John Armstrong: Review blunts English's attempt to skewer Labour

On a good day, Bill English's blunt Southland drawl can cut like a rapier when the right mixture of sarcasm and outrage are added to the mix.

Yesterday was not one of those days. The Finance Minister's attack on Labour, which followed the release of the report of the ministerial inquiry into the failure to disclose a $300 million shortfall in accident compensation funding in the run-up to last November's election, had all the bite of a toothless Muppet.

That was not English's fault. National initially had high hopes the inquiry conducted by management consultant Michael Mills would ping Michael Cullen, English's predecessor, and former ACC Minister and Labour front-bencher Maryan Street as being responsible for hiding the cost blow-out and thereby breaching the Public Finance Act.

Instead, the report is a fizzer from National's point of view. It lays the blame solely at the Treasury's door for not including the shortfall in the list of "fiscal risks" in last October's pre-election update - otherwise known as the "opening of the books".

The update, required by law to present a true and accurate picture of the state of the Government's accounts, was introduced after the 1990 election when Labour hid from voters the fact that hundreds of millions of dollars would have to be poured into BNZ to prop up the then partly-privatised institution.

Last year's non-disclosure of the ACC's liabilities is the most serious lapse since that time. National would have wanted for nothing better than to have Cullen implicated as breaching the Public Finance Act even though he is quitting Parliament shortly.

Instead it had to listen to Labour loudly claiming Cullen and Street had been exonerated, which in terms of the dictionary definition of "free from blame", is absolutely correct.

The inquiry's report, however, found that Street was told in mid-August by ACC that it would likely be seeking appropriations of $300 million-plus each year for the next five years. Cullen's office got the same indication a few days later.

That was some weeks before the Treasury finalised its list of fiscal risks for the pre-election update. The report finds there is no question that the list should have included what was going on at ACC. That did not happen because extra funding had yet to be agreed and the Treasury determined the matter was not under "active consideration" by Cullen, as required by the department's rules for inclusion in the list.

Still, Cullen later signed off the fiscal update taking responsibility for the "consistency and completeness" of the fiscal update in accordance with the Public Finance Act.

That looked reason enough for English to go after Cullen in Parliament yesterday which he duly did to the extent of making a ministerial statement to highlight the report's findings.

Labour MPs just laughed. They knew that English knew his case was completely undermined by the report not commenting on the two former Labour ministers' actions. They were not even interviewed by the inquiry.

The moment of truth arrived in the form of Act's Sir Roger Douglas asking English whether he intended to refer Cullen to the police for a "blatant" breach of the Public Finance Act.

English replied that the problems facing ACC were far more important than a "theoretical constitutional discussion" about whether previous ministers could be prosecuted.

The question of whether ministers should be up front about fiscal risks is more than just theoretical. Lack of transparency can potentially have a significant impact on an election campaign - especially when it comes to the affordability of a party's spending promises.

Cullen and Street have avoided sanction under the provisions of the Public Finance Act. That still leaves open the question of whether they have abided by the spirit of the act.