Appropriation (Parliament 2018-2019) Bill 2018


Debate resumed from 10 May; motion of Mr DALIDAKIS (Minister for Trade and Investment).

Mr RICH-PHILLIPS (South Eastern Metropolitan) (09:49:35) — I am pleased to rise this morning to make some remarks on the Appropriation (Parliament 2018–2019) Bill 2018. This bill before the house this morning is the bill which provides parliamentary authority for the departments which make up the Parliament. As members know, this bill is separated from the general appropriation bill and has been so since the early 1990s. Later in my contribution I will come back to the reason for that structural separation of the bill and the bigger issues around governance of the Parliament and the independence of the Parliament from the government.

To turn to the specifics of the bill this morning, the bill largely follows the structure of the general appropriation bill in respect of providing through its structure for the issue of certain sums from the Consolidated Fund — in the instance of this year it is a total of $154 293 000 — and provides the usual structure around allowing for that issue of funds to be varied in accordance with determinations from the Fair Work Commission in accordance with variations for salaries and related costs, which is a standard mechanism which exists in the general appropriation bill to provide for accommodating decisions in the industrial environment which may arise through the course of —

Mrs Peulich interjected.

The PRESIDENT — Order! Mrs Peulich, if there is a conversation outside, I am not sure that it is very productive, and I am having difficulty hearing Mr Rich-Phillips.

Mr RICH-PHILLIPS — Thank you, President. I was saying the issue-of-money clause provides for that structure, which allows for industrial determinations to be accommodated within the appropriation as variations may be required through the course of the financial year. It is effectively a special appropriation which allows for those variations to be accommodated.

The bill then goes on to run through the formal appropriation, the Consolidated Fund, and then provides for the application of those funds as appropriated to the different departments of the Parliament by way of schedule, which is again consistent with how the general appropriation bill manages the appropriation for the general government sector on a department-by-department basis.

In respect of the Parliament we now have some six individual departments which receive appropriation under this bill. The first is the Department of the Legislative Council, which this year is to receive an appropriation of $4.6 million in output funding with no allocation this year for ATNAB funding, which is additions to the net asset base, and it is not unusual for the Department of the Legislative Council not to have asset funding. In respect of the Department of the Legislative Assembly we see an allocation of $4.98 million, again for output, and no allocation for asset. For the parliamentary committees, which are considered as a separate line item — and this is funding for the joint investigatory committees — the allocation is $7.45 million, which is a modest increase on the $7.26 million that was allocated in the 2017–18 financial year.

For the Department of Parliamentary Services the allocation output funding, under section 29 of the Financial Management Act 1994, is $110.35 million, up from $104.6 million in the last financial year. In relation to asset funding — net additions to the asset base — there is an appropriation of $1.92 million, which is a decrease from $6 million in the previous financial year, reflecting a change in the allocation of funding for capital projects. Obviously one of the big capital projects that the Department of Parliamentary Services has been undertaking has been the construction of the new accommodation wing in the rear of the parliamentary precinct.

Another element picked up within the parliamentary appropriation bill is funding for what is termed the Department of Auditor-General, which is the Victorian Auditor-General's Office. As an officer of the Parliament a separate appropriation is provided for the Auditor-General by way of an allocation through the parliamentary appropriation bill. This year we have seen an allocation of a little over $17 million in output funding, up from $16.5 million, and $4.6 million allocated by way of funding for the audit office. A new addition to the appropriation bill this year is the Department of Parliamentary Budget Office. It is new in the sense that the office is now established. The newly established Parliamentary Budget Office has an allocation of $3.3 million in output funding and, not surprisingly, no asset funding.

The amounts allocated by way of the appropriation of course do not reflect the total amount which is allocated in respect of the individual departments of the Parliament. For a better picture of the actual funds which are available to those departments I would draw the house's attention to budget paper 3, the 'Service delivery' budget paper, and the chapter in relation to Parliament. It sets out with better description the actual funds which are available, because the funds which are appropriated through the appropriation bill are only a component of the total resources which are made available to the Parliament and indeed made available to other departments.

