Public Accounts Committees and the New Public Management

Kate Jones and Kerry Jacobs

Abstract This paper asks how parliamentary public accounts committees can fit into the new public management environment. Initially it examines the transformation of traditional public administration, or progressive public administration as Hood has described it, into new public management. Then it outlines the development of public accounts committees in the Australian national and state parliaments, and takes on, the Victorian Public Accounts and Estimates Committee, as a case study. The paper concludes that, despite the rhetoric of non-partisan and bi-partisan committees, the effectiveness of public accounts committees in scrutinising government expenditure is constrained by political considerations, regardless of any change from progressive public administration to new public management. However public accounts committees have shown themselves to be adaptable to changing environments in the past and there is no reason to assume that they will not be equally adaptable in the future.

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Introduction

This paper is a preliminary exploration of the role of Australian parliamentary public accounts committees (PACs) in the new public management (NPM) environment. Public accounts committees are the oldest parliamentary committees in Westminster systems, dating back to the mid nineteenth century, and have had varied success as accountability mechanisms. During the ascendancy of new public management in English-speaking societies in the late twentieth century it sometimes appeared that they were irrelevant, or at best marginal, in a new administrative system that rejected the old style of public administration.

Since the term ‘New Public Management’ began to be used numerous characteristics have been seen to define the phenomenon. Hood (1995) identified seven dimensions of change, relating broadly to how far the public sector should be distinguishable from the private sector and ‘how far managerial and professional discretion should be fenced in by explicit standards and rules’ (Hood 1995, p 95). In their study of ten countries, Pollitt and Bouckaert (2000) observed that public management reform is ‘potentially a means to multiple ends’ (Pollitt and Bouckaert 2000, p 6). The ten countries were not following the same route to public management reform, nor did they necessarily agree about their desired future. Torres (2004) argued that ‘NPM rhetoric has spread throughout all OECD countries, although not always with the same meaning’ (Torres 2004, p 99).

In this paper we will examine the change from the traditional system of public administration under which the public accounts committee model was established to new public management. We will then describe the experiences of one specific committee, the Public Accounts and Estimates Committee of the Australian state of Victoria, as an example of how a public accounts committee has operated in changing times.

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Progressive Public Administration and Parliamentary Scrutiny

Public accounts committees form part of the ‘circle of control’ (Chubb, 1952, p. 6) of parliamentary financial scrutiny, comprising the submission of estimates to parliament by the executive, the requirement for money to be expended in accordance with appropriations approved by parliament, the submission of accounts to parliament to be audited by the Auditor-General, and parliament’s responsibility to examine expenditure. Public accounts committees carry out this last function on behalf of parliament, normally working closely with the Auditor-General. Parliamentary scrutiny of public finance was embedded in the system of progressive public administration (PPA) that developed by a process of accretion during the nineteenth century (Hood, 1995). It was characterised by the control of inputs, in the form of the appropriation process, and an increasing control of the crown by parliament.

NPM is not a single homogeneous theory. Hood (1995, p. 95) identified the overlap amongst different accounts of NPM as entailing ‘the ideas of a shift in emphasis from policy making to management skills, from a stress on process to a stress on output, from orderly hierarchies to an intendedly more competitive basis for providing public services, from fixed to variable pay and from a uniform and inclusive public service to a variant structure with more emphasis on contract provision’. It is also possible to distinguish two distinct streams, one of managerialism and the other of privatisation and/or marketisation (Pallot, 2003; Jacobs and Jones, 2006). Managerialism is marked by a concern with efficiency, effectiveness, performance measures and transparency. Pallot (2003, p. 134) identified privatisation as ‘an agenda which seeks to render the public sector more private’; it is marked by contracting out, by the movement of provision of services from the public sector to the private sector and by the selling of public assets.

The origins of New Public Management as a popular concept can perhaps be located in Osborne and Gaebler’s (1992) book, which initiated debate about the nature of government and public management in many countries. However the practice of NPM had come before, perhaps having its origins as early as Margaret Thatcher’s radical reforms to the British public sector in the 1980s (Aucoin, 1995) and New Zealand’s 1986 reforms, beginning with the State Owned Enterprise Act, and followed by other 3

legislation affecting the public service and financial management (Boston, Martin, Pallot and Walsh, 1996; Jacobs, 1997; Inquiry to Review New Zealand’s Constitutional Arrangements, 2005). The changes in Australia were more gradual, beginning with the reforms of the Keating Labor government in the 1980s and early 1990s, taking on greater impetus with the election of the Liberal National Party coalition government led by John Howard in 1996, and arguably culminating with the Liberal National Party winning a majority in the upper house and introducing industrial relations reforms aimed at the complete restructure of Australia’s industrial relations system in 2005.

