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A Treasury trove of errors

By John Roskam - posted Friday, 14 August 2009


We now have the OzCar scheme to add to the list of Labor's failed grand designs. But OzCar won't be remembered as another of the federal government's botched programs. Instead, OzCar will be famous for potentially costing Malcolm Turnbull his job as Opposition Leader.

If the Canberra press gallery could somehow be a little less fascinated with Turnbull and a little more interested in the performance of the government, the Australian public would be much better served. At the moment it looks like there's not much chance of that happening.

If you want to know why Kevin Rudd shouldn't run hospitals, look no further than his track record. Thankfully the consequences of bungling things like the "education revolution" and the national broadband network aren't as serious as leaving someone unattended on a hospital trolley for seven hours.

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The so-called education revolution gives schools gymnasiums they neither want nor need. The broadband network is already year behind schedule and is becoming a more remote prospect by the day. The government can even muck up announcing good news. Recently, when the Rudd announced the creation of 50,000 "green jobs", it emerged these were not jobs at all - they were places in training programs. No wonder the Minister for Employment Participation, when pressed for specifics, confessed he didn't "have all the details".

In the aftermath of the OzCar affair it's not Malcolm Turnbull who should be under pressure to hold his job - it should be Treasury secretary Ken Henry. In the past few days Treasurer Wayne Swan has been demanding that Turnbull explain his actions. Swan should be busy explaining what his own department has been doing.

OzCar was originally going to be a $2 billion program to bail out car dealers who had lost access to finance. It was a program of not insignificant size. To put it into some sort of perspective, $2 billion equates to about 10 per cent of the entire budget of Western Australia Yet the whole OzCar scheme was managed by one person - Godwin Grech who, according to the auditor-general, "operated largely on his own".

According to Grech's own evidence, which on this matter hasn't been contradicted, when he was on sick leave for three weeks in February "nothing happened on OzCar - the project came to a complete stop". Presumably no one in Treasury noticed that the person in charge of a $2 billion program hadn't been in the office lately.

The auditor-general documented numerous other management failures. Treasury hired financial advisers to the scheme before the department had obtained a quote of what their services would cost. As the auditor-general says, such an "approach seriously weakens the commonwealth's negotiating position and provides little comfort that the commonwealth is receiving value for money in agreeing to the contractual arrangements". Only a government department could get away with being so cavalier with other people's money.

Ken Henry is now running a review of the country's tax system. Instead of inventing new ways to get money from taxpayers, maybe he should concentrate on how to better spend the money he already has.

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The auditor-general also noted that when quotes for services were obtained, Treasury "did not document the basis on which it was satisfied that the engagement terms represented value for money" (which was a breach of the federal government's financial management and accountability regulations). Furthermore, Treasury "gave insufficient priority to documenting the engagement terms, resulting in extended delays in contracts being prepared and signed".

If a public company ran a $2 billion project the way Treasury ran OzCar, there would be a shareholders' revolt and the board would be sacked. Luckily for them, ministers operate according to a different set of rules to anyone else.

The media coverage of the auditor-general's report into the OzCar affair conforms to the pattern established with the Rudd Government's election. Practically the entire focus has been on the opposition and its leader. There was scant coverage of the damning findings about the way the government makes policy and delivers programs. To some extent it is understandable. It's more interesting to psychoanalyse Grech than analyse the minutiae of the government's financial management systems.

The problem with an obsessive concentration on the opposition is that the opposition is not actually running the country - the government is.

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First published in The Australian Financial Review and on the IPA's website on August 7, 2009.

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About the Author

John Roskam is executive director of the Institute of Public Affairs.

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