Senate Finance and Public Administration Legislation Committee, , 9:38:21 to 10:00:53
The Department of Finance is questioned on infrastructure grant guidelines, regulatory reform, and budget forecasting accuracy.
Topics: Grants administration, Law reform
Speakers: Senator The Hon Katy Gallagher, Senator The Hon Bridget McKenzie, Senator The Hon Jane Hume, Anna Harmer, Senator Barbara Pocock, Matt Yannopoulos, Senator Karen Grogan, Speaker 41
>> Sorry, you've caught me. >> I have one last question. won't take and it relates to uh consultants. Um, we've been talking about the government's desire, which I don't doubt, which is to reduce uh expenditure on consulting and and rebuild the public sector, and yet we're seeing um the absolute value of spending on consultants continue to grow every year. U Minister, I've asked you many times why you won't commit to a target uh for reducing spending and you've answered that the PGPA act prevents you from intervening in that way. What other options are available to the government and the minister when they need to influence the direction operations of a department or agency?
>> Uh well, they've been reflected in the decisions that we've already taken uh which is to reduce agency appropriation. um that you know that is the way that we influence um that we you know I would like spending on consultants and contractors to be lower than it is. Um I'm not convinced that um all agencies have done what we've asked them to do and respond. uh I acknowledge that some agencies like I said you know if I look at some where particular [clears throat] technical skills are being sought and needed to supplement the work of agencies that's fine but we have invested in additional public servants to deal with that issue so um you know there is a level of frustration from me and I have raised it with my ministerial colleagues about ensuring that we are doing everything we can to reduce spending on consultants and contract contractors. It's expensive. We do a lot of it. Um it's appropriate. We never said we would not spend anything in this area. Um but I would like to see greater effort to reduce it.
>> So Minister, have you considered um something like a ministerial direction? Um why why wouldn't you consider something like that which gives you you know a legally binding instruction uh or order issued by government to a department or agency? that's a tool available to you, is it
>> Yeah. I mean, take it on notice. I think in terms of what whether or not that's even an option, I would not think it is because I am not sworn minister for a number of most of those a the agencies across the public service.
>> But the relevant ministers could all agree to adopt such a mechanism, could
>> Uh I'd have to take advice on it. It's not something that I have given a thought to. uh I have and I am talking with finance about further steps that we can take to reduce the spending in this area.
>> Another option would be to build it into uh returns KPIs uh that affect salary. >> That's an option. Would you consider
looking at that as well? I think that's in place in in I'm not again privy to all um of those agreements that exist um around performance agreements but I am aware that that you know that that procurement and delivery of programs through you know ensuring good procurement uh is can form part of those
>> well on notice could you inform me of um the use uh of any KPI or salary related measures that uh respond to the quantum of consulting expenditure. Thank you. Um and have you considered establishing a whole of government requirement via cabinet? a whole of >> a whole of government response uh through the cabinet in relation to setting requirements for secretaries in relation to consulting.
>> Um look I I would have to check that's not really in my portfolio responsibilities that would be a matter for the prime
>> Okay. Thank you. I'm done.
>> Thank you very much. Um I will just note uh that we are now releasing the Australian naval infrastructure. Um so
>> traveled from Adelaide to be here.
>> I am aware uh the committee does uh try and stress to senators who call witnesses to ensure that those witnesses um are well utilized and called for good purpose. We'll go to Senator Hume. Actually, Senator McKenzie.
>> Oh, really?
>> We'll go to Senator McKenzie.
>> Excellent. Wow. >> You do. I appreciate it so much. Um, good evening, Minister. >> I've got some questions about the priority and community infrastructure program round two and finances role in very humd drum in comparison to what Okay. Um last night uh we heard some astounding evidence in RAT estimates and I want to thank the infrastructure department secretary Jim Betts for his remarkable honesty. Uh we heard about a $125 million uh program worth of projects under the priority community infrastructure program round two being taken as decisions of government in the March 2526 budget. They are reported as decisions taken but not yet announced in PIO 2025. The secretary described in estimates yesterday these decisions of government as merely election commitments. There were no guidelines for these decisions. So it's the decisions were taken yet not announced but there were no guidelines for these decisions to be taken under because the guidelines were developed after the election is what he said. the senior responsible the senior official responsible for delivering these grants said of the pre-election budget decisions I'm not sure of the process to approve these projects now the department secretary in infrastructure was unable to answer questions about how the decisions were taken to list the projects in PIO and um the projects in questions are all listed on page 28 of PO adding up to $125 million. And the secretary said he was unable to answer about how those decisions were taken and I quote because those decisions were taken in a budget process at the time and we may not even had visibility as to how those projects were generated. I want to ask finance what was the process undertaken to assess the priority community infrastructure program round two projects prior to decisions being taken to approve $125 million worth of funding in the 2025
>> So uh Senator I don't know whether one of my officials can uh assist. I wasn't in the role and so I don't know uh like I've just I'm just reading that myself.
