[LINK] Finance has lost the plot

[Bernard Robertson-Dunn]

Finance has lost the plot
Canberra Times
3 August 2001
http://canberra.yourguide.com.au/detail.asp?class=your%20say&subclass=general&category=editorial%20opinion&story_id=73277

Wittingly or unwittingly, the Minister for Finance and Administration, John
Fahey, and, separately, his department, have put their fingers on the
source of what is beginning to look a formidable indictment of political
and managerial incompetence in Government. Faced with a devastating
Auditor-General's report which shows that an ideologically driven decision
to sell much of the Commonwealth's office property has been a financial
disaster which will in time cost the Commonwealth dearly, the department
says that its job was to implement Government policy, not to protect the
overall interests of the Commonwealth. The minister responds by accusing
the auditor of exceeding his brief: selling the property was a policy
decision, and it was no part of the auditor's role to second-guess policy.

Even were this true, the retort would be that the auditor's investigation
showed that Finance flopped in implementing the policy. The Government may
have raised a billion or so by selling assets, but even had the full
proceeds been invested in Commonwealth bonds, within 10 years or so the
rents the Commonwealth is paying in leaseback agreements would exceed the
interest.

It is far from the only debacle involving the same minister and the same
department. Like many of the others, moreover, its base is in ideology. The
forced outsourcing of information technology, against reasoned opposition
from most agencies, was pushed through by a minister and a department
convinced that they knew better. A department which lectures other agencies
on good management and accountability systems completely dropped the ball
with the sale of business units of the former Department of Administrative
Services. Now criminal proceedings for one instance of outright fraud are
over, there ought to be a public inquiry into how high the incompetence and
mismanagement went. There have been other disasters as well.

Close ministerial involvement sometimes excuses an agency for the
consequences of bad policy. It could hardly be a defence here. Finance,
from the top at least, has shown every indication of being as ideologically
driven as its minister. The bad ideas, in short, are as much its own.
Finance itself did not listen to numerous warnings of the risks it was
taking; even now it is all too typical of its approach to accountability
that it simply rejects the auditor's criticisms. In any event, even the
implementation of the ideas was flawed, and this made things worse. John
Fahey and his colleagues must wear the primary responsibility for bad
policy, but it would not be fair to assume, for example, that he intended
that the divestment of DAS agencies occur in such a way that left
Government open to enormous fraud and an almost complete lack of proper
supervision.

There is nothing wrong with modern government deciding that some functions
can be performed more efficiently and more cheaply in the private sector. A
competent government will be continually market-testing its operations to
see how best value for the taxpayer can be obtained; there can be as much
ideology in flatly refusing to countenance outsourcing. The tests, however,
should be fair, not artificially stacked to lead to an outcome. John Fahey
says that Government decided that it should not be in the property
management business. This betrays a lack of real understanding. Owning or
renting, buying from within or without, Government is in the property
management business, just as it is in the employment business, the IT
business, and the transport business. Government must seek best value for
the taxpayer; however it organises it, it is bad business when that value
is not there.

-- 
If all the economists in the world were laid end to end,
it wouldn't be a bad thing.
-- Perceptive Person, quoted by Peter Lynch.

Regards
brd

Bernard Robertson-Dunn
Canberra Australia
brd@dynamite.com.au
brd@austarmetro.com.au