The headline number in the appropriation bill, because of the way the Financial Management Act 1994 is structured, never entirely reflects the resources which are available to each department and quite often does not even approximate the resources which are available to departments given the fairly complex way in which departments are funded in Victoria. While we do have the annual appropriation line, which is voted on through the budget, and then the breakdown of that between output funding and asset funding in addition to the asset base, there are also provisions under the Financial Management Act which allow for various departments to retain their own-source revenue as part of their financial resources. There is the capacity for the Treasurer to permit the application of previous years unexpended appropriations to the new financial year, which adds to the capacity available to an agency.

Then there are special appropriations, and in the case of the Parliament the main special appropriation which flows to Parliament is the special appropriation which is created under the Parliamentary Salaries and Superannuation Act 1968, which provides for the salaries and entitlements for members of Parliament. While this particular bill before the house today is often viewed as the one that pays MP salaries, in fact it is not. This bill provides the appropriation for the running of Parliament, it provides the appropriation for the salaries of parliamentary officers and the parliamentary staff here at Parliament House and it provides for the salaries of electorate officers in the electorate offices throughout the state, but this appropriation bill in fact does not pay the salaries of members of Parliament — that is paid through a special appropriation. That highlights that the headline number in the appropriation bill does not reflect the actual resources which come to the Parliament.

For a better explanation of that, I would draw members' attention to a table which is contained in the service delivery volume of the budget papers — table 2.24, 'Parliamentary authority for resources'. It shows the annual appropriation, which is what this bill deals with; the split between provision of outputs and assets; receipts credited to appropriations, which is revenue made available to a department, and in this instance that is approximately $26 million, which I would assume would be revenue paid to the Auditor-General for audits undertaken by the Victorian Auditor-General's Office and then appropriated to the Department of Auditor-General; carryover of previous years appropriations, $5.9 million; and the special appropriations. In the case of the Parliament no trust funds are applied, but for the 2018–19 financial year total parliamentary authority stands at $237.4 million, which is a substantial difference from the $154 million set out in the appropriation bill by virtue of those other elements that I have spoken about. And obviously that special appropriation line is largely related to salaries of members of Parliament, the level of which is a matter of public record through the parliamentary salaries and superannuation legislation.

To understand where the Parliament expends its funds it is necessary to look at the other expenditure in, again, budget paper 3. It sets out the output costs for the individual departments, which in this year's budget total $229 million. In the case of the Department of the Legislative Council the total output cost for the budget year is $19.8 million. It is good to see that the additional funding which was provided in last year's budget in respect of Legislative Council committees has been continued in this year's budget. This is a matter which has been of concern to the Legislative Council for a number of years.

The Legislative Council, I think two years ago, proposed an amendment to the parliamentary appropriation bill, which was an unusual thing to do. This suggested amendment, given it was an appropriation bill, was to provide additional resources to the Legislative Council in recognition of the work that the Legislative Council select committees had been undertaking. When that suggested amendment was transmitted to the other place the Treasurer agreed to provide those funds to the Legislative Council on the basis not of an amendment to the appropriation bill but of an exchange of letters between the Treasurer and the two presiding officers, so those funds were made available for the 2016–17 financial year. Last year we saw funds provided in the appropriation for the Department of the Legislative Council, but again we did not have the ongoing funding. That was a matter which was raised in committee last year, with the Council again considering the prospect of an amendment to the appropriation bill to lock in that funding for the Council committees.

Again we had last year an undertaking from the Leader of the Government on behalf of the Treasurer that that funding for the Legislative Council select and standing committees would be provided and would be reflected in the forward estimates for the parliamentary appropriation. We have now seen that in this year's budget, which is a positive step. In regard to that matter this year we do not need to contemplate an amendment to the appropriation bill to lock in that funding. I think it is a positive step that the role of the Legislative Council standing and select committees has been recognised and the resourcing need for those committees has been recognised by the government in the structuring of the parliamentary appropriation bill. Clearly they will continue to have a role to play with the Council, and having certainty around that funding is an important step.

I would just like to run through some of the output measures which are listed for the Parliament. As I indicated, the Parliament is divided now into some six individual departments, the Legislative Council being the first one, with a $19.8 million output cost. A number of performance measures are recorded in the service delivery chapter in the output statement for the Legislative Council. Many of those performance measures are useful in the sense of assessing or measuring the performance of the Department of the Legislative Council. They consider things such as the frequency with which procedural references are updated and the quality of the parliamentary process — that is, the way in which the chamber manages the legislative process, manages the dispatch of legislation, the consideration of amendments in committee, the interaction between the houses in relation to messages and amendments and ensuring that the activities of the Council in a legislative sense are validly conducted in accordance with our standing orders, our sessional orders and of course the Victorian constitution.

