SECTION ONE

Special Reviews

Government Campaign Advertising

Parliamentary Control over Public Funds

Hon Pam Allen Travel Expenditure

Expenditure on Tax Advice

Ministerial Office Audits

Public Sector vs Private Sector Audits

Government Campaign Advertising

Because of the then impending 1999 General Elections, the Office paid particular attention to Government campaign advertising from around the last quarter of 1998.

Five advertising campaigns were identified as requiring audit, either because of complaints from members of the NSW Parliament or from the public or because the content of the advertising appeared to be supportive of the Government’s election ambitions.

The five campaigns considered were: The NSW Board of Studies’ advertisements concerning the revised approach to the Higher School Certificate; the Roads and Traffic Authority’s advertisements on use of the upgraded Pacific Highway during the summer holiday period; the State Rail Authority’s ‘we’ll get you there’ advertisements; the State Forests’ urban advertisements for hardwood plantation joint ventures; the Government’s advertisements for State Forest agreements.

The results to date of the reviews of these advertisements follow.

In the summer holidays in 1998-99 the Roads and Traffic Authority (RTA) conducted a television, radio and press campaign about modifications which had occurred to the Pacific Highway.

RTA saw the campaign as:

• highlighting locations where major improvements had been achieved
• increasing awareness of new sections involving major changes in traffic conditions
• encouraging patience in drivers
• reinforcing overall road safety.

The campaign was scheduled to run from mid-December 1998 until 24 January 1999. It was managed by one of the four agencies on RTA’s pre-selected panel.

The campaign budget was around $0.6m and it was approved by the Cabinet Sub-committee on Advertising in October 1998.

The campaign was selected for review by The Audit Office because the advertising could have been interpreted as a commendation for the Government’s program to upgrade the Pacific Highway. That highway influences a number of electorates important to the Government’s election aspirations.

On balance the campaign was not considered to be political. A similar campaign had been conducted for the 1997-98 summer. The advertising gave credit to the Commonwealth Government which also funds the upgrading of the Pacific Highway. The campaign appears to have been developed without close political oversight.

However, The Audit Office questioned whether RTA’s campaign could effectively address the road safety purposes for which it was designed and approved. RTA has not assessed the usefulness of the campaign and cannot conclude that it and its 1997-98 version were effective.

During February and March 1999, the State Rail Authority (SRA) continued an advertising campaign centred on the theme ‘we’ll get you there’.

The campaign was selected for review because one of its five spot advertisements discussed the enhanced security of CityRail transport, following the placement of security guards on CityRail’s night trains. This same message – enhanced security for passengers on night trains – was featured in advertisements of the Australian Labor Party (ALP) in the lead-up to the March 1999 State elections. It was reported to The Audit Office that the CityRail and ALP advertisements were juxtaposed on one or more occasions.

On 7 December 1998, the government ordered that ‘all campaign advertising by State Government agencies will cease for a period of two months (ie from end January) from this embargo prior to a State election’. Exemptions allowed from this embargo included advertising ‘…having clear commercial considerations (for example, transport providers …)’. The conduct of the CityRail advertisements in February and March 1999 was considered by the relevant Cabinet Sub-committee on 23 February 1999, a fortnight or so before the writs were issued for the State elections. The campaign had previously been approved by the Minister for Public Works and Services.

The CityRail advertising campaign cost around $0.4 million. The advertising firm was selected by SRA by tender in 1995 and SRA’s Chief Executive approved the advertisements in June 1998. SRA advises that the details of timing of display is a matter for the advertising firm and the Government’s contracted media placement agency.

SRA says it chose to repeat the advertising in February and March 1999 because of, inter alia, the opening of the Olympic Stadium and the early Easter Show.

There appears to be agreement that the question of security on night trains is a sensitive issue. SRA see it as at least having commercial implications; the Government and the ALP saw it as at least having political implications.

SRA’s interest in attracting train passengers for major events, and keeping them as regular users, is sufficient to justify its approval of the campaign. However, it must have some concern that the theme of some of its advertisements was taken up by a political party in the approach to the general elections. CityRail’s advertisements would presumably have reinforced the message of the ALP advertisements (and vice versa).

