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Legislative
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| Mike Elliott Leader Australian Democrats Member of the Legislative Council |
Parliament Index |
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Legislative
Council |
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| Mike Elliott Leader Australian Democrats Member of the Legislative Council |
Parliament Index |
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AUDITOR-GENERAL'S REPORT
The Hon. M.J. ELLIOTT: I seek an explanation from the Treasurer about major projects and due diligence in relation to major projects. I refer to A.3-1O8, the summary of conclusions, the last two paragraphs of which state:
Previous reports have commented on inadequacies in relation to major project and contract management. This year's specific commentary indicates that more diligence is required of public sector agencies in this substantive area of government operations to ensure value for money and accountability obligations associated with project developments are achieved.
As communicated last year, agencies have been provided with a comprehensive policy guidance framework to facilitate effective planning and management of projects. It is essential that key personnel within government agencies apply the detailed requirements of that policy framework.
I now refer to A.3-103, which refers to one specific project under the heading `Audit Review 1998-99' and which states:
During 1998-99, audit reviewed certain aspects of the contractual and administrative arrangements in relation to the Holdfast Shores development project. The review involved obtaining an understanding of the current status of the project and determination of compliance with the provisions of the Holdfast Shores development agreement.
The review identified that there was scope for improvement with respect to a number of administrative and reporting processes mandated by the development agreement. This included aspects such as monthly reporting on consortium management fees and expenses, establishment of accounting policies, improved maintenance of project committee minutes and papers and reporting on project and precinct overheads.
I want to read into the record two further sentences from that reference prior to my asking questions. The paragraph states:
The development agreement provides for the consortium to progressively implement the master plan within specified time frames and under specified profit sharing arrangement with the government. The total approximate cost of the project is $180 million.
Linked to this, on 17 February this year, I asked the Treasurer several questions about the public cost of the Holdfast Shores and West Beach developments, to which to this day I have received no reply. My questions related specifically to the cost of the state government's role in the developments, the value of public land made available for the developments and the value of any other contributions made by the state government to the development. At that time I also asked who was responsible for the cost of ongoing liabilities associated with the developments. Certainly, I was not aware at the time of asking those questions that there was supposed to be a profit sharing arrangement, as alluded to in the Auditor-General's Report.
In fact, that is the first time of which I am aware that that has been made public knowledge, and it does raise some questions about conflict of interest with the government's being a developer, sharing in the profit in addition to being the planning agent, particularly as it was declared a major project and did not go through the same processes that many other projects might have to go through.
The Hon. T.G. Cameron: What share has it got?
The Hon. M.J. ELLIOTT: One question we will be asking the Treasurer is: what are the profit sharing arrangements? First, will the Treasurer provide details in terms of costs and so on in relation to the questions I asked in February; and, secondly, and as importantly, will the government also put on the record in this place what is being done about the concerns of the Auditor-General? Clearly, according to his previous report, the Auditor-General felt that they were not being addressed. Also, could the Treasurer tell this place why this contract, which is essentially an exclusive contract-no other company can be in it, so commercial in confidence does not seem to be appropriate-and the reporting processes should not be put on the public record so that we do have full accountability in terms of this and similar projects?
The Hon. R.I. LUCAS: If the government has not provided a reply to the honourable member's questions from February, I apologise on behalf of the government. The questions would have been referred to the appropriate minister, whom I assume is the Minister for Government Enterprises. I will have my officers-
The Hon. M.J. Elliott: That explains it. He is the slowest minister to answer in this place.
The Hon. R.I. LUCAS: I am not sure; I am just saying that I assume that that is the case. I will have my officers take it up with the appropriate minister and see whether we can expedite a reply from February. In relation to the honourable member's references to profit sharing arrangements, again, I do not have the detail with me in relation to that. I would say that the Auditor-General is using the term `profit sharing' advisedly. When one sees the answer to the honourable member's first question in terms of cost to the government, I cannot imagine that the profit sharing will be profit in the truest sense of the word: there will be costs on one side and revenue coming in on the other, which is probably being described as profit sharing within the agreement. Nevertheless, costs will be separately incurred by the government in relation to, I presume, aspects of the development.
In relation to the Auditor-General's references at A.3-108, again, the government's general view would be that they are entirely reasonable comments by the Auditor-General. The government might want to take issue with some aspects, but what the Auditor-General is doing, as I read it, is cautioning governments-all governments, but this present government-that significant public funds are being applied to project developments which do need significant accountability and which also demand high standards of management. Again, the government would not be disagreeing with that.
As I have said previously, no government is ever perfect. Those governments that delude themselves that they are do so at their own cost. Governments need to acknowledge that, in relation to particular issues and projects, there may well be matters on which they ought to admit that they could have done things better and will endeavour to do so in the future. The Auditor-General's comments in relation to inadequacies in some projects are a salutary lesson to the government. As I have said on a number of occasions, we value the contribution from the Auditor-General. While we do not always agree with it, we nevertheless value his input and I am sure that, more often than not, we would find common ground with the Auditor-General. There is certainly common ground on the need for proper accountability and, if there are inadequacies in major project management, we must endeavour to ensure that they are recognised and that we do not repeat the mistake in the next project.
In our six years in government I have seen the evolution of our own decision making. We now make rigorous use of the prudential management group, which was established as a result of the criticisms in the Auditor-General's Report about project management. That prudential management group is in place to ensure that the financial and legal processes are handled and that the government processes with respect to Premier and Cabinet are ticked off by a senior prudential management group before the government proceeds. That committee resulted in recognition of some of the criticisms of inadequacies in the past and the recognition that we need to improve processes, and that is part of an overall series of processes that the government has instituted to try to ensure more efficient management of major projects in South Australia. I will refer other aspects of the honourable member's question about Holdfast Shores to the appropriate minister and bring back a reply.