>> I'm very happy to take it on if you need it.
>> Yeah. No, I've got I've just been given the publication. Uh I'm very happy
>> come back after dinner once you've had a >> because I really would like to reconcile Secretary Betts's evidence um with how we get a PIO listing projects that have not been decisions have been taken without guidelines being in place.
>> So, Senator, perhaps um if I could um be just to ask a question just to help us with that inquiry. uh you've referred to both the processes for identifying things in PIFO but also the issuing of guidelines. In relation to guidelines, finance does have a role in reviewing guidelines for grants programs which you
do because we had to amend milip's guidelines thanks to your fancy footwork before they were published. But when I say we, I mean the Commonwealth, I mean the government.
>> I suppose just in relation to those guidelines, it would be quite usual for guidelines to be developed after a program is determined. So guidelines are issued to provide certainty to potential applicants as to eligibility, assessment, etc. It is quite normal for those guidelines to be issued after a decision has been made to establish a program. So I'm I'm just wanting to clarify.
>> Yes. So if you go to page 28, it's not just the pro I get uh prior to elections, there may be programs set up with an amount of money um for which commitments can be then go through an internal process um on which to the decisions to be made. Here is a list of actual projects with money committed, decisions made, but the guidelines for this program weren't actually developed until post the election. So that's it's a unique situation in my experience and I've gone back and checked other PIOS. So I I would appreciate accuracy cuz I was surprised by min Minister Betts, Secretary Betts's
evidence. I think we can I mean a provision was made it was published at budget at PIO as it has to be um and identified as treasury and finance are required to do >> and then the guidelines are developed for the implementation of those decisions and so that is very normal to come afterwards. So, you know, that's a provision that's been made. Then a grants program will be established in order to deliver them. Um, and the guidelines are developed to do that. And that would happen and would only be able to happen post election because you would have to be reelected in order to uh utilize that provision and pay those grants. That is the way it operates.
Minister, I appreciate your evidence, but listing specific grants, not the entirety of the grants. When I read out part five on page 28 to Secretary Betts last night and said, cuz I thought we had run the Commonwealth had run a round two of the priority community infrastructure program and he said, "It's a mistake in the P in PIFO." and I said, "Well, have you rung finance or treasury to tell them it's a mistake?" Uh, and he said the name was changed. And I just didn't have a paper trail for it. So, I'm here to ask questions about
it. >> Let's just review what he said. Um, I think in terms of establishing grant guidelines after in order to implement a decision that's absolutely >> that's very normal. But
specific projects.
>> Yes. But that like any decision that we make >> can be, you know. Yes. And then they go through like we did and like you did in the election campaign then when you're administering those >> you go through a value for money and due diligence phase which is set up through the grant guidelines and the process that's done then. But let us review what
>> these decisions were taken on projects not setting up a program Minister. Typically programs would be set up with an amount of money that ERC deems necessary. I'm happy to run through my questions or would you me prefer me to come back?
>> I don't mind, but we we do need to have a look at whatever um Jim has said because I'm not across that.
>> Okay, I'll come if that suits the committee once the government's Minister bets. Minister bets. He'll love
>> thank you. What time are we breaking? >> 6:45. Okay. Thank you. Uh, Minister, the AFR reports on the 21st of October that over the life of the Albania government, unexpected spending revisions have totaled 145.6 billion. Um, Secretary, I I suppose I should ask probably you is this a figure that you understand and agree with?
Uh, I haven't s I don't know that I've seen that article, Senator, if you can
>> see if I can find it for you. It's on the 21st of October this year. So, I've got a link, but I haven't got a copy. I'll find it for you. Um, the veteran budget watcher Chris Richardson again said, and I'm quoting him here, "The public service was rapidly getting worse at forecasting the cost of government. You want the public service to be able to produce on average unbiased forecasts. Nobody demands or expects perfection, but we're talking huge dollars, so it's worth understanding if there's something systematic going on. Um, Secretary, these are fighting words. Are you concerned about the accuracy and the quality of the budget estimates given these sis systemic underestimates?
Senator, no. Um, Senator, if we could see the article, that would be helpful, I suspect. [laughter]
>> Okay.
>> May be that we're talking about changes in expenses and there are we can explain some of the things that will have driven those which don't go to the accuracy of our forecasting.
Um, I will find you a copy of this article and I will come back to you with that. I want to ask you more questions please about the um whole of government regulatory reform agenda if I can that agenda that was outlined in the recent budget. The fact sheet said that the government is progressing 14 legislative reforms to reduce regulator regulator burden in the financial sector by $780 million a year. I just I want to know who is accountable for ensuring the delivery of each one of those 14 measures.
>> Uh Senator, can I just confirm that the the particular element of the regulatory burden you're referring to was in the financial services sector? Is that what you said?
>> Yes.
