be more staff in the senior executive service than the 800 proposed in the original bill. The second amendment refers to mortgage repayments as an eligible benefit. It is proposed that such mortgage repayments will not exceed 20 per cent of a remuneration package. The third amendment deals with employment benefits with respect to termination. The amendment seeks the insertion of a clause to provide that benefits continue when a senior executive has moved into another position until such time as the executive's previous contract would have expired. The other three amendments are identical except that they relate to amending the Public Service Management Act. I inform the House at the outset that the Opposition did not oppose the original legislation on its introduction in July 1989. The Minister for Industrial Relations said in his contribution that the Opposition has always been critical of the size of and the benefits associated with the senior executive service. However, the Opposition was never critical of the concept, and this bill is not critical of it. An objective of the bill is to prune the size of the senior executive service and
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the benefits that the service provide, to bring it into line with the Opposition's previously stated position.
The bill has three principal objectives. First, the bill will reduce the size of the service. Second, the benefits will be reduced. Third, it will ensure that the remuneration packages of senior executives will be determined by the Industrial Commission. I am grateful for the remuneration comparisons that I have received from the Director-General of the Premier's Department. It has been argued that the New South Wales senior executive service is smaller than the those in public services of other States and that of the Commonwealth. That is like saying that if there are more indians there have to be more chiefs. It is ridiculous to argue that because of the size of the New South Wales public service 1,614 senior executives are required. A parallel situation would be to suggest that the number of senior officers at Canterbury council should be increased from six to 18 because the three neighbouring councils each have six senior officers responsible for populations one-third the size of the population for which Canterbury council is responsible. The senior executive service should not be expanded whenever the public service is expanded; there is no strength in the argument that there should be a high number of senior executives because of the many public servants in this State.
The Minister said that the senior executive service in Tasmania forms 1.1 per cent of that State's public service. That is not surprising in Tasmania, which has a smaller population than other States. To paraphrase an old adage, many chiefs are needed for a smaller number of Indians. We have been told that the tally of 1,614 senior executive positions compares favourably with the number of such positions under the former Labor Government. The Minister, however, did not add that the Government has reduced the public service by about 16,000 employees. The Government defeats its own argument when it claims that the former Labor Government had as many senior executive service officers. The Government, having let go 16,000 employees, on its own argument should have reduced the senior executive service by at least 80 positions. If the Government achieves projected reductions in the public service of 30,000, on its own argument it should reduce the senior executive service by at least 150 positions. The Opposition thought that the SES had at least 1,500 officers, but the Government denied that and said there were only 1,300. The Director-General of the Premier's Department has said that the figure is 1,614. Obviously the Government knew that but decided to tell the Opposition that there were only 1,300 officers in the service. We have now been provided with the true figure, which shows 314 positions more than the Government's initial estimate.
The Government claims that if the Opposition's bill is passed, senior executives will lose security of tenure. I point out, however, that 80 per cent of the senior executive service officers are continuing public servants and can go back into the public service if their positions are made redundant. Officers signing up for the senior executive service have the option of a right of return on payment of an annual pittance. Officers who did not take that option must have been politically naïve, or
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believed that the legislation would never be amended, or were too mean to do so. Most public servants joining the senior executive service would have signed an agreement for a right of return. The non-continuing public servants, who comprise 20 per cent of the senior executive service, were to receive 12 months' compensation with their complete package if they lost their positions, as provided in the principal Act, the Public Service Management Act.
Tenure is not a major issue. It is highly unlikely that senior executives will be thrown out of their jobs or regraded. The bill is designed to reschedule staff as contracts expire and to cut down on the senior executive service during the course of time. The proposed amendments go further in that respect. Under the proposed legislation the number of senior executives will be reduced naturally as contracts expire. Numbers will be reduced in stages. The senior executive service is top-heavy and should be reduced. That is the object of the bill. What has the Government achieved in the present senior executive service? The Government has appointed 1,614 persons to senior executive positions and provided them with over-the-top salary packages, and 80 per cent of those positions are held by continuing public servants. In other words, 80 per cent of the talent of the senior executive service was already in the public service, effectively carrying out positions of responsibility. The Government, under the current Act, handed over packages of unjustified bonuses, lurks and perks to professionals who were already adequately catered for.
The second major change proposed is to senior executive service benefits. Current agreements allow a member of the senior executive service to convert up to 50 per cent of the package to certain benefits, including home repayments. I have foreshadowed that the Opposition intends to reinstate in the bill a clause providing that a portion of home repayments could remain as a benefit if it did not exceed 20 per cent of the remuneration package. The home repayments benefit includes capital repayments and interest. Other perks and benefits are private school fees, child care fees, purchase of motor vehicles and, for heads of departments, purchase of more than one car.
[Extension of time agreed to.]
Senior public servants receive a fleet owner's discount and sales tax concessions when purchasing a car. Under the current agreement, the balance paid by a senior officer on the purchase of a car may be deducted from taxable income. The greatest perk of all is that the cost of holiday visits may be deducted from taxable income. All these benefits represent considerable savings in income tax which are not afforded to other public servants or to the majority of wage-earning and tax-paying workers in this State. The existing legislation is a good example of New South Wales Inc. introducing an arrangement to beat the tax system of another government. Peter Clyne may be deceased but his ghost lives within the corridors of New South Wales Inc. I emphasise that the bill introduced by the Opposition would not remove all benefits. The bill will limit benefits but will continue to
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provide for benefits such as one motor vehicle, employer's contribution to superannuation, subscriptions to professional associations, and purchase of a right of return to the public service. The bill also provides for other benefits that can be authorised by legislation. The bill is not a bad package at all. The bill will trim off the fat that is currently available to senior executives but also maintain a set of very fair and responsible benefits.
The third major change to the legislation concerns the alteration to the system whereby salaries and benefits are determined. They are determined at present by a statutory remunerations tribunal, which comprises three persons, one appointed by the Government, the other two the head of the Premier's Department and the head of the Public Service Board. Both are members of the senior executive service. They are in the club. They adjudicate on their own wages, their own benefits and they increase their own salaries as well as those of their friends. For many years in this State the electorate at large was extremely critical that another body - this Parliament - used to do that. There was a time when members of Parliament voted in their own salary increases. The general public found that to be wrong, and they were justified in that belief. The Parliamentary Remuneration Tribunal - Mr Justice Slattery - determines parliamentarians' salaries and allowances. An outside body, the majority of whose members do not belong to the senior executive service, should determine the salaries and remuneration of senior public servants. The team of three that makes up the remuneration tribunal are all senior public servants. The Opposition wants to take that function from that tribunal and give it to the industrial tribunal.
The honourable member for Davidson intends to move an amendment in Committee that will alter the bill. His amendment would retain the tribunal but require it to consult with the Industrial Commission. The Opposition has no problems with that amendment. Its main concern is that an outside body should provide some sort of check and balance against those who adjudicate on their own salaries. I cannot speak for all members of the Opposition, but I dare say the Opposition will have no trouble with the amendment of the honourable member for Davidson. It seeks to take away the right that senior public servants have to determine their own salaries by virtue of the fact that they have to consult with the Industrial Commission on any matters relating to salaries and benefits.
The Government should adopt the proposed legislation. It should admit that it got it wrong in the first place. It should realise that the senior executive service has not achieved a great degree of efficiency, particularly in view of the fact that about 80 per cent of the service comprises existing public servants who in the past were paid adequately to carry out functions no more onerous than the functions they carry out today. The Government should support the proposed legislation so as to provide a balance between this State's public service and the Federal public service. I do not believe anyone could argue that the bureaucrats in Canberra are doing it tough. I support the proposed legislation because it seeks to abolish the tax lurks that the Government has enshrined into salary packages. Fat cat tax lurks are seen
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by the Opposition as nothing more than a gross insult to every other taxpaying member of this State.
Dr MACDONALD (Manly) [3.14]: I welcome this opportunity to speak to the Australian Labor Party bill. This is a hallmark day in the sense that private members' and Opposition bills are being introduced and debated fully in the House. That is part of the reform of which this House is so proud. The bill is timely, but it will be ineffective. It will be more destructive, I believe, than constructive. There is a perception that over the years the public service has been bloated, unaccountable, and inefficient. For those reasons, there has been a need for a leaner and smarter top echelon. I support the senior executive service concept. There is a need for new management and new work practices. I wish to comment on the senior executive service as I see it as the result of some investigations that I have made independently. I should then like to make a few suggestions to the Minister and seek some commitments from the Government for elements of reform.
Mr Hartcher: Is the honourable member speaking for or against the motion?
Dr MACDONALD: I shall be speaking against the bill. The senior executive service started in a slow way. There was recruitment from the private sector of about 20 per cent. A strong argument was put up for retaining elements within the higher echelons of the public service because it is necessary to retain corporate memory. There was a perception in the private sector that if one got into the public sector it might be a blight on one's career. That may explain why there has been a slower uptake from the private sector. Senior executive service salaries have been the subject of much debate. The figures seem to oscillate between one extreme and the other. I had the opportunity to speak to the head of the executive recruitment department of Coopers and Lybrand. I felt it was necessary to obtain an independent assessment, particularly on salaries. The comments included the statement that all was not well; that senior executive service salaries are recession proof - that term came up within the assessment; that the benefits were excessively generous. Coopers and Lybrand said:
But, the benefits for all SES and CES were excessively generous. And they were "recession proof". When executives in the private sector were having their salaries halved by a Board decision without their knowledge, our SES executives were "safe".
That is an indication that some fine tuning is required within the senior executive service. I shall come to that in a moment. The executive recruitment officer of Coopers and Lybrand pointed out that salaries in the private sector - presumably since the recession - could be half what they are in the senior executive service, but in the public sector salary reduction tends not to happen. We were directed by Mr Humphry, the Director-General of the Premier's Department, that we should address our concerns to the extracts from Cooper and Lybrand's reports for stage 1 and stage 2 of the senior executive service evaluation. That was an unfortunate
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direction. The document was not an objective assessment; it was a survey of senior executive service officers. Some of it makes interesting reading. One of the questions asked their opinion about remuneration. The report read:
The vast majority of respondents (85%) did not consider the SES over-remunerated.
Of course that was likely to be the case. The report continued:
The SES has not created an unacceptable elite.
Of course they would say that. That is hardly an objective assessment. Another comment was:
Social responsibilities in government are not neglected as a result of commercial management emphasis.
That was from 56 per cent of respondents. The document was not particularly valuable in terms of trying to make an assessment whether the senior executive service was effective. The point of my remarks is that we need to look at opportunities to fine tune to implement systems of evaluation. During my investigations I also had the opportunity to obtain some comments from the chief medical officer of one of the major utilities in this city. It would not be appropriate to name him but he is not a member of the senior executive service. He pointed out that there have been improvements. He said:
. . . I have seen a marked improvement in management decision making. This is not to say that it is in any way perfect but rather because managers are being held accountable, they are less inclined to the old style of buck passing. Therefore I no longer see files that have been through hands of multiple departments before any real action is taken. I have particularly noted this where disciplinary measures have been started against employees who are not performing or who have poor attendance records.
It was pointed out also that as a result of the establishment of the senior executive service, it was found that some senior officers did not meet the criteria. In other words, following the establishment of the senior executive service, the chaff was retained. The person to whom I referred earlier continued:
Most of these were round pegs in square holes or people who had been promoted by reason of their age and seniority beyond their capabilities.
There has been an improvement, as well as signs of better decision-making and an indication that government departments are less cumbersome. During my investigation I consulted the executive recruitment officer at Coopers and Lybrand. In summary he said:
My impression is that there is an improvement in the quality of the SES executives. They are better decision makers and their departments are less cumbersome.
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The program involved jumping public servants several positions if they had suitable abilities, and this resulted in clearing out "some of the chaff".
I am not a member of the Government or the Opposition. I sought an independent assessment from the executive recruitment officer at Coopers and Lybrand. The difficulty is to assess in a scientific and measurable way how the senior executive service is working. One way of making such an assessment is to try to build in performance mechanisms. From the information I have been able to gather, at present only a $5,000 or $6,000 component of the package is subject to performance assessment. In the private sector 30 per cent to 50 per cent of the package may be subject to performance assessment. One criticism of the service is that in many cases the senior executive service officer, perhaps because he is not under sufficient scrutiny, makes changes for the sake of change; he takes action for the sake of being seen to do things. I will refer to this matter again when I seek a commitment from the Government to introduce a process of evaluation and scrutiny.
The bill introduced by the Australian Labor Party is tantamount to applying a scalpel without a great deal of thought. The assessment of the Treasury is that there will be a $14 million cost rather than a saving. That assessment relates to the proposal of the Australian Labor Party to down-size the senior executive service from 1,600 to 1,100. The Australian Labor Party suggests that the Statutory and Other Offices Remuneration Tribunal should be replaced by the Industrial Commission in the setting of salaries. I am not convinced of that. It argues that benefits should be curtailed. Those arguments are set out in the bill. The commitments I shall seek from the Government will allow those benefits to be scrutinised. Independent members are assaulted on the one hand by Michael Egan, who claims one thing, and on the other by Mr Humphry and the Minister for Industrial Relations and Minister for Further Education, Training and Employment, who claim something else. It is difficult to know who is telling the truth. I recall the words of an American philosopher who said, "I'm scared, I don't know whether the world is full of smart men bluffing or fools who mean it". Sometimes it is difficult to drag out the elements of truth.
As soon as the bill hit the floor of Parliament, the Independents were immediately assaulted by a large amount of documentation setting out argument and counterargument. I do not intend to detail every aspect of those arguments, but apples were not always compared with apples. On occasions there have been attempts to compare the senior executive service with politicians. That attempt has been the subject of argument and counterargument. The question of whether an electoral allowance and superannuation should be included in benefits has been raised. In all this confusion a number of things are clear. If I am to believe the figures produced by the Premier's Department, 70 per cent of senior executive officers receive a package of less then $94,500. It has been claimed in the debate that there has been an enormous burgeoning of fat cats who receive salaries above $150,000.
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[Extension of time agreed to.]
The figures reveal that of 1,600 senior executive officers, 32 receive packages in excess of $150,000. That has to be put into perspective. The female gender component in the senior executive service has moved from approximately 8 per cent to 12.64 per cent. It is worth noting also that since the senior executive service was introduced the number of senior staff has not increased. It seems to be suggested that since the senior executive service was introduced, there has been an expansion of the top end of the public service. That claim does not seem to stand up to scrutiny. The bill will be effective in a sense but by default. Its direction is punitive rather than constructive. I have sought advice from outside the House as to whether the bill contains provisions upon which we can move. The bill serves a purpose in that it has allowed the spotlight to rest on the senior executive service and has allowed a review process to be undertaken. The Premier and the Minister have agreed that fine tuning is appropriate. Any decision we make, whether in this House or in our private lives, should always be subject to some evaluation process afterwards.
The advice I received from outside the House is that when Parliament allocates public resources during the budgetary process, it should do so in a way will simultaneously make the senior executive service accountable. It should direct senior executive service officers to deliver the goals and services set out in the legislation they administer. At present the contractual relationship between the Government and the senior executive service is similar to a sacred cow; it is beyond effective scrutiny. Even those who know what is in the packages appear to be unable to gain any substantial control over them. I am sure the Minister would welcome a window into that process. The bill does not effectively deal with those aspects. It raises issues but in a sense does not address them. The Minister has stated that he is willing to accept certain suggestions. The Premier has stated that he will make some commitments to this House that will perhaps satisfy some of my concerns in relation to scrutiny and public accountability. I seek from the Premier, the Minister and the Government a commitment that will allow for those concerns. I ask that the annual reports Act be amended to allow for a number of things. First, there should be a prescriptive report on the number, the profile and the gender of those in the senior executive service. Second, all senior executive service officers over level 5 should be named in the annual report and there should be a performance audit on whether they have been effective and how they have functioned in the previous year.
I am not asking that their performance agreements and their targets be prospective, because there is a degree of confidentiality in what is being planned for the next 12 months. But at the end of that 12 months the performance audit should appear in the annual report. When the report is tabled in Parliament members will have the opportunity to scrutinise it. Without this happening we lose an opportunity to assess whether our senior executive service is being effective. The Australian Labor Party has a concern about numbers. The proposition that the senior executive service be reduced by 100 a year, by 20 per cent or by 5 per cent begs the question.
