Chapter 2Review of selected annual reports
2.1This chapter examines selected annual reports in greater detail in accordance with standing orders. The committee has selected the annual reports of the following non-corporate Commonwealth entities, corporate Commonwealth entities and non-statutory bodies for examination:
Department of Agriculture, Water and the Environment;
Murray-Darling Basin Authority;
Department of Infrastructure, Transport, Regional Development and Communications; and
Australian Broadcasting Corporation.
2.2In accordance with standing orders the following summaries of reports examined draw attention to significant matters relating to the operations and performance of bodies during the year under review.
Climate Change, Energy, the Environment and Water portfolio
Department of Agriculture, Water and the Environment
2.3The Department of Agriculture, Water and the Environment (DAWE) annual report for 2021-22 was presented out of sitting in the Senate on 21 October 2022, and tabled in the House of Representatives on 25 October 2022.
2.4The Secretary of the department, Mr Andrew Metcalfe, outlined some of the challenges the department had faced in 2021-22, as well as its achievements in this period, including:
responding to floods and bushfires, in particular though recovery of native wildlife facilitated by habitat management, breeding programs and protections for fire-affected species and ecological communities;
quarantining the department’s Antarctic stations from COVID-19;
arrival of the Antarctic icebreaker RSV Nuyina, and its first voyage south as a research and resupply vessel;
maintenance of Ramsar sites, promotion of diversity of vegetation, and support for waterbirds and the spawning of native fish in the Murray Darling Basin;
declaration of two new marine parks in Indian Ocean Territory, extending Australia’s marine park coverage to 40 per cent of its waters;
presentation of the department’s action plan on species protection under the Threatened Species Strategy 2021—2031; and
development of an Indigenous Platform for Shared Benefits Realisation, facilitating collaborative work with Indigenous Australians.
Performance reporting
2.5Based on an Australian National Audit Office audit of DAWE’s annual performance statements, the department revised many of the performance measures it set out in its Corporate Plan 2021-22 for the purposes of its 2021-22 annual report. The below examination is based on the performance measures which appear in the annual report.
2.6Each of the performance measures was presented with a summary of the results achieved against the criteria and targets. Three of the department's five purposes related to outcomes under the environment and water portfolios: 'Environment and heritage', 'Antarctic' and ‘Water resources’. Of the 26 listed performance measures under these three purposes, the department reported 12 as achieved (including the performance measure Establish a revised baseline of: national average of habitat condition assessment scores which was satisfied through the establishment baselines for future measurement), one as mostly achieved, nine as partially achieved, four as not achieved.
2.7The performance measure stability or improvement in trajectory of the Threatened Species Main Index was not achieved. The last update of the Threatened Species Index in 2020, which used 2017 data, saw a continued decline in the relative abundance of Australia’s threatened species at the national as well as state and territory scales (limited to threatened species under the EPBC Act). The department reported that it ‘worked with other agencies to support threatened species protection and recovery through implementation of the threatened Species Strategy Action Plan 2021-26’.
2.8The performance measure approval bilateral agreements are in place, underpinned by national environmental standards and supported by strong assurance was not achieved. The department noted that in the 2020-21 reporting period, 2 bills to amend the EPBC Act designed to implement the recommendations of the Samuel Review were introduced to the Senate. The Environment Protection and Biodiversity Conservation Amendment (Streamlining Environmental Approvals) Bill 2020 had the purpose of facilitating bilateral agreements with the states and territories, and the Environment Protection and Biodiversity Conservation Amendment (Standards and Assurance) Bill 2021 of establishing a legislative framework for national environmental standards and an Environmental Assurance Commissioner. These Bills lapsed when the 46th Parliament was prorogued. The department reported that it has started working with the government on its response to the Samuel review.
2.9The performance measure increase in the volume of water recovered for environmental purposes in the Murray-Darling Basin to meet Basin Plan targets was not achieved. There was no progress on the surface or groundwater bridging the gap targets, which was similar to the 2020-21 result. In providing context for this lack of progress on targets in 2021-22, the department stated that ‘Murray-Darling Basin states are key partners in our water recovery efforts’.