Although no criticism of SRA’s advertising decisions appears justified on this occasion, the SRA executive and board might care, when considering the timing of advertising campaigns, to contemplate the risks they run (of being enjoined in a political debate during a State election) in the next and subsequent elections.

In November 1998, State Forests commenced a series of television and press advertisements for its plantation annuities campaign.

State Forests saw the campaign as being designed to:

• stimulate interest in planted forests as a viable investment opportunity
• encourage landowners to make land available for plantations
• help to brand State Forests and increase community awareness of initiatives in relation to greenhouse mitigation and planted forests.

The advertising campaign consisted of two television advertisements, namely ‘the Deal’, which ran on regional television and ‘the City’, which ran on three Sydney commercial stations and NSW SBS, as well as advertisements in regional press. State Forests advised that no metropolitan press advertising was undertaken, because this was considered not to be cost-effective.

The campaign was managed by an advertising agency which was selected by a competitive tender process. The campaign commenced in the week beginning 8 November 1998 and concluded in early December 1998.

Total media cost of the campaign, approved by the Chief Executive of State Forests, was $447,237. This was comprised of ‘the Deal’, $340,644; ‘the City’, $46,151; and press advertisements, $60,442.

The State Forests’ campaign was selected for review because ‘the City’ television advertisement could be viewed as commending State Forests and the Government for its increased involvement in plantations that reduce greenhouse gases. (The non-metropolitan advertisements were seen as commercial and as fitting more comfortably into State Forests’ goals.)

State Forests have utilised a research company since 1996 to track community attitudes towards forestry and State Forests. We understand that the success of ‘the City’ advertisement, in conjunction with other initiatives aimed at improving the perception of State Forests, will be assessed as part of this process.

The Audit Office is of the view that governments may lawfully inform the public of their activities, if the motive for so doing is proper. Nevertheless, such advertisements, designed to cause approbation for the Government, run the risk of being viewed as ‘political’ even when the motivation is proper. On this occasion, the small absolute and relative amounts expended on metropolitan advertisements is unlikely to support a view that they were politically motivated.

The Department of Urban Affairs and Planning was responsible for airing (in October/November 1998) a multi-media advertising campaign in support of the Eden Forest Agreement. The campaign was aired in metropolitan Sydney, Newcastle, Wollongong and the New South Wales south coast.

The purpose of the campaign was to inform the community of the benefits of Regional Forests Agreements (the Eden Agreement being the first), in particular:

• protection of environmental values
• job creation
• greater job security in the region’s timber industry
• sustainable forest management.

The Department received approval for the campaign on 23 July 1998 from the Cabinet Sub-committee on Government Advertising.

The budget of the Resource and Conservation Assessment Council, a unit within the Urban Affairs and Planning portfolio, met the campaign costs of approximately $1m. Expressions of interest were called from interested parties to provide the campaign’s creative direction. The firm was selected by a tender committee which included a number of ministerial staff. Media bookings were arranged by the Government’s master media agency.

Viewers could interpret the campaign as one eliciting public approval in the lead up to the general election in March 1999, for a Government program on forestry management. Accordingly, The Audit Office reviewed the expenditure.

The Audit Office has received documentation from the Department of Urban Affairs and Planning and the Cabinet Office, including Cabinet minutes.

Staff from certain Ministers’ offices participated in the process of planning and overseeing the campaign. We believe these Ministers’ offices received and are responsible for certain documents and Ministerial staff might have made records on these documents and created other documents that would assist The Audit Office in completing this review.

Because of this, the Auditor-General requested to see documentation held by the then Minister for Urban Affairs and Planning, the then Minister for the Environment and the Minister for Forestry. These requested that all documents be received by the Auditor-General within 14 days after the date of request.

Requests for this documentation from the then Minister for Urban Affairs and Planning, the then Minister for the Environment and the Minister for Forestry has not, at the time of writing, resulted in all of these documents being delivered to The Audit Office. A representative from the office of the then Minister for the Environment had advised that some documentation has been located (and forwarded to The Audit Office) but was not yet confident that all documents had been found. A representative of the Minister for Forestry has explained that all of the Minister’s relevant documents should have been under the control of the Department of Urban Affairs and Planning.

