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Legislative Assembly for the ACT: 2001 Week 1 Hansard (14 February) . . Page.. 153 ..

MR KAINE (continuing):

uses terms like "prudent levels". Who is to determine, if it comes to the crunch, what a prudent level of liabilities or assets is? I do not know how the government could implement the provisions of this bill. It gives me some concern that the terms being used are absolutely undefinable.

Furthermore, having set down some principles of responsible financial management, maintaining prudent levels of assets as compared to liabilities and the like, and managing prudently the fiscal business of the territory, it then says that "the executive may depart from the principles specified in subsection (5)". If they do, a couple of things must follow. But who determines if and when the government departs from prudent levels of management?

If I were the Treasurer I would not know how to implement this bill, because what is prudent to one is not to another. I would guess that if Mr Humphries and Mr Quinlan had a little debate about what a prudent level of assets or liabilities is, or what constitutes prudent management of the fiscal risk, you would get no agreement between them. So I have great difficulty with the concepts that are being expressed here. They are good statements of motherhood.

I suppose, ideally, a government should maintain prudent levels of liabilities and assets so as "to provide a buffer against factors that may impact adversely on the level of total liabilities in the future", whatever that means. What factors that may impact adversely on the level of total territory liabilities in the future? There are factors that could not even be conceived of and could not be defined that could at some future time impact on that.

I think the same thing can be said about achieving and maintaining levels of territory net worth that provide a buffer against factors that may impact adversely on that net worth in the future. What on earth is likely to come up in the future, in the unforeseen future, that is likely to adversely impact upon the net worth of the territory? It could be anything at all. It could be an earthquake that destroys half the physical assets. How can you prudently manage to cope with something of that kind, such as a fire that destroys a lot of the assets that the territory owns. How can the government prudently manage to take account of such events? It cannot, because the government, essentially, self-insures. Even if it didn't, even if it went out to insure its assets, how could it value the assets that it is going to insure? Which assets would you insure and which ones wouldn't you insure?

So, Mr Speaker, while they are fine statements of motherhood, they do not provide a prescription by which the government can reasonably act, and in the event that the government does not act prudently, according to Mr Osborne's definition or mine, or Mr Quinlan's, what can we do about it? There are no penalties involved, no penalties prescribed for not "acting prudently". They are not in the Financial Management Act now, and this bill does not insert them. In fact, one of the problems with the Financial Management Act is that it describes all sorts of things that the government may or may not do, but there are no penalties if the government chooses to ignore them. We have already seen an aspect of that in recent months.

Mr Speaker, I cannot support a bill that in my view is totally meaningless. It is a bill that writes a prescription which I do not believe the Treasurer, any treasurer, could satisfactorily comply with. Even if you could define what prudent management is, there

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