2.10The performance measure number of water resource plans accredited under Commonwealth law was not achieved. No water resource plans were accredited during the reporting period. Of the 33 water resource plans in place, 13 have been accredited. The department reported that New South Wales submitted 20 plans to the Murray Darling Basin Authority (MDBA) in June 2020, all of which were subsequently withdrawn ‘because of inconsistencies with the Basin Plan’. One of those plans was resubmitted and was under assessment at the end of the reporting period.
Financial reporting
2.11The annual report provided a summary of DAWE’s financial performance in 2021-22. DAWE reported a total comprehensive income of $12.6 million, significantly lower than the budgeted comparator figure of $107.9 million.
2.12DAWE detailed a number of major budget variances in the year ended 30June 2022, and provided explanations. These variances include:
higher than budgeted supplier expenses, related primarily to the department’s approved operating loss for 2021-22;
higher than budgeted employee benefits due to higher staffing levels than originally anticipated, and provisioning for prior year underpayments;
higher than budgeted depreciation due to the capitalisation of the RSV Nuyina and full year depreciation on assets revalued in 2020-21 not included in original budget;
unexpected gain due to changes in the key economic and engineering assumptions used to calculate the restoration provision for Antarctic solid waste disposal;
higher than budgeted government revenue due to additional appropriations received though Appropriation Act (No. 3) 2021-2022, and supplementation which will be appropriated in 2022-23;
total assets higher than originally budgeted, primarily due to:
trade and other receivables higher than budgeted due to capital project delays and retained prior year underspends;
non-financial assets lower than original budget due to capital projects delays including Antarctic-related programs and the department’s system integration software projects; and
lower than budgeted lease liabilities, primarily due to higher than budgeted principal payments.
2.13The Secretary and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that DAWE will be able to pay its debts when they come due.
2.14The Australian National Audit Office (ANAO) independent report found that DAWE’s financial statements for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.15The committee considers the Department of Agriculture, Water and Environment’s 2021-22 annual report to be ‘apparently satisfactory’.
Murray-Darling Basin Authority
2.16The 2021-22 annual report for the MDBA was tabled in the House of Representatives on 27 October 2022 and in the Senate on 21 November 2022.
2.17In his review, Authority Chair Sir Angus Houston outlined some of the major changes the MDBA had undergone in 2021-22, as well as the focus of it work. These included:
retirement of Mr Philip Glyde as MDBA chief executive, and commencement of Mr Andrew McConville in the role;
exit of Authority member Ms Joanna Hewitt, and entry of Dr Jane Doolan and Ms Roseanne Healy; and
working towards the Basin Plan Evaluation in 2025 and the Basin Plan Review in 2026.
2.18Chief Executive McConville referred to several challenges faced and achievements made in his own review, including:
volume of water in government owned dams in the Murray-Darling Basin more than doubling between June 2020 and June 2022;
flood operations to protect the Hume Dam and limit flood damage to downstream communities during extreme weather events, as well as efforts to react to blackwater risks created by flooding across New South Wales;
responsibility for compliance moving from the MDBA to the Inspector-General of Water Compliance in August 2021;
finalisation of the Registers of Take for 2020-21, which tracked how much water was taken across the Basin for 29 surface water and 80 groundwater areas, and their provision to the Inspector-General of Water Compliance;
implementation of a 3-year communications and engagement plan from 2020 onwards to improve transparency and confidence in the Basin Plan;
progress on the River Modelling Uplift Project to integrate all existing MDBA and state government river models by July 2024; and
operation of the Basin Condition Monitoring Program to deliver new monitoring and reporting of economic, social and environment conditions in the Murray-Darling Basin.
Performance reporting
2.19The MDBA’s purpose for the reporting period was ‘to advance the sustainability, productivity, wellbeing and resilience of the Basin and its communities’.
2.20The MDBA assessed its performance in 2021-22 against 19 performance measures, of which were 13 were met, two were partially met, two were not met, and two were not applicable.
