Page 2356 - Week 08 - Wednesday, 29 August 2007
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It is not clear from the budget how the government determines the terms of these loans as these are not made on a commercial basis, are not uniform and vary from loan to loan. For example, the government’s current loan to ACTION buses uses a fixed interest rate of 5.5 per cent, whereas its loan to Actew Corporation uses an interest rate equal to the three-month bank bill rate, a swap rate, plus two basis points, which is likely to be higher than 5.5 per cent. The disparity in interest rates between loans and disparity from the market rate mean that some agencies may be induced into less efficient spending decisions than others. It is important that the government be mindful of this economic effect when considering loans under the act.
The dissenting report of the estimates committee has recommended that the government consider this matter and consider whether it should adopt a uniform approach to intergovernmental loans. I certainly welcome this recommendation and hope that the government will adopt this suggestion. The government is currently undertaking a review of its investments and, in particular, a review of the prospect of considering environmental, social and governance factors in its investments. I have raised questions about this review in estimates hearings because I want to be sure that the government deals properly with this issue.
Mr Stanhope has assured us that investment returns will not be sacrificed under any decision that is made. This is extremely important since economic performance is what drives all else in government. The ACT government is already taxing and spending substantial amounts of money, courtesy of the wallets of ACT residents. Any loss in investment revenue would increase pressure on the government, and I suspect that I know how the government might react to that pressure. It has shown again and again that it has difficulty constraining spending and instead relies on ever increasing taxation to keep its operation afloat. Any changes that might come as a result of that ethical review would be a matter of some concern. It is an area for extreme caution.
DR FOSKEY (Molonglo) (4.26): The issues that I would like to touch on regarding the territory banking account also apply to the superannuation account. The main issue is that very little or no consideration is being given to the ways in which the government’s investment decisions impact adversely on the people of the ACT, the environment and labour standards, among other things. At least the procurement decisions of the ACT public service are moderated by policy guidelines that direct decision makers to take labour standards, ethical behaviour and environmental impacts into account. But the ACT’s investment policies are silent on the issue of the kinds of activities we choose to support with our investment decisions. It is as if the government and its advisers believe that we can invest over $3 billion into various corporations, yet somehow we do not share any responsibility for the activities those companies get up to with the support of our money.
There is an argument that most of our investment decisions could be seen as being of a procurement nature. The procurement act deals with the procurement of goods and services by territory entities. Many of the financial products and financial management services which the ACT government contracts for could reasonably be described as goods and services, yet no effort is made to apply the provisions of the procurement act to these procurement decisions. Perhaps a declaration and a writ of mandamus are in order.
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