It is disappointing that – several weeks after the requests was first made – the Government has been unable to identify the present location of State documents important to allowing an assessment of the legitimacy of public expenditure. The lack of complete documentation precludes The Audit Office from reaching a view on the appropriateness of the campaign.

During 1998, the Office of the Board of Studies (OBOS) conducted a television and press campaign about the proposed changes to the School Certificate (SC) and the Higher School Certificate (HSC).

OBOS saw the campaign as part of a process of informing the community of changes that followed a major review of the HSC undertaken by the Government.

Following a Green Paper prepared by Professor Barry McGaw, further consultations and a White Paper, ‘Securing Their Future’, released by the Government in August 1997, Parliament passed amendments to the Education Act 1990 for changes to the SC and HSC. The changes were proclaimed to commence in May 1998 and January 2000 respectively for the SC and HSC.

OBOS then developed a comprehensive community awareness campaign in respect of the legislative changes with a view to maintaining confidence in the SC and HSC by teachers, parents and the wider community. A major method of achieving this was a media advertising campaign which formed one important segment of a total strategy designed to make community members aware of the changes. The community awareness program is to continue throughout 1999, 2000, 2001 and the start of 2002.

The campaign budget for the media element, involving metropolitan and regional television and metropolitan, regional and ethnic print advertisements, was $579,347. The total budget for community awareness is $1.6m allocated equally between OBOS and the Department of Education and Training (DET).

DET organised the media element of the campaign using its existing period contract for media advertising.

The campaign was selected for review by The Audit Office because the television advertisements could have been seen to induce public approval for the Board of Studies’ decision to modify the HSC. It was not aimed to provide information about those changes (which information the viewer could use to come to a judgement about those changes) and it was not aimed to enable a viewer to make choices required by the HSC process. However, it did invite and provide a range of opportunities for viewers to seek further information upon which such choices could be made.

OBOS advised that the television advertising was only one facet of the community awareness program and that advertising should not be viewed in isolation from the rest of the overall strategy. OBOS provided material which supported the overall strategy and which is to be used right up to and beyond the time the first candidates present for the new HSC in 2001 and beyond.

In light of that advice and the full context of the community awareness program, the campaign was not considered to be political.

In Volume Two of the 1998 Report (at pages 1, 2 and 7 to 10), attention was drawn to instances of major non-compliance with legislation governing the appropriation of Consolidated Fund moneys. This specific issue raises the question whether other Parliamentary controls over NSW public sector finances are adequate.

Parliament has the ultimate accountability for public funds invested in, and held by, the public sector. Does Parliament have sufficient controls to assist it in meeting its duty to oversight the prudent use of taxpayers’ moneys? Recent legislative changes have significantly reduced Parliament’s control over the appropriation of funds to agencies. This continues the tendency to reduce parliamentary oversight over, and to increase the Government’s control, of public moneys.

As a consequence of the above, following is a review of current Parliamentary controls.

In common with other Australian jurisdictions, the Government of NSW is generally precluded from expending Consolidated Fund moneys without the approval of the Parliament.

This is a basic State law – it is also reflected in the State constitution – and it reflects the outcome of the historical tussle between the Crown and the Parliament over use of taxpayers’ moneys.

Up until 30 June 1998, the NSW Parliament appropriated Consolidated Fund moneys to agencies at a program level. This restricted agencies’ Consolidated Fund expenditure to an upper limit specified for each program. The legislation allowed for limited or conditional additional funds, if required, provided certain approvals were obtained from the Governor or Treasurer or Minister.

A change occurred with the 1998-99 Appropriation Bill. Enacted in mid 1998, this Act appropriates funds at a total agency level and not at agency program levels. This change provides greater flexibility to agencies because they can now lawfully expend funds in excess of amounts shown for individual programs in the Budget Papers, up to the appropriation total available to the agency.

This change significantly reduced Parliament’s control over the Consolidated Fund. Although Budget Papers detail at a program level the estimated appropriations of the Consolidated Fund moneys for each program, agencies have total flexibility.