2.21The performance measure Percentage of water resource plans (WRP) that are accredited was not met. The MDBA assists Basin states to prepare WRPs and recommends them for accreditation by the minister for water. Of the 33 WRPs to be accredited there were 20 outstanding at the time of reporting, all in NSW, falling short of the 2021-22 target of 100 per cent accredited. On 30 June 2022, one of the outstanding WRPs was resubmitted for assessment, with the rest in the process of being redrafted and resubmitted.
2.22The performance measure Percentage of report cards with maintained for improved environmental health for 7 key sites of the River Murray system was not met. Two sites maintained the same rating and the other five were classified as declining. The target was 70 per cent, which would have constituted five sites maintaining or improving condition. The MDBA attributes this failure to the impacts of hot and dry conditions across the southern Murray-Darling in recent years.
Financial reporting
2.23The annual report provided a summary of the MDBA’s financial performance in 2021-22. The MDBA reported a total comprehensive income of $29.7 million, higher than the budgeted total comprehensive income of $21.6 million.
2.24The MDBA attributes this higher than expected income to revenue received for projects for which expenditure was lower than funding received, including the South Australia Riverland Floodplain Integrated Infrastructure Project, and the Integrated River Modelling Uplift Project, as well as lower spending than anticipated on Murray-Darling Basin Agreement functions.
2.25The Chief Executive and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that MDBA will be able to pay its debts when they come due.
2.26The ANAO independent report found that the MDBA’s financial statements for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.27Overall, the committee considers the MDBA’s 2021-22 annual report to be ‘apparently satisfactory’.
Communications and Arts portfolio
Department of Infrastructure, Transport, Regional Development and Communications
2.28The 2021-22 annual report for the Department of Infrastructure, Transport, Regional Development and Communications (DITRDC) was tabled in the House of Representatives on 27 October 2022 and in the Senate on 21 November 2022.
2.29In his review, the Secretary Mr Jim Betts provided a broad outline of the achievements of the department over the 2021-22 reporting period, including delivering on the purposes of ‘enabling people in Australia to connect to effective, safe communications services and enabling investment in communications technologies’, as well as ‘supporting sustainable and inclusive creative and cultural sectors, and protecting and promoting Australian Culture and content’.
Performance reporting
2.30Of DITRDC's six purposes, two relate to the communications and arts portfolio, including 'Communications connectivity' and 'Creativity and Culture'. Of the 37 performance measures listed under these two purposes, the department reported 19 as achieved, four as partially achieved, 11 as 'no target', and three as ‘no data available’.
Key activities
2.31In 2021-22, the department’s key activities within the ‘communications services’, ‘communications infrastructure’, and ‘creative and cultural sectors’ objectives included:
supporting the statutory review of the News Media and Digital Platforms Mandatory Bargaining Code commenced in February 2022;
working with the government to progress the program of work to reform media laws, including the release of the Media Policy Statement: Green Paper Response and Next Steps;
deployment of temporary facilities under the Strengthening Telecommunications Against Natural Disasters (STAND) package during the March 2022 East Coast floods to impacted communities, including Road Muster Trucks and satellite fly-away kits, to provide temporary telecommunications coverage. This included the installation of 750 NBN Sky Muster satellite services at evacuation centres and emergency depots around the country at locations nominated by state and territory governments and emergency services;
implementation of the Regional Broadband Scheme in line with legislative requirements in partnership with the Australian Communications and Media Authority;
implementation of a $500 million support package for the cultural and creative sector as it recovers from the economic disruption of COVID-19, as well as the $200 million Restart Investment to Sustain and Expand (RISE) fund, which has supported 541 projects across the arts and entertainment sector; and
provision of ‘last resort’ funding assistance through 28 grants worth $53.5million under the COVID-19 Arts Sustainability Fund.
Financial reporting
2.32The annual report provided a summary of DITRDC’s financial performance in 2021-22. DITRDC reported a total comprehensive income of $9.8 million, lower than the budgeted comparator figure of $17.7 million.
