Public Finance and Audit (Treasurer's Instructions) Amendment Bill


Second Reading

Adjourned debate on second reading.

(Continued from 29 October 2014 – see bottom of page.)

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 12:00:17 ): I rise to speak on this amendment bill and to say that I am the lead speaker for the opposition. I do not think that I will trouble the timekeepers with everything that is entitled to me. While I am sure it can be dealt with quite quickly, this Public Finance and Audit (Treasurer's Instructions) Amendment Bill 2014 is nonetheless an important piece of legislation. I say that the Liberal opposition supports the amendment bill. It is nonetheless very important, as I said. It will be dealt with certainly more fulsomely by the opposition in the other place, by the Hon. Rob Lucas, who is the shadow treasurer.

Essentially, this is about internal operating instructions clarification. It is perhaps about hierarchy as well. Treasurer's Instructions via the Public Finance and Audit Act in a certain way can take priority over other acts with regard to spending, entering into contracts, use of funds, acquisition or disposal of property, incurring liabilities, etc., by public authorities. It does this by essentially saying that the Treasurer's Instruction under the Public Finance and Audit Act are deemed to become part of and additional to the public authority's obligations under its own act.

This is generally for very good reasons, because it might well be that the Treasurer, or in fact the Minister for Finance, who at the moment is the same person, might have some accounting practices or might have some ways of conducting financial transactions on behalf of the public of South Australia which are very important, and those things might evolve over time. A new standard might come in that needs to be adopted by all public authorities, and so it makes good sense for the Treasurer to have the capacity to give instructions that all public authorities, acting under a range of different acts, should adopt in relation to these new and positive ways of operating.

In some ways, while these are actually Treasurer's Instructions, in some ways it might even be more relevant to the Minister for Finance and that minister's responsibilities in terms of having an oversight in not just where the money is coming from and going to, but in fact the process of how it is spent, and having to deal with the Auditor-General's questions later on.

It does throw up one important question, though. What happens if there is a conflict between the Treasurer's Instructions to the public authority and that public authority's existing obligations under their own act? I will come back to that shortly, but, while I say again generally that there are positive reasons why the Treasurer's Instructions would have this authority, that is a critical issue: what happens if there is a conflict?

I am advised by the Hon. Rob Lucas that one of the reasons that this amendment bill has come forward at the moment is because of an example that has arisen with regard to WorkCover. WorkCover is a public authority for the purpose of the Public Finance and Audit Act. It is therefore intended to be subject to the requirements of that act and Treasurer's Instructions. However, WorkCover obtained legal advice that indicated they believe provisions of the WorkCover Corporation Act means that they do not have to comply with the Public Finance and Audit Act or Treasurer's Instructions. The government has advised that the Solicitor-General disagrees with WorkCover's advice and their interpretation of the bill, so this bill is intended to ensure that WorkCover and any other public authority does have to comply with the Public Finance and Audit Act and the Treasurer's Instructions.

That is one example that has been brought forward by the Hon. Rob Lucas, and I am sure that the Treasurer would be aware of that situation. However, it does beg the question of what other examples might be out there, so I ask that the Treasurer, when he makes a further contribution to this debate, share with this house any other examples that might have come up or any other issues that may have led to the need for this clarification that we are working through at the moment.

What is the current problem with the scope of the Treasurer's Instructions that has meant the government needs to make these changes? Has the Auditor-General ever raised an issue that has led to a need to clarify this; if so, what was the issue or issues? Is there an example or examples of a particular provision of an act that is inconsistent with the Treasurer's Instructions? Assuming this legislation is passed, if the parliament has passed an act that provides that a body should be independent of the minister, does this give Treasury authority to override that and make the body subject to the Treasurer's authority via the Treasurer's Instructions? Of course, that then gets me back to the question I raised previously: what happens when there is a conflict?

I would like to point to a couple of clauses in the bill. I would be more than happy to come back and ask these questions in the committee stage, although I would be equally happy if the Treasurer, when he contributes further remarks in the debate, could clarify these issues. Essentially, looking at part 2, section 41, four additional clauses, which will replace the original subsection (4) in the act, are proposed to be inserted into the act by this bill. I will read the last two of them:

(6) Treasurer's Instructions are to be interpreted as being consistent with an act conferring functions or powers on a public authority if it is possible for the public authority to comply with both the act and the Treasurer's Instructions in the performance or exercise of the functions or powers.

