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Legislative Assembly for the ACT: 2003 Week 10 Hansard (25 September) . . Page.. 3676 ..

MR SMYTH (continuing):

This remains a most serious matter and the committee would urge, therefore, that all parties that could be involved in this matter seek to resolve the issues that are in disagreement as soon as possible. This may be more in the nature of a disagreement over a technicality. But, as far as our committee is concerned, it is not appropriate for the territory's financial statements to be qualified and we will be concerned if the territory's financial statements continue to be qualified because of this disagreement.

Let me now turn to the review of the Financial Management Act. What can we say about this matter? On the one hand, we have the Treasury saying that the review is substantially completed, yet, on the other hand, we have the auditor saying that the fundamental review of the FMA has not been undertaken. So the question is: who is correct? This has been quite a dilemma for the committee to resolve.

We have concluded that further work is required to ensure that the act does what it should do through providing an appropriate financial management framework for the territory. Further, we believe that there is merit in an independent review being undertaken by the Financial Management Act to ensure that it provides an appropriate financial model for the territory and that it relates effectively to the requirements of associated legislation such as the Auditor-General Act and the Annual Reports Act.

An independent review will ensure that people with appropriate expertise are appointed to undertake this review and also ensure that the review is not distracted through other priorities impacting on the allocation of resources from within Treasury and other departments to this review. Consequently, the committee recommends that an independent review be conducted of the Financial Management Act.

The next matter on which I wish to comment is the Treasurer's Advance and, specifically in the year that is the subject of this audit report, the use of the Treasurer's Advance to provide $10 million for fire safety issues. The auditor, in a section of the report dealing with possible breaches of the Financial Management Act, made the finding that Housing received $10 million from the Treasurer's Advance in June 2002. The audit view is that this was a misuse of the Treasurer's Advance and that its legality could also be questioned.

The committee is most concerned about this matter. As will be seen from our report, we have dealt at some length with the matter. It has proved rather complex to identify the sequence of events that relates to this matter and to establish the history of various decisions and records of action. Ultimately, however, this matter appears to revolve around two key issues: what is the purpose of funds sourced from the Treasurer's Advance and when did the actual expenditure take place? On the first of these issues the audit is quite clear that the use of the Treasurer's Advance should satisfy two parameters: essential expenditure is required to be incurred, and the need for this expenditure could not have been foreseen when the annual budget was prepared.

The auditor also injected the notion of such spending having to be urgent to satisfy the use of the Treasurer's Advance. Of course the fact that such spending had not been included in the annual budget implies urgency, because the need must have arisen at short notice, by which time it was not possible to build it into the annual budget. The

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