107th Report – Scrutiny by the Committee of Orders made under the Financial Management and Accountability Act 1997

The core function of the Standing Committee on Regulations and Ordinances is to scrutinise legislative instruments to ensure that they do not breach personal rights or parliamentary propriety. One aspect of parliamentary propriety is that legislative instruments should not contain matter more appropriate for parliamentary enactment.

The Committee does not raise this principle often, but when it does it often highlights fundamental issues of the proper relationship between the Parliament and the executive and of the appropriate prerogatives of Parliament. This Report describes Committee scrutiny of the Financial Management and Accountability Orders 1998 (Amendment), which illustrates such issues.

The Report first outlines the criteria which the Committee apply to determine whether the subject matter of a legislative instrument should be included in a Bill, where it would face the full rigour of parliamentary passage. The Report describes how these criteria have been applied in practice. In one such case the Committee obtained an undertaking to amend the Act to bring to an end seven years of yearly extensions by regulations of discrimination based on sex. Some of the other circumstances where the Committee has raised this matter included the censorship of books, magazines, films and computer games; disclosure of personal information by Australia Post to, among others, ASIO and law enforcement agencies; substantial constitutional change to Australian territories; and the prohibition on advertising natural remedies as drug free.

The Report next analyses the enabling Financial Management and Accountability Act 1997, which provides for the management of public money and public property. The Report notes a number of wide powers under the Act to make legislative instruments. For instance, it provides for the Minister to issue Special Instructions, which are not subject to tabling or disallowance, breach of which is punishable by two years imprisonment, which override the Act and the regulations. The Report mentions Committee scrutiny of instruments made under some of these powers.

The great bulk of the Report, however, addresses Committee scrutiny of the Financial Management and Accountability Orders 1998 (Amendment). The substantive part of these Orders, which was six lines long, established Comcover, described as a managed insurance fund, which will insure or arrange insurance, for all Commonwealth insurable losses except for employers’ liability risks already covered by Comcare. The substantive part of the Explanatory Statement, which was seven lines long, merely repeated what was in the Orders. The Committee obtained further information from the Minister, which advised that Comcover would be a comprehensive disciplined managed fund, collect premiums, accumulate reserves, meet losses out of reserves, be modelled on the best managed funds in Australia and overseas, improve accountability and transparency to the Parliament, deliver a dividend to the government at least comparable to industry standards and adopt a business-like approach to the government’s insurance and risk management arrangements through the provision of services at competitive market rates.

In these circumstances the Committee considered that the scheme may have been more appropriate for parliamentary debate and passage, particularly since a similar agency, Comcare, was established by detailed statutory provisions. The Report notes that Committee scrutiny of the Orders took nine months, over two Parliaments, including extensive correspondence, a meeting between the Committee and the head of Comcover and a meeting between the Chairman and the Minister, following which the Minister agreed to amend the Orders to meet the Committee’s concerns. The Committee is now able to report to the Senate that the amended arrangements will not contain matter more appropriate for parliamentary enactment.