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Legislative Assembly for the ACT: 1999 Week 7 Hansard (30 June) . . Page.. 1873 ..
MR RUGENDYKE (continuing):
So here we have the appropriated money used up and a further $21m worth of work under way. The alarm bells were ringing, Mr Speaker. The Government was obviously optimistic of acquiring the private sector funding and there was an election around the corner, so obviously the Government was sensitive about any negative news about the Bruce Stadium redevelopment being reported at this time.
The question has to be asked: If the project was out of cash at this point, why were moves not being instigated to establish a capital injection for Bruce Stadium? The Government banked heavily on getting the private sector finance. Let me point out at this stage that there has been no mention of investment, and no mention of section 38 of the Financial Management Act. Section 38(2) confers discretion on the Government to proceed with "prescribed investments" without appropriation from the legislature. I am of the view that this provision was surely not intended to authorise an investment of $9.7m in circumstances where the Government had consistently stated that the limit upon the expenditure of public money was $12.3m. The Government's conduct, even if lawful, had the potential to mislead.
The precedent needs to be established that the discretion conferred upon the executive government to invest without appropriation should be exercised in a way which respects the role of the legislature in ensuring that the executive government remains accountable. The Government, by putting all its efforts into acquiring private sector finance, was not consistent with the responsible budget approach in these situations. It is certainly odd, according to accountancy advice I have received, that the Government did not seek to create a capital injection.
It is even more curious that in December 1997, the same month that the Bruce funds were exhausted, an amendment to the Government's Financial Management Act was passed by the Assembly. On 2 December 1997 the Bill was passed with a clause specifically relating to capital injections. The Chief Minister's own presentation speech for this Bill said:
While some capital injections are used for approved purposes, other capital injections are in the form of working capital advances or "loans". Where capital injections are in the second form, budget papers will clearly differentiate between these purposes and indicate the intent of the appropriation. Where the amount is repayable, the budget papers will indicate the period and terms of repayment.
This amendment, Mr Speaker, was freshly passed, and you would think still fresh in the Government's mind. The Treasurer knew it was there. For a government which claims to set the standard for prudent financial management, would that not have been a prudent option - to disclose a capital injection, rather than rely on the hope that external finance would materialise?
When you turn to page 422 of Budget Paper No. 4 of 1999, it outlines procedures for capital injections. The loan is provided by the Central Financing Unit, is supported by an appropriation and meets the disclosure requirements of the Financial Management Act. In my view, the $9.7m loan fits this section perfectly. Loans for projects such as the Kingston Foreshore Authority, the Gungahlin Development Authority, and the Tidbinbilla Visitor Centre are listed in this way in the current budget papers.
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