So Senator, as as you're aware, the uh most recent budget included that statement which would identified a number of potential regatory burden reductions across a number of portfolios. It is those individual portfolios that are charged with delivering each of those and they are itemized um at the conclusion of the fact sheet. Uh for those that relate to the financial services sector, it is the treasury portfolio that has the lead on implementation and delivery of those reforms.
>> it's Treasury you're saying that inter that tracks it's that does the internal reporting arrangements to track the delivery is that what you said the
treasury's responsibility for apologies treasury is responsible for delivering the individual reforms but perhaps sorry if I can just take a step back you are referring specifically to those items that relate to financial services sector not the regulator ideas that we've previously talked about
>> regulatory reform agenda Yes, >> the fact sheet says the government's progressing 14 legislative reforms to reduce regulator burden in the financial
that is 700 is responsible for leading those. That's correct.
>> So that's who is tracking the delivery of those items. Treasury or finance?
>> Treasury is responsible for delivering those items. As a leader in regulatory reform and coordinating across government, we take a role in uh in uh the coordination of regulatory reform. And so we certainly maintain some visibility of it but delivering those reforms and advising on their execution is led by the treasury.
>> Okay.
>> So I can give you
>> delivery is sorry let me just be delivering respon is responsible of the treasury. I understand that
>> for for for ones that fall under their portfolio. There's others but it may help. I've I thought we might go here, but there's a October 2026 update of which I can table and give to you which is of all of those issues um that we asked the regulators to come forward with ideas. So this is a summary of all of those issues which is slightly different but it's in >> if you want that
>> is the draft regulations for the first item on that list included there >> that's raising the monetary thresholds they're out for consultation at the moment. Is that included on that list?
>> No that that list is the list of regular aid that we spoke about that last estimate. So those ideas
>> I'd love I'd love to see them anyway.
That would be if you could table them
>> Okay. So of the 14 measures that you were saying that Treasury are responsible for delivering but can I be really clear Treasury is responsible for delivering them but finance is responsible for tracking the delivery.
>> We keep a broad eye on delivery of of regulatory reform at large. That is correct.
>> Thank you. So there were 14 legislative reforms that were mentioned in the fact sheet. There was one of them that's out for consultation at the moment. For each of the 13 measures, how do we know whether they've been implemented so far? >> Do you are you responsible for for tracking that or is treasury?
>> That would be the treasury, We we monitor status at a high level those are in progress and we know where they are up to that it is the the detail of delivery um and where individual pieces of consultation or implementation are up to would be best asked at the treasury.
>> Okay. All right. I will ask those questions of Treasury. There were $10.2 billion in gross regulatory burden that was discussed at the last estimates I we did have this conversation in finance certainly I remember it very clearly because there was no real timeline as to when we can expect that figure to be achieved but it was also subject to revision. Can I ask whether there have been any revisions to that 10.2 billion since the
>> No, Senator.
>> Okay. And how much has been realized of the 10.2 billion so far?
>> So, Senator, as as we set out um at last estimates, the implementation of each of those will take varying periods depending on the particular regulatory reforms that are being pursued. Some of those involve the passage of legislation through the parliament. Um some of those um have occurred since we last met. So for example the regulatory reform omnibus bill uh recently passed and received royal ascent. Others however remain under development. Uh and uh to take an example competition reforms involves engagement with the states and territories. And so in order for those to be realized um there is further work that is required. The realization of the $10.2 2 billion will be contingent on um uh completion and implementation of all of the ideas within uh that fact sheet um uh a number of which remain in progress other of which have been delivered.
>> Okay. Is there a some sort of
>> we'll report against it?
>> There will be report against it.
>> Okay. >> As much as we can because this is going to be an area of continued focus for us. But for example like the EPBC assessment pathways they are um calculated at a um 3 just over 3 billion of that 10 like that I think if I'm correct comes in in a month or so through the national environmental standards. So the legislation's passed but haven't come into effect. So that's, you know, but I would cuz we're focused on this and continuing to to chip away at um reg reform that we would also need to update this table, but I would imagine we would do that in the budget next year.
>> Budget next year. So not my FO.
>> I don't think so. Just for the purpose that some of them like like the EPBC act, we won't have an update, you know, because it's hasn't actually come in. It'll come in in Dece I think it's the 1 of December. That's right. >> Yeah. >> So, I just don't think there's been enough time between May and November or December to to affect any significant change. And so, I think it's probably more meaningful to do it in the budget.
>> Okay. Can you just remind me when will the 10.2 billion be realized because it's 10.2 billion per year? Obviously,
>> it's 10.2 to peranom once all of those reforms are in place and done and as um as Miss Harmer said like national competition policy which is again falls under the treasury portfolio is being led through kefir uh involves states and territories so probably hard to put a timet around that but you know I think we'll see what we can do to provide more meaningful information around it
>> so senator Hume we are coming up against the dinner break. Did you have a wrap- up or are you happy to stop there? Excellent. Um we will now um suspend for the dinner break and we will return with finance at 7:45.