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There should be a downsizing but that should be linked to the size of the public service generally as it is reduced and to how effective the process is. It could be argued that as the senior executive service becomes more effective and there is a more efficient public service there will be less need for the senior executive service. I ask that as a minimum the senior executive service be reduced annually in parallel with the reduction in the public service.
Since the introduction of the senior executive service the public service has been reduced by 20,000 and the number of senior executive service officers dropped by about 7 per cent, which is about parallel. This process should continue or improve. Performance linkage should be addressed. As I said earlier, 30 per cent to 50 per cent of private sector packages are linked to performance. At the moment the figure in the public sector is about 3 per cent. A report should be made to Parliament on methods of altering packages to link them to performance: senior executive service officers will not receive the bonuses and benefits unless they produce the results. This would be in everybody's interest. Currently the Statutory and other Offices Remuneration Tribunal is the sole arbiter of packages and wages. I ask that the Government give a commitment to consult with the Industrial Commission. That would satisfy the foreshadowed amendment of the honourable member for Davidson. I put on record that if these commitments are not forthcoming within the next 12 months' I will introduce a bill to deal with the matter in the House. In summary, I do not believe the slash and cut method for the senior executive service is appropriate. Out of the ashes something should rise - proper scrutiny and public accountability.
Mr GREINER (Ku-ring-gai), Premier, Treasurer and Minister for Ethnic Affairs [3.34]: I agree with the honourable member for Manly that the process this afternoon has been useful. I think the honourable member for Manly is entitled to some modest self-congratulation in that regard. I have listened to the speeches of members of the Australian Labor Party and the honourable member for Davidson. They are basically speeches in search of substance and self-justification. This bill from the Australian Labor Party, like the majority of bills it proposes - not all - comes from simply doing market research to find out what is popular, not from any policy development process to achieve what is right. Of course, fat cats are unpopular. Indeed, the public service is a useful chopping block for politicians of all sorts. There was no policy contribution whatsoever in any of the speeches, in the bill or in the remarks made by the honourable member for Davidson. They were purely about politics. The remarks of the newly Independent member were in search of self-justification. His former colleagues in the Cabinet and the party room would have had to stifle wry grins at some of his remarks, including his suggestion that the Industrial Commission ought to have involvement within a bull's roar in this matter. It is a totally ludicrous proposition. The honourable member for Davidson ought to have more pride than to come up with some twaddle about consulting the Industrial Commission on this matter. After all, he is the person who introduced legislation to take the teachers entirely away from the Industrial Commission. I have to say -
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and I am very balanced about my former colleague - that it is a piece of abject hypocrisy.
I come to a second general point, because this is the first of further such debates. The Australian Labor Party and the Independents need to understand that when their legislation comes forward it will be subject to exactly the same weight of scrutiny as legislation from the Government, and so it ought to be. The Australian Labor Party cannot pretend that it will have passed, let alone have implemented, a single piece of legislation that fails the test of the highest standards of policy analysis. We are very proud of the standards of policy analysis in this State. The Cabinet Office model is being followed by the Queensland Government and the Western Australian Government, and it is being looked at by some of the other Labor governments in Australia. It is not a matter of saying, "It is a `you beaut' idea", whether it is to cut public servants' wages and perks or to put a consumer price index cap on prices. That sort of populist nonsense is well and good, and may well be popular. I accept that. But that is a totally different test. The Australian Labor Party will find that it will fail that test on all the pieces of legislation with the possible exception of some of the environmental ones that it pinched from our side. It will find that the things it has put up based simply on the most superficial piece of market research will fail any reasonable test. I expect this House, the other House and the whole process to ensure that any legislation that comes into force in this State is subject to the highest standards of analysis.
From the remarks made by my colleague the Minister for Industrial Relations and Minister for Further Education, Training and Employment and the remarks made by the honourable member for Manly, who has said that he has gone to some trouble to get advice and information separate from that available from the public service and the Government, it can be seen that this bill passes no tests. As the honourable member for Manly said, the bill at least brings attention to the subject. The establishment of the senior executive service is potentially a revolution in public sector management. This State's senior executive service is the first senior executive service in Australia which is genuine, which gets rid of tenure and introduces performance assessment. I shall return to the point made by the honourable member for Manly about that. The establishment of the senior executive service was a step in the right direction. Since the legislation came forward I have said publicly and privately to the honourable member for Manly that of course there are deficiencies. In any 1,600, 1,500 or 1,100 people in the senior executive service anywhere there will be people who are overpaid and people who are underpaid, but that is the nature of the process. The idea is to minimise those sorts of anomalies.
But to suggest that because there might be some anomalies we should throw the baby out with the bath water is truly trivial, and this bill is a truly trivial effort by the Australian Labor Party. This bill was its landmark to show what good legislation was. It contributes absolutely nothing. The honourable member for Manly approached the matter constructively. He reported that some of his advisers had suggested that the senior executive service was a little recession proof. In
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fairness, I think that is correct. But he should tie that in with the point he made about the lack of performance bonuses in our system. In other words, the reason the senior executive service is recession proof is that we do not have a significant performance bonus-related element in the legislation.
As the honourable member suggested, in some sections of the public service, notably the Treasury Corporation and the State Bank, SES remuneration packages have a component of 30 per cent related to performance. If that were not so, it would not be possible to attract the right people to run those sections. The initial senior executive service legislation has provision for a bonus element, a much larger performance-related element. The question of performance linkage, which was the last point made by the honourable member for Manly, is part of the original concept, and I am perfectly happy to have that matter reviewed. It is easy to introduce performance linkage in areas such as government trading enterprises. It would be obvious to the House that it is a little harder to introduce performance linkage in some of the straight policy areas of the inner budget sector, but that does not mean one should not try.
Mr Knight: Let alone introducing it into the Cabinet.
Mr GREINER: There would be no bonus large enough for most of the members of my Cabinet. Certainly we accept that a greater element of performance linkage is desirable, particularly in the government trading enterprises area, and, if we can work out effective ways of doing it, in the inner budget area. I am perfectly happy to set up a mechanism for reporting back to the Parliament on how performance linkage could be enhanced. I must say quite honestly that there are differing views among chief executives and Ministers about the appropriateness of bonuses and performance linkage in the inner budget sector, and that is something that is worthy of serious discussion and deliberation. The honourable member for Manly suggested that a regulation be made under the annual reports Act to provide the number, the profile and the gender of senior executive service members, presumably in each annual report. Though a provision remotely close to that is in existence already, I think that is an entirely appropriate thing to do. It is, of course, the same as happens in public companies, which have to specify how many people are earning what, their gender and so on. I have no problem with that. To a significant extent it is a variation on the existing theme.
If I understood the honourable member for Manly correctly, he suggested that the annual report should include a performance audit of senior positions, level five and above. That is a good idea. It was not previously considered and it is entirely appropriate in terms of the accountability of the system. The final matter that the honourable member for Manly raised was targeting. He reached the obvious conclusion that what the Labor Party is putting forward is unadulterated nonsense. Opposition members are suggesting that one merely picks any number - that is about half the present number - 800, 750; the number kept changing while they were preparing the bill. That is sheer rubbish. Obviously they should try to get the
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number right, and that is not done by picking a number that is roughly half and then cutting it. It is true, and I think the honourable member so conceded, that the numbers in the senior executive service have been reducing in proportion with the reductions in the public service generally. As part of the financial statement in July and again in the Budget last month, the Government is undertaking a process of down-sizing or right-sizing corporate head offices and corporate support units. Obviously that is where significant numbers of senior executive service people are to be found.
I must say that the Opposition is setting a reasonably easy target in merely reducing the number of senior executive service positions in line with the reduction in overall staff numbers. I should have thought we could conceivably set ourselves a rather more difficult target than that. But certainly as a base-line the House has my absolute commitment that it is not proposed to retain the present strength of the senior executive service and, indeed, management below level 12, and reduce the number of workers. That would be the exact antithesis of good management and the exact antithesis of what we are trying to do. That is all that needs to be said about the legislation. That has absolutely no merit at all, other than perhaps the merit adduced by the honourable member for Manly, which was that it directs attention to it. The Government is willing to acknowledge that fine tuning - and it may be more than fine tuning in some areas - is necessary and appropriate. It is fair to say also that to merely rely upon a survey analysis of the members of the senior executive service is unlikely to produce the highest level of criticism of the organisation. I think that is a totally accurate and perceptive observation. No case was made out by the Leader of the Opposition or, I must say, the very pathetic group of Labor Party speakers who followed him in the debate. Certainly no case was made out by the honourable member for Davidson, who gave me the clear impression that having nailed his colours to the mast on this subject he had to find a justification. He knew the bill was a mess.
[Extension of time agreed to.]
The honourable member for Canterbury was trying to change the very basis of the bill. The bill was so wrong that as soon as it was introduced the Opposition rang the Premier's Department saying, "Can we do this, can we do that or can we do something else?" It is a sham of a bill. It is a piece of puffery, a piece of public relations propaganda. It is not a serious attempt to address the important issue of how to attract and retain high quality people within the New South Wales public sector, in trading enterprises and otherwise. I have not referred to agreeing to have the Statutory and Other Offices Remuneration Tribunal consult with the Industrial Commission. I have no objection if the SOORT wants to consult with the Industrial Commission. I am happy about that. I do not see considerable merit in that but if there is to be informal consultation, I have no problem with it. It is difficult to see what it would contribute but I am happy to have that happen. This is the Labor Party's first test in putting forward legislation. I said at the outset that it has to pass the same scrutiny as every other piece of legislation. In this case there can be no
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doubt at all that the Labor Party's first effort has failed. The Opposition has fallen at the first hurdle. It will fall at the first and second hurdle every time because none of its legislation is based on sound policy. It is merely an attempt to score cheap political points, and that will not wash in this House.
Mr SCULLY (Smithfield) [3.48]: What a load of claptrap from the Premier.
[Interruption]
Madam DEPUTY-SPEAKER: Order! I remind honourable members of the Speaker's ruling this morning and I ask them to leave the Chamber in silence.
Mr SCULLY: The Premier spoke about this bill being motivated by market research. The fact is the Premier conducted some market research and as a result he sacked Terry Metherell as Minister for School Education and Youth Affairs. Yet he has the audacity to suggest that the Opposition is motivated by market research. The Premier gave a promise and said, "I give my absolute commitment that if workers go down, managers will not go up". This is from a man who is the greatest pathological liar in the history of New South Wales.
[Interruption]
Madam DEPUTY-SPEAKER: Order! I call the honourable member for Monaro and the honourable member for Smithfield to order. The honourable member for Monaro will cease interjecting and the honourable member for Smithfield will direct his remarks through the Chair.
Mr SCULLY: I reject absolutely any commitment that the Premier gives that workers will go down and managers will not go up.
[Interruption]
Mr SCULLY: The Minister for Industrial Relations may laugh. He was present in the Chamber this morning when the Assistant Treasurer misled the House. He was responsible for the Premier's misleading the House when the Premier asserted that a letter had not been signed, when we all know it had been signed. The Premier lied, yet he expects us to believe him when he said that if workers go down, managers will not go up. The Premier is a liar; we cannot accept anything he says. He promised the honourable member for Manly that he will consider establishing a mechanism for reporting to Parliament. I do not believe him. He said that an annual report would be prepared on the profile of senior executive service members. I do not believe him. He said there will be a performance audit conducted of all senior executive service members. I do not believe him. If the turkeys on the Government side of the House were honest, they would say that they do not believe him either. They know the Premier is a pathological liar. The only way the Premier can absolve himself -
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[Interruption]
Mr SCULLY: I suggest to the honourable member for Ermington, who will get his herbarium from funds allocated in the Budget, that he should convince the Liberal Party to advise the Premier to dump the Assistant Treasurer. He made you all look like fools.
Mr Photios: On a point of order. Despite the rhetoric and unintelligent contribution of the honourable member for Smithfield, it is clear that the matters he is referring to, which have been discussed this day in the Parliament, are in no way relevant to the matter before the Chair. A reasonable attempt has been made by members on both sides of the House to debate this legislation sensibly. Despite his few years in this House -
[Interruption]
Mr ACTING-SPEAKER (Mr Merton): Order! The honourable member for Ermington will be heard in silence.
Mr Photios: I ask that the honourable member for Smithfield be directed to return to the substance of the bill.
Mr Harrison: On the point of order. The honourable member for Ermington has taken a point of order about a matter referred to by the honourable member for Smithfield with regard to the credibility of the Premier. It is well documented that the Premier has already broken 240 promises. He has made a further four promises in this House today. The honourable member for Smithfield is entitled to refer to that matter.
Mr Scully: On the point of order. The political pygmy opposite who raised this silly point of order -
Mr ACTING-SPEAKER: Order! The honourable member for Smithfield will refrain from using such expressions as political pygmy when he is referring to a member of this Chamber.
Mr Scully: The veracity of the Premier is an essential aspect in this debate. He has attempted to win support for the Government's position by saying that changes will be made to the senior executive service program. I suggest that because of his reputation as a pathological liar he cannot be believed.
Mr ACTING-SPEAKER: Order! I uphold the point of order. I am sure that if I direct the honourable member for Smithfield to confine his remarks to the bill on this occasion, he will do so.
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Mr SCULLY: The provisions of this bill and the proposed amendments of the Opposition will ensure that the membership of the senior executive service is reduced from 1,600 to 1,100. The method of the establishment of the senior executive service, and remuneration packages for senior executives, must be examined. The Government knows full well that the senior executive service concept is offensive to the people of New South Wales. Despite what Mr Dick Humphry had to say, the senior executive service in New South Wales is extremely bloated, inefficient and incompetent. I say with some pleasure that the introduction of the senior executive service has severely damaged the Government's credibility. It would be dishonest for any member on the Government side of the House to pretend otherwise. The ordinary people of western Sydney who earn $20,000 and $25,000 a year - in many instances less than 10 per cent of the salaries of chief executive officers - are battling to pay the increased taxes and charges that have been imposed upon them by this Government.
[Interruption]
Mr ACTING-SPEAKER: Order! The honourable member will be heard in silence.
Mr SCULLY: They have had to sit back and watch this bloated senior executive service being established by the Government.
Mr Cochran: The honourable member does not represent the working people. He does not know what they are about.
Mr SCULLY: Often I look to the National Party for the measurement of the length of one's snout as one approaches the trough.
Mr ACTING-SPEAKER: Order! The honourable member will cease using such expressions as "snout" and "trough", particularly relating to the National Party.
Mr SCULLY: The problem is that the Government believes that the senior executive service will function in the same way as the private sector functions. Directors of various corporations in this State have so mismanaged the funds of shareholders that noses have been broken in the bottom of barrels on their way to getting a remuneration package. Government supporters think that they are corporate whiz-kids with a pipeline to their corporate mates. They know full well that it matters little how much the senior executive service in New South Wales is paid; it will be substantially less than what people are paid in the corporate world.
Mr Cochran: You have almost convinced yourself.
Mr SCULLY: Listen, you dill! You should read the report written by Dick Humphry. If you stop taking mogadon, you will know what you are talking about. Despite the fact that the salary levels being offered were more than doubled, the
Page 3404
Government was not able to attract many from the private sector. The Director-General of the Premier's Department said that 80 per cent of the senior executive service were from the public sector.
[Interruption]
Mr SCULLY: I urge the honourable member for Ermington to read the report of Dick Humphry. He said that 20 per cent of the appointments came from the private sector and other government sectors. He is clever. He does not tell us what the other government sectors were.
Mr Fahey: The honourable member should have listened to my speech.
Mr SCULLY: I listened to it. The Minister should apologise to the House for having delivered it. Frequently the Minister accuses members of the Opposition of reading speeches prepared by others. After I listened to his speech I read the report written by Dick Humphry. They were exactly the same. Who is doing whose bidding? The Minister does not even write his own speeches. He is an absolute disgrace. It is unfortunate that the Minister has allowed the director-general of the Premier's Department to become probably the most politicised public servant in the history of New South Wales.