Whatever the variations in timing and culture, NPM has been marked by a change of emphasis from inputs and process to outputs. It has emphasised performance measurement and indicators, program evaluation, a move towards contracting out service delivery and high levels of privatisation. Where do PACs sit in this system? By their very nature, it would seem that they concentrate on process and inputs. Their role is an ex-post one (Wehner, 2003). They examine the public accounts after the expenditure has occurred and, it could be argued, in pursuit of mistakes in procedure and process. Their perspective is retrospective, aiming to point out where and why things have gone wrong, not to prevent them. Their preventative aspect could be described as a reflective look at the past and a warning for the future. To consider this more closely we need to look at the evolution of progressive public administration into new public management.

The work of Christopher Hood (1991, 1995, 1998) would seem to provide a theorised analysis of what was before and what was to come. However, each iteration provides us with a different model. Hood (1991) presents three different sets of core public management values. The first, he calls ‘sigma-type’ values which are concerned with keeping the public sector lean and purposeful. This approach is centrally concerned with frugality, reducing waste and measure success in money and time. Hood (1991, p. 12) suggests that this set of values is central, mainstream and traditional in public management where frugality in resource use in relation to given goals is the criterion of success and failure in terms of waste and resource misuse. Hood (1991, p. 12) argued that the orthodox design for realising these values closely approximates the ‘mechanistic’ structures applicable to stable defined conditions. This would seem to 4

imply a form of process control built on bureaucratic rules and structures and a strict control over inputs. However, Hood (1991, p. 12) suggested that this actually implies a process of output control based on clearly defined and delineated objectives and effective and unambiguous performance measures focusing on outputs.

The second set of values Hood (1991) called ‘theta-type’ values. They are focused on keeping the public sector honest and fair, processes of mutuality, prevention of distortion, bias and abuse of office. Hood (1991, p. 12) suggests that these values are also ‘central and traditional in public management’ and can be found embedded in appeal mechanisms, public reporting requirements, independent advisory bureaucracies and independent scrutiny systems such as ombudsmen and public sector audit processes. These issues often involve a concern with process and therefore tend to be highly procedure focused and regulated. This is clearly an example of the focus being on process control rather than output control. The original purpose of PACs, as they were established in the nineteenth and earlier twentieth centuries, was to ensure that public money was spent in accordance with the purpose approved by parliament. This was consistent with the ‘sigma-type’ and ‘theta-type’ values identified by Hood (1991). PACs were the parliament’s way of keeping the executive honest and ensuring that public resources were not wasted (Chubb 1953; Jones 1987).

The third set of public management values identified by Hood (1991) he called the ‘lambda’ values and these relate to reliability, resilience, robustness, survival and adaptivity. In effect this approach seeks to keep operating in the worst conditions and adapt rapidly to a crises and therefore describes (in theory if not always in practice) military response capability, disaster recovery and some critical infrastructural engineering systems such as electricity generation and transport systems. From a design perspective these environments tend to be highly uncertain and therefore Hood (1991, p. 15) argues that the appropriate organisational structure is one which contains sufficient slack to manage multiple objectives and enable learning and deployment to emergent areas of need. Therefore Hood (1991, p. 15) suggests that control systems must be focused on input and process rather than output and a personnel management structure that while promoting cohesion and systematic coordination still allowed unorthodox approaches and accepted errors and mistakes and a normal part of the process. 5

Using this three-part model of public management values, we might see NPM an example of the lean and mean approach, while the earlier approaches were examples of the keep it fair and keep it working values. However, this is clearly incorrect as both the older approaches and the newer approaches share some of the same values. Hood (1995) handles some of this uncertaintly by simplifying the earlier process with a two part model, distinguishing between New Public Management (NPM) and progressive public administration (PPA). Hood (1995, pp. 93-4) argued that the accountability paradigm of progressive public administration placed stress on two basic management doctrines: the separation of and sharp distinction between the public and the private sector and the creation of buffers against political and managerial discretion. The elaborate structure of hierarchical procedures and rules were designed to prevent favouritism and corruption and to keep a clear distinction and separation between the politicians and the civil service. According to Hood (1995) this involved high-trust relationships between those within the civil service structure that were not necessarily controlled by formal accounting and performance measured and low trust relationships between those within the service and the outside world (for example – the letting of contracts) which involved very formal procedures, processes of records keeping, audit and scrutiny.