2.33DITRDC reported budget variances in year ended 30June 2022, and provided explanations. These variances included:
grants and contribution expenses higher than the original budget mainly due to a transfer of the departmental funding to administered appropriation within the Public Interest Telecommunications Services Special Account and a grant to a portfolio agency that was not included in the original budget;
revenue from contracts with customers higher than budget mainly due to the recovery of expenses associated with seconded employees being budgeted against employee expenses;
financial assets higher than budgeted, mainly due to higher than budgeted cash and appropriation receivables;
intangibles higher than budget, mainly due to commencement of capital projects that were delayed in the prior financial year due to the impact of COVID-19;
other non-financial assets higher than budget, mainly due to the timing of payments made in relation to prepayments; and
other payables higher than budget primarily due to budget not taking into account six additional business days between the last payday and 30 June.
2.34The Secretary and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that DITRDC will be able to pay its debts when they come due.
2.35The ANAO’s independent report found that DITRDC’s financial statements for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.36The committee considers the Department of Infrastructure, Transport, Regional Development, Communication’s 2021-22 annual report to be ‘apparently satisfactory’.
Australian Broadcasting Corporation
2.37The Australian Broadcasting Corporation (ABC) Annual Report 2022 was presented out of sitting in the Senate on 20 October 2022, and tabled in the House of Representatives 25 October 2022.
2.38In her foreword, ABC Chair Ms Ita Buttrose noted the 90th anniversary celebrations of the public broadcaster that took place during the reporting period, and outlined challenges faced and achievements made during 2021-22, including:
news investigations into the cosmetic surgery industry, sexual abuse in sport, and failings in child protection and the guardianship system;
appointment of 60 additional journalists to regional areas;
efforts of Emergency Broadcasting teams covering floods across New South Wales and Queensland; and
the appointment of the ABC’s first Ombudsman, Ms Fiona Cameron, following an Independent Review of ABC Complaints Handling Procedures.
Performance reporting
2.39The ABC’s purpose for the reporting period was ‘to deliver valued services that reflect and contribute to Australian society, culture and identity’, with a vision ‘to be the home of Australian stories – accessible, bold, creative’.
2.40The ABC assessed its performance in 2021-22 against 20 performance measures, of which one was exceeded, 10 were met, and nine were not met. This is a decline in targets met from 2020-21, when one was exceeded, 12 were met, and seven were not met. The targets cited below are those that apply for 2021-22.
2.41The target for Awareness of the ABC among all Australians was not met. The percentage of Australians who were aware of an ABC’s product or service had increased from 94 per cent in 2020-21 to 95 per cent in 2021-22, under the target of 96 per cent. Echoing its 2020-21 annual report, the ABC stated that it will use targeted advertising campaigns (including off platform activity) and improving brand attribution for ABC content that is distributed through third party environments to increase awareness further.
2.42The target The ABC is trusted by all Australians was not met, with the percentage of Australians who trust the ABC falling from 78 per cent in 2020-21 to 77 per cent in 2021-22, against a target of 80 per cent. While noting that it is the most trusted media source in Australia, the ABC restated its commitment to ‘enhance the transparency of its efforts to ensure accurate and impartial journalism that the Australian public can trust.’
2.43The target The ABC connects me to my local community was not met, with no progress being made on this performance measure since last financial year. 64 per cent of those surveyed agreed with the statement, narrowly missing the target of 65 per cent. The ABC did however highlight its increased investment in regional journalism and Emergency Broadcasting offering, as well as an increased presence in outer suburban and regional areas.
2.44The target Distinctiveness was not met, with 82 per cent of the ABC audience feeling that the content they consumed was distinctive, against a target of 84 per cent. This is a decline from 2020-21, when the proportion was 83 per cent. The ABC attributed not meeting this target in part to their audience engaging with news content more than other products during the COVID-19 pandemic, as news content is rated as their least distinctive product.
2.45The target for Indigenous employees, introduced in the ABC’s 2020-21 Corporate Plan, was not met. There was a slight increase in the measure from the first reporting period it was recorded, from 3.2 per cent for 2020-21 to 3.3 per cent for 2021-22, against a target of 3.6 per cent. While highlighting the negative effect of COVID-19 on the recruitment pool, the ABC stated that it will continue to work to create opportunities for indigenous staff under its Reconciliation Action Plan.
