Legislative Assembly for the ACT: 2021 Week 04 Hansard (Thursday, 22 April 2021) . . Page.. 1124 ..
It is not a slush fund, I can assure Mr Cain. In its history, it has not been drawn upon. It is a reserve that allows agencies with multiyear budget allocations for capital works—many agencies have large projects that extend over multiple years—to draw on future funding that has been appropriated. It is not to expand the pool of funding but to bring forward funding into the current budget year if capital expenditure exceeds that allocation for that year. You bring it forward and then you subtract it from the future year. It is not net additional spending; it is simply around when, in a project, money is required to be drawn down.
For example, Mr Cain—through you, Madam Speaker—if a project is delivered faster than scheduled, a directorate can access its future year funding, already approved and appropriated by this place, through the reserve to maintain the pace of progress on a project whilst staying within the overall project cost envelope.
The amount available in this reserve—whole of government, in a capital works program that is approaching $1 billion annually and $4 billion over the forward estimates period—is $150 million. It is a small percentage of the territory’s total capital expenditure. I regret to say that since its establishment in 2019, no agency has drawn on the capital works reserve; but the mechanism remains available to help accelerate the delivery of a program.
There is an incredible amount of accountability and transparency over the use of funds from the reserve. This is governed in the Financial Management Act 1996 as part of the amendments that I brought to establish the fund that we debated. We had all these discussions; it is on the Hansard. It was only in the last Assembly.
The power to authorise payments from the reserve is vested in the Treasurer under section 18E. The Treasurer must notify the Assembly of details on payments from the reserve in the quarterly financial statements that are required under section 18G and section 26 of the FMA.
The territory’s financial operations in a year are reported in the annual financial statements that are prepared by the Under Treasurer and then audited by the Auditor-General. Both the annual financial statement and the Auditor-General’s opinion on the statement are presented by the Treasurer to the Assembly in accordance with sections 22 to 25 of the FMA.
So there is a rigorous amount of transparency associated with the use of the reserve. I have not yet had to advise the Assembly of use of it, because it has not yet been drawn upon; but I believe the public policy principle and the reason it is there are very sound. We would not want an infrastructure program or project delayed because it was ahead of schedule. That would send a really bad signal, I would argue, to our directorates delivering public works.
That is why the reserve is there. If and when it is called upon, it is reported on. It is not a slush fund. It does not take money away from other projects. It simply allows money to be brought forward from one fiscal year into the current fiscal year. Then any money that is brought forward is subtracted from the money for the future fiscal year. The total project cost remains the same.