Mr ACTING-SPEAKER: Order! The honourable member for Smithfield has been warned already about being relevant. I draw his attention to the bill and I ask him not to refer to extraneous issues that have no relevance to the matter being debated.
Mr SCULLY: The report that sought to justify the Government's position with regard to this legislation states:
Statements to the media by Dr Metherell that the SES has been a total failure are incorrect. Dr Metherell has only had experience in one portfolio and in his time in the Government did not voice any concerns about the SES.
It is almost legendary now that the honourable member for Davidson defended himself admirably against this diatribe. Whom are we to believe? Should we believe a former Minister of the Government who seeks to spill the beans on the Government? He wants to tell us the truth about matters in relation to which we had only suspicions. Now we are told that he is not to be believed, that we should believe a statement of a public servant at the direction of a Minister and the Premier. The philosophy of the senior executive service is similar to that referred to by the honourable member for Wakehurst: the strong rise to the top and are rewarded but the weak are crushed. That is what the Opposition and the majority of the people of New South Wales find objectionable about the service. It is not the view of the Opposition that if the senior levels of organisations are rewarded, all will be well and the organisation will operate efficiently. A document circulated to chief executive
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officers of the senior executive service which sums up the philosophy of this Government, states:
This benefit does not cover payments to a family member or dependent but to a recognised carer such as a nanny providing child care in the home.
Goodness me! How many people living in western Sydney have the luxury of the provision of a nanny in their remuneration packages? There are none.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Ermington to order.
Mr SCULLY: The report from the director-general of the Premier's Department states that the senior executive service seeks to improve the performance and accountability of senior managers, that there is less job security, a widening of pay differentials and severe sanctions for non-performance. The only truth is that pay differentials have increased. The report also shows that cluster directors in the Department of School Education and principals in the senior executive service are being given substantial salary increases but teachers are receiving only a small amount. Where are these performance checks and the jobs that have less security? That is a joke. When the Government was elected literally scores of public servants were sacked - public servants who we all thought had guaranteed jobs. The Government says those employees were tenured and were inured to being booted out. The Government, on gaining office, went through every department possible and sacked everyone who it suspected had voted Labor. Those public servants did not have performance contracts. The Minister has the audacity to say that the Opposition is trading job security for money. The officers in the senior executive service have job security but the ordinary public servants in this State do not, and they are the ones who will be sacked.
[Interruption]
Mr SCULLY: Government members should not laugh. What about Dr Grimwood and the Department of Transport? Mr Right-Right-Right-Wrong-Wrong-Wrong could not get rid of Dr Grimwood so he transferred him to managing paperclips at North Sydney and brought someone else in to run the Department of Transport. Dr Grimwood could not be got rid of because he was on a seven-year contract.
Mr Photios: You cannot have it both ways. You said that we sacked them all; now you are saying that we cannot sack them.
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Mr SCULLY: The Government senior executives have job security but the public servants who are not on contract do not have security. When the voluntary redundancy programs fail the Government will be forced into mass sackings.
[Extension of time agreed to.]
The Minister said that salary packages in New South Wales had to take account of the cost of living. According to the Minister the cost of housing in Sydney is higher than in other States and therefore the Government has to pay its chief executives much higher salaries. In his next breath he said that its chief executives are not being paid more than those anywhere else. The Minister then said that New South Wales has the leanest senior executive service in Australia. What the Minister says sounds simple but that may be only because I am missing something that is complicated. The Government, on attaining office, turned its back on the public servants and created the fourth arm of government - the consultant's report. The Government orders a consultant's report before making any decision in any area. The Government paid them $400 million. The Government then said: "We want a high quality public service so we have to pay them top dollars, a quarter of a million dollars. But we cannot use any of them because they are no good. We have to keep going to Coopers and Lybrand to get decent reports". The Minister is confused - does he use consultants or does he have the whiz-kids the Government thought it could get from the private sector but never did?
The amendment moved by the honourable member for Davidson is laudable. These packages are arranged in the quiet, smoke-filled, whisky aired backrooms of the Government, where the director-general - one of three assessors, a person who directly benefits from the packages - is one of the people who orders Mr Fry to make these recommendations. Is the Opposition not entitled on behalf of the people of New South Wales to ask who is this Mr Fry who cooks up in the pan these fantastic deals for this small band of receivers of largesse? Who is he? He was the executive director of the Metal Trades Industry Association, a most mean-minded, mean-spirited ratbag who used to say, year after year, "We cannot give one extra dollar to the workers of New South Wales, but when it comes to our mates - hundreds of thousands of dollars, no worries". The Minister should be ashamed to have appointed someone like him. Why not make matters public and make him publish reasons for his findings? Why not make the tribunal available to anyone who wishes to make submissions? It is a real shame. The Premier has sought to bag the hell out of this measure. He knows he is embarrassed by it. If he does not take on this amendment it will be to his detriment. The Opposition once again, as with the Industrial Relations Bill, is doing the Government a favour. If we wanted just to get votes we could sit back and forget about this issue and when the election comes before Christmas we could sit back and say, "Look, voters, at all this largesse. Vote for us and Greiner will be out".
Mr RUMBLE (Illawarra) [4.8]: I support the Public Sector Legislation (Senior Executives) Amendment Bill. The thrust of the bill is to reduce over a
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number of years the number of officers in the senior executive service and their inflated packages. One of the reasons the bill is being debated is because of the budget deficit of $1 billion. The salary packages paid to senior executive service officers make up a part of the Government's deficit, together with the hundreds of millions of dollars paid to consultants and contractors, the result of the decision not to proceed with the Darling Harbour casino, and a host of payouts to wealthy egg producers and newspaper proprietors. Senior executive service officers enjoy packages ranging up to $220,000. Top public servants can take up to half their salaries in the form of benefits rather than income. These benefits can include two prestige motor vehicles for chief executives and one vehicle for other executives, private overseas holidays, private school fees, the appointment of a nanny to care for the children of senior public servants, and payment of home mortgages, both interest and capital. Although members of the senior executive service pay fringe benefits tax on these benefits they are entitled to claim the whole cost of the benefits as an income tax deduction, including the fringe benefits tax.
The Premier and Treasurer has stated many times in this House that higher salaries must be paid to those in the senior executive service because high salaries are paid in private enterprise. In private enterprise, however, inflated and outrageous salaries are paid. The Government has fallen for that. The Government reminds us constantly that we are going through the worst recession in 60 years, but its belief that higher salaries should be paid to attract talent from private enterprise has been reflected in senior executive service packages in this State. In March 1991 the Opposition revealed in Parliament that not one of the 205 known senior executive service appointments in the Department of School Education was recruited from the private sector, and only five were appointed from outside the New South Wales public service. This shows that the attempt by the Government through paying inflated salaries to attract the best talent available outside the public service has been a complete failure. That is one of the problems the Government has to wear because it made undertakings that the best possible talent would be brought into the SES from private enterprise. In fact, some of the officers recruited from outside the public service have been pushed sideways. I do not need to restate the fiasco of Dr Grimwood counting his paperclips on the North Shore.
High salaries have been paid. Some appointments have been successful, others have been a failure. On 5th October the Sydney Morning Herald reported that Mr Brown, Federal Minister for Land Transport, said that the chief executive of the National Roads and Motorists Association receives a salary of $350,000 and that the Prime Minister receives $200,000 a year. Mr Mackay, the president of the NRMA, was reported by the Sydney Morning Herald as saying in reply that two employees of the NRMA earned $618,000 last financial year, but their earnings did not represent a 17 per cent salary increase as the figure was distorted by a bonus paid to one of them in relation to the privatisation of compulsory third party insurance. Bearing in mind that this is the worst recession in 60 years, Mr Mackay went on to say:
These salaries are not high when compared with those paid to executives of comparable organisations, as the recent independent monthly survey showed.
Page 3408
Because extravagant and outrageous salaries are being paid in private enterprise, this Government says, like a mug, "We have to match those to get the best possible talent from the outside". On the outside the salary package of the chief executive of a profitable company like Broken Hill Proprietary Company Limited is $1 million a year. BHP, as a successful company, makes that decision. On the other hand, the chief executive of a bank in another State that had suffered heavy losses was paying himself $400,000 a year. This Government's philosophy of letting the managers manage means that more responsibility is supposed to be placed on the shoulders of those people. However, I come back to the point that in private enterprise there is a great deal of greed and avarice; inflated salaries are paid in successful companies but also, in a more obnoxious manner, in unsuccessful companies. The Government has obviously said, "These inflated salaries being paid must be matched in the senior executive service and the chief executive service".
As I have said already, many of the people appointed to the senior executive service were already State public service employees. Few people have been recruited from outside. The honourable member for Davidson, a former Minister in this Government, has said that the senior executive service policy of this Government has been a monumental failure. He stated also that many senior executives had received a 50 per cent salary increase since the elitist body had come into force for doing basically the same type of work. When a former Minister of this Government, who was a member of Cabinet and knew what was going on, says that the senior executive service should be seriously looked at, the Government should take heed. The Minister in his contribution to the debate stated that the salaries must be market related, but market related to what in the economy? The country is supposed to be suffering the greatest recession in the past 60 years. Are the salaries market related to those of executives who it is said received $1 million a year or the executive in charge of the National Roads and Motorists Association, who receives $350,000 a year? Approximately 10 per cent of the population is unemployed yet those grossly extravagant salaries are being paid both in private enterprise and the public service.
The Premier in his speech today mentioned accountability. That is a new thought on the part of this Government. It has shown no accountability for the senior executive service. Questions have remained on the Questions and Answers paper for 12 months that seek details about the senior executive service. The secrecy involved in the discussions to finalise senior executive service salaries has been brought to notice. Until now the people involved must have had to take a blood oath not to reveal the details of their salary packages. The introduction of this bill has had the effect of making the Government reveal details about the senior executive service. I have been attending the estimates committees hearings and have heard the information that has been revealed about senior executive service gradings. The estimates committees have shown that the Government has to come clean on salary packages. The Minister for Industrial Relations and Minister for Further Education, Training and Employment said today that the Government had to have the capacity to recruit. How many senior executive service members does the Government wish
Page 3409
to recruit? After all, the Government is trying to shovel out 12,500 public servants who are not members of the senior executive service. To what extent does the Government wish to recruit more senior executive service members when the lower ranks are being trimmed.
To have 1,800 members of the senior executive service is to have far too many. The Opposition would like that number halved. I believe - rightly or wrongly - that a senior public servant should not get more money than the Minister to whom he reports. More than 12 months ago I remember being in the House and asking the Minister for Transport about the salary package of the chief executive officer of the State Rail Authority. The Minister said it was about $200,000. Notwithstanding the fact that the Minister for Transport has broken more promises than any other Minister in this Government - which is no mean feat - and in recent times is the only Minister who has been ejected from this House and the only Minister who has missed a division, I do not think he should be paid less money than the chief executive officer of the State Rail Authority. This Government seems to have let that principle fly out the window.
The senior executive service fiasco in New South Wales has meant that many senior executive service members have received more in their salary packages than has the Prime Minister of Australia, the Premier of New South Wales or the President of the United States of America. Another anomaly is that the New South Wales Inspector General of Police receives more money than the Commissioner of Police. The Opposition has calculated that he is one of the highest paid police commissioners in the world. In the senior executive service 1,500 senior public servants are eligible for bonuses of up to 10 per cent of their salary packages. Needless to say, no one knows how senior executive service bonuses are calculated. That is done in secret, and the Opposition cannot find out how the calculation is made. The former head of the Department of Corrective Services in 1988 received a salary of $76,000. As head of the former Department of Family and Community Services, he earned $150,000. The Attorney General's Department has reported that the Greiner Government planned to extend the senior executive service to 3,000 people from grade 9 upwards. Perhaps the Minister will comment on that.
Mr Fahey: I cannot. It is the Opposition's bill. I have no right of reply.
Mr RUMBLE: Who was the senior executive service member who wrote the press release for you?
Mr Fahey: How would I know?
Mr RUMBLE: You should resign as a member of Parliament because you are a toady for the senior executive service in putting out a media release like that. The Government is on the ropes. I listened to what the Minister and the Premier said today. The Premier said that perhaps the Government could investigate certain matters raised by the honourable member for Manly. The Opposition has not been
Page 3410
able to obtain any information in answers to questions that have been placed on the Questions and Answers paper in respect of this important matter. They are not answered. This not good enough. The Opposition wants the Government to come clean. I fully support the bill introduced by the Leader of the Opposition. I hope it will be carried in this House.
Mr GAUDRY (Newcastle) [4.20]: I support the Public Sector Legislation (Senior Executives) Amendment Bill. I am surprised that the Government did not introduce this legislation. It is committed to lean and efficient government and has talked about revising the public sector. The senior executive service advised the Government and administered the public sector in the period leading up to the election that the Premier so confidently said would result in a resounding win for the Government because of the efficient and lean management of the senior executive service. At the election the exact opposite occurred. In the period leading up to the election huge taxes and charges were imposed upon the people of New South Wales. After the election the Government changed tack and, as a result of advice from the senior executive service, placed 12,500 public sector jobs under threat. The same senior executive service was responsible, together with the Government, for the blowout in the Budget of $1.1 billion.
Under every principle of efficiency and public sector review, the Government should have introduced a bill such as this to cut the bloated senior executive service from the size to which it has grown. If the Minister for Transport were in the Chamber, he would be able to say, "Yes, we got it wrong, wrong, wrong". Though the Government claimed the senior executive service had 1,250 to 1,300 members and the Opposition in the initial stages of preparing the bill said the service had approximately 1,500 members, when the report of the director-general, Sir Humphry, was issued on 16th October, the Opposition discovered that the number was in fact 1,614 - 1,614 highly paid, highly geared, lean, efficient and mean public servants who have been responsible for a blowout in the Budget of $1.1 billion.
Let us look at these public sector workers. The Government has invoked the Judas principle with respect to the senior executive service. It has done this by saying, "There will be cuts; we will gut the public sector; you will go in and take the jobs of ordinary workers and strip them out of the public sector". I am sure the Government plans to package up sections of the public sector to sell to its mates in the private sector. The Government asked itself: "While this is being done, how can we make sure that we have a lean, mean but very loyal group? We can give them such a good package that their loyalty will not be in the tradition of the Westminster public service system". That system involved loyalty to the State and the people and working in concert with the Government. That concept involved giving good and fearless advice to the Government and ensuring that if the Government put forward legislation or proposals that did not stand up, the public service would not support it. The Judas principle has done away with that. The Government has provided bloated remuneration packages with up to 50 per cent of the packages being able to be taken in benefits. That has meant that the senior executive service group has
Page 3411
moved away from the strong tradition of the public service towards a tight management approach of following the Government in all aspects.
If that has occurred, I do not mind, but I had hoped the Government would say: "We have got it wrong. We have had this terrible blowout. It is time to bring forward legislation that will constrict the size of the senior executive service in the public sector and make it lean and efficient but return it to the concept of a true public service". The Government has not done that because it wants to use the senior executive service for its own ends. One of those ends is to get rid of those 12,500 jobs - and obviously it is the Government's legitimate right to do so - and to keep pressing down on the people of New South Wales. Several speakers have mentioned the method by which these excessive packages were arrived at. That process was not one of public scrutiny, input by the public or scrutiny by the Industrial Commission. They were arrived at by the Statutory and Other Offices Remuneration Tribunal. My colleague the honourable member for Smithfield alluded to the fact that for 40 years the chairman of the tribunal, Ron Fry, was with the Metal Trades Industry Association. During that time he spoke strenuously against the most miserly salary increases for workers in the metal trades industry.
The tribunal received advice from the Premier and from three assessors: the head of the public service board, the head of the Premier's Department and an appointee from the banking sector. Two of those assessors clearly stood to gain from these excessive packages. Let us look at the packages that have been handed out. They include a provision that 50 per cent of the package can be taken in benefits which include two prestige motor vehicles for chief executives and one motor vehicle for other executives. Other parts of the packages provide for private overseas holidays and payments of private school fees - not fees for public schools but fees for private schools for our top public servants. For many members on the other side of the House the concept of a public school education is so foreign that they cannot understand any objection to the inclusion of the payment of private school fees in any remuneration package. The packages include payment for the employment of a nanny to care for the public servant's children. It is a nice package. The packages include repayment of both interest and capital on home mortgages.