2.46The target for Culturally diverse executives was not met, with the measure falling from 12.5 per cent in 2020-21 to 12.1 per cent in 2021-22, against a target of 15 per cent. In the context of a ‘demanding and competitive job market’, the ABC stated that it will continue its recruitment reporting tracking of culturally and linguistically diverse candidates, the development of inclusive recruitment training, and creating internal and external opportunities for career development for CALD staff.
2.47The target for Culturally diverse content makers was not met, despite a reasonable increase in the measure from the previous reporting period. Just over 11 per cent of ABC content makers were culturally diverse in 2020-21, compared to 12.8 per cent in 2021-22, falling short of the target of 15 per cent.
2.48The target for Employees with a disability was not met, despite improvement towards the target of 8 per cent. In 2020-21, representation of disabled employees was 4.7 per cent, which then rose to 5.6 per cent in 2021-22. The ABC noted the impact of partnerships with JobAccess and the Human Rights Commission’s IncludeAbility Employment Project on increasing recruitment and retention of disabled staff and raised the possibility of an affirmative measure recruitment program targeting disability in the future.
2.49The target for Operation of transmission facilities was not met. The target of 100 per cent was met in 2020-21, but was marginally missed in 2021-22, at 99.47 per cent, due to services in Tasmania going off-air in the context of extended wet weather and storms which impacted power supply to transmission facilities. The ABC reports that large capital replacement works to reinforce transmission capability continue across the country.
2.50The committee notes that the same performance measures which were not met in the 2020-21 reporting period were also not met in 2021-22.
Financial reporting
2.51The annual report provided a summary of the ABC’s financial performance in 2021-22. The ABC reported total comprehensive income of $55.3 million, significantly higher than the budgeted total comprehensive income of $2.6million.
2.52The directors and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the ABC will be able to pay its debts when they come due.
2.53The ABC reported a number of major budget variances for the year ended 30June 2022, and provided explanations. These variances included:
employee benefits balance was higher than budget, primarily due to the allocation of greater than budgeted own source revenue towards additional content making positions, including new regional journalism roles;
suppliers’ expenditure was lower than budget due to one off savings in costs such as travel in the context of COVID-19, as well as an increased use of employees for content creation;
the revaluation of the ABC’s Artarmon New South Wales property prior to reclassification as an asset held for sale, which had not been budgeted as no asset revaluations had been expected;
ABC’s 'other investments’ balance, which is comprised of surplus cash in term deposits with an original maturity of more than three months, was higher than budget. The ABC attributed this to a higher opening balance, the investment of proceeds of the sale of ABC’s Elsternwick Victoria Property, and the delay of cash outflows for capital projects due to the impact of COVID-19 on supply chains, resulting in a temporary increase in surplus cash invested in term deposits; and
cash proceeds from the sale of the ABC’s Elsternwick Victoria property, which did not take place until after the budget had been completed.
2.54The ANAO’s independent report found that the ABC’s financial statement for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
Compliance index
2.55As a corporate Commonwealth entity, the ABC is required to prepare its annual report in accordance with the legislative requirements of the PGPA Rule. Entities are required to include the table set out in the PGPA Rule.
2.56In its Annual report (No. 1 and No. 2 of 2022), the committee noted that for the requirement ‘any significant activities and changes that affected the operation or structure of the entity during the reporting period’, the compliance index refers to ‘all sections’ of the report. The committee recommended that the ABC provide a short summary of major activities and changes, along with an accurate and specific page reference, in future reports. This recommendation has not been implemented in the ABCs’ 2022 annual report, where the above requirement again appears in the compliance index with a reference to ‘all sections’ of the report. The committee again encourages the ABC to be more specific in addressing this requirement.
2.57Overall, the committee considers the ABC’s 2022 annual report to be ‘apparently satisfactory’.
Senator Karen Grogan
Chair