Government initiatives in recent times have been to reduce the focus on financial inputs alone, ie Consolidated Fund appropriations, with a move to a greater focus on outputs and outcomes achieved from financial inputs provided. Achievements are reported through the use of performance information. While controls over inputs have been reduced, as evidenced by the move to appropriate Consolidated Fund moneys at a total agency level, performance measures for the level of outputs and outcomes achieved are still being developed. There are also concerns whether relevant performance indicator information is reported.

The NSW public sector comprises two broad sectors, the general government and public trading enterprises. The State’s annual budget covers the general government sector only. Thus Parliament is unable to directly exercise a budgetary control over the trading enterprise sector.

Actual results at an aggregated general government sector level are required by law to be prepared, audited and presented to Parliament. This financial report is known as the Public Accounts. However, Parliament cannot readily compare these audited results with the budget because the Public Accounts are prepared using an accrual basis of accounting while the budget is prepared on a cash basis using Government Finance Statistics principles. Parliament is therefore unable to compare actual results with the cash based budget. This situation may change following the presentation of the 1998-99 budget on both a cash and accrual basis. Accrual budget figures are now available for inclusion in the Public Accounts.

A highly summarised cash report of actual results for the year is prepared and audited. There is no legislative requirement for it to be prepared, audited and presented to Parliament. It is, however, included with the Public Accounts and is therefore available for Parliament’s review. This report allows a comparison of actual results with the budget but only at a highly summarised level. Its usefulness to Parliament is therefore limited. In any event, there has been no practice for Parliament to examine or debate these reports.

An alternative would be for the budget to be prepared at a total public sector level using the accrual basis of accounting. Actual results currently prepared and audited at the total State sector level (see below) could then include budget estimates for comparison and review purposes.

Although consolidated financial reports for the total NSW public sector have been prepared and audited since 1992-93 there was previously no legislative requirement for their preparation, audit or presentation to Parliament. This shortcoming was removed effective from 1997-98, but there is yet no tradition that Parliament examine or debate these financial reports.

Agencies are required by legislation to present their annual reports each year to the Parliament. These reports include the audited financial statements. Parliament is therefore able to review financial information relating to individual agency operations.

Key performance indicators, where included in annual reports, are not required to be audited. Proposed new legislation is to require performance indicators to be audited as to their accuracy in compilation (and perhaps as to whether they are misleading) but not otherwise as to their relevance. It is not clear what mechanism will be used to review the relevance of performance indicators.

Legislation requires the Auditor-General to report to Parliament on agency operations. This obligation is met by the submission of a three-volume annual report to Parliament. In addition, results of specific performance reviews (special audits) are also presented to Parliament on a regular basis.

The annual report to Parliament is designed as a reference document and thus is not often used to meet members’ accountability needs on the use of public funds. The performance reviews, even though there might be a dozen reported each year, cover not even a small portion of Government activity.

Parliament’s debate of Bills put before it can be one of its strongest controls over the State’s finances. Bills allow for Parliament’s approval before any financial impacts of the proposed new legislation take effect. However, Parliament’s effectiveness is reduced by the dominance of political parties.

In the Legislative Assembly (Lower House) one or other party typically dominates the chamber. Debates can therefore be fruitless because they will follow the party line. One party does not dominate the Legislative Council (Upper House). However, its powers over financial bills are limited because under the Constitution Act it cannot veto many money Bills. The lack of veto power lessens the importance of Legislative Council debate.

The dominance of Government is also reflected in the small number of days that Parliament sits. The Government decides at the beginning of each Parliamentary session how long Parliament will sit. The Legislative Assembly sat for 49 days in 1998 and 43 days in 1997. Studies have found that the increasing volume and complexity of proposed legislation placed before Parliament has not resulted in an increase in the number of sitting days.

The Public Accounts Committee is a committee of the Legislative Assembly of the NSW Parliament. Its functions are to examine the Public Accounts, the accounts of authorities and the Auditor-General’s Reports. It is to report to the Legislative Assembly on any matter connected with those accounts or reports.

The current effectiveness of the Public Accounts Committee is restricted by there being:

• no legislative requirement (or practice) for the Government to respond to recommendations made in Committee reports
• limitations on power to call for persons, papers and records. Its powers are less than those of other parliamentary committees.