How do these packages work? Under the new deal, top employees can convert their salaries into any of the approved fringe benefits. Though they are required to pay the 47 per cent fringe benefits tax, they can reduce their taxable income by the whole value of the benefit and the amount paid in fringe benefits tax. That means that for an overseas holiday costing $10,000, the employee will pay $4,700 in fringe benefits tax but will save $7,092 in income tax. In other words, a $10,000 holiday to Majorca or one of the pleasant spots overseas finishes up costing $7,608. Tell that to the people out in the community on ordinary wages who are paying $70 out of their incomes towards the maintenance of this public sector fat cat syndrome. Earlier in the debate I listened to my learned colleague, the dear doctor, the honourable member for Davidson. He has an inside view of the workings of the
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Government and clearly stated that he and many members on the benches opposite, and many public servants, are well aware that the senior executive service has the staggers, that it is not the lean, mean and efficient outfit it is claimed to be. He claimed that it has become so involved in remuneration aspects that it has lost its way. He said that privately many members of the Government see the need to cut back on that fat cat approach.
The report to the Premier's Department by the director-general stated that one of the reasons for paying such a high level of remuneration was that, unlike in every other senior executive service scheme, New South Wales officers have no job security: the traditional public service tenure does not exist and continuing employment depends on performance. I understand that. The huge perks, lurks and salary packages make that acceptable. In the options package advice that was put out it was clearly stated that for the princely sum of $151 a year an SES officer can negotiate a right of return to the public sector, so senior executive service officers are not so badly off after all. Although I was not a member of Parliament at the time, I believe the Opposition agreed that the introduction of the senior executive service would allow the opportunity to attract the aggressive business types from the private sector to revolutionise the tired and lagging public service. What an insult to the career public servants who for so long had given first-class service - until they were traded away on that Judas principle. We were going to have a rush from the private sector of very successful lean and mean aggressive business types who had made such efficient progress in Australian industry over the past decades.
[Extension of time agreed to.]
We were told that these private sector types would rush into the public service with their concepts of excellence. Following the trial period we found that 80 per cent of the senior executive service came from the public sector. People have been shifted around but in many cases expertise has not been transferred across. People understandably have had difficulty adjusting to other areas. I suffered through the period of the Scott review. The honourable member for Davidson was zealous in bringing in change. He was probably one of the more active members in changing the senior executive service. I had 28 years' experience in the schools sector. The Scott review led to a loss of morale among the many excellent teachers who saw created over them the juggernaut of the cluster directors or, as they were very quickly called, the duster collectors. That sums up the role problem that those people had. They walked around schools for one or two years contemplating their navels at great length and seeking a reason for existence. They were not used in an educational support role. They were not used as the old school inspectors were used in the appraisal of teachers. They were not sure how they would be used and there was a long period in which they searched for an identity.
This would have been at some cost. I am not denigrating the many excellent members of the cluster director-duster collector section. Many were caught in the change of career which was said would be so positive for them. For many of them
Page 3413
this has not proved to be the case. What has been the cost to the community? The 150 cluster directors cost $10.5 million a year in salaries. I think there were 99 school inspectors. There was an increase in numbers and a decrease in role in many cases. We can see where the need is in the school system: it is in educational support; support of the teachers at the classroom level; and improvement in career direction for the teaching staff. We will put the cluster directors back into the school system. That will enable the $10.5 million to increase educational outcomes.
Mr Hazzard: What are you going to do with them? Will they just teach or what will they do?
Mr GAUDRY: At a time when the increased amounts are being paid there has been a cutback of 2,500 in the teaching service, a cutback in ancillary services within the schools and now a cutback in cleaning services within schools. Our schools have larger composite classes and less educational input. In answer to the honourable member for Wakehurst, we will put the cluster directors back in an educational support role to assist teachers in the schools to develop expertise in the teaching area. When the Greiner Government came to office there was only one officer in the Department of Youth and Community Services earning more than $80,000 a year. Now 22 officers have a take home salary of between $82,000 and $184,000. So there have been great improvements at the upper echelons, but what is happening in service delivery? The Government has decided, as is its role, to take the regional office of the Department of Community Services from Newcastle and break up the disability support service in the area. In an area which has a huge number of developmentally disabled people, both young people and others through the life cycle, we are removing those people who would give direct support to the developmental disability service delivery area.
This Government has arrogantly inflated its fat cat salary package. The honourable member for Davidson said that the senior executive service should be rationally brought back to a level at which it is lean and efficient but not mean - bloated and mean. Though the honourable member for Davidson has foreshadowed amendments, he has basically supported the thrust of the Opposition's approach. I imagine that in Committee the honourable member's amendments will be supported, and I hope that rational members opposite will support them. We have been told - I believe it to be true - that many members opposite, when they are in their quiet rooms and away from the pressure of others in their group, realise that there is a great need to bring a rational approach to the senior executive service. I have great pleasure in supporting such a rational approach in the bill introduced by the Leader of the Opposition, the Public Sector Legislation (Senior Executives) Amendment Bill 1991.
Mr SPEAKER: Order! The honourable member's time for speaking has expired.
Page 3414
Mr CRITTENDEN (Wyong) [4.40]: A Roman senator, Palinurus, once said, "Only by avoiding the beginning of things can you escape their endings". The Greiner Government established the senior executive service and it is now coming back to haunt it. Since the coalition parties took over the Treasury benches in March 1988 on a temporary basis they have acted like kids in a tart shop. From the way their inexperienced Ministers behaved I am sure that many of them must have been shown replays of "Yes, Minister". This bill is about reducing the size of the senior executive service. I am not sure whether a number of Ministers in this House and in another place realise that the structure of the senior executive service is the perfect recipe for an explosion in the public service overall - and it certainly has had that mushrooming effect. At present in two departments officers who entered the senior executive service at one level have either been promoted to a higher level or have had their positions upgraded. The senior executive service has eight levels and if a tight rein is not kept on management control there will be a disastrous effect.
The Premier quite rightly pointed out that the skills needed in the public sector are often very different to those of the private sector, especially policy-making skills. Some of the geniuses that have come from the private sector have not had the ability to analyse issues and arrive at a workable response. The biggest problem with the Greiner Government is that it has tried to apply monetary principles to a non-monetary service provider. One can use all the buzz words about outcomes, inputs and so on but at the end of the day there is no bottom line profit in the public sector, especially in a budget sector. The issue is efficiency and effectiveness. The best way of summing up the public sector in terms of efficiency and effectiveness is: it can be efficient without being effective but it cannot be effective without being efficient. That principle has gone out the window. It seems to have been lost completely.
There is a $17,000 differential between the senior executive service salary package and that of a grade 12 public servant. A grade 12 officer receives a salary of $56,000. The gross package is around $65,000. The senior executive service package starts at $82,000. The Minister for Industrial Relations and Minister for Further Education, Training and Employment, who is leading for the Government in this debate, claimed that this bill is a political campaign to gain cheap political mileage. I assure honourable members it is not about cheap politics. It is about preparing the Labor Party so that when it is returned to the Treasury benches in the near future it will be well on the way to reducing waste and reveal the arrogance of the Greiner Government. The Labor Party has governed this State for more than two-thirds of its history, and it is now preparing for its next long term of government. The honourable member for Davidson spoke about the corrosive effect on public service morale. There certainly has been a massive corrosive effect on public service morale. People in grade 12 positions have become contract administrators for consultants employed by the senior executive service.
The Minister for Industrial Relations spoke about market-related claims. As various Government members have said in recent times, there has been a downturn
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in the economy but nothing has happened to senior executive service salaries, which underlines the fact that public sector salaries are capped at a benchmark level. When talking about market-related claims, we should examine the provision of vehicles. In the private sector many executives have on a yearly basis half the monetary equivalent of a new vehicle written into their contract. However, in the public sector only $7,500 is the norm, based on the fact that the Government does not pay sales tax. It is irrelevant to apply that argument when equating the private sector with the public service. The election on 25th May meant that the deck chairs on the Titanic were rearranged temporarily. Many functions in the former Department of Business and Consumer Affairs were hived off to the Department of State Development, which has resulted in surplus positions. But what has happened? There has been no rationalisation to reduce the burden on New South Wales taxpayers.
Before the Greiner Government was elected in March 1988, it proposed a performance-related bonus system. I am not sure what the Premier was referring to when he spoke in the debate but it would seem that such a scheme is what he was getting at. That system has not been implemented. The simple reason is that the Premier has not been game enough to introduce it. He has not found a workable system to enable him to do so. Any promises he may make to the honourable member for Manly in that regard are hollow. The fact that a bonus system has not been introduced is a possible reflection on performance agreements which specify outcomes but not necessarily inputs. Any performance agreement in the public sector must of necessity include not only outcomes in terms of what services are to be provided, but also additional inputs in terms of what junior staff and so forth are employed. The honourable member for Strathfield said that the senior executive service is now open and above board. In reality the senior executive service is more closed off, more sheltered and more hidden than it ever was.
When the Labor Party was in government the Government Gazette not only published clearly a position and the name of the person who achieved that position but also the amount that person would receive from the date of his appointment. Since the Greiner Government has been in office the salary paid to a member of the senior executive service has not been mentioned. A discussion on this matter of the senior executive service would not be complete without a reference to the honourable member for North Shore. If newspaper reports are to be believed, the honourable member for North Shore got into a spot of bother under the Income Tax Assessment Act, as amended, by claiming child minding as a possible work-related expense. The Greiner Government needs to bring in a package similar to its package for the senior executive service. If it had a similar package the honourable member for North Shore would not be in such a dilemma and he would not be in conflict with the Deputy Commissioner of Taxation.
One thing that amazes me is that various Government members have said how effective, how wonderful and how non-political the New South Wales public sector
Page 3416
is. I became a member of the public sector in March 1988 and, since that time, the rag-tag baggage that Ministers have invariably picked up from special interest groups, Young Liberals or young people in the National Party, has been nothing short of incredible. Ministerial staff were not capable of looking at the ramifications of the SES package that was put to the Government. No one could have been less capable than the former Minister for Minerals and Energy. At that time ministerial staff might have had a vested interest.
[Extension of time agreed to.]
Since April 1988 ministerial staff have been scurrying to the department - at that time it was the Department of Minerals and Energy - because they realised they had a dud Minister. Because of a factional deal between the Premier and the former Minister some time ago this Government has been relieved of that Minister. That has caused a morale problem in senior executive service positions and positions throughout the public sector. This Government is in its death throes. It knows it is on its last legs. All those people who have not jumped ship yet know that they have to get off in the next few months. This Government has had a vested interest in keeping the gravy train going. The Opposition wants to ensure that the gravy train is stopped. We must provide people with an efficient and effective service. We do not want to decimate the senior executive service. We want to ensure that it is competitive and we want to ensure that there are no jobs for mates. People aspire to positions in the SES. Many people in the public sector have a high intellect and many skills. Those people should be rewarded and should be given a satisfying career path. They do not want to be part of an organisation that is of no use to them and to the development of their career. Long-suffering taxpayers simply cannot afford to pay for excesses in these economic times.
The concept of the SES is good, but we cannot afford poor management. This Government has as its catchcry, "Putting people first by managing better". Last year, when I was campaigning to win the seat I now hold, I walked around a number of suburbs in Wyong. People I spoke to suggested that when the Premier was managing his father's timber company in Wyong there was no need to worry about him. As an aspirant to political life I did not accept their words at face value. I have now been in this place for some time and all I can say is that they were right. This Premier and this Government are on their way out. The same sort of hopeless management that pervaded the timber company is now pervading this State. On 25th May the people woke up. Unfortunately, not enough seats were gained by the Labor Party. In the future that situation will be remedied.
Mr West: All you got was 44 per cent. What a lousy result!
Mr CRITTENDEN: Honourable members opposite are interjecting but they really do not know what they are saying. This election was held on redistributed boundaries. The Premier -
Page 3417
Mr SPEAKER: Order! I have given the honourable member for Wyong considerable latitude. He is continuing to stray from the scope of the bill. I ask him to come back to the scope of the bill.
Mr CRITTENDEN: Mr Speaker, if you do not mind, I wish to clarify that point. The voting patterns -
Mr SPEAKER: Order! The honourable member for Wyong will come back to the scope of the bill or he will resume his seat.
Mr CRITTENDEN: We need to cut the public sector of this State. Yesterday we debated an important bill - the Government Insurance Office (Privatisation) Bill. This Government is making one of the most momentous decisions in the history of this State. We are asking this Government to come clean. We recognise that we have to take drastic action. Part of that drastic action is the better management of this State. Members of the Labor Party cannot stand by and allow this mushrooming of the senior executive service. We cannot allow that to continue when we are facing major problems in this State.
Mrs LO PO' (Penrith) [4.59]: I support the Public Sector Legislation (Senior Executives) Amendment Bill. While I have been a member of Parliament honourable members have constantly been reminded that Australia is in a recession. But the recession is not affecting the senior executive service. The rest of the community is expected to be lean and mean, but what we are talking about here is fat cats. Proposed new section 42C of the bill limits the employment benefits to be paid to the senior executive service. I was of the opinion that I knew everything about remuneration but today I heard the honourable member for Davidson talk about people being provided with cars, and using cars out of the car pools. One of the greatest travesties of social justice is the education system of this State. Recently, I was approached by the members of a family who complained that there was lack of general assistants to clean up schools. These general assistants go to one school for three days and -
Mr SPEAKER: Order! The honourable member for Penrith should remain within the scope of the bill. I am sure that general assistants do not come within the senior executive service.
Mrs LO PO': I believe it is relevant. I am referring to the matters referred to in paragraph (c) of the explanatory note to the bill. My belief is that the money being spent on remuneration packages for senior executives could have been better spent on those who do the job at ground level. This Government claims that it is managing better, but that is not the case. If funds were not made available to provide the benefits referred to in paragraph (c), money would be left over to employ general assistants in schools. Recently at a school in my electorate a five-year-old child took home a used condom that was in the playground. No general assistant had been employed to clean up the school grounds. Not only is this a wider social issue,
Page 3418
it is of great personal concern to the family involved. With the support of the Government the fat cats at Prospect Electricity have dealt themselves a wonderful package. The idea was to attract new blood to Prospect Electricity. The eight fat cats at that utility did not do that. With the consensus of the Government they recycled themselves and paid themselves more money. The package they gave themselves included the payment of contributions to a superannuation scheme, the use of a prestige motor vehicle, the payment of mortgage repayments, education expenses, family care, medical and insurance expenses, private travel, a second private motor vehicle, the payment of Prospect Electricity accounts in an amount greater than $500 a year, the payment of amounts in excess of $500 a year relating to the purchase of electrical appliances from Prospect Electricity, professional subscriptions and other payments as approved by the general manager or chairman, and a salary. They have given themselves this sort of package at a time when some people in the Prospect Electricity area cannot pay their electrical bills and find when their electricity supplies are disconnected, they must pay a $120 reconnection fee. I fail to understand how that service can be regarded as a public service.
When people are given such an open-ended package they become greedy. It is a human frailty. It seems that the senior executive service has gone over the top with sheer greed. The honourable member for Newcastle was correct in what he said about education. Mr Humphry said that he wanted to "bump up the moribund public sector". That is an offensive statement to begin with: the public sector was never as moribund as Mr Humphry thought. He said he wanted to attract better people to the public sector. That did not happen in education. Only two people were attracted and appointed as directors, but they were already educationists. The senior executives recycled themselves into highly paid positions and ignored the principles of the concept of an senior executive service; that is, to bring in new blood. Everyone is aware of what has happened. It is not as though the Government does not know about and is not disappointed with the performance of the senior executive service. It must have been extremely disappointed when it realised that it has a deficit of $2 billion and it almost suffered defeat at the recent election.