Hood (1998) presents yet another analytical framework which seems to move away from a simple PPA/NPM progression. He argues instead that there are four alternative models of public management available and that each of these alternatives, while having its own advantages and disadvantages, constitutes a viable way to organise public sectors. Hood (1998, p.7-12) bases the four alternative models on grid/group cultural theory. Grid’ denotes the degree to which peoples lives are circumscribed by conventions and rules as apposed to individual negotiation. ‘Group’ denotes the extent to which individual choice is constrained by group choice, by binding the individual into the collective body. Hood (1998, p.8) suggests that those in collectivist religious or social communities are examples of a high-group mode, while those in a more isolated and atomized existence are low-group. Within the public management debates high-grid is typified by organisations that run according to strict regulations and rules and low-grid by the idea of managerial freedom and autonomy, high-group is illustrated by those who argue for collectivist and communitarian 6

structures and services, while advocacy for for-profit privatisation and user-pays structures represent a low-group approach. Therefore Margaret Thatcher’s statement that there is no such thing as society represents her clear stance as low-group. According to Hood (1998, p. 9) four styles of public management flow from these cultural choices. The first he calls the ‘fatalist way’, a high-grid and low-group approach which is therefore both highly bureaucratic and highly individualistic, low in cooperation and rule-bound. The ‘individualist way’ is low-group and low-grid, involving approaches stressing negotiation and bargaining; an example is the Chicago school doctrine of ‘government by the market’. The ‘hierarchist way’ is high-group and high-grid, drawing both on the concept of society and structured bureaucracy, and as such involves socially cohersive and rule-bound approaches to organisation. Hood (1998) calls the last style the ‘egalitarian way’; it has a high-group and low-grid orientation and as such provides a highly participative structure where each decision is negotiable rather than established by rule and regulation.

Utilising Hood’s three different analyses (1991, 1995 and 1998) it is therefore possible to make more sense of the question of what came before. Progressive public administration focused on keeping the public sector honest and fair and on the prevention of distortion, bias and abuse of office. Control was exercised primarily over inputs and process with relatively little attention being devoted to output and outcome. However, particular attention was paid to interaction with the private sector businesses and with politicians, as these were perceived to constitute the source of dishonesty, distortion and bias. On the whole these approaches adopted a high orientation towards grid with extensive and detailed bureaucratic rules and procedures. From a control perspective it is clear that control was exercised jointly over inputs and process with little concern for outputs. Perhaps the limited exception were areas of major technology and engineering risk such as nuclear power, bridging and some elements of the health system which were controlled and driven by an engineering risk-management approach aimed to manage peak capacity and reduce any possibility of failure. After all few politicians are likely to get re-elected following a nuclear power station meltdown in their constituency.

New public management, as already observed, is a dynamic process, not a static model. Peters (2001) argues that, despite the implementation of changes and reforms 7

‘almost no national government would argue that administrative change has now been completed or that the public sector has been put into good working order’ (Peters 2001, p. 118). Some observers have noted that there is now a reaction against the narrow emphasis on outputs and a swing back to a concern with process and outputs. Hood and Peters (2004) have noted the observations that in the USA and UK ‘process controls over bureaucracies were in many cases retained and augmented and that increased formality and regulation were imposed on public bureaucracies during the “New Public Management” period’ (Hood and Peters, 2004, p. 271).

Public Accounts Committees in ‘Westminster Systems’

Like progressive public administration, parliamentary public accounts committees evolved during the nineteenth century. They form part of the financial oversight mechanisms of Westminster systems. McGee (2002) defined them in the following terms:

The PAC helps Parliament hold the government to account for its use of public funds and resources by examining the public accounts. Its terms of reference can be expressed narrowly by concentrating on financial probity and regularity, or its terms of reference can be expressed more widely by being conceived in performance audit terms, with the PAC being charged with examining the effectiveness of programmes in achieving their objectives. The PAC has an independent audit oversight on Parliament’s behalf of the government and the public service. (McGee, 2002, p 55)

McGee’s definition was developed as part of the work of a Commonwealth Parliamentary Association Study Group on the functioning of PACs in Commonwealth countries. As such it was a definition based on the empirical experience of countries that derived their parliamentary model from the British model exported to colonies as they attained first self-government and then independence. What distinguished this model from other legislatures? Wehner (2003) has made the distinction between ‘ex-ante’ and ‘ex-post’ financial scrutiny in different types of legislatures. In legislatures with a strong separation of powers, such as the USA, financial scrutiny is typically ex-ante. Financial oversight committees concentrate on 8

examining and, if necessary, altering the budget. In Westminster systems financial scrutiny is typically ex-post; the emphasis lying on examining expenditure retrospectively. This is a natural enough consequence of the institutions of responsible government in Westminster systems. The government is formed by the party with a majority in the lower house, the prime minister or premier is the leader of that party, and the cabinet is made up of members of that party. The existence of minor parties, coalition governments and hung parliaments may result in some modifications but essentially the political interests of the government members in parliament and the executive are intertwined. In Wehner’s words ‘the institution of the PAC is at the same time vehicle and expression of the Westminster version of financial scrutiny, with its ex post emphasis’ (Wehner, 2003, p. 25).