The Estimates Committees of the NSW Parliament (in recent years a Committee of the Legislative Council only) has a limited role over the State’s financial operations. The scope of questions that can be asked by members of Estimates Committees when reviewing the Government’s proposed Budget has been narrow and the available time is limited.

From a brief survey by The Audit Office, most Australian jurisdictions have or are moving from cash to an accrual basis for their budgets and appropriations. The move to accrual budgeting has included a reduction in Parliamentary focus on financial inputs which is to be replaced with a greater focus on outputs and outcomes achieved. For most jurisdictions performance indicators, to measure outputs and outcomes, are in the initial development phase and there are relevancy and accuracy concerns.

In NSW, parliamentary controls over financial inputs used by agencies have been reduced without an accompanied increase in objective reporting to Parliament on the outputs or outcomes purchased with these inputs. This shortcoming needs to be addressed to assist Parliament to achieve its accountability responsibilities. Based on New Zealand’s experience this may not be an easy task.

New Zealand is a recognised leader in improving information presented to Parliament. Major improvements were made following legislative changes in the 1980s. Despite continuing evolution since, there still appears to be scope for improvement. The New Zealand Auditor-General said in a 1998 report, ‘Issues concerning the Sovereign Authority of Parliament and the Accountability of Executive Government’, that the New Zealand Parliament currently receives good financial information – especially about the outputs purchased and the financial performance of agencies. However, non-financial performance information could be significantly improved. That Auditor-General also argued that that Parliament should receive better information about the Government’s desired outcomes and the extent to which those outcomes were being achieved.

The NSW Parliament, in considering how it is to acquit its constitutional duties, may be able to benefit from a review of New Zealand’s experiences.

Hon Pam Allan Travel Expenditure

A review into the travel expenses of the then Minister for the Environment (the Hon Pam Allan) for a visit to Lord Howe Island, for six nights commencing 26 November 1998 has been undertaken. The review followed public reports into this and other trips by the then Minister. The review was requested by a Member of Parliament who asked The Audit Office to conduct an investigation into whether the travel expenditures fell within current Government and ministerial guidelines.

The main, advanced purpose of the Lord Howe visit under review was to launch a recovery plan for an endangered Lord Howe Island snail, and to announce the State’s third Marine Park.

Accompanying the Minister on the visit was her partner and child; a ministerial staff member; and the Director-General of the National Parks and Wildlife Service (NPWS) and his wife. Eight media representatives and two NPWS media officers joined the group for the last two days of the visit for the formal announcements of the Snail Recovery Plan and Marine Park, at the cost of NPWS.

The cost of the six-day visit to the sponsor, the NPWS was $19,212, while the Lord Howe Island Board also incurred a cost of $1,375. Costs comprised: four charter planes, $16,965; meals, $1,712; refreshments, $1,216; accommodation for the Director-General, $450; and subsistence allowance for two NPWS media staff, $244. Ms Allan has advised The Audit Office that Ms Allan paid for her and her partner and child’s accommodation and food expenses, totalling some $2,500.

Charter planes were used to fly the Minister’s group and the media to the Island, even though a commercial service operates every day of the week except Fridays. Government guidelines stipulate that charter aircraft can be used to enable special commitments to be met when alternative means of transport are not practicable. No documentation could be found on NPWS files outlining the special commitments which required charter planes to be hired, or that commercial flights were considered. (The then Minister has publicly contended that a commercial flight could not be used because it clashed with an engagement at Parliament House. In addition, Ms Allan has advised that flights to Lord Howe Island are heavily booked in advance, making it impracticable to cater for a large contingent of people at relatively short notice.)

The official itinerary, reproduced by way of an appendix to this report, appears generous in length. Conversely, Ms Allan and the Director-General of the NPWS have advised that the official itinerary did not show the full range of inspections, meetings and discussions that they had while on Lord Howe Island.

If flights for this visit had been by commercial aircraft, the saving to the taxpayer on this account would have been approximately $3,600.

Our review also disclosed that the then Minister chartered an aircraft for all three visits which the Minister had undertaken to the Island since February 1998. This could give rise to the perception that the hiring of a charter plane by the Minister on flights to Lord Howe Island is done as a matter of course, rather than after due consideration has been given to the availability of cheaper commercial aircraft.