The Government is wondering from where it will seek advice in the future. Not only do the senior executives employ themselves on huge salaries, but also they employ consultants. The Government has spent $400 million on consultants. The honourable member for Davidson said that the Government's program with regard to consultants has been a disaster. Mr Humphry's report referred to severe sanctions for non-performance. I should like to know what they are. When people sign a seven-year contract no one can get rid of them. That has all been said before. It is a furphy to suggest, as the Government does, that though the previous public servants could not be dismissed, the new ones can. What a joke! As the honourable member for Smithfield said in his contribution, the form of the public service was altered by being reduced in size in 1988 when the Greiner Government came to office. All that reduction succeeded in doing was to politicise the public service. It has created within the Westminster system an American-style system whereby the
Page 3419
incoming government takes with it the people it wants but dismisses those who were left behind by the outgoing government. That is not in the true traditions of the public service. The Government has politicised the public service.
It has been suggested that this legislation will abolish the senior executive service. That is a false assumption. It seeks a general reduction from 1,250 positions to 1,000 positions by 1994, to 800 positions by 1995. It is not correct to say that the Opposition wants to get rid of the senior executive service. It is correct to say, however, that the number of senior executives will be reduced. As the public service is depleted, the number of senior executives should be reduced accordingly. The remuneration package of members of the senior executive service is unbelievably generous. Not even members of Parliament would dream of having such a package. Their package includes a limit of one motor vehicle each; the payment of superannuation contributions, the payment of professional association subscriptions; costs involved in an officer returning to the public sector should he or she elect to do so; and any other benefit authorised by the regulation. I was appalled when I realised that some senior executives were being reimbursed the cost of providing aged care for their parents. Reference is made to child care expenses and private school fees.
You know as well as I do, Mr Speaker, that families in the western suburbs of Sydney are doing it tough. This Government should not be concerned only about those who are on high remuneration packages. It is supposed to be a government for the people. I remind you that families are experiencing difficulty meeting their needs. Money outlaid for these packages could be put to better use in the area of education, for example, where there is a shortage of 2,500 teachers. It could be put to use to provide a whole range of things desperately needed by the western suburbs. Chief executive officers are being paid education expenses and transport expenses. They have the use of motor vehicles and are able to use taxi cabs. They also receive child care expenses. I know of no family that receives child care expenses as part of a remuneration package. The Government has lost the plot. What started as a good idea has, sadly, gone awry. I am sure that in the privacy of their rooms members on the Government side of the House concede that the senior executive service has failed dismally. The honourable member for Davidson has blown the whistle. He has told honourable members about what is said in private by Government supporters, and I have no reason to doubt what he says.
The service should be pruned. On each occasion members comment about how the Budget has affected their electorates, they are speedily reminded that we are in a recession, but this matter has not had the financial strictures it deserves. If honourable members and their electorates are suffering from the recession, surely the senior executive service could be expected to be subject to the recession, but, for some reason I cannot work out, it appears that the senior executive service officers have been sheltered totally from it. I support the amendment because any debate about social justice and about people who should be serving the community shows that we must curtail the excesses of the senior executive service. I emphasise that
Page 3420
these people are providing a service. Some people see the SES as a form of private enterprise. It is not; it is a group providing a service to the community. The two cannot be compared; it is like comparing apples with oranges. A whole range of matters are involved in providing a public service. People who do not want to be part of a group providing public service should not apply for appointment to it. Public service cannot be bought by paying huge salary packages. This is where the Government has failed. The fact that it has paid big money and not achieved results must be of concern to it, and I know that it is.
There has been much waffle about SES officers being subject to a performance clause. I do not understand how that will impact; I do not know what the measurement criteria will be. I am sure that the Government does not know what the performance indicators will be. I do not believe the suggestion that the Government has drafted a performance indicator for implementation within the SES. I see some value to the amendment moved by the honourable member for Davidson for a two-tier salary structure. However, the fact that salary beneficiaries will be the only people to consider that structure leaves it open to suspicion. It is valid for that to be overseen by the Industrial Commission. I will have no difficulty promulgating this bill in my electorate. My constituents are concerned about fat cats and I will be happy to tell them that during the next four years we will reduce the number of officers in the SES to 800. Thinking people in the community will support that. I urge honourable members to support the amendment.
Mr J. H. MURRAY (Drummoyne) [5.14]: The explosion of the senior executive service is one of the great rorts of the Greiner-Murray Government. I am pleased that the Minister for Housing is in the House. He knows as well as I that the SES has not worked. He would not admit that in this House, but I assure honourable members that if they spoke to him in private - I have not done so - he would agree totally that the SES has got out of hand and become bloated and really has not delivered the philosophies intended of it when it was established.
Mr Schipp: It has delivered in housing.
Mr J. H. MURRAY: The Minister admits that the SES has delivered in one department but not in others. More importantly, this SES rort rates with the great exploits of famous Australians like Woolcott Forbes. That gentleman travelled the world selling the Sydney Harbour Bridge. That is what has happened here: SES officers have gone to the Premier and the head of the Premier's Department and sold the Government a Woolcott Forbes scheme. The only beneficiaries have been the fat cats, the 1,600-odd SES members of the public service.
Mr Schipp: It was 1,500. It has gone up by 100.
Mr J. H. MURRAY: The number was 1,500, but it was discovered during the deliberations of an estimates committee that it has risen to 1,600. We can thank the Government for allowing us to ask questions in that estimates committee, because
Page 3421
we flushed out another 100 SES officers. One of the great proponents of the SES is none other than the Minister for Industrial Relations, who has responsibility for employment and technical and further education. When the coalition was elected in 1988 TAFE had 12 SES officers. It was decided after the Scott committee report - which after another set of consultancies resulted in the fourth reorganisation of TAFE - that TAFE was not working. At an estimates committee meeting last Tuesday evening the Minister admitted that he had cut back the fat cats from 57 to 53. He said he had taken the knife to them. Though TAFE has 53 SES officers, there are not that many in all the universities of New South Wales. Since the colleges of advanced education have been coalesced into the university system, TAFE is nowhere the size of the university system, yet TAFE has a greater number of highly paid bureaucrats. They are not performing. About 27 of the additional SES positions were established as a result of the recommendations of the Scott report, the reorganisation of TAFE. As a consequence a series of networks were established. It was said that the networks would solve TAFE's deficiencies but they were a sham and lasted only 18 months. They were a sham because they were run by SES officers on salaries between $83,000 and $114,000.
Consequently the present director-general conducted his own investigation. He found that the networks did not work because of poor leadership, and decided to eliminate 21 SES positions. Almost every one of the SES officers in the networks were placed in the 11 institutes. They all received a job in the reorganisation. The lesson is that anyone who is a failure should obtain a job in the State Emergency Service so that in the event of a reorganisation he will be looked after. However, if he is an average public servant, one of the 12,500 who will be sacked, his efficiency will not be considered, he will be asked to leave. It is indicative of the Government's attitude that the Minister for Industrial Relations and Minister for Further Education, Training and Employment, the Minister responsible for employment, is one of the greatest advocates of a bloated bureaucracy based on a high-salaried SES structure. Some of the debate has centred on the top salary paid in the SES, in the vicinity of $240,000. To attract the very best personnel to the SES, in competition with the private sector, now and again it might be necessary to pay a large salary. I do not say that that must happen, merely that it might. However, I do not know that that is where the SES has gone wrong. The fault is in the middle management. The philosophy of this Government is that the system must compete with the private sector, a system with the same culture, ethos and attitudes. I do not believe that is correct. I do not believe that it is possible to establish a public service with people with that attitude. Also important is the need for an attitude of service to the public in a public service that has constraints the private sector does not have.
Private sector organisations do not have an Auditor-General or a Minister responsible to and coming under criticism in the Parliament. The public service has constraints that do not exist in private enterprise. The Government is foolish to expect officers who have come straight from the private sector to improve the public service. The problem is not so much in the top echelon but in middle management.
Page 3422
I shall give an example. Two and a half years ago an officer was on $43,000 per year, then changed jobs and received $56,000. At that time the senior executive service was being organised and $55,000 was a cut-off point. The officer, now in the senior executive service, had a salary increase to $76,000. Following that, the officer, now supervising more people, was advanced from the $76,000 band to the $83,000 band. The officer is doing the same job for the same hours but now is in the top band, and has the top of the range Holden Berlina, a car telephone, and the kids' schooling paid for. He has not stopped smiling. Every time I see him he is wearing the widest grin. He told me that he had had aspirations of being a politician but that the Greiner Government was the best thing that has ever happened to the senior executive service in New South Wales.
Mr Schipp: He said it was the best thing that ever happened to the State.
Mr J. H. MURRAY: He did not say that at all. He said: "I was born a public servant and will always remain a public servant. If I had a chance of going to the private sector I would still be on $56,000 doing the same job. But if they keep rolling it up to me in barrel loads I am going to take it". That officer is in middle management. A whole band of SES officers are overpaid, though not underworked - they still do the same work.
Mr Schipp: Now you are crawling: you insult them and then crawl.
Mr J. H. MURRAY: I am telling the truth. I have a great belief in the New South Wales public service, which does an excellent job. But the service has gone haywire, and I shall give another example of that. Concrete Constructions is a close parallel to the Public Works Department but has double the number of employees. Concrete Constructions employs about 8,000 people, the Public Works Department employs about 4,000. Concrete Constructions has two highly paid executives but only six executives being paid between $82,000 and $100,000. Last week's Government Gazette shows that the Public Works Department has 67 SES positions. That is a sham and a shambles. I, as a taxpayer, am paying money for officers who are not needed. The Government should pay salaries similar to those paid in the private sector to its middle management if it wants to create a service that equates with the private sector. The Government should do it properly. I suggest that the Government Gazette shows that 99 per cent of those senior officers in the Public Works Department were employed in the public service as architects, engineers, surveyors, estimators and in other positions before the introduction of the senior executive service and were not recruited by lateral infusion.
Mr Schipp: Why should they not be properly rewarded?
Mr J. H. MURRAY: The senior executive service is bloated. Mr Speaker, could I seek an extension of time.
Page 3423
Mr SPEAKER: Order! I ask members to seek extensions of time three minutes before time, as they are supposed to. The opportunity really has passed now but in the circumstances I shall put the question.
[Extension of time agreed to.]
Mr J. H. MURRAY: Similar examples can be drawn from numerous government departments. On election day the fat cats gathered for their tallyroom feast, to use the silver service, to eat the caviar and toast the Government with champagne because they know they are on a good thing and want the Government to remain in office. The fat cats are not happy with this bill to reduce the number of senior executive service officers. Any Minister in any government will clap hands with glee if the bill is passed. The difficult step is resolving to do it. The Opposition, by moving the bill and allowing it to be passed and enacted, will enable the Government to do something about that service. During Committee other amendments will be brought forward. Clause 23 will be amended to ensure that the Minister makes submissions but not directly to the tribunal. Clause 24E will be amended to ensure that the tribunal will consult with the Industrial Commission about those matters that the tribunal should consider when making determinations of remuneration packages for executive officeholders, so that consultations may be conducted by correspondence with the President of the Industrial Commission or at meetings with the President and such other members of the Industrial Commission as the President determines.
Those two proposed amendments will be moved by the honourable member for Davidson. Mr Dick Humphry, head of the Premier's Department, makes the point in his background briefing note that if the number of SES officers is reduced the senior executive service will not be eliminated because those officers will be replaced by a lower order, and that a comparable number of officers will remain in the public service. That is not so. The paper shufflers will still be cut back. The troops will still cop the redundancy packages. The Government, with typical hypocrisy, says that a senior executive service is necessary so that conditions comparable to those in the private sector are available to attract suitable people. The Government applies a different philosophy to redundancy packages for the troops. Those redundancy packages contain the worst conditions offered by any State and are roughly half those offered by the private sector.
If one is a fat cat, meaning a senior public servant, one must keep with the remuneration and the conditions of the private sector. However, when it comes to redundancies, a person in the private sector will receives four weeks' pay for each year of service. However, those in the public sector in this State receive only two weeks' pay for each year of service, with a maximum of 26 weeks. A person who has worked for 30 years for the State of New South Wales receives the same redundancy as a person who has worked for 13 years. In the private sector one receives an average of four weeks' pay for each year of service with no limit. So for 30 years worked a person will receive a redundancy package of 120 weeks' pay.
Page 3424
The Government saw no logic in applying to redundancy packages the same principle as was applied to packages offered to the senior executive service. I wish to make one last point: this says it all. I refer to circular No. 90-24 circulated by the Premier's Department, which reads:
The New South Wales senior executive service new benefit options:
This is totally outrageous. As a taxpayer I am affronted by this, and when the honourable member for Sutherland hears it he could not possibly agree with it. It continues:
Payments may be made for the care of an elderly relative by an approved third party. This benefit is designed for payments to recognised public or private sector providers of support, accommodation, health or welfare services and not to other family members.
That is fair enough. A person cannot be paid if someone else in the family looks after the aged relative. It continues:
These services may be provided in the person's home or in an external facility.
The taxpayers will pay for the oldies of a member of the senior executive service to be put in a rest home. It is outrageous to offer a public servant a salary package, one of conditions of which is that taxpayers will pay for the aged relatives of the public servants to be placed in an institution.
Mr SPEAKER: Order! The honourable member has exhausted his time for speaking.
Mr SCHIPP (Wagga Wagga), Minister for Housing [5.34]: I wish to make some comments to put the big lie to what the honourable member for Drummoyne has been peddling, as indeed did the honourable member for Penrith. They clearly do not understand the senior executive service. If an impartial person sitting in the gallery were to believe from the remarks of the honourable member for Drummoyne that the cost of that care for the aged was in addition to the salary package, that person would be the subject of a con. Such benefit is bought out of the package. Does the honourable member not understand? The senior executive service officer can buy back out of his or her salary package certain benefits that he or she wishes to have put in the package. For example, if the officer wanted a car, that becomes a deduction from the total salary. Senior public servants have always had drivers and cars. If the senior executive service officer wants a driver, that is added on to the package. In the past when they received a salary the cost of these benefits was never calculated; they were open-ended. A value would be put on that aged care and
Page 3425
the senior executive officer would buy back that benefit out of the total package. The Opposition has presented it as if it were a further perk added on to these salaries. That is a furfy being peddled by honourable members opposite.
Many of these officers in the middle level - the honourable member for Drummoyne mentioned them often - are worse off now than they were in the past. I have spoken to cluster directors about these matters. If they were to receive an increment that would take their salaries to a level higher than that of a senior principal, they are in their own special category in the school education system. If they received that increment, together with the benefits available to them beforehand - for example, superannuation benefits, a car and so on -
[Interruption]
Mr SPEAKER: Order! The member for Drummoyne has made his contribution to the debate.
Mr SCHIPP: All I am saying is that they have said to me they are worse off under this system than they would have been under the former system. The honourable member for Drummoyne did not compare like with like so far as the private sector is concerned. Those six directors of the company the honourable member referred to would have a lot of add-ons to their $82,000 to $100,000 salary, and the honourable member knows that that happens in the public sector. The honourable member for Drummoyne mentioned the Department of Housing. Prior to the senior executive service being established there were 29 above-grade level officers. Today there are 24 senior executive service officers. Of those, 20 are on the minimum scale for their level. There is one level 7 officer, one level 6 officer, and the remainder are on level 1. Twenty are on the minimum salary and none is on the maximum salary. That is a responsible approach to this matter. Honourable members opposite have just peddled stories and yarns. They obviously have no understanding of how the senior executive service works. The attacks being made on responsible officers of various departments and authorities are disgraceful. These people are working harder than ever before.
Mr J. H. Murray: Rubbish!
Mr SCHIPP: The honourable member may say it is rubbish, but the motivation, the momentum, the performance, the increased efficiency, and the 38 per cent increased efficiency within the Department of Housing are all a result of the senior executive service. The honourable member should not peddle stories about things he knows nothing about. He has just proved his lack of knowledge of this service; he is right out of his depth.
