TAA a treasured resource

An outcome of Labor’s Burke-Dowding WA Inc years was a promptly forgotten report by one-time under-treasurer Les McCarrey – The Report of the Independent Commission to Review Public Sector Finances.

The Court-Cowan Government commissioned him to advise on re-adopting certain prudential procedures.

It raised many issues, including over usage by treasurers of what’s called the Treasurer’s Advance Account (TAA).

This little-noticed account exists for treasurers to dip into whenever what are called “extraordinary and unforeseen” circumstances arise.

Once it was assumed those words meant assisting whenever natural catastrophes such as fires, floods or droughts struck.

Having a TAA is, therefore, a good idea, for it meant treasurers could rapidly react to assisting whenever real needs arose. Only after having outlaid the needed funds was parliamentary approval formally gained, since taxpayers’ funds were spent.

But during WA’s wasteful 1980s the meaning of the words “extraordinary and unforeseen” was markedly stretched.

In 1987-88, for instance, the Labor Government injected TAA cash because the Swan Building Society failed, meaning natural disasters were displaced by a man-made financial disaster.

During the following year TAA funds were used in the disastrous Rothwells liquidation and Labor’s even more disastrous petrochemical plant plans.

But the TAA hasn’t only tempted Labor treasurers.

Liberal premier and treasurer Richard Court used it with verve during the years immediately after the McCarrey Report, which he’d commissioned.

The extent of his reliance was disclosed just before the most recent State election when an auditor general’s report carried an analysis of the TAA’s usage between 1980 and 2000.

During the Court years the TAA was used: on the State Government Insurance Corporation; to meet delays in the sale of government vehicles; computers for schools; for Western Power ($123 million); and for a North-West Shelf subsidy gas arrangement ($66 million).

Why these outlays weren’t covered by traditional and immediately above-board budgetary allocations that required prior parliamentary approval remains a mystery.

The 2001 auditor general’s report got to the heart of things by pointing out that the words “extraordinary and unforeseen” were not “defined and therefore open to broad interpretation”.

So broad that it recommended adopting guidelines “that clearly defined the circumstances of use of the TAA”.

One couldn’t object if annual TAA spending averaged, say, $5 million to $10 million for various sudden eventualities, with all other government outlays covered in immediately above-board State budgets.

However, that’s not happening at the moment.

And that applies to conservative and Labor treasurers alike, with more than two decades of their performance as evidence.

Last month Treasurer Eric Ripper presented two appropriation bills, which were whisked through parliament with hardly a ripple.

They showed TAA outlays for the last two Court Government years – 1999-2000 and 2000-2001 – and the first Gallop Government year – 2001-2002.

These bills and associated documentation make revealing reading.

Firstly, during the two Court years the TAA provided a huge $683.5 million – $217.3 million in 1999-2000 and $466.2 million in 2000-2001.

Don’t assume things improved during Dr Gallop’s first year, for Mr Ripper advanced himself a huge $262.1 million to be spent without prior parliamentary approval.

That’s nearly a billion dollars

over three State budgets.

Clearly all governments now regard the TAA as a handy little piggybank to dip into.

Why have budgets? Indeed, why have a parliament?

The TAA is no longer one that’s only resorted to for “extraordinary and unforeseen” circumstances.

The advice of Mr McCarrey and the auditor general has been tossed to the wind, by both sides, meaning a trend that was identified back in the Burke-Dowding years is now standard financial practice, despite expert warnings to the contrary.

But that’s not all.

According to papers tabled by Mr Ripper, a large number of government agencies received TAA money for what was deemed to be their so-called efficiencies.

For example, $186,000 is shown as having been allocated for Environmental Protection “in accordance with the 1 per cent budget incentive scheme which rewarded agencies that achieve desired outcomes of government during 1998-99 within their approved budget allocations”.

There are many other such cases.

In other words, agencies received money from the non-budgeted TAA, which is allegedly there only for “extraordinary and unforeseen” purposes, for having used their budgeted fund allocations economically and efficiently.

It’s absolutely bizarre, outrageous. There are no other words. Clearly, treasurers and cabinets cannot be relied on to prudentially administer the TAA.

All that money at their fingertips – more than $945 million in the past three years – and without having to firstly go to parliament to clear spending is just too tempting.

What’s required is an all-party upper house oversight committee that adjudicates if particular unexpected calls for funds qualify as being “extraordinary and unforeseen”.

Otherwise it will simply be more of the same, irrespective of which party is in power.

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