On the assumption that some of the events included within the attached itinerary could appropriately be classified as official functions, then the travel of the Minister’s partner with the Minister would fall within current guidelines. The Director-General paid for any additional costs arising from the visit by his spouse.

No documentation was found on NPWS files to evidence that more than one quote was obtained for any of the charter planes used on this visit. Ministerial air charter guidelines require at least two quotes to be obtained, with the lesser quotation being used.

Although NPWS files bore no evidence that its own aircraft was considered for the trip prior to the chartering of a flight, we were able to locate documentation that suggests the plane was being serviced at the time.

Included in the total cost of meals and refreshments on the trip is the cost of a dinner function for the media at Capella Lodge South. This function cost $1,188 ($646 for meals, $542 for refreshments) at an average of around $59 per head.

There are no specific guidelines which address the appropriateness or otherwise of agencies expending funds to facilitate media coverage of an announcement such as the new Marine Park and the Snail Recovery Plan. Given the absence of guidance, it must be assumed that the Government does not envisage that public funds would be expended to transporting members of the media. To consider otherwise would allow departments considerable flexibility to approve payments which seem not to be for a public purpose. On this trip the media charter flights cost the NPWS $7,445 while the Media function (as noted above) cost $1,188. It is our understanding that journalists who accompany the Prime Minister on overseas trips are required to contribute to the cost of air travel on a commercial basis, notwithstanding any low marginal costs. The Audit Office is of the view that the issuing of specific guidelines on this area would be helpful to all agencies.

While only minor amounts were involved ($244 in total), two NPWS Media Unit staff claimed subsistence allowance (an allowance to cover accommodation and meals when travelling) for this visit when they had in fact been provided with lunches and dinner. It would appear that these officers were not entitled to this allowance, and should have had their actual costs recouped instead.

Itinerary for Ministerial visit to Lord Howe Island

6:00 pm (approx)      Arrive Lord Howe Island - met by Manager and Secretary of Lord Howe Island Board. Members of                                         party conducted to accommodation.

10:00 am                       Join Woodhen survey team for familiarisation with census/banding techniques.

                                      Lunch

3:00 pm                       Meet with local Board members.

                                      Remainder of day and evening free.

Day free

6:00 pm                      Pre-dinner drinks at Government House (approx duration one hour) with representatives of various                                        Island organisations.

                                    Remainder of evening free.

Day free

6:00 pm                     Barbeque at Ned’s Beach (location dependant on weather) with local Board members, senior                                     staff and families.

11:15 am                     I nspect Windy Point erosion control works (media in attendance).

12:30 pm                      Lunch with media at Ned’s Beach.

2:30 pm                     Visit typical site of known endangered land snails population (Ned’s Beach). Announce Recovery Plan                                         (media in attendance).

3:00 pm                     Boat tour of Marine Park waters (media in attendance, duration 1 1/2-2 hours).

7:00 pm                     Dinner with media- Capella Lodge South.

9:30 am                     Marine Park announcement (Signal Point, weather permitting, media in attendance) followed by                                        morning tea at Community Hall (Island residents invited).

Lunch

2:00 pm                          Inspect new Middle Beach access track works and Big Muttonbird Ground Landcare project.

                                     Remainder of day & evening free

8:30 am                     Depart Lord Howe Island

A complaint arose during the course of the election when the Treasurer released advice about the taxation implications of the Opposition’s proposed sale of the State’s electricity bodies. The Opposition had proposed during the election campaign that certain electricity account holders would receive either $1,100 of shares or $1,000 in cash on the sale of those bodies.

According to the Treasury, on or around 15 February 1999, the Treasurer’s Office inquired about the taxation status – under Commonwealth taxation laws – of the Opposition’s proposed grants. The request was satisfied by a four-paragraph letter of 15 February 1999 from a large accounting firm for which advice it charged $900.

The advice was passed to the Treasurer when it was received by Treasury, and the Treasurer caused the advice to be reported in the media shortly thereafter. The advice thus formed part of the political debate on the Opposition’s privatisation proposal.