Public accounts committees as they were originally constituted fitted into the progressive public administration model. Their concern was with an exact accounting for the finances, considering whether money had been spent in accordance with the rules. They are a creation of nineteenth century parliaments in Britain and its colonies. Their role initially was to examine and report on public expenditure, on whether money had been spent in accordance with the rules governing its expenditure. In many jurisdictions their responsibility has expanded to include investigations into the efficiency and effectiveness of policies but never the appropriateness or desirability of a policy (McGee 2002; CCAF-FCVI 2005; Stapenhurst, Sahgal, Woodley and Pelizzo, 2005). The Canadian parliament established a standing committee on public accounts by the early 1850s (Balls, 1963, pp. 21-2). In Britain the House of Commons had wrested control of supply from the Crown by the early part of the nineteenth century and a Select Committee of Public Accounts was appointed in 1862 (Chubb, 1952). The committees reflected the political and social climate of their time. The British politicians who were instrumental in establishing the House of Commons public accounts committees in the mid nineteenth century were deeply suspicious of all government spending, the provision of financial information by government was rudimentary, and there was a general view that irregularities in the accounts were to be expected and sought out (Chubb 1952, pp 33-5). The first Australian public accounts committees, which were also established in the nineteenth century, had a similar view. By the late twentieth century public accounts committees had adopted a

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broader view of their responsibilities, extending their scrutiny of the public accounts to include efficiency and effectiveness.

Britain’s Australian colonies were given responsible government in the second half of the nineteenth century. The parliaments established in the colonies were versions of the Westminster system established in Britain itself. Rhodes and Weller (2005) have described such parliaments in settler societies as ‘transplanted Westminster systems where settler societies without prior traditions other than indigenous cultures adopted the structures, but then began to adjust them to local conditions’ (Rhodes and Weller, 2005, pp. 2-3). By the time Australia became an independent nation in 1901, two of the colonies had established public accounts committees, Tasmania in 1862 and Victoria in 1895. New South Wales, the oldest and most populous state, established a committee in 1902 and in 1913 the Commonwealth parliament passed legislation to create its own committee of public accounts. Government budgets grew in the twentieth century with the increasing cost of defence and wars, more elaborate education and health systems and requirements for infrastructure to support economic development and industrial development. However, it was not until the 1970s and 1980s that the other states (Queensland, South Australia and Western Australia) and the territories (Australian Capital Territory and Northern Territory) moved to create their own public accounts committees. This was a period when the parliamentary committee system was receiving much attention (Lees and Shaw, 1979), and was to some extent seen as the vehicle by which parliaments could re-invent themselves despite predictions of their increasing irrelevance (Longley and Davidson, 1998). Even parliaments where public accounts committees already existed, such as Victoria, were reforming them. The Australian Capital Territory, the seat of the federal government, was the last to establish a committee, one year after it received selfgovernment in 1988. Victoria and the Commonwealth had both suspended the operations of their public accounts committees in the early 1930s, paradoxically citing the need for economy during the depression years as a reason, and both re-established them in the early 1950s. As Jones and Jacobs (2006) have observed, Australian parliaments (with the exception of Tasmania and New South Wales) operated without public accounts committees for much of the twentieth century.

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Table 1: Characteristics of Australian public accounts committees

Jurisdiction

Australia (a)

Name

Date of

Current

original

legislative or

establishment

other basis

1913

Public

Joint

Committee of

Accounts and

committee, ten

Public

Audit

members from

Accounts and

Committee Act the House of

Audit

1951

Joint

Membership

Representatives and six from the Senate

Australian

Standing

1989

Standing

Capital

Committee on

Orders 215 and members, uni-

Territory

Public

217

Accounts New South

Public

Wales

Three

cameral parliament

1902

Public Finance

Legislative

Accounts

and Audit Act

Assembly

Committee

1983

committee, six members

Northern

Public

Territory

Accounts

1986

Standing Order Five members, 21A

Committee Queensland

Public

uni-cameral parliament

1988

Parliament of

Seven

Accounts

Queensland

members, uni-

Committee

Act 2001

cameral parliament

South

Economic and

Australia (b)

1972

Parliament

Legislative

Finance

Committees

Assembly

Committee

Act 1991

standing committee, seven members

Tasmania

Public

1862?

