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Legislative Assembly for the ACT: 1996 Week 6 Hansard (23 May) . . Page.. 1719 ..

Mrs Carnell: But not between capital and recurrent.

MR WHITECROSS: That is an interesting point that Mrs Carnell raises. Mrs Carnell says, "Not between capital and recurrent"; but of course, if you read clauses 14 and 15 of the Financial Management Bill in combination, you see that clause 15 allows you to move money between capital and recurrent within an appropriation, and clause 14 allows you to move money between appropriations, provided that you do not move from capital to recurrent. For instance, speaking hypothetically, if you had a $14.2m blow-out in the health budget you might, within the constraints of the legislation, be able to move it from capital to recurrent within the Urban Services budget and then move it from the recurrent budget in Urban Services to the recurrent budget in Health, provided of course that you meet the other conditions. There are reporting requirements in the legislation, to table information on these transfers. I am not saying that we would not all know that it was happening, Mrs Carnell; but I am saying that it is not quite correct to say, as you just said, that you cannot move between capital and recurrent. You clearly can.

Mr Speaker, there is nothing magical about a new budgetary framework. The effectiveness of a new budgetary framework depends on how you use it, what you do. Bad decisions are still bad decisions. If you sign a contract with the VMOs to save $3m and you do not save $3m, you still will not save $3m under the Financial Management Bill. A new financial framework will not affect bad decisions. What it will do is clarify some issues like the application of capital and separation of the implications of committing capital to one thing rather than another thing as opposed to the commitment of money for recurrent expenses. Nobody would argue with the importance of those reforms, Mr Speaker.

Accrual accounting will not stop cuts to services. In fact, some people might be concerned that accrual accounting, by making explicit some of the implicit costs, might encourage some to promote further cuts in services. Accrual accounting will not reduce fees and charges. Accrual accounting will not fix problems with Mrs Carnell's three-year budget strategy. These reforms will not repair and expand the Territory's revenue base. These reforms will not stimulate business confidence or employment. The ACT will not see a significant improvement in the decision-making capacity of this Government just because we pass the Financial Management Bill. Mrs Carnell has promoted the rhetoric that everything was darkness before and, after today, when we pass this legislation, everything will be light. It will not be. I think even Mrs Carnell is starting to see that it will not be. It is important that we have that sense of perspective about what is going on.

These reforms, because of their magnitude, have greatly affected the way the Public Service has been operating during their formulation. These reforms will continue to greatly affect the operation of the Public Service. They are tying up resources and will continue to tie up resources as the Public Service comes to grips with the implications of this legislation. While I endorse the legislation and support the legislation, we have to recognise that those resources are going to be tied up, at the expense of other priorities such as review of social policy and review of other reforms in the areas of health and education. Resources are going to be devoted to coming to grips with the implications of

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