We have seen in the last 12 months the Clerk of the Council become the Acting Clerk of the Parliaments with responsibility for the interaction between the Parliament and the Governor's office for the final stage of the legislative process. So it is all the more important that the functions and activities of the Legislative Council are carried out with, basically, a perfect level of accuracy in respect of the Parliament's obligations under the constitution and its processes and proceedings so that we can be assured of the integrity of the legislation which results from our parliamentary activities.

Likewise, the output group reports on member satisfaction with the accuracy, clarity and timeliness of advice. I was intrigued to compare our measures with measures in the Legislative Assembly. The last actual outcome for the Department of the Legislative Council was reported in the 2016–17 financial year, and no doubt in the annual report of the department this year we will see an actual outcome as opposed to an expected outcome. Legislative Council member satisfaction was assessed at 82 per cent for 2016–17, and in the Legislative Assembly it was assessed at 96 per cent, which I found an intriguing comparison.

In thinking about it and reflecting on the complexity of the advice which is required in the Legislative Council and the dynamic nature of the advice which is required in the Legislative Council — which is a very, as you would appreciate, President, dynamic environment where a number of things occur, a number of practices are tested and a number of firsts have been established in the case of this Parliament — I think the members of this chamber can be very pleased with the level of advice, the clarity of advice and the timeliness of advice they receive from the clerks, the table office staff and the support staff behind them, because the environment in here is very different to the other place. The other place is, in its processes, far more predictable than the Council, far more predictable —

Ms Pennicuik interjected.

Mr RICH-PHILLIPS — Ms Pennicuik says I am being diplomatic, but for members of this place the other place is predictable. Its processes are predictable, its passage of legislation on the guillotine is predictable and its lack of scrutiny of legislation through consideration in detail processes and the like, through the activities of standing committees and select committees — the lack of those things — is very predictable.

As a member of the Council I can only speculate that the nature of advice that is sought by members from the clerks and table staff in the Assembly would be far less complex and involved than the advice that is required day-to-day in the Council, where it is a dynamic environment, precedents have been tested, a range of new concepts and issues have been explored and continue to be explored and the resources required from the Clerk and his staff are very significant. Looking at precedents in the commonwealth Parliament and elsewhere in Australia does put a big demand on the resources of the Council, and I think we have been very well served by our parliamentary staff who provide that advice accurately and on a timely basis in a very complex environment. I am intrigued by the relative assessments on those output measures between the two chambers, because we have been extraordinarily well served in a very complex environment.

Moving to the Department of the Legislative Assembly, we see that its total output funding is $38.6 million. It has a similar number of performance measures. Some of them are intriguing. For example, one of the measures listed for the Department of the Legislative Assembly is 'Teacher satisfaction with tours of Parliament for school groups'. I am somewhat perplexed that the Legislative Assembly regards that as one of its core measures — that teacher satisfaction is one of the eight performance measures which are listed for the Department of the Legislative Assembly as the key ways in which it assesses its success.

The Department of Parliamentary Services is of course the major cost centre for the Parliament, being the department which is responsible for the provision of electorate officers, being the staff, and offices, being the physical infrastructure, and the output cost of the department this year is $116.6 million, which reflects the size and the relative complexity of the tasks it undertakes. Again, looking at the list of performance measures one cannot help but wonder if they are the most reflective of the responsibilities of that department. For example, one of the performance measures listed is to 'Provide MPs with an approved standard electorate office', with a target of 95 per cent. The provision of an office is a basic task of the department, and for that to be a performance measure in the sense of a numerical target rather than an assessment of quality or satisfaction is a bit surprising. It does raise the question of how relevant some of those targets are with respect to that department.

The next department considered in the appropriation bill is the Department of Parliamentary Investigatory Committees, which is the funding provided for joint committees as distinct from the select and standing committees which are attached to the Legislative Council. The output cost for 2018–19 is $7.5 million, and it is interesting to see that the expected output of the department of committees this year is substantially lower. This is attributed to the election environment where the Parliament will be effectively, from a committee perspective, not operating from September through to the end of the year. There is not likely to be much committee work until the new Parliament next year.