Public

11

Joint

Accounts

Accounts

Committee

Committee Act three members 1970

committee,

from each house

Victoria (c)

Public

1895

Parliamentary

Joint

Accounts and

Committees

committee, five

Estimates

Act 2003

members from

Committee

the Legislative Assembly and four from the Legislative Council

Western

Public

Australia

1971

Standing

Legislative

Accounts

Orders 284-

Assembly

Committee

286

standing committee, five members

(a) The committee did not operate between 1931, when no members were appointed for 1932 and its final reports were completed by select committees, and 1952, after the passage of the Public Accounts and Audit Committee Act 1951 (b) The Economic and Finance Committee replaced the Public Accounts Committee and is not strictly speaking a public accounts committee. Its role is to examine and contribute to the state’s economic development rather than to examine its finances. (c) The committee did not operate between 1931, when it was not appointed, and 1955, when members were appointed to the committee under the terms of the Standing Order under which it had first been appointed

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The above table indicates that Australian public accounts committees vary widely in the time of their establishment, whether they are mandated by standing orders or legislation, whether they are joint committees, and the number of their members. There are other differences: of the nine committees, four are able to examine the budget estimates, one appoints the Auditor-General and only two have a chair who is a member of the Opposition. This last is a substantial difference from the practice of public accounts committees in most jurisdictions (McGee 2002, p 66). Studies of PACs throughout the world have shown wide variations in their practices and structures (McGee 2002; CCAF-FCVI 2005; Stapenhurst, Sahgal, Woodley and Pelizzo 2005; KPMG 2006).

The Victorian Public Accounts and Estimates Committee

The Public Accounts and Estimates Committee in the Victorian state parliament has experienced most things that can happen to public accounts committees. It evolved and changed in response to parliamentary political events of its times. It was established as a committee of the lower house, the Legislative Assembly, in 1895 when Victoria was a British colony, its progenitors explicitly seeing it as an exact copy of the House of Commons committee in the British parliament. The standing order that gave the committee its mandate specified the following duties:

a) To examine the accounts of the receipts and expenditure of the colony, and to bring under the notice of the Legislative Assembly any items in those accounts, or any circumstances connected to them, to which it may consider the attention of the Legislative Assembly should be directed. b) To report to the House any alteration which may appear to the committee desirable to be introduced in the form of or method of keeping the public accounts, or in the mode of receipt, control, issue or payment of the public money. c) To inquire into and report upon any question which may have arisen in connexion with the public accounts. d) To inquire into and report to the Legislative Assembly upon the investment of and dealings with the funds of the Commissioners of Savings Banks.

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e) To deal with any special references that may be made to them by the Legislative Assembly. (VPD, 1895, pp.2093-4)

In 1931 parliament did not appoint members to the committee and it ceased to operate until 1955 when members were re-appointed under the same standing order which had existed in 1931. Frazer (1985) has described the Public Accounts Committee during this period as ‘the only committee that served in any way as a check or review on the administration of government programmes and the performance of government agencies’ (Frazer, 1985, p. 100) although, like the other committees, it was not well-resourced and sometimes ineffective (Mathews, 1982). In 1979 the Public Accounts Committee was re-constituted as a joint committee, the Public Accounts and Expenditure Review Committee, and given a research director and the explicit role of seeking to improve the administration of government policies (Frazer 1985). Its functions were set out in Section 5 of the Parliamentary Committees (Public Accounts and Expenditure Review Committee) Act:

(a) to examine the accounts of the receipts and expenditure of the State and to bring to the notice of the Parliament any items in those accounts, or any circumstances connected with them which it may consider appropriate; (b) to inquire into and report to the Parliament on any question in connexion with public expenditure which is referred to it by the Council or the Assembly; (c) to consider and report to the Parliament how, if at all, the administration of Government programmes and policies may be carried out more efficiently, effectively and economically; and (d) to report to the Parliament any alteration which may appear desirable to be introduced in the form & method of keeping and presenting the Public Accounts, or in the mode of receipt, control, issue or payment of the public money.

