The Rudd Government continues to make significant progress in increasing governmental transparency and accountability.
Yesterday, Finance Minister Lindsay Tanner released the Government’s response to the report by former Democrats senator Andrew Murray on improving the transparency and usability of budget papers. The cheerily-named “Operation Sunlight” has been a Tanner project for several years, and he appointed Murray in March to review ways in which the Budget papers and the appropriations process could be improved.
None of it is exactly enthralling stuff and it got minimal media attention — Laura Tingle covered it in the AFR and other papers ran an AAP item. But it will lead to significant changes in the way Governments fund their programs and start fixing the pre-election joke that is the costings process.
The biggest change will be to the Outcomes-outputs through which Governments appropriate and spend funding. The Howard Government shifted to Outcomes at the start of the decade as a way of moving the focus of programs from inputs to actual results. But as so often happened under the Coalition, the process was corrupted, and Outcomes started to become — like the names of Bills — small pieces of government propaganda, or they became so meaningless as to authorise pretty much anything. The most egregious, and famous, was in the Department of Workplace Relations, where half of the Department’s budget was allocated to be spent under the Outcome “Higher pay, higher productivity”.
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At least that was nicely ironic, given the Howard Government’s IR agenda was lower pay, higher productivity.
This was the Outcome from which the Government drew funding for its pre-Workchoices advertising campaign in 2005, despite Workchoices not being mentioned — and in fact not even thought up — when the funding was appropriated. When Greg Combet and Nicola Roxon took High Court action to stop it, the Court ruled that due to the wording of the standard Appropriation Bill, the Government could spend money virtually any way it wished (Crikey discussed this problem back in April).
Under Tanner, the Government is now working through every single Outcome in every agency to make them more specific and transparent. Tanner has promised this will be in place for the next Budget, although the sheer amount of work required in agreeing changes to every single Outcome in the Budget between Ministers makes that a little unlikely. The Government will also strengthen reporting requirements so that Budgets contain targets for all programs. This is supposed to have happened already, but bureaucrats are intensely averse to providing any targets that could be used to make their Minister look bad if they are not met, and it’s hard to see that changing.
The Government has also committed to “review” the distinction between the two forms of public service expenditure, administered and departmental, that was at the heart of the Combet-Roxon case, although a commitment to fix the wording of the standard Appropriation Bill to remove that problem would have been better.
As I said, not exactly enthralling stuff — but it goes to the core of how governments move money around.
Some of the speculation in recent months about the impact of the financial crisis on Government revenue will also be addressed by a new requirement that Treasury and Finance announce material changes to revenue and expenditure on their websites, with fiscal updates every three months. Tanner also wants to impose greater rigour on tax expenditures. These blew out, along with spending, in the last years of the Howard Government as the Coalition doled out tax breaks to politically-preferred targets. Tanner wants to establish a strict process of review of new tax breaks to prevent them becoming permanent, and to link them to specific Budget programs so that there is greater transparency in their impact.
There’s a host of other measures – more frequent inter-generational reports, modelling of programs likely to be affected by demographic changes, an end to the hiding of blowouts and policy failures under the guise of “parameter variations”. The Commonwealth will also abandon its dalliance with depreciation funding, introduced with accrual accounting a decade ago. The Howard Government abandoned the “Capital Use Charge” — an almost inexplicably absurd construct that charged agencies for the amount of capital they held, but also funded them for that charge, though in such a manner as to encourage disposal of assets — a couple of years ago, and now the Government will go all the way and end depreciation funding altogether from 2010, requiring agencies to seeking funding for major capital investment from the Government.
Most significantly, Tanner has also moved to reform the Charter of Budget Honesty to enable Oppositions to have programs costed up to twelve months before an election, instead of during the election campaign. As it stands, the Charter of Budget Honesty is heavily biased against Oppositions, who can only get their proposals costed in the heat of an election campaign, while the Government has its full term in office to develop and cost proposals. It’s a mug’s game that Mark Latham refused to play in 2004 by not submitting anything for costing, and which Rudd and Tanner avoided last year by having one of the big accounting companies cost their commitments first before submitting them to Finance.
If Tanner was really seriously about having a fair process he’d allow Oppositions to have policies costed by Finance without public release up until the election campaign, though that might be look a lot like giving a sucker an even break. Moreover, Oppositions might worry that the Finance Minister might somehow get to hear of what they’ve asked to be costed.
Tanner’s commitments are the sort of reforms that young governments make, when the next election is still off in the distance and political imperatives can be temporarily ignored in favour of improving governance. The implementation of a number of them will depend on the goodwill and ability of Ministers to embrace accountability as much as Tanner has. It’s easy to do it when you’ve only been in office a short while. Once you can be judged on your performance, there might be less enthusiasm for Tanner’s new world of fiscal transparency.