The next department we have is the Parliamentary Budget Office (PBO). This is a new initiative over the last couple of years. The Parliamentary Budget Office was established by way of legislation in 2017, and funding of $3.3 million has been provided in this year's budget. It remains to be seen what function the Parliamentary Budget Office has. To date we have seen that after an extended delay a head has been appointed to the Parliamentary Budget Office. Whether that PBO goes on to play an important role in the operation of the Parliament, an important role in the provision of services to members, remains to be seen. To date I have not had a sense that there is a lot of engagement with that office or a lot of use for that office. It will be a matter of time as to when we determine whether the $3.3 million allocated to the PBO is a good use of resources, or whether those funds would be better allocated elsewhere in the Parliament or indeed better allocated elsewhere in the public sector.

There are a lot of challenges for the PBO, for the way in which the office has been constructed under its legislation, the function it is supposed to have and whether members will have confidence in that structure. This is not a reflection on the officer that has been appointed, but rather on the way that the office has been constituted. It remains to be seen whether members choose to engage with that or whether they continue to get advice on budgetary matters and advice on policy costings externally from people who may be more expert in individual policy areas, or indeed more expert in the costing of policy areas. So a big question mark remains over whether the PBO will be an effective resource for the Parliament or as I said, whether those funds could be better directed elsewhere. A big question mark hangs over that office and its long-term future.

The other element that is picked up under the parliamentary appropriation is the Auditor-General's office. As an independent officer of the Parliament, it is picked up in the parliamentary appropriation bill, but of course it operates quite independently of the Parliament, though it has some — I hesitate to say oversight, but certainly interaction with — the Public Accounts and Estimates Committee. This year we have seen the output cost for the Auditor-General at $27.3 million, and it is good to reflect on the type of performance measures that the Auditor-General has in the output group for the audit office because some of them are quite meaningful.

For example, the first is a quantitative measure, which is the average cost of audit opinions issued on performance statements, and that cost is $5100. We have the average cost of audit opinions issued on the financial statements of agencies, which is $51 000. We have quality assessments which relate to external and peer review of material that is prepared by the audit office looking for variations from professional and regulatory standards. So the audit office performance measures are quite meaningful in assessing the performance of the audit office, and I think that is something that perhaps other departments of the Parliament and other departments of government more generally could learn from in ensuring that the performance measures listed are meaningful.

Now I would like to touch on the structure of this bill, because one of the issues we do tend to discuss each year at this time is the fact that we do have an appropriation of Parliament bill, which ostensibly exists to provide independence for the Parliament from the government. This is something which has been in place since the early 1990s or thereabouts, when the first appropriation of Parliament bill was introduced to create the impression that Parliament was master of its own resources, that there was a bill to appropriate funds for the operation of government and there was a separate bill to appropriate funds for the operation of Parliament, and that the Parliament would determine its own path, its own resources by way of this parliamentary appropriation bill.

The reality is that that is a fiction. The independence of Parliament through the parliamentary appropriation bill is a fiction because the requirements of our constitution and the requirements of the Financial Management Act 1994 mean that inevitably the appropriation of Parliament bill is a government bill. It is a bill that is prepared in the Treasury, it is a bill that is approved by the cabinet, it is a bill that is introduced by the Treasurer and it is a bill that can only be introduced after an appropriation message from the Governor, which of course is only issued on the instruction of the government. The independence —

Ms Pulford interjected.

The PRESIDENT — Order! The member is actually referring to the Parliament's ability to determine its own financial position, as distinct from the process that we all know does exist with the rest of the budget. So it is actually a substantive point that is being made, and the member ought to have —

Ms Pulford interjected.

The PRESIDENT — I am serious about this one. On that basis the member deserves to be heard in silence.

Mr RICH-PHILLIPS — Thank you, President. The point I was making is that the parliamentary appropriation bill can only be introduced to Parliament with an appropriation message from the Governor, which is only issued at the instruction or request of the government. It is a bill which is prepared in Treasury, it has cabinet approval and it is introduced by the Treasurer, so the notion that the bill is independent of government is a fiction.