Mr HATTON (South Coast) [5.37]: The introduction of senior executive service legislation is opportune, as is this debate, because it brings a focus on the concept of government service, that is, the contract versus the permanence in the public service. We are told that the senior executive service system is all about
Page 3426
efficiency and performance, market competitiveness and innovation. I believe there is a lot of truth in that. The permanence aspect means that there is an allegiance to the public - not to the Minister, the political party or the philosophy but a dedication to true public service. Even in the system of permanence in many countries throughout the world and in particular Australia a drift has occurred within the Westminster system. Particularly at the senior level there is a marked tendency to tell a Minister what the Minister wants to hear more than what he needs to know. A drift has occurred in the tradition of absolute independence of the public service, of quality of advice, the ethic of faithful and conscious service, and of not counting the hours in serving the public in a position of great responsibility. This is not a reflection on the public service at large. It is an indication of what is happening in our society, and that must be recognised. Obviously within the bureaucracy inefficiencies will occur. So there is this political trend, and it is fact that there is an increasing move at the senior levels to serve the government philosophy rather than the public interest in a true independent sense.
The contract system has raised the spectre of more political influence and the sacking of people if there is a clash of ideology. All public servants have to work under a policy framework for which the politicians and the political process are responsible and must take responsibility. It is difficult in looking at the senior executive service to ascertain, first, the truth of the information that one is given about how beneficial it is in streamlining procedures, in innovation, in saving money, and, second, whether it is truly servicing the public or, whether because of the officers' special position on contract, they are serving the Government, which may not necessarily serve the general public. In pursuing that aspect, I looked at the question of job shedding. If the figures are accurate, in the past three years or so more than 30,000 public service jobs have been shed across New South Wales. The target will bring the number up to more than 50,000. One must then say, ipso facto, that the level of the senior executive service must drop because the amount of responsibility and the size of the public service must drop. The Government's response to that is that it has. However, I cannot satisfy myself that it is dropping proportionately in the way one would expect.
I support the concept of the Opposition's bill, though I do not support some of its features. Before the bill was brought before the House I expressed concern publicly about arbitrary reduction. There is no doubt that one cannot achieve the original Australian Labor Party proposal, which was to draw a line and say, "We are going to shed some positions from the senior executive service", without knowing how that will affect the efficiency, competence and innovative processes within the public service. Similarly, one cannot arbitrarily - this is the second position of the Australian Labor Party - draw back and say: "We are not going to do that now. We are going to reduce it by something less". There must be a test. That point was well emphasised by my colleague the honourable member for Manly, who asked what the test would be for assessing how many people should be on contracts and the size of such contracts.
Page 3427
I express concern about the cost of contract payouts. Mr Humphry tells me it would cost of the order of an additional $14 million. No savings would be achieved, and further down the track it would cost an additional $7 million. That shows a great weakness in and lack of research into the bill before the House. I am alarmed and a little sickened at the size of some of the packages and the way they are put together. As the argument has been put to me on behalf of the Cabinet, I can understand that two-thirds of the senior executive service earn less than $100,000. Applicants must be offered things such as accommodation and there must be flexibility or people will not be attracted from the private sector. I find it difficult to understand - and I am sure my constituents and other people would also - how in this time of recession, when there is a drop in the number of public servants and a drop in activity in the public sector, people are able to attract such enormous packages. I cannot fathom how that happens in a recessed economy. Also, I do not believe that one attracts the quality commensurate with any additional salary offered over $100,000. Perhaps it is my pedestrian taste or my background - my father was a labourer - but I do not understand packages of $150,000 and $200,000. That is mind-boggling; it is outside the range that most of my constituents would understand. Forty-two per cent of people in the South Coast electorate earn less than $15,000 a year, according to the census, yet people in the senior executive service can earn that in four to eight weeks. I find it difficult to come to grips with that.
I do not say that there should not be a senior executive service. I believe there should be, but the packages are too generous. I accept what Mr Humphry tells me - that many of the executives earn less than $100,000. I accept also that many of them are recycled public servants and that a small, though significant, number have failed. I do not accept, however, that the performance tests or the performance criteria are working. So far as I am aware, the packages contain the provision that the executive must lose $5,000 if he does not perform. I do not know of any case where the $5,000 has been lost. The honourable member for Manly covered that aspect adequately. I wished to make these few comments to express my concern. I look forward to voting on amendments to the bill. It is important that the Opposition can bring bills before the House and can challenge the advice that the Government is receiving, especially when the heart of that advice comes through the senior executive service, which is the subject of the debate.
I recognise that there are significant risks in bringing a matter before the House. If the Opposition feels that by gaining this benefit in this hung Parliament it is all going to be beer and skittles, it may soon be easily embarrassed. It does not have adequate research facilities or does not carry out sufficient research and it has against it the whole weight of the machine behind the Government that can analyse in great depth the practical effects of the bill. In my opinion, all those things will not enhance the standing the Opposition has unless it can rise to the occasion. That is a difficult scenario. In this honeymoon period the Opposition is looking forward to bringing bills before the House. I welcome that, but it will remain a honeymoon period only if that problem can be solved. True to what I believe are proper principles of public accountability, I see no reason why the entire package of anyone
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who is paid by the public service should not be made public. People say that is an intrusion into one's privacy. I do not believe that that argument stacks up against the public interest argument, which is that if public expenditure is involved - in particular, salary packages - the public has a right to know. If the salary packages for individuals and the positions they held were exposed, the Government, if it has a solid defence, could explain those individual packages. The Government would have no embarrassment in doing that and the right of the general public to know would be served.
Mr FACE (Charlestown) [5.48]: In regard to the measure before the House, I have never seen such extravagance in the period I have been a member of Parliament. The delineation of the upper echelons of the public service falls into two strands - the chief executive service and the senior executive service. When the bill was introduced the Opposition believed that was a reasonable approach to take to senior managerial positions in the public sector. Though there is no disagreement about the creation of those senior administrative strands, there are two major objections to the manner in which the Government has established these services. The first objection is to the extent of the salary increases that have been granted to appointees to positions within these services; the second objection is to the number of positions that have been included in the senior executive service. With some of the positions one needs a vivid imagination. They are assistant positions. Everyone has jumped on the bandwaggon. There are numerous examples where people must have said, "Hey, hey, let's get on the gravy train".
Some chief executive service salary packages are more than double the salaries that were paid prior to the establishment of the CES. For example, it is said that Gary Sturgess and Dick Humphry receive salaries in excess of $250,000. Salaries for other positions in the CES have increased significantly above those paid formerly - increases that make rises given to the average worker who is lucky to have a job seem like petty cash. The senior executive service includes an army of about 1,400 or 1,600 people. That high number of positions is well beyond the need for executive posts in the public sector. As a consequence the service includes many positions that are not executive in nature but whose occupants are paid exceptionally high executive salaries. Although the Premier, Mr Greiner, said initially that the cost of the CES and senior executive service would be $20 million, my understanding is that the first year's operation of those services cost taxpayers an additional $40 million. When I did this research some time ago it was expected that the annual recurrent cost would exceed $25 million. In a State facing the budgetary difficulties that we hear about daily, such largesse is an insult to taxpayers of New South Wales. The Premier's bland statement overlooks the continuing cost to the State. For example, in the first five years of operation when the initial contracts expire the cost to the State will be more than $150 million.
Not content with handing out these slabs of salary increases, the Government has gone a step further and included fringe benefits for public servants. The taxpayers will have to pick up the bill for those. The first of those to which I refer
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is motor vehicles. This is where things have really got out of hand. Depending upon at which of the five levels the public servant is employed, a particular range of vehicle becomes available as part of the package, whether or not the officer requires the vehicle for official duties. Vehicles can be accepted under various conditions, ranging from an SES officer being given the use of a vehicle which is allowed to become part of the departmental vehicle pool for use by other departmental officers during working hours, to vehicles becoming the sole possession of the SES officer. I understand that not many officers avail themselves of the first-mentioned. Most of them opt for the package that enables them to retain the vehicle for their exclusive use. That is easy to understand. People in the community know that those officers have good reason for keeping those vehicles.
At a recent informal function I spoke to the wife of an SES officer who told me that her husband had an SES vehicle but did not use it to travel to work. He travelled with someone else. The officer's wife said that she worked at Fairfield and it was more convenient for her to take the departmental vehicle to work. I am sure the next door neighbours of those people cop it pretty hard when they realise that the wife has a departmental vehicle available to her. People in the community, especially where I come from, know that some public servants get cars and use them for their personal purposes. In this day and age it is difficult to understand how it is possible for an SES officer who lives next door to a long-standing friend of mine to travel to work with a mate - and I am not aware of the arrangements for reimbursement of the person who drives this officer to work - while the wife of the officer drives from St Ives to Fairfield to attend her employment as a secretary. It is said that is part of the package. However, it does not sit well with those in the community who have to meet the cost. I understand that the proportion of the salary package that applies to the conditions under which the vehicle is allocated increases in proportion to the use the officer makes of the vehicle. The highest component of the salary package applies when the SES officer has sole use of the vehicle for his or her private use. The lease payment on the vehicle covers all costs, including registration, maintenance and petrol. Thus the officer is protected from any price increase.
The system encourages frequent use of the vehicle to maximise usage at no additional cost to the officer. It is not difficult to understand why people in the community would not be pleased about SES officers having vehicles in those circumstances. Staff at one government department from which I sought information did not know what the costs were for particular vehicles. They could inform me of only one lump sum for maintenance and petrol. Though all Australians faced substantially increased petrol costs because of various matters, including the Gulf crisis, and limited the use of their vehicles to offset the additional costs, the SES officer was in the privileged position of maximising usage and the amount of petrol used, at no additional cost. Senior executive service officers who elect to take a vehicle for their personal use can nominate another member of the family as an authorised driver of that vehicle. As in the example to which I referred, if an SES officer nominates his wife as the authorised driver, because he has no need for the
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vehicle on his official duties, the vehicle is left at home for the wife to drive. Some officers receive a second vehicle. At the function mentioned previously the wife of an SES officer skited to all and sundry within my hearing that her husband had a vehicle and she had a Toyota Camry as an additional cop. One can imagine how that would go down with the average Joe Blow who is trying to meet the expense of running one motor vehicle. That SES officer has a vehicle for himself and the wife has another vehicle to boot. I understand that the choice of vehicle varies from level to level in the SES, but the range is quite wide.
Some officers have opted for four-wheel drive vehicles as recreational vehicles for their weekend bush treks and have not the slightest worry about the amount of fuel used or the wear and tear on that special type of vehicle. They know that if anything goes wrong, the taxpayer will be there to pick up the tab. Over the Christmas period I had the opportunity to visit the mid North Coast. I called in to see some friends at Burning Palms. A fellow who is a member of the same surf club to which I belong in my electorate asked about an SES officer who had a Nissan Patrol four-wheel drive. My friend told me that this fellow had ripped the side out of the tyre of the vehicle and said: "That does not matter. It will go back. It is not my vehicle, it is part of the package". That again does not sit well with those in the community who are trying to make ends meet. Members opposite can shake their heads all they like. People in the community do not accept that as being reasonable behaviour or that the taxpayer should have to meet the tab. At a time when the city's road network is showing signs of strain and photochemical smog resulting from the increased number of cars on the roads has increased dramatically, why does the Government encourage further motor vehicle use by handing out cars to armies of these officers? Some officers who have no need for a vehicle on their official duties have decided to enjoy the luxury of driving to and from work. They have been allocated expensive car parking spaces at their places of employment, once again at the expense of the taxpayer. As a matter of interest, in the central business district of Sydney parking spaces sell for upwards of $35,000.
[Extension of time agreed to.]
Another fringe benefit available to chief executive service and senior executive service officers is the election to use part of the salary package for holidays, such as a private overseas trip. Say an officer in one of those services elects to take an overseas trip at an estimated cost of $10,000. In normal circumstances an officer on the substantial salary that applies to these positions, who would have to earn $20,000 before tax to meet his net cost of $10,000, can nominate $10,000, part of his salary package, to be taken in the form of an overseas holiday. He or she would then be required to pay fringe benefits tax on this amount of approximately $5,000, so that the gross cost to the officer is $15,000 compared to a gross cost of $20,000 if it had to be paid out of his or her salary under normal circumstances. That represents a tax saving to the officer of about $5,000, but the shortfall in Commonwealth tax revenue once again has to be picked up by the
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ordinary workers, the suckers of the country, who do not occupy the privileged positions given to this army of public servants by the Government.
Many years ago Clyde Cameron coined the term "fat cats". He did not become very popular for doing so. The New South Wales Government is now breeding a new strain of animal, the super bloated fat cat. The chief executive service and the senior executive service took effect in October 1989 after a study by consultants Cull Egan and Dell. A number of positions, approximately 1,400, were slotted into these services. Since that time there has been an indecent scramble by all those just below the level of those services to gain seniority and join that privileged group. Since October 1989 many additional positions have been created in the senior executive service. They have been accorded the same privileged status. Very few positions, probably none at all, have been abolished. It would be interesting to ask the Premier how many additional public servants have been admitted to the tart shop since October 1989 and how many have been dismissed. The rhetoric about these public servants being paid for performance and being dismissed if they do not perform does not stand up to scrutiny. The simple fact is that if an officer was to lose his or her contract, he or she would return to his or her privileged position just below the senior executive service. I should like to give an example of that. In the portfolio I shadow, a particular public servant was receiving $49,000 per annum. As a result of his five-year senior executive service contract he is now receiving $90,000 and a Ford Fairmont vehicle to boot.
Mr Schipp: It is not to boot; it is included.
Mr FACE: The Minister had his chance. I did not interrupt him. I very rarely interject.
[Interruption]
Mr SPEAKER: Order!
Mr FACE: The simple fact of the matter is that that officer is now paying a small component of his package which will allow him to return to the public service if he loses his senior executive service contract. Officers who lose their contracts are able to return to their previous positions below the senior executive service level. They are still guaranteed employment as public servants at a time when Australians are being retrenched nationwide with little or no hope of re-employment. The only ones who have suffered in the public sector are the ordinary workers at State Rail, Elcom and the Water Board, who have been retrenched, admittedly with redundancy packages but with no assurance of re-employment. That is the sad fact. Many people who joined the Water Board or the Hunter Water Board thought they had a job for life. People of my age who are retrenched have no options because if they do not leave, their jobs are not available in any event. Many other fringe benefits are available to these privileged groups such as payment for private health coverage and professional association fees. All of these benefits
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are set out in a manual issued by the Office of Public Management to all departments so that the officers who oversight dispensation of these luxuries will know what is available to their privileged officers of the chief executive service and senior executive service. In my view it is important that a copy of this manual be obtained so that the full extent of the benefits can be evaluated and confirmed by others. Any action by a government to deliberately circumvent the tax laws, as the Government has done, must be considered amoral.
I have been a member of this Parliament for a considerable time. During my time in and around this Parliament I have never witnessed such a disgraceful use of public money at the expense of taxpayers. The problem must be addressed. The original legislation was never intended to achieve the present result. At a seminar I attended recently, it was revealed that senior executive service officers of this State are receiving on average 40 per cent more than Commonwealth senior executive service officers and senior executive service officers from other States. Recently a former New South Wales public servant told me he was put on a short list for employment in a similar job with the Queensland Government. His salary package and associated benefits was about 40 per cent less across the board than he would have received under the senior executive service structure in this State. This responsible bill will to some extent alleviate a situation that is out of hand. As I have said throughout my contribution, for the average person in the community who is paying his or her way, it is pretty hard to cop people swanning round in expensive motor vehicles, having their private school fees paid and generally rorting the system at the expense of the taxpayer.
[Mr Speaker left the chair at 6.6 p.m. The House resumed at 7 p.m.]
Mr FACE: The senior executive service has failed because almost 90 per cent of the people who have taken positions in that service were formerly members of the public service who assumed no greater responsibility but in fact for the same work were paid much higher salaries and provided with perks such as cars and other matters which they did not receive in their previous positions. I instance the case of an officer in the Chief Secretary's Department. I do not denigrate him personally, but I point out that this person was earning $90,000 and also had a 1991 Ford Fairmont car, all for doing exactly the same job that he had done before, with no more responsibility, for which he had been paid a much lower salary. I have taken a conservative view in assessing at 90 per cent the percentage of former public service employees who took employment in the senior executive service.
Mr Fahey: It is 80 per cent.