The question asked of The Audit Office was whether the expenditure for the taxation advice sought by the Treasurer’s Office was properly met from taxpayers’ moneys.

Similar questions have been raised before. Crown Solicitor’s advice on this matter is recorded from page 401 of Volume Two of the 1996 Report to Parliament.

In essence, the advice suggests that expenditure which is within the power of a government can be unlawful, if the expenditure was made for an illegitimate purpose.

It is thus not sufficient to advise, as the Treasury on this occasion has done in defending the legitimacy of its expenditure, that the information ‘requested by the Treasurer’s Office falls within the normal range of advice provided by Treasury’. What is also required, to draw from the Crown Solicitor’s advice, is to determine whether or not ‘the substantial purpose was the advancement of the electoral prospects of the party in power’. Such a determination is especially relevant when the expenditure concerns a politically live matter.

Motivation is not plainly visible to outsiders. But one can draw from inferences surrounding the expenditure some view of its cause. In this case, it appears strongly that the expenditure was predominantly for a political purpose. The request arose in the context of the State general elections when the Opposition had announced a policy which sharply differentiated itself from the Government. The advice sought was particular to that Opposition policy. The advice was useful to the Government’s political purposes and formed part of the political debate. It is difficult to consider why else the Government wanted such urgently prepared and promptly conveyed advice.

Moreover, it is doubtful that a Government would have been able to rely on that advice for its own purposes. Even if it happens to be correct, a four-paragraph advice without any citation of the applicable law and without any reference to precedential practice or court cases is not inherently reliable. (It was countered quickly, I understand, by contrary advice to the Opposition from a senior legal practitioner.)

Finally, it is instructive to ask whether the Government would have released the advice into the public arena, if the advice had not been politically helpful.

In light of the above, the expenditure of public moneys was, in my view, predominantly for a political purpose and the expenditure itself was thus likely to have been unlawful. The invoice for the advice would have been better met from the private funds of the political party in power.

Although the amount of public moneys in question – $900 – is not large, this example does allow those who have the duty to authorise commitments or expenditure to see how expenditure can be unlawful, even if it relates to matters which fall within the scope of Government activity.

Treasury disagrees with this assessment and comments that it is difficult for public servants to refuse to provide advice unless it is manifestly apparent that to do so would be improper. The full response is provided below:

The Auditor-General has expressed a view that the use of public monies for advice in this matter (expenditure on taxation) by Treasury was predominantly for a political purpose and the expenditure itself was thus likely to have been unlawful.

The Auditor-General has come to a conclusion that the advice was for a party political matter after making an assessment about the motivation behind the request, ie in the context of an election etc.

The Auditor-General also refers to legal advice provided by the Crown Solicitor, dated 4 April 1996 on a completely separate matter, to support his view that the expenditure was illegal.

Treasury, like the Audit Office, has no special legal expertise in understanding or interpreting the law. Nevertheless, it is very difficult to see how the Crown Solicitor’s advising of 4 April 1996, gives any support to the Auditor-General’s conclusions in this matter. Indeed the contrary appears to be the case.

In his advising, the Crown Solicitor states:

"It is recognised that Ministers are at the same time members of political parties and that this is a feature of our political system. Furthermore, a particular activity of a Minister does not cease to be a legitimate activity within his or her capacity as a Minister for the reason that it may also result in some benefit for the Ministers political party".

In the normal course of carrying out their office, Ministers seek advice from their departments. This advice should be consistent with the normal duties required to be performed by the officer.

There are no doubt some circumstances where it would be improper for an officer to provide advice. For example, if the Government had sought advice on the confidential dealings between Treasury and the Opposition on the costings of the Oppositions election commitments. But other than in such exceptional circumstances, Departments have an obligation to provide advice to their Ministers that is both objective and timely.

In this matter, the expenditure of money by Treasury had only one purpose, that being to provide advice sought by the Treasurer’s office, which was within the normal range of advice provided by Treasury, and to which the Treasurer and his office was entitled.

It is unreasonable to expect a public servant to refuse to provide advice in circumstances where it is not manifestly apparent that it is improper to do so.

