Department heads who continue to blow budgets could be sacked

DEPARTMENT heads could face the sack if they don’t rein in their profligate spending following the Territory’s fiscal crisis

Former West Australian under treasurer John Langoulant addresses the media on the Northern Territory's fiscal crisis at Parliament House. Picture: Jason Walls

DEPARTMENT heads could face the sack if they don’t rein in their profligate spending in the wake of the Territory’s fiscal crisis, the government budgetary toecutter has warned.

Former West Australian under-treasurer John Langoulant’s interim review of the Territory’s finances recommended expenditure growth be slashed from 6.2 per cent to 2.9 per cent, which he described as “a wake up call” for chief executives.

Mr Langoulant said a cultural change away from the notion that budgets were “nothing more than an estimate that can be broken” was required to achieve that goal and the consequences for CEOs who couldn’t curtail their spending could include being shown the door.

“In WA for instance, if agencies exceeded their budget, those agencies were then subject to external review,” he said.

“So the message to the agencies was if you observe your budget targets we will allow you to manage subject to those budget targets — if you don’t observe those budget targets we’ll bring an external process into your organisation to make sure that you do.

“Where one of those boards did not meet its budgets both the chief executive and the chairman were removed, so that’s the accountability which gets applied.”

Chief Minister Michael Gunner said the process of external review had already begun in departments which had consistently blown their budgets, such as health.

“We brought in those external review agencies last year to look at the decisions those CEOs and agencies were making so we can get on top of why their budgets were growing beyond what the estimate should be,” he said.

“It’s not pleasant as a CEO to have someone come in and externally review the decisions you make, it’s not pleasant as an agency to have someone come in and look over your shoulder and say: ‘Justify this decision’.”

Mr Gunner said while the belt-tightening would not necessarily lead to mass sackings, any additional hiring would be tightly controlled.

“We’ve got to stop the growth in public service numbers, that’s the important message out of this,” he said.

“What the current fiscal situation does, it provides us with a line in the sand moment, we can go to these agencies and say: ‘You can’t blow your budgets because the money you’re looking at spending is money that doesn’t actually exist’.”