Mr FACE: The Minister says that the percentage is 80 per cent, which is still very high. When the senior executive service was to be introduced we were led to believe that we would get some extremely talented business people from the private sector who would bring their skills to assist in making government much more efficient. That has not happened, and to be candid, I do not think it could have
Page 3433
taken place. Already there were experts available, public servants expert in their own fields, who received much lower salaries than any member of the senior executive service and did not have perks provided such as cars or four-wheel drives. One officer who ripped the wheel off a four-wheel drive at Burning Palms thought that that was funny, but only, I suspect, because it was not his own vehicle. He had not been working in the relevant department.
Mr KNIGHT (Campbelltown) [7.2]: I would like to begin in a very unusual fashion by paying tribute to the Minister for Industrial Relations and Minister for Further Education, Training and Employment, who is at the table. He led for the opposition, albeit the Government, in giving the opposing side in this debate. I have known the Minister for about seven years. I have seen him on occasions make impassioned speeches and on occasions sensibly and rationally argue his case. I have never before seen him carry the burden that was thrust upon him today. He was provided with the most appalling documentation by the Director-General to the Premier's Department, Mr Humphry. The way the Minister manfully shouldered that burden, stuck his head down and read for over an hour without pausing - and on occasions without verbs - is an enormous credit to him. I acknowledge what a terrible task that would have been for him. He certainly had no support from members of the Government, with the exception of the Premier who came into the Chamber - almost as a brief respite from his other troubles in the course of the day. The Premier has had the smiles today, but the Opposition has had the laughs.
Except for the Premier's contribution and a short, unscripted and provoked contribution from the Minister for Housing, there has been virtually no contribution from the Government side. A very interesting question is: where were the Government backbenchers; where were the people who should in the normal course of events be here defending the Government's policy? They were not here because they know that the senior executive service is a rort and they are offended by the insulting and untruthful material put out by the Director-General of the Premier's Department about the salaries of backbench members of the Government. The honourable member for Gosford knows that this is true; he nods his head in agreement. Dick Humphry has told lies about his salary.
At the outset, I want to make clear that the Opposition sees a role for the senior executive service in New South Wales. It recognises that there is a need to have some flexibility as to who might be employed at the most senior levels of the public service. We, and I am sure some of the individuals involved, accept that upon the inevitable change of government in New South Wales certain political appointees and those persons who strongly identify with anti-Labor policies will need to be removed from the very senior levels of the public service. Such flexibility of employment is necessary. It is one of the main reasons why the Australian Labor Party supported the introduction of the senior executive service to New South Wales. The Premier is fond of declaiming in this House and elsewhere that the Labor Party voted in favour of the introduction of the senior executive service. It is a matter of public record that we did so. It is also obvious that we support the continuation of
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the senior executive service in an appropriate form. The bill we are debating today is not called the Public Sector Legislation (Abolition or Repeal) Amendment Bill 1991; it is the Public Sector Legislation (Senior Executives) Amendment Bill 1991.
Though the Opposition supports the senior executive service and voted to introduce it to New South Wales, there is a clear and unequivocal difference between what we supported and what the Greiner Government inflicted upon the people of New South Wales; what we were told - we thought in good faith - by the Premier of New South Wales was to be introduced and the outrageous set of laws that was inflicted on the people of New South Wales. We support a more flexible, properly paid senior executive service. The Greiner Government has given us instead a bloated, ponderous, massively overpaid and taxpayer-funded tart shop. That is the difference between what we were promised and what we have. That is the difference between what we are opposing and what we believe is appropriate. That is why the Opposition has brought this legislation before the Parliament.
The bill has three main features. First, we seek a phased reduction in the number of people at the chief executive service and senior executive service officer levels. We seek a phased reduction to 1,250 officers by July 1993, to 1,000 by July 1994 and to 800 by July 1995. In other words, we do not say, "Slash it tomorrow"; we say, "Let's have an orderly and gradual reduction". It is significant that the Opposition is willing to put its money where its mouth is as that reduction is made. Each day as we come closer to government, so too does the timetable of fewer and fewer people in the service, as in our proposal. Secondly, this bill intends to open up the process by which the salary and the benefits of people in the senior executive service are determined. We want their remuneration not to be a secretive matter of negotiation between them, some other people in that service and the Statutory and Other Offices Remuneration Tribunal. We want an open, fair and above-board procedure.
Third, we want an end to the Government-sponsored tax rorts and outrageous benefits that have been given to certain people within the SES. We want to limit the items that can be taken as fringe benefits in lieu of salary. They will be limited to one motor vehicle - not the two that many SES officers have now - to a proper employer's contribution to superannuation, to subscriptions to professional associations, to purchase of a right of return to the public service and to other benefits that are authorised by regulation. I will return to the detail of those three matters. It is difficult to argue on the exact specifics of what is going on in the senior executive service because it has been deliberately shrouded in mystery and secrecy. One of the great problems is that to some extent we are working from guesstimates for the very sensible reason that the Government has deliberately sought to deny the public of New South Wales - not simply the Opposition - access to the relevant data.
I am indebted to Mr Humphry because in the debating points in the circular he sent out to members of the SES who were trying to justify their positions, like a
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circular from the union secretary to the shop stewards, included with a number of highly political arguments and debating notes for protection of this endangered species, he let out some truthful details of the service. I have to take issue with my colleague in another House, Mr Michael Egan. He has been attacking the Government for having 1,500 people in the senior executive service. He has admitted that that was an unfair and unreasonable allegation. Following the document that Dick Humphry put out we know that as at 30th June - we are sure it has grown since then - the figure was 1,604. We were wrong; it is even worse than that. In the same document Humphry also admitted that 80 per cent of the positions, upfront, were filled by existing public servants. In virtually every case that means somebody who was not promoted but was doing the same job before the SES, was doing the same job after that, with the SES and getting a lot of additional perks and salary.
Where did the other 20 per cent come from? If we weed out the people who had been on ministerial staffs and moved into the departments, the friends of the Government and the failures who came in as alleged high fliers from the corporate sector and were gone within a matter of months, who else is left? Where is the alleged cream of the outside world that was recruited into the senior executive service? I was fascinated to note that nowhere in any of the defences put up by the apologists for the SES - the Minister, the Premier or the head of the Premier's Department - do we find any listing of the great and talented individuals who have been attracted into the senior executive service. I ask the Minister now to tell me their names.
Mr Fahey: I cannot respond. It is your bill.
Mr KNIGHT: The Minister says that he cannot respond. The speech by the Minister today was remarkably difficult for him and tonight is the first time in seven years that the Minister has felt constrained by the parliamentary procedures not to interject. I hope, Mr Speaker, you have not failed to observe his enormous good manners on this occasion. How well he conceals his bursting enthusiasm to jump up to name these people and lay their curricula vitae before the Parliament to expose their full glory and wisdom! The terrific parliamentarian that he is, he will sit there and not risk infringing the rules of the Parliament. But even the Minister's own advisers know the answer: there ain't no such people.
[Extension of time agreed to.]
In the brief time left to me I shall deal with the specific intentions of the bill. As I have said, the Opposition seeks a phased reduction in the number of people in the CES and the SES. We argue that too many are taking up too many government resources. It is significant that this is the Government that keeps talking about downsizing administration. This is the Government that says we need to be leaner and meaner.
Mr Fahey: Right-sizing.
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Mr KNIGHT: The Government got halfway there with the Deputy Premier; it missed the leaner part. What does it mean when it talks about downsizing or has the Minister who has suddenly found voice to interject says right sizing. Perhaps he would like to elaborate it into New Right sizing or far right-sizing. Downsizing the Government means fewer teachers, fewer nurses, fewer welfare workers and fewer trains but it does not mean fewer senior executive service members. The Opposition by this bill also seeks to get a determination of these benefits into the public arena. Dick Humphry - and the Minister in reading his speech notes today - has tried to draw a false analogy between the position of parliamentarians and the position of members of the senior executive service. It is a false analogy for a number of reasons. First, no group in this country has more scrutiny of their wages, conditions and benefits than members of Parliament. Our salaries are a matter of public record. All the benefits received are dealt with by a tribunal which publishes its determinations and the reasons for them. We are subjected to public scrutiny, as we should be. But it is an insulting and contemptuous distortion by Dick Humphry to claim that there is an analogy in that members of Parliament are paid better than members of the senior executive service.
A backbench member of the New South Wales Parliament gets, give or take a few dollars, $65,000 per annum. Whatever else is paid in addition by way of allowances is not to compensate the member for additional work, not to add to his salary package, but specifically laid down by tribunals to provide the tools of trade for his work. Members of Parliament do not get allowances to pay for child care. The honourable member for Gosford is not given money so that he can put his parents into an old folks home and have the accommodation subsidised by the State and Federal governments. Members from both sides of the House are given allowances which are specifically to be expended on their duties as members of Parliament. It is an absolute furphy for Dick Humphry or anyone else to suggest that the money given to members of Parliament for the carrying out of their duties - not for personal benefit but for their tools of trade - should in some way be classed as being equivalent to the rorts and outrageous benefits of the senior executive service. It is a disgraceful indication of the thinking of the head of Premier's Department. Certain allowances are given to parliamentarians. When the honourable member for Blue Mountains, by virtue of his job, comes here and stays overnight as part of his job, he gets some money to assist him. To include that allowance and to purport that it is part of his salary package is not only untrue and not only outrageous but fails to take into account any analogous situation with a member of the SES.
If a member of the SES goes to Katoomba for two days' work on behalf of the SES and stays in a luxury hotel, at Fairmont or some other establishment - or goes to some bodgie course, such as the course attended by people who were temporarily transferred to Orange with the Department of Agriculture and Fisheries, to learn how to cope with the cold, how to deal with rubbish and how to avoid rumours and false material put up on notice boards, and who were ultimately transferred back to Sydney anyway - those things are not included as part of a
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package of salary and benefits for SES members. However dubious the courses might be, they are part of their tools of trade. If the Government wants to start including work-related expenditure as part of the salary package, that is fine. But if it does so, it will find that Dick Humphry earns more than half a million dollars and many people in the SES will have packages of more than a quarter of a million dollars and increasing at a rate of knots.
The third item the Opposition seeks to address relates to reducing the perks and the tax rorts. The Government has said: pity these poor people in the SES. Life is tough. They have to give up their old jobs, most of them in the public service and go out into a competitive atmosphere, thereby running the risk of instant dismissal. Well, they have worked out a way around that. The way to protect yourself is to buy insurance. The calculations included in a manual put out for SES members tells them how to calculate insurance premiums for re-employment in the public service. For a person on a package of $87,500 it costs the magnificent sum of $151 a year to ensure getting back into the public service at grade 12. If a member cannot afford that, it is not all that bad because it can be claimed as a tax deduction and only half of it has to be paid. A person on a package of twice that amount can take out insurance at a cost of just over $1,000 in order to buy his way back into the public service. If a member of the SES wants a holiday in New Zealand, or child care for your children, there are a series of tax rorts -
Mr SPEAKER: Order! The honourable member has exhausted his time for speaking.
Mr NAGLE (Auburn) [7.22]: The inevitable conclusion one reaches about the senior executive service under the Greiner Government is that never in the history of New South Wales has so much money been lost by so few in such a short period of time through their own incompetence, inefficiency and ineffective management. The SES came about by virtue of the great concept the Premier learnt at Harvard, that university of distinction in Boston, Massachusetts. Harvard - H-A-R-V-A-R-D - means for the people of New South Wales the harmful, awful, reduction, vicarious, avarice, rubbish and destructive nature of the Greiner Government's senior executive service. Let me tell the House about Harvard, that great university in America that the Premier attended. Warwick Fairfax also went to Harvard. He went to the same school and learnt the same things that the Premier learnt. If I were not constrained by the standing orders, I would say the Premier is doing to the people of New South Wales through the SES what Warwick Fairfax has done to Fairfax press. That is why we are in the mess we are in today. However, in deference to the standing orders I will not use those words.
This debate is about good management so that the good people of New South Wales will get a very good return on the money they spend to employ the people who run the State of New South Wales. A scheme that is learnt in America will not necessarily work in New South Wales. This legislation has three aims. It aims to reduce the senior executive service to a manageable level of 800 personnel. We
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have heard much about the lean and mean Greiner Government. If we had 800 good senior executives, we could run New South Wales superbly without the 1,600 or so that we have now. The second aim of the legislation relates to justification for the salary packages of between $87,000 and $22,000. The object of the bill provides that the remuneration payable to members of the SES is to be determined by the Industrial Commission. The people of New South Wales have come to realise that they are receiving no rewards for the money they pay to employ members of the SES. What they are getting instead of rewards is the closing down of hospitals and courts, a reduction in the number of teachers, and the closing of schools. I predict that there will be 40,000 fewer students next year in the TAFE system. Let us see how many people are rejected for admission to TAFE colleges next year.
In the three years in office of this Government there has been $1 billion of waste, and much of that came from the administration of the Minister for Industrial Relations and Minister for Further Education, Training and Employment. I refer to the Scott report which cost $30 million for an inquiry that lasted no more than 12 months. In the end the Government rejected the recommendations in that report and went to a new system. However, before it rejected the recommendations of the Scott report, it ensured that TAFE was included as part of the SES. This Government has spent $80 million on consulting or contracting. What are the members of the senior executive service doing about the money paid on consultancies, about $150 million paid in SES perks or about $30 million or $40 million paid in wasted advertising. Because of the way this Government is running the State of New South Wales - or not running it - I will lose a top hospital from my electorate. I will lose an acute care and operating system at St Joseph's Hospital. Services at Lidcombe have been greatly reduced and it may be that Auburn District Hospital will be on the chopping block if certain things happen at the hospital at Concord. Those three hospitals are affected, yet salary packages of between $87,000 and $220,000, plus perks, are paid to these officers as a consequence of this managerial concept that comes from Harvard in the United States. That is and always has been the problem.
The main objects of the senior executive legislation that the Opposition supported were greater efficiency, effectiveness and accountability of the public service. No results have been seen from that effectiveness, efficiency or accountability. The honourable member for Campbelltown asked the Minister for Industrial Relations and Minister for Further Education, Training and Employment to name those people who form part of the senior executive service but he could not do so. He could probably name the people in his department and one would hope that he would have been happy to do that. However, he has not done so. Coopers and Lybrand, another consulting firm - it is a consulting and or contractual economic recovery adviser for big business in New South Wales - in a confidential report to the Premier stated that there were problems with the senior executive service. Basically it found that many senior public servants recruited from outside were unsuitable. It also found that many non-performing SES members could not be sacked or replaced because of the cost. I should like to know how many mates employed in the SES are members of the coalition parties or how many the
Page 3439
Government is indebted to for helping it to gain office in 1988 and 1991. I should like to be given a long list of the names of the senior executive service so I know who these people are.
Honourable members are aware of the old concept of the Ash Street butlers. In the old days in Ash Street after the coalition parties were elected to office they said they proposed to appoint supporters to various government positions, so let us find out who has been appointed to the senior executive service. This Government has taken the senior executive service and made the appointment of their mates, good friends and old boys network to these positions an art form never before seen in New South Wales. People who would normally have received $155,000 in 1988 are now picking up $220,000 and, in addition, lurks and perks to the tune of $60,000 or $70,000. After nearly four years in government the coalition parties keep blaming previous Labor governments for not solving the problems in New South Wales when in fact the coalition parties have had the care, control and management. As I said before, Harvard means harmful, to the extent that I believe the SES has been harmful to the public service; awful, because we do not know and cannot determine who is performing what - there are no guidelines as to how well these people are performing; ridiculous, because they are not accountable to this Parliament or anyone else except their Ministers who hide from the Parliament the faults of the SES; vicarious, because they keep blaming everyone else for their own inadequacies; avarice, because of the amount of money they receive - $220,000 plus their lurks and perks; rubbish, and destructive, because of the Harvard concept in our society. It is a disgrace that the Opposition has had to introduce legislation to reduce the size of the SES to a manageable size of 800 positions, which will save the taxpayers of New South Wales tens of millions of dollars, and which will achieve greater effectiveness, efficiency and accountability.
