Independent Commission to review public sector finances

19/2/93

A comprehensive review of Western Australia's public sector finances was the first step to ensuring the State's finances were returned to a sound footing, Premier Richard Court said today.

"After a decade of creative accounting practices in the public sector, it is proper that we obtain an independent opinion of the position of the State's finances," Mr Court said.

The Premier announced the establishment of an Independent Commission to review public sector finances, honouring a key Coalition election pledge to provide the public of Western Australia with an independent overview of State finances.

"The 'balanced budget' has become a myth and the time has arrived for the true financial position of the State to be publicly explained and understood," Mr Court said.

"The Independent Commission will provide a comprehensive report on the State's finances, highlight areas which require corrective action and make recommendations on the future management of financial matters.

"It will examine the finances and operations of major departments, Government agencies, statutory trading authorities and other areas of Government."

The Premier said that in particular, the Commission would examine State debt, which had soared to over $11.2 billion.

"The 'bankcard mentality' of successive Labor Governments has left a legacy of debt," he said.

"The Independent Commission will give us a true picture of the current situation allowing the Government to set a new course to ensure better management of the State's finances."

The Premier said the members of the Commission were:

Mr Les McCarrey (chairman), Mr Peter Leonhardt, Mr Charles MacKinnon and Mr Peter Unsworth.

"Each has been selected because of his extensive financial management experience," Mr Court said.

"The Independent Commission will operate on what would be regarded as a tight budget for a review of this nature.  The Government will provide up to a total of $500,000 for the project."

The Premier said he expected the Independent Commission to report within three months.

Independent Commission to Review Public Sector Finances

Structure of the Commission:

Chairman:

Mr L E McCarrey C.M.G. Former State Under Treasurer

Members:

Peter Leonhardt Managing Partner Coopers & Lybrand, Chartered Accountants, Perth

Mr Charles W MacKinnon Managing Director of Lothbury Limited, an investment banking company

Mr Peter J Unsworth Corporate Consultant

Terms of Reference:

Without limiting the scope of the Commission's review, it shall investigate and report on the following:

1.    Budget sector transactions and outcomes for 1991-92, projected for 1992-93 and trends in recent years with regard to the Consolidated Revenue Fund, the General Loan and Capital Works Fund and relevant accounts in the Trust Fund.

2.    The outcome in each year if the State Budget had been constructed according to accepted national accounting principles with a single Consolidated Fund.

3.    The Government's cash position and the trend over recent years, including the application of interest earned on short term investments.

4.    Review the several assessments of State debt, advise the most appropriate measure of debt, the position at June 30, 1992 and the estimate for June 30, 1993 for:

4.1 The Budget Sector

4.2 Public Sector Trading Enterprises

4.3 The Public Sector as a whole.

5.    Borrowing and debt redemption policies and practices for general government and government agencies with recommendations for greater scrutiny and control by Parliament.

6.    Interest commitments identifying accrued, unpaid or deferred interest.

7.    Contingent and other liabilities of a non-debt nature which could impact on the State's finances, including superannuation commitments.

8.    The assets and liabilities of the State public sector and the measures required to enable the publication of a comprehensive balance sheet.

9.    Recommended changes to the presentation of the State Budget and accounts required to better inform Parliament and the public as to the ongoing financial position of the State Government including the true budgetary position, changes in accrued liabilities and public sector debt.

10.  Provide forward estimates to 1997-98 of budget sector revenue and expenditure and the budget outcome based on the 1992-93 budget estimates, drawing attention to any significant contingencies which could impact on the Budget.

11.  Review the operations of the Treasurer's Advance Accounts.

12.  Conduct an examination of the finances and operations of major departments, Government agencies, statutory trading authorities and others as may be referred to the Commission.

13.  Recommendations on the future departmental structure of Government.

14.  Recommendations to Government on future ownership of assets for reduction of debt.

15.  The Western Australian Commission may issue one or more interim reports and the Premier may extend the terms of reference and request advice from the Commission at any time.