The second clause, which I will refer to in a moment, provides:

(7) In particular, if an act confers on a public authority power to enter a contract or manage or apply a fund or other powers relevant to the receipt, management or expenditure of money, the acquisition or disposal of property or the incurring of liabilities, the authority must, in exercising the power, comply with Treasurer's Instructions—

which is all straightforward, but it then goes on to provide—

… unless it is not possible for the authority to do so and to also comply with any requirements relating to the exercise of the power under the Act.

So this bill clearly recognises that there may well be instances where there is a conflict.

Certainly in my reading of the bill (and I am happy to be advised otherwise), there is nothing that actually stipulates how these issues would be dealt with where a conflict does exist. It might well be that it is contained in another act that the Treasurer or his advisers are aware of, and I would be very grateful if that information could be brought forward because, clearly, where there is no conflict it is quite easy to understand that this would all be done for very positive purposes, as mentioned before; however where there is a conflict, that presents a very difficult situation with regard to how that public authority should conduct its business when it is caught between Treasurer's Instructions and the responsibilities and obligations of its own act.

One other hopefully very small question—it might just be that it is a term I have never come across myself—relates to part 2, clause 3—Amendment of section 4—Interpretation, which provides:

…after the definition of local government indemnity scheme insert:

Property means real or personal property and includes—

(a) a chose in action;

I am just not sure what 'a chose in action' means. It might well be a perfectly legitimate legal term that I have never come across. If the Treasurer could answer that question for me, and for the rest of the house because it appears that nobody else here knows what it means either, it would be helpful. It may well be quite a straightforward technical or legal term that none of us have come across. I will finish up here.

This does seem to be very sound logic, but we would like to know whether there are any other examples in addition to the WorkCover example that have meant that the government has decided to bring this bill forward. We would like to know whether there are any examples the government is aware of where there is or could possibly be a conflict between Treasurer's Instructions and that public authorities act. We would also like to know, please, how the government proposes to deal with those situations when and if there is a conflict.


Public Finance and Audit (Treasurer's Instructions) Amendment Bill

Introduction and First Reading

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:09:35): Obtained leave and introduced a bill for an act to amend the Public Finance and Audit Act 1987. Read a first time.

Second Reading

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (12:10:09): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Public Finance and Audit Act1987 provides the framework for the financial management of public finances. The ability for the Treasurer to issue instructions binding public authorities is central to providing a framework that advances accountability, integrity and transparency for the benefit of the State. This Bill clarifies matters relating to the application and scope of Treasurer's Instructions and makes minor amendments of a statute law revision nature

The main purpose of the Bill is to make it clear that a general provision in an Act establishing a public authority, such as a power to enter contracts (or even a more specific provision such as a requirement to have a particular body approve a contract), will not override a requirement of Treasurer's instructions applying to the public authority, for example, requiring an approval of the Treasurer or delegate to be obtained for entry into a contract. While these matters can be clarified in relevant charters and directions for particular bodies, the amendments are designed to improve general understanding about the relationship between Treasurer's Instructions and provisions of an Act providing a public authority with functions and powers.

The opportunity is also being taken to clarify the scope of Treasurer's Instructions so that it is clear that they may regulate any matter related to the receipt, expenditure or investment of money, the acquisition or disposal of property, or the incurring of liabilities, by the Treasurer and public authorities.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

Part 2—Amendment of Public Finance and Audit Act1987

3—Amendment of section 4—Interpretation

This amendment adds a definition of property to make it clear that it includes any type of property including contingent rights.

4—Amendment of section 5—Receipt of public money

This amendment is consequential on including both real and personal property within the definition of property.

5—Amendment of section 41—Treasurer's instructions

The addition of paragraph (f) to subsection (1) is designed to ensure that Treasurer's Instructions may regulate any matter related to the receipt, expenditure or investment of money, the acquisition or disposal of property, or the incurring of liabilities, by the Treasurer and public authorities.

New subsections (4) and (5) clarifies that Treasurer's instructions may refer to standards etc published by the Australian Accounting Standards Board or Standards Australia.

Subsections (6) and (7) are designed to ensure that a public authority's powers and functions are read subject to Treasurer's instructions. It is only if it is not possible to comply with both the Instructions and the authority's Act, that the Instructions give way.

Schedule 1—Statute law revision amendment of Public Finance and Audit Act1987

The Schedule contains further amendments of the Act of a statute law revision nature.

Debate adjourned on motion of Mr Gardner.


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