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Zero-Based Budgeting

The Hon. J.A. DARLEY (15:39): My questions are to the Treasurer. Bearing in mind that the principle of zero-based budgeting in the formulation of budgets has been around for at least 40 years, can the Treasurer advise how many government departments and agencies adopted the principle of zero-based budgeting in the formulation of their 2018-19 budgets and how many government departments and agencies did not?

The Hon. R.I. LUCAS (Treasurer) (15:39): I thank the honourable member for his question. Whilst he did not put it in his explanation, I understand he had an interesting experience with a prominent Adelaide council in relation to the whole notion of zero-based budgeting and their implementation.

In the budget speech yesterday I indicated—and I know the honourable member's great interest in this, and we have pursued the issue in parallel during Budget and Finance Committee meetings over recent years—on behalf of the government that we had implemented a simplified version of zero-based budgeting, as I put it. Can I make it clear what I meant by that. What I meant by that was that, in the budget bilaterals, the discussions that I had and Treasury had with ministers and with CEOs in particular is that we indicated to them at the budget bilaterals that we no longer accepted the former governments tradition of, in essence, a salami slicing approach to expenditure restraint; that is, you just continue doing everything that you used to do and to achieve a savings target. Remember that the former government had $715 million worth of savings locked and loaded in their Mid-Year Budget Review from December.

What we said was that we were not going to accept that. What we wanted them to do was a simplified version of zero-based budgeting. Return to first principles. Go back and have a look through your expenditure at what are either wasteful or low priority programs that you are currently funding. If the new government wants to fund a new program on palliative care, paediatric eating disorders, cancer services or whatever it might be, we therefore need to say that there are existing Labor priorities, existing Labor programs, existing Labor projects which are a lower priority to important programs like palliative care, paediatric eating disorders, suicide prevention programs and the like.

It is a simple matter: if you are going to incur additional expenditure on new programs or extended programs, unless you have a magic pudding, you actually have to stop funding certain programs. That is the approach we have adopted. We have had the debate in this house. One of the former government's favourite programs, Fund My Neighbourhood—$20 million—we took the difficult decision to say that was a lower priority program than some of the new programs that the new government, which has been elected by the people, wanted. They had rejected the former Labor government, and the new government had new priorities and wanted new projects and programs.

That was the process. There was no formal written directive that went to departments and agencies in relation to that. As a result of the first experience we have had, which is, as I have described, a simplified version of zero-based budgeting, I am having and will have further discussions with Treasury to see whether or not we could or should formalise that process through the budget bilateral process.

As the honourable member knows, I don't support it being a legislative provision. I believe good governance and good governments should be able to manage these processes with obviously their ministers being in charge of their CEOs and their departments in terms of managing expenditure restraint. That is an ongoing debating issue in relation to it.

The answer to the honourable member's question, which I can give him, is that all departments and all ministers were asked to look at this simplified version of zero-based budgeting, that is, to go through and see what particular programs, projects or priorities you don't not want to continue—not that you don't want to continue them. Ultimately, in the end, we have to make the difficult decision to say that, to fund a new program, we have to get rid of this particular program.

I indicated in the speech yesterday a reasonable selection but not an absolute comprehensive selection of projects, programs and priorities that were not going to be continued. The detailed explanation in the budget papers do outline a series of other and further projects and programs that ministers and CEOs said, 'We're not going to continue to fund those particular programs.' So there is further detail in the budget papers and the budget documents, which I am sure will be explored during the estimates committee process in the coming weeks.

That's the answer to the question: all agencies were asked in terms of that process. I'm happy to continue to engage with the honourable member with his ongoing interest in responsible expenditure restraint, a shared goal that we have. As I've said, we the government are not inclined to move down the path of legislative regulation of this particular area at this stage, but we are prepared to engage in productive discussion as to whether the version we used in our first budget round of bilaterals might be further improved. I'm happy to have that discussion with the honourable member as well.

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