Never in my three and a half years as a member of this Parliament have I seen a Government try to kill off second reading speeches as this Government is trying to do in this debate and the vindictive way in which it wants to destroy this bill. Were this bill to pass through both Houses of Parliament the Government would have to say to its mates, "We do not have control of the Parliament any more. We did our best for you but we will now have to work out who is going and who is staying". The Government is so scared of this legislation that it has brought in the heavy guns. It has brought in Mr Humphry to brief Government members on how to refute the allegations of waste and mismanagement. Mr Humphry spoke about the salaries of members of Parliament. After reading what he had to say I can only say that I would be happy to accept a salary package that he has created for a backbencher in this Parliament. If he wishes to say that what we receive is equivalent to what he and his mates in the SES receive, I will be quite happy to take those salary increases. In truth they do not exist. Parliamentarians have many expenses in regard to running their electoral offices, attending various functions, and the costs of running a motor vehicle.
Page 3440
Mr Humphry included an electoral allowance as some sort of disposable income. Obviously he has no idea of the business costs involved in serving the electorate. He does not understand what an electoral allowance means to the member for Campbelltown, to the member for Wyong or to many others. Mr Humphry claims that $31,000 per annum is expended on the superannuation of members of Parliament. A number of members who sit on the Opposition benches and even more members who sit on the Government benches can earn considerably more in private enterprise than their superannuation package. Members of Parliament cannot get an electoral car because of the fringe benefits problem. The SES do not seem to have a problem in getting a fringe benefit basic package, together with all their other lurks and perks. We would all love to have fringe benefits such as a child care allowance, housing loan repayments, private health insurance, and education expenses. Members receive only an allowance to run a private car and, if one survives long enough in this place, one receives a superannuation payout of a certain amount of money. This legislation will reduce the size of the senior executive service and enable the Industrial Commission to assess the worth and value of these SES positions. We must have more accountability. A Minister should not be able to direct a tribunal to give members of the senior executive service whatever they desire by way of wage increases. They too should have to go before an industrial tribunal like the rest of us. I support the bill. It is a good piece of legislation which, if passed, will bring accountability, efficiency and effectiveness back to the public service.
Mr CARR (Maroubra), Leader of the Opposition [7.37], in reply: I thank all those honourable members who participated in this debate. I acknowledge that, because of pressures of time, some of my colleagues - shadow ministers - who were keen to speak declined that opportunity. The debate has been notable for two reasons: first, the revelations by a former Minister of the nature of the senior executive service and its abuses in New South Wales. He provided a rare insight as someone involved in the process for two years and he spoke about what has actually happened. It is very rare in parliamentary debate that we are provided with that kind of insight. Second, behind the Speaker's chair, this Government has been making secret promises to reduce the size of the SES if this legislation is not passed. Today one departmental head, in trying to gain the support of the Independents, said: "We will reach Carr's target provided you do not force the legislation on us. Save us from this legislation. We admit we overdid it. We concede the real abuses but, if you do not pass the law, leave it to us and we will pare the size of the SES to something like Carr's targets".
Let the word go out throughout the New South Wales public sector that this Government, conceding its errors, has made a secret commitment to meet the target to wind back the size of the senior executive service to 1,100 by 1996. But the key question for this Parliament is whether this reduction should be achieved by a secret promise to ward off the threat of legislation or whether we, the Parliament, in charge of expenditure and the management of the public sector in New South Wales, ought to determine and manage the process by legislation. The Opposition stands by the
Page 3441
second approach. I ask the Independents this question: Is a secret deal the way to resolve the problem of mismanagement and waste concerning the senior executive service in New South Wales? If they believe in the supremacy of Parliament why not tackle this question - namely, the size and deployment of the upper strata of the New South Wales public sector - by legislation, not by responding to desperate assurances from a sweaty-palmed bureaucrat behind the Speaker's chair.
The Premier promised an annual report of the profile of the senior executive service. He promised to review reporting mechanisms from the senior executive service on an annual basis. I ask this question: After today's performance by this Government how could any member of this House believe anything it says on any subject? It gave us promises at the start of this whole exercise about the size of the senior executive service and did not keep them. But look at the Government's performance today. We had a clear misleading of the House by the Premier and the Assistant Treasurer - they said that the document we had referred to was fraudulent - and we had a pathetic apologia by the Assistant Treasurer, not to the Parliament but at a press conference, toting the most lame and pathetic of excuses for his deceit to the Parliament: computer breakdown; he did not write the letter; and someone removed a "not", he had never seen the letter; the staff were to blame. He used every excuse except, "The dog ate my homework".
Mr Fahey: On a point of order. The Leader of the Opposition obviously is trying to keep his troops awake but this has absolutely nothing to do with the bill before the House. I ask you to bring him back to the scope of his bill.
Mr SPEAKER: Order! I remind the Leader of the Opposition that he is speaking in reply; therefore, he can address only those matters raised by other members during the debate.
Mr CARR: The great revelation in the debate was what the honourable member for Davidson had to say. He was a Minister in this Government. He saw the senior executive service -
Mr Fahey: He spoke about tax evasion.
Mr CARR: He spoke about tax evasion? This Government is going to reply to his serious and considered points about the mismanagement of the senior executive service by launching a personal attack on him.
Mr Fahey: No, I am telling you what he spoke about because you obviously did not listen.
Mr CARR: I will tell the Minister what the honourable member for Davidson said because it is highly relevant to the debate and cannot be contested. He conceded that this bill seeks, over time, to contract the senior executive service; it does not seek to abolish it. He conceded that this bill will allow for flexibility.
Page 3442
He said that this bill will preserve existing contracts and limit abuses in the future. But he went on to make the kinds of revelations about abuse of the senior executive service that only a former Minister is capable of making. He said with all the authority that comes with running a department of state in which the senior executive service was tried out, "The 1,100 target is obtainable by 1995-96". He said that it can be met. The honourable member for Davidson was not speaking as a member of the Opposition; he was a Minister in this Government. He was saying what can be achieved with the senior executive service.
Mr J. H. Murray: With a full understanding of it.
Mr CARR: As the honourable member for Drummoyne has pointed out, he has a full understanding of it. As someone who had run a senior executive service he pointed out that the senior executive service had had a corrosive effect on public service morale. He said that it has not attracted outside talent. This was not a member of the Labor Party speaking; this was a Minister of this Government with at least two years' ministerial experience, who had seen how the senior executive service worked in practice in the two departments for which he had responsibility. The honourable member for Davidson pointed out that the senior executive service had not attracted outside talent. Whatever prominent Government Ministers may state privately, they would agree that the senior executive service has not worked. The important point is that the honourable member for Davidson quoted two Ministers - the Minister for Industrial Relations and Minister for Further Education, Training and Employment, who is in the Chamber, and the Minister for Housing - as acknowledging in private that the senior executive service had not worked; it had been a failure. Though it has worked better to some extent in the commercial area, in government trading enterprises - in the view of the honourable member for Davidson that is the core areas of government education, technical and further education, and health - the senior executive service clearly is not working. In other words, the senior executive service is failing three-quarters of the State budget sector.
In short, the honourable member for Davidson has confirmed, amplified and expanded every criticism of the senior executive service as practised by this Government that we as an Opposition have made. Let it be clearly understood: in the words of the honourable member for Campbelltown, we stand for a small, flexible senior executive service. We want a phased reduction in the senior executive service and we want greater control over the benefits that are payable to senior executive service members. I refer once again to the key question: do we bring the senior executive service under control by legislation, a law passed by this Parliament - this is very relevant to the Independents - or do we say, as a number of the Independents are inclined to say, "We will not go for the legislation of the Labor Party but we will settle for a secret assurance given by the Government from behind the Speaker's chair that the senior executive service will be cut back and we will reach Carr's targets without the legislation"? So we have people from this Government saying behind the Speaker's chair: "Trust us. Do not pass the bill. We
Page 3443
will cut it back, believe us". Again I ask: who can believe this Government? Who can believe anything it says? Old "Am I stupid?" over on the Government benches is not to be believed. Did honourable members hear him on television tonight asking, "Am I stupid?" Can we believe anything he says?
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Blacktown to order.
Mr CARR: We have often joked about the senior executive service and the way it is applied in New South Wales. We have joked about what the initials SES might stand for. But if we opt to accept assurances that the senior executive service will be culled secretly and silently rather than controlled by legislation we are really accepting that what we have is a secret executive service. God protect us! Greiner's SS headed by Heinrich Humphry! We really ought to be able to do better than that. I have an alternative that I will put to the Independents. Let us control the senior executive service by legislation passed by a Parliament whose justification is control of expenditure by the Executive. The Parliament sets the deadlines in legislation. We pass legislation that sets the deadlines, that sets the targets. Honourable members should not fall for assurances given behind the Speaker's chair by a sweaty-palmed public servant to this effect, "We will do it if you spare us Carr's legislation". Honourable members must not fall for that for a host of reasons, not the least being that they can never believe any assurance given by this Government.
I conclude with this observation: why is the concept of the senior executive service controversial only in this State? It is not a great source of controversy in the Commonwealth. These sorts of debates are not had in the Commonwealth Parliament and that is because the senior executive service has been properly controlled. As far as I know there is no debate about the senior executive service in Victoria. People in Victoria accept an upper echelon of public servants providing flexibility in public sector management. It is not an issue of debate in that State, but it is an issue of controversy in New South Wales. There are three reasons for that: first, the excessive size of the service in New South Wales; second, the level of remuneration; and, third, fundamentally because everything tackled by this Government - health, education, the Budget, Eastern Creek, the environment, the senior executive service, every area of public policy and public sector management - it gets wrong. The real tragedy of the mismanagement of the senior executive service by the Government is that the concept has been discredited and rendered controversial in a way it never is in any other jurisdiction. The whole notion of an upper band of the public sector responding more flexibly to the needs of the public sector management has been discredited in this State. It must be brought under control. It must be controlled not by a secret deal made behind the Speaker's chair, but by legislation of this Parliament.
Question - That this bill be now read a second time - put.
Page 3444
The House divided.
[In Division]
Mr Whelan: On a point of order. Mr Speaker, I draw your attention to Standing Order 203, which provides:
A Member having given his voice with the Ayes or Noes, shall not, on a Division being taken, be at liberty to vote with the opposite party; and if he should do so, Mr Speaker, on being satisfied thereof, shall order the Division lists to be corrected.
At the time of the calling of the division the honourable member for Gosford voted in a manner different from the way he is now voting. I ask that you, Mr Speaker, when the division is recorded as the standing order requires, correct the list.
Mr Hartcher: On the point of order. I reject the allegation of the honourable member for Ashfield. No member, with the exception of the honourable member for Auburn, made any reference to what I was supposed to have said. I called out, "No, the Noes have it", and I stand by what I called out.
Mr SPEAKER: Order! The Chair is not in a position to make a determination one way or the other. I can take no action.
Ayes, 46
Ms Allan
Mr Amery
Mr Anderson
Mr A. S. Aquilina
Mr J. J. Aquilina
Mr Bowman
Mr Carr
Mr Clough
Mr Crittenden
Mr Doyle
Mr Face
Mr Gaudry
Mr Gibson
Mrs Grusovin
Mr Harrison
Mr Hatton
Mr Hunter
Mr Iemma
Mr Irwin
Mr Knight
Mr Knowles
Mr Langton
Mr McManus
Mr Markham
Mr Martin
Dr Metherell
Mr Mills
Mr Moss
Mr J. H. Murray
Mr Nagle
Mr Neilly
Mr Newman
Ms Nori
Mr E. T. Page
Mr Price
Dr Refshauge
Mr Rogan
Mr Rumble
Mr Scully
Mr Shedden
Mr Sullivan
Mr Whelan
Mr Yeadon
Mr Ziolkowski
Tellers,
Mr Beckroge
Mr Davoren
Page 3445Noes, 48
Mr Armstrong
Mr Baird
Mr Blackmore
Mr Causley
Mr Chappell
Mrs Chikarovski
Mr Cochran
Mrs Cohen
Mr Cruickshank
Mr Downy
Mr Fahey
Mr Fraser
Mr Glachan
Mr Graham
Mr Griffiths
Mr Hazzard
Mr Jeffery
Dr Kernohan
Mr Kerr
Mr Longley
Dr Macdonald
Ms Machin
Mr Merton
Mr Moore
Ms Moore
Mr Morris
Mr W. T. J. Murray
Mr Packard
Mr D. L. Page
Mr Peacocke
Mr Petch
Mr Phillips
Mr Photios
Mr Rixon
Mr Schipp
Mr Schultz
Mr Small
Mr Smiles
Mr Smith
Mr Souris
Mr Tink
Mr Turner
Mr West
Mr Windsor
Mr Yabsley
Mr Zammit
Tellers,
Mr Beck
Mr Hartcher
Pairs
Mr Collins
Mr Greiner
Mrs Lo Po'
Mr Thompson
[In Division]
[Interruption]
Mr SPEAKER: Order! I remind honourable members of the necessity to maintain decorum at all times, even in division.
Question so resolved in the negative.
[Motion negatived]
HONOURABLE MEMBER FOR NORTH SHORE AND EASTERN CREEK RACEWAY
Personal Explanation
Mr Smiles: I wish to make a personal explanation.
[Leave granted.
Page 3446
Mr Smiles: Since I made a statement earlier today I have conducted an exhaustive investigation with members of my staff in an attempt to trace a copy of a letter to a Ms Niblett.
Mr Neilly: On a point of order. Various media reports have stated that the honourable member for North Shore already has apologised to the Parliament - an event that has not happened.
Mr SPEAKER: Order! No point of order is involved.
[Interruption]
Mr SPEAKER: Order! The honourable member for North Shore sought the leave of the House to make a personal explanation. There was not one dissenting voice, and the House granted the honourable member leave to make that explanation.
Mr Smiles: Ms Niblett is the person referred to by the Leader of the Opposition and the honourable member for Ashfield in the House today.
[Interruption]
Mr SPEAKER: Order! This is a late hour for the House to be sitting on Thursday. The House granted leave to the honourable member for North Shore to make a personal explanation and he is entitled to be heard in silence.
Mr Smiles: The search for the letter has been unsuccessful. No record or copy of a letter dated 3rd October from Ms Niblett or a letter to her signed by me can be found. I am willing to accept -
[Interruption]
Mr SPEAKER: Order!
Mr Smiles: I am willing to accept that if Ms Niblett says she has a letter in my name written to her, that is the case. I can think of no reason why she should invent a story.
[Interruption]
Mr SPEAKER: Order!
Mr Smiles: It may well be that a letter bearing my name was sent to Ms Niblett and that that is the letter that the Opposition has in its possession. The truth is that I do not recall the letter and I do not have a record of it. It must be remembered that hundreds of letters are issued from my office every month. The
Page 3447
view expressed in one short sentence within the letter is not my view and never has been. The House should be aware that if the word "not" were inserted in the sentence, it would more correctly represent my views.
[Interruption]
Mr SPEAKER: Order!
Mr Smiles: I am prepared to accept that the letter could have been written by a staff member and that I signed it without reading it word for word and without picking up the contradiction. I accept full responsibility for that.
[Interruption]
Mr SPEAKER: Order! It is very close to the rising of the House this day. Therefore I may be forced to invoke a procedure adopted by my predecessor, Speaker Kelly. The application of Standing Order 392 at this late hour on Thursday would have little effect. Therefore I may have to apply Standing Order 387. If honourable members continue to interrupt, they will be removed not only for the rest of today but until Tuesday of next week. I have made many general calls to order. Every member on both sides of the House is now deemed to be on three calls to order. I warn members that if I call to order any member specifically, he or she will be named.
Mr Smiles: I did not intentionally mislead the House or the Premier. However, I am satisfied that I cannot prove beyond reasonable doubt that the letter in question did not emanate from my office. Accordingly I apologise to the House and to the Premier. I emphasise that this matter only serves to highlight the dilemma faced by every member of Parliament as a result of a spate of forgeries which have been circulated throughout the press gallery in recent weeks. This has arisen in the environment of the past fortnight in which at least two bogus press releases have circulated in my name, causing me considerable embarrassment. It also followed a professionally organised and executed break-in of my electorate office on 1st October, which has been reported to the police. I should be able to produce my copy of the correspondence. However, owing to a computer failure the record of this and thousands of other letters has been lost. In all honesty and sincerity, in the light of recent events I presumed, wrongly, that the letter was a forgery. Again I apologise to the House and my constituent.
House adjourned at 8.5 p.m.