It is Treasury’s view that the use of departmental advice by a Minister in public and hence political debate, or to answer a question from the media (as was the case in this matter) is not for an "illegitimate purpose" and hence not an improper or inappropriate expenditure of public funds.

A further complaint was received concerning the issue by the then Minister for Mineral Resources and Minister for Fisheries of a one-page ‘Open Letter to all Freshwater Anglers’, as it was titled, dated 23 March 1999.

The letter discussed the policies of the ‘Coalition’ and compares these with the policies of ‘a Carr Labor Government’. The letter foresaw ‘a return to the dark ages’ under ‘a Coalition government’ and encourages all to support the continuation of the current fishing licence arrangements.

The Government advises that the letter was sent by the Minister by facsimile to addressees who issue freshwater licences on behalf of the Government. I understand that there are about 650 such agents. The cost of the despatch would have been met by the Minister’s host agency, the Department of Mineral Resources.

The issue of the letter appears from its timing and content and nature to be wholly or primarily aimed to achieve political purposes by seeking support for a policy of one political party compared to that of another. On this basis, it would not be lawful in my view for the Department to meet costs which can be identified with its issue.

One of the major findings of a previous audit of ministerial offices was that documentation supporting travelling claims was often inadequate to ensure authenticity, and that host agencies were incapable of properly scrutinising claims and averse to seeking the necessary additional information. The Office stated its intention to review this issue at a later date to determine whether improvements followed publication of the report. That report (Ministerial and Ministerial Office Travel) was included in Volume Three of the 1996 Report to Parliament (pages 19-37).

In early March 1999, The Audit Office advised all Ministers and Chief Executives of host agencies that there would be an audit of the adequacy of documentation supporting host agency payments made at ministerial office request. The audits are to consider all payments from 1 October 1998 to 30 June 1999, other than payroll, which relate to ministerial office activities and requests, including any which may be charged other than to the Minister’s office budget allocation. Their purpose is to determine whether host agency authorising and certifying officers are capable of examining, and properly examine, claims in accordance with the requirements of the Public Finance and Audit Act 1983.

The planned approach, as discussed with the Premier’s Department, is to seek host agency advice of its processing and control procedures as they relate to meeting audit criteria for adequate controls. A sample of transactions across the range of payments will also be subjected to testing. The Office will advise the outcome of the audits to respective Ministers and agency heads. Composite reporting on the audits is expected to be in Volume Two of this report.

The audit timing and notification were chosen because the Office saw the period immediately before a general election as presenting the highest risk that inappropriate claims might arise and that competing demands might reduce administrative oversight and weaken financial control. It also allowed officers notice that there would be an audit of transactions with a distinct probability of reporting to Parliament.

At the date of preparation of this report (22 April), audits were at an advanced scheduling stage, with fieldwork yet to commence. All 20 original host agencies involved have positively responded to requests to nominate appropriate contact officers and facilitate access to relevant records.

Because Cabinet and portfolio changes following the March 1999 election will affect financial arrangements with host agencies, audit plans will be amended to embrace the records of all ministerial offices operative within the period.

In Australia, public sector audits differ significantly from those conducted by private sector audit firms. These differences primarily stem from the Auditor-General’s mandate and the characteristics of the public sector entities that are audited.

The role of an Auditor-General also helps to distinguish the way audits are done in the public sector from the ways used in the private sector. Auditors-General are the primary providers of independent assurance that government activities are carried out in a manner consistent with Parliament’s intentions. By providing independent assurance, the Auditor-General enhances the accountability of the public sector.

As is demonstrated in the following summary, private sector auditors do not provide the same service offered by public sector auditors. Other distinguishing features include the public sector auditor’s independence and specialised knowledge of the public sector issues.

CONCLUSION

The Auditor-General is the external auditor to the public sector with primary accountability to Parliament in a manner consistent with the Office’s independence. The Auditor-General’s responsibilities are specified in legislation and recognised as matters involving public accountability. Public sector auditors carry out only audit activities. They develop a detailed knowledge of legislation, the operations of Government and government entities which strengthens the service provided.

By outlining the differences between public and private sector audits, clients and stakeholders can better appreciate the significance of the work performed by The Audit Office.

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