Tanner To Stop Squirrelling

Sydney Morning Herald

Wednesday November 19, 2008

Mark Davis Political Correspondent

HUNDREDS of millions of dollars in cash stashed by federal government departments and agencies is being targeted in a funding shake-up by the Minister for Finance, Lindsay Tanner.

As the economic slowdown puts pressure on the budget surplus, the Finance Department has devised plans to overhaul more than $10 billion a year in funding for government departments for depreciation of their equipment and employee entitlements.

Mr Tanner has been concerned that some agencies have been squirrelling away the funds as part of cash reserves amounting to hundreds of millions.

He is also concerned about suggestions that some departments have been double dipping - spending their depreciation funding on running costs, then seeking fresh funds when the time comes to replace assets such as computer systems.

The present system, in which departments are given funds to cover non-cash expenses every year rather than when the money is needed, was introduced by the Howard government.

Mr Tanner told the Herald he was developing alternative funding models to improve the accountability of departments and ensure they used the cash appropriated by Parliament for its intended purposes.

"The lack of transparency of the appropriation and use of these funds has led to criticism that the provision of cash in excess of immediate needs provides a pool of funds which can be used for other purposes."

The Finance Department is considering "net cash" funding, where appropriations to departments and agencies would be based on their cash expenses and receipts each year.

Instead of receiving appropriations every year for depreciation charges, for instance, agencies would be provided with the funds they needed to replace assets only in years when the cash was required.

Some smaller agencies, which have been feeling the pinch from the Rudd Government's "efficiency dividend" funding cut, are understood to be concerned about losing control of cash reserves.

Mr Tanner said the overhaul was not designed to cut overall funding to departments.

© 2008 Sydney Morning Herald

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