It is very much a bill which only reflects the views of the government in its introduction and its passage through the house, and of course the fact that it is the appropriation bill and cannot be amended here and can only be amended in the other place — in other words, the house where the government has, by definition, the numbers — means that it is inexorably a bill that reflects the wishes of the government. That is reinforced by what we saw two years ago, when the Council moved a suggested amendment with respect to Council committee funding. That was not supported by the government in the other place in that form, and an exchange of letters was put in place to facilitate Council committee funding. But nonetheless the bill in its final form, when it was passed as an act, reflected the way the government wanted it to be structured.

That raises the question of how the Parliament gets genuine independence from the government and what form that should take. In the last 12 months there has been work undertaken by the Parliament. Some of that work has been undertaken through the parliamentary library, which included the production of a very interesting paper on the independence of Parliament which looked at the way in which funds for parliaments are appropriated in other jurisdictions and contemplated some of those models and some of those options for providing genuine independence of Parliament.

One of the challenges of an alternative model is ensuring appropriate governance. As I outlined with this year's budget, we have $154-odd million appropriated through the parliamentary appropriation bill and we have total parliamentary resources for Parliament of $230-odd million, so it is a very substantial amount of money that is provided for the running of Parliament. What we do not currently have is an appropriate oversight mechanism for that, because there is not a capacity to get up in this place and ask questions of a minister about that expenditure, ask questions of a minister about how the expenditure is being managed or ask questions of a minister about the administration of those funds more generally or the assets that are under the control of the Parliament or other extremities of the Parliament. So the ordinary accountability mechanisms we have for funds appropriated under the general appropriation bill — for example, through ministers in this house — are not available on that same day-to-day basis in respect of the parliamentary appropriation bill.

One of the key areas that would need to be considered in establishing or providing an alternative model for the appropriation of funds to the Parliament, and one of the models that is canvassed in the parliamentary library's paper on the independence of Parliament, is the establishment of a parliamentary corporate body to oversee Parliament. In my view one of the key things that would be required if such a model was to be contemplated, and I think it is a matter that the government in the next Parliament is going to have to contemplate, is what type of oversight you provide to a parliamentary corporate body if that is the model that is chosen, because there does need to be that day-to-day accountability that we bring for funds appropriated to the government under the general appropriation — the accountability that will take place in this chamber, the accountability that will take place in the other chamber — which does not currently exist for the parliamentary appropriation.

In looking at independence, in my view that cannot be done in isolation. It must be looked at in terms of governance as well. What is the governance structure that sits over those parliamentary funds, whether it is a board or a similar structure, and how is that held to account on a day-to-day basis in the Parliament? Because it is a considerable sum of funds that is vested in the Parliament. We have seen obviously big asset projects undertaken such as the construction of the new building at the back of the parliamentary precinct for accommodation, but there is also the oversight of 128 electorate offices and the staffing of those offices, which runs into the many hundreds of people. It is a big enterprise, it is a complex enterprise and it is an enterprise that should be transparent in its use of the $230-odd million that the total parliamentary authority accounts for.

We recognise the challenges of the independence of funding for Parliament and the need for a genuinely independent structure, which does not exist to date, but in looking at how we could provide a genuinely independent structure we also need to give priority consideration to what is the governance structure that would sit on top of that independent structure. The governance structure for the Department of Parliamentary Services is probably the highest priority given it is the largest expenditure area, more so than the individual chamber departments which tend to have fairly direct oversight from their respective presiding officers. But the administration, the back-of-house activities, undertaken by Parliamentary Services is an area where governance would need to be considered very carefully before any model of further independence was created.

Indeed in saying that I acknowledge that the current model is not optimal because it does not provide the oversight that is required. While it is technically a government bill — signed off by the cabinet, signed off by the government — there is actually then no government oversight once those funds are in the hands of the Parliament. So in many respects it sits as almost a vacuum: the government ticks off on the funding and then it is in third-party hands. If we are to go down the path of full independence and genuine independence from government, we do actually need to put those governance structures in place so we do not have that gap with respect to Parliament.

The coalition obviously is not going to oppose the appropriation for Parliament bill. We do welcome the fact that Legislative Council funding for committees has been clarified in this year's budget. But I do note that while there is interest around the Parliament with moving to more independent structures, much work needs to be done around the governance of those structures before we could contemplate moving to further independence of the appropriation structure.
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