In 1982 , however, the incoming Labor state government (the first since 1955) radically reformed the parliamentary committee system, creating a number of new 14

joint investigatory committees and replacing the Public Accounts and Expenditure Review Committee with the Economic and Budget Review Committee. The Economic and Budget Review Committee had much broader functions as outlined in S.4A of the Parliamentary (Joint Investigatory Committees) Act 1982:

To inquire into, consider and report to the Parliament on any proposal, matter or thing connected with public sector or private sector finances or with the economic development of the State where the Committee is required or permitted to do so under this Act.

The legislation also gave the Economic and Budget Review Committee power, in S.4F(2), to ‘inquire into, consider and report to the Parliament on any matter arising out of the Annual Estimates of Receipts and Payments of the Consolidated Fund and other Budget Papers’. Unlike other Australian public account committees at the time, there was no specific requirement for the Economic and Budget Review Committee to examine the public accounts or the accounts of the Auditor-General, although it did in practice carry out these functions. It appointed sub-committees to undertake specific inquiries, but it was not until 1986 that it appointed a Public Accounts Committee sub-committee (Walker 1992, 6-7). Kiss (1997) argues that during this period parliamentary committees in Victoria could best be understood as ‘part of the Labor government’s elaborate participatory policy apparatus’ (Kiss 1997, p. 254).

After another change of government, in 1992, the new Liberal government replaced the Economic and Budget Review Committee with the Public Accounts and Estimates Committee (PAEC), introducing a more explicit commitment to the public accounts function. Under the Parliamentary Committees (Amendment) Act 1992 the Committee was required to inquire into, consider and report to the Parliament on

(a) any proposal, matter or thing connected with the public administration or public sector finances; (b) the annual estimates or receipts and payments and other Budget papers and any supplementary estimates of receipts or payments presented to the Assembly and the Council-

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The Liberal government which took office in 1992 under the leadership of premier Jeff Kennett was a quintessential neo-liberal government committed to the implementation of new public management principles in government. It embraced some of the trends which had been developing in public administration and management over the previous two decades, and has been described as ‘a transformative administration that has changed the nature of governance in Victoria in significant ways’ (Costar and Economou 1999, 261). The Kennett government introduced contractual arrangements for public services, privatised utilities, drastically reduced public service numbers and introduced case-mix funding arrangements into public hospitals. It also substantially eroded the position of the Victorian parliament and concepts of parliamentary responsibility. As Eckersley and Zifcak have observed, the Kennett era saw the concentration of political power in the executive and a consequent decline in the power of parliament as well as other institutions (Eckersley and Zifcak, 2001, 68-71). It presented itself not just as a reforming government, but as one which would join social and economic liberalism, and bring private sector principles into the public sector. In its approach to both the institutions and the workforce of the public sector the Kennett government’s ideological aim was privatisation and marketisation (Jacobs and Jones, 2006). Managerialism was not a major part of its program. Changes to how organisations were managed, to governance and accountability mechanisms, were secondary to reducing public sector structures to introduce competition and market disciplines.

In its first report on its own activities, the PAEC referred to the restoration of its ‘proper name’ (Public Accounts and Estimates Committee, 1994, p 1). There was a sense amongst government members that the committee was returning to what a public accounts committee should be. Its chair, Graham Weideman, had been a minister in the previous Liberal government and a member of both the Public Accounts Committee and the Public Bodies Review Committee during his time in opposition. He might have expected a ministry in 1992, given his political record and electoral success as well as his previous closeness to Kennett, but he was not offered one. Instead he was offered any committee he wanted. He chose the Public Accounts and Estimates Committee because he regarded it as the only one which was relevant; he also had the clear intention of maintaining and enhancing its relevance. Weideman’s experience on the previous Public Accounts Committee had given him a 16

number of ideas about what a public accounts committee needed. However he discovered early that the government’s intention to cut government spending extended to parliament (Weideman, 2005). The PAEC was to have its funding and staffing reduced. Weideman’s solution to this problem was to approach the Auditor-General and major accounting firms to second staff to the committee. This approach resulted in a policy throughout the 1990s of staff from the Auditor-General’s office spending time working for the PAEC.

