Financial Review Debate — Office of the Auditor-General

Every year the Government distributes hundreds of millions of dollars to various non-governmental organisations dealing with health, social development, sport, and education, to mention but a few. Shortly after I arrived in Parliament I was very struck by the number of people who came to me spontaneously with tales about how much of that money is poorly spent or, indeed, misappropriated. They told me that massive wastage was going on in the system. Since then, of course, there have been scandals—such as that involving the Pipi Foundation, and all kinds of misappropriation of funds in polytechs and many other areas—to actually prove the point.

About 2 years ago I first raised with the Auditor-General the question of whether non-governmental organisations were obliged to produce audited accounts before the Government disbursed money to them. I was told that there was no such requirement. Two years later—the first time since then that the Auditor-General has appeared before the Finance and Expenditure Committee—I was able to ask him the same question. By the way, the Auditor-General made it clear 2 years ago that he would like to see the Government adopt a strategy whereby no Government funds would be granted to a non-governmental organisation unless the organisation first produced audited accounts. So again I asked the Auditor-General whether that was now a requirement in that situation, and again he said it was not. So the fact is that as we sit here today Government funds continue to be disbursed willy-nilly to many, many non-governmental organisations in all the sectors I have mentioned, and others, without the necessity of audited financial accounts being produced as a prerequisite. I believe today that Parliament needs to determine—and I recommend this strongly to the Government—that that situation be brought to an end.

I have asked many people whether they would be prepared to hand, say, $5,000, of their own money, in $1 coins to a stranger, for a purpose to be determined, without that person producing audited financial accounts, and, of course, everyone has told me that they would not be so stupid. I then ask them whether the standard should be any lower when the $5,000 in $1 coins is handed to a stranger—a non-governmental organisation, in this context—without previously produced audited accounts simply because that money belongs to someone else. That is the situation we are talking about. We are talking about money that has been compulsorily collected from taxpayers being given to non-governmental organisations without the prerequisite of financial statements. I answer that question myself by saying surely that requires of us not a lower standard than we would apply to our financial affairs but a higher standard. Therefore, I believe it is time the Government said that it will not dispense as it currently does. I agree there needs to be a threshold. I have suggested in the Finance and Expenditure Committee that it could be, say, $5,000.

I suggest that figure because that is the threshold the Lottery Grants Board insists on when it gives away money that has been collected from the profits of gambling. It does not give more than $5,000 to any organisation without two prerequisites being met: first, that the organisation produces audited accounts for the previous financial year; and, second, that the organisation produces a post-grant audit report stating exactly how the funds are spent. That system came into being some years ago when we had the great “ghost-busting” scandal about such grants. I say to Parliament today that if that is good enough for the Lottery Grants Board then surely it is good enough for the Government itself.

I warn that if the Government fails to change the rules and adopt those requirements as a standard right across the whole system of disbursement of Government funds to non-governmental organisations, then we will continue to see scandals coming to the attention of this House. To me it follows, as night follows day and as day follows night, that if we continue to give out money as we currently do, that will be the case. I can tell the House that those scandals will be about league clubs spending grants—grants given to them to promote rugby league—on Friday night booze-ups. I could mention many things that, as I said earlier, people have brought to my attention about the way their money is spent. They tell me that as taxpayers they are brassed off, and they wonder how the Government could be so stupid as to continue with the present line. So with those few remarks, I signal my strong support for change. This is covered in the report of the Finance and Expenditure Committee, and I wanted to strengthen it.

There is another matter in the report, which I want to touch on briefly. I agree there is a need to put in place ethical standards around the question of conflicts of interest in respect of agencies outside the supervision of the State Services Commission. Those agencies include polytechs, other tertiary education institutes, and so on, and all sorts of other non-governmental organisations. If that is not done, the House will continue to hear of scandals in that regard, as well.

Report noted.

Ministry of Agriculture and Forestry