The PAEC, as it was constituted in 1992, had nine members, six from the Legislative Assembly and three from the Legislative Council, five from the government and four from the opposition. Graham Weideman was a member of the Legislative Assembly, as was his deputy, Ian Baker. Following committee convention, Baker was an Opposition member. He had been a minister in the previous ALP government, as had two others, Theo Theophanous and David White. Tony Plowman was a long-standing National Party member. The Public Accounts and Estimates Committee had a very close working relationship with the Auditor-General, as had its predecessor the Economic and Budget Review Committee. Weideman met regularly with the AuditorGeneral, Ches Baragwanath, asking him for advice on priorities for the new Committee, and indeed regarded the PAEC as to some extent the Auditor-General’s committee in parliament. The meaning and closeness of this relationship was to be tested by events later in the 1990s when there were major public conflicts between the premier and the Auditor-General. Initially the Kennett government had every reason to feel grateful to the Auditor-General; it had issued a number of reports that were very unfavourable to the previous Labor government. However, by the time the Kennett government had been in office for several years it was clear that the AuditorGeneral was impartial in his criticism, as he had issued equally unfavourable reports on some of its initiatives and policies. The government’s response was a set of reforms which would remove much of the Auditor-General’s powers. In 1998 the Auditor-General’s Office was split into two. Most of the staff was transferred to Audit Victoria, effectively a state-owned accounting company, and the Auditor-General lost the right to conduct audits of state bodies, while retaining the responsibility for reporting to parliament. English (2003) argued that the government’s rationale that the reforms were a consequence of its application of competition policy could not be

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justified. This was the view of the Auditor-General himself and of a wide range of supporters in the Victorian community. What then was the position of the PAEC?

Graham Weideman had retired from parliament at the 1996 election and the new PAEC was chaired by Bill Forwood, a Liberal who had been elected to the Legislative Council in 1992. Forwood had not previously been a member of the committee; the only continuing member was Theo Theophanous. The deputy chair was Tony Sheehan, who was first elected to parliament in 1982 and had been a minister in the previous government. Ches Baragwanath regarded Weideman’s retirement as ‘a tragedy’ (Yule 2002, 234), believing that Weideman would have resisted Kennett’s attack on the office of Auditor-General. Forwood, he and others believed, was too ready to bow to the wishes of the government (Hayward 1999-2000; Yule 2002). This was not however a belief that was tested. Although the relationship between the Auditor-General and the government began to sour in 1994 with the unfavourable audit reports the government took no action until late 1996, well after the March 1996 election and Weideman’s retirement. Weideman’s position was very different from Forwood’s. He was at the end of a distinguished career and had nothing to lose in defying the premier and the government. Forwood, on the other hand, was at the beginning of his political career and had everything to lose.

Both Weideman and Forwood were, like almost every other Australian parliamentarian, caught in the contradictions between party and parliament. Regardless of their commitment to parliamentary government, Australian members of parliament in this position almost inevitably follow the party line. The only option open to them is to change the line, often by personal lobbying of ministers or the premier. Given Kennett’s personality and style, it is unlikely that any such lobbying would have been effective, although Weideman, with his long acquaintance with Kennett, may have been more successful than Forwood. The PAEC, despite its close association with the Auditor-General, was unable to directly affect the outcome. However the existence of the PAEC and the other institutions of parliamentary government were factors in the outcome.

In 1999 the Kennett Liberal government was unexpectedly defeated at the polls. One of the first actions of the new Labor government was to reinstate and increase the 18

powers of the Auditor-General (Yule, 2002, pp 277-93). In doing so it also added to the powers of the PAEC. Its relationship with the Auditor-General’s office was formalised and it gained the power to select the Auditor-General. It first exercised this power in 2006; the contract of the Auditor-General, who had been appointed by the government in 1999, was due to expire and the PAEC announced that rather than reappoint him it would advertise the position.

PACs as (a)Political Organisations

Members of PACs in Australia and elsewhere emphasise the non-partisan or bipartisan nature of their committees as an element in their success (McGee 2002; Woodley 2004; Stapenhurst 2005). It is argued that when members of parliament become members of a PAC they do, to greater or lesser extents, leave their party affiliations behind them. We would argue that this varies with several other factors, including the level of party discipline in the parliament, the point in his or her career at which members of parliament become members of committees (and especially chairs of committees), and whether the chair is a member of the government or the opposition.

The Australian party system in the federal sphere has been one of two-party dominance since the emergence of parties in the early twentieth century (Woodward 2006). Governments have almost inevitably been formed by either the Australian Labor Party or an anti-Labor group, usually a Liberal Party and National or Country Party coalition. Some state and territory parliaments have experienced hung parliaments with the balance of power held by independents (Costar and Curtin, 2004) and until the 2004 federal election the government did not have a majority in the Senate. The state of Victoria has had stable two-party dominance for more than half a century, although recent reforms to the upper house, the Legislative Council, may result in a dilution of this. Party discipline is strong, it is rare (and indeed politically dangerous) for parliamentarians to cross the floor and equally rare for votes to be decided on anything but a party basis. Kiss (1997) suggested that membership of committees does not lead to any special recognition and that, in fact in the 1980s so many committee places were available (81 for investigatory and 51 for parliamentary domestic affairs committees in a parliament with 132 members) that membership had become an obligation rather than an opportunity. In 19

2006 the Victorian parliament still has 132 members and there are 83 places on investigatory committees and 46 on domestic committees, aside from ex officio positions for presiding officers. The positions on the committees are filled by the parties, and the government, as the party with the majority, has a majority of members on the committees. Committees, including PACS, are an inevitable step in the career of parliamentarians but the culmination of a career for only those few who see who see their vocation as a parliamentary one. When the Victorian government attacked the independence of the Auditor-General in the 1990s, the PAEC was not in a strong position to defend it because the members were constrained by their own political situation to place party ahead of committee.

The foregoing does not necessarily lead to a conclusion that PACs cannot be effective. The Kennett Liberal government had presided over large scale contracting out and privatisation as part of its commitment to NPM policies (Alford and O’Neill 1994; Proust 1996). One of the earliest acts of the new PAC appointed after the election in 1999 was to release two reports into contracting out of services and commercial-inconfidence material and the public interest. The inquiries had been conducted by the old committee, with a majority of members and the chair consisting of government members. The new committee completed the inquiry and issued the report. This could be regarded as simply a political act, members of the new government turning on the policies of the old, but it does not negate the fact that it is possible for the activities and mandates of PACs to be flexible enough to be reactive to the policies of the executive.

Conclusion

The question asked at the beginning of this paper was where public accounts committees, the oldest and most traditional expression of parliamentary financial oversight, are placed in the new public management era. In answering that question it is necessary to consider three things. First, new public management is a dynamic and evolving concept and actuality. Some versions of new public management reject traditions of parliamentary scrutiny. The premier of Victoria, Jeff Kennett, weakened the position of parliament (Eckersley and Zifcak, 2001; English, 2003) and was sometimes reported as regarding himself as ‘the CEO of Vic Inc’ (Yallop, 1996). 20

Pond (2005, p. 171) has described how a neo-liberal Conservative government in the Canadian province of Ontario between 1995 and 2003 ‘effected a drastic transformation in the status of the provincial legislature’ by allowing the government to bypass it when implementing many of its more contentious reforms. However rejection of parliamentary scrutiny is not a necessary element in new public management. Parliamentary committees have the capacity to support managerialist initiatives and to impose increased competition. Second, public accounts committees are political as well as parliamentary bodies. Despite the findings of surveys that their strength in lies their non-partisan or bi-partisan nature (McGee 2002; Woodley 2004; Stapenhurst 2005) they are political organisations. This is particularly the case in Australia, where party dominance is strong. Committee members are not necessarily members only because they are interested or expert in the details of the public accounts or accountability. They are members of the committee because they are members of parliament, and they are usually members of parliament because they are members of a political party. An effective public accounts committee needs more than a formal commitment to parliamentary scrutiny; it also needs political will. Pelizzo and Stapenhurst (2006) came to a similar conclusion about legislative oversight in general. Using data collected by the World Bank Institute and the Inter-Parliamentary Union from 82 countries and the European Union, they concluded that the number of oversight tools available to parliament increased the probability that the country is formally democratic, but increased the probability that it is liberal democratic less. They defined formal and liberal democracy in the following terms:

Formal democracies are political regimes characterized by vertical accountability through regular, free and fair election and by the lack of horizontal accountability. By contrast, liberal democracies are characterized by the fact that they are both vertically and horizontally accountable, that is by the fact that the power of the executive branch is constrained, checked and balanced by other branches of government and also by the fact that civil rights and individual rights of individual and groups are protected. (Pelizzo and Stapenhurst, 2006, p. 3)

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They concluded that the existence of oversight tools is a necessary but not sufficient condition for effective oversight. Also needed is political will, which is itself subject to the political requirements of committee members.

Finally, public accounts committees throughout the world vary widely in the way they operate. The majority are chaired by Opposition members; this is seen as providing some certainty that they will attempt to control the executive. Most Australian committees, on the other hand, are chaired by Government members, who argue that their access to government allows them to better argue for the implementation of their recommendations.

The relationship between individual public accounts committees and governments is always under negotiation in the light of the above factors. They have shown themselves to be very capable of adapting to changing conditions, but their members are politicians who are subject to political pressures, and governments have power over their resources and sometimes their very existence. Political will on both sides may be the most significant determinant of how they will survive.

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