Contents

Contents

Membership of the Committee
Resolution of appointment
List of abbreviations
List of recommendations

Chapter 1 Introduction
Chapter 2 Intellectual Property Policies and Practices in Commonwealth Agencies
Chapter 3 The Administration of Major Programs - Australian Greenhouse Office
Chapter 4 Commonwealth’s Administration of the Dairy Industry Adjustment Package
Chapter 5 Service in the Family Court of Australia and the Federal Magistrates Court
Chapter 6 Management of Federal Airport Leases
Chapter 7 Management of Customer Debt – Centrelink
Chapter 8 Management of the Standard Defence Supply System Upgrade
Chapter 9 ANAO Inability-to-form-an-Opinion on the Department of Defence financial statements 2003-04
Chapter 10 Financial Management of Special Appropriations
Chapter 11 Container Examination Facilities - Australian Customs Service
Chapter 12 Regulation of Non-prescription Medicinal Products - Department of Health and Ageing and Therapeutic Goods Administration
Appendix A – Conduct of the Committee’s review
Appendix B – Submissions
Appendix C – Exhibits
Appendix D – Witnesses Appearing at Public Hearings
Appendix E – Schedule of Airport Insurance Cover – Federal Leased Airports 1997 – 2005

Foreword

One of the important functions of the Joint Committee of Public Accounts and Audit, as prescribed by its Act, the Public Accounts and Audit Committee Act 1951, is to examine all reports of the Auditor-General, and report the results of the Committee’s deliberations to the Parliament. Report 404 details the findings of the Committee’s examination of 11 performance audits by the ANAO.

This is the first review of Auditor-General’s reports to be undertaken by the Committee of the 41 st Parliament. This review includes three ANAO reports which were selected for review by the Committee of the previous Parliament. That review was suspended upon the dissolution of the House of Representatives in August 2004.

In December 2004, the new Committee of the 41 st Parliament resolved to complete the review of the three ANAO reports begun by the previous Committee, and also to undertake a busy program reviewing a further eight Audit Reports, selected from the 37 ANAO reports that had been presented to Parliament during and following the election period.

The eleven reviews undertaken by the Committee have covered a broad range of Government agencies, and have included subjects such as grants administration; customer service; regulatory functions; management of assets; contract management; and program implementation. In each chapter of the report we have made recommendations to improve agencies’ efficiency and effectiveness in implementation of programs; and to ensure that the Auditor-General’s recommendations are implemented.

Two of the Audit Reports, nos. 5 and 21 of 2004-05, have detailed major problems with financial management and project administration at the Department of Defence. The Committee held a number of public hearings on this subject, and is concerned to note that further Audit Reports tabled since the beginning of this current inquiry have revealed more problems.

The Committee also reviewed an Audit Report detailing Centrelink’s management of customer debt. This report highlighted problems in planning, communication across regions, and consistency in managing customer debt across the Centrelink network. This report is just one of a series of Centrelink reviews undertaken by the ANAO. The Committee has now embarked on a new review of seven ANAO reports which further detail some problems with Centrelink’s customer service; and a review of another report which details the failed Edge information technology system.

Another theme emerging from our review of a number of the Audit Reports is a need for Government agencies to pay closer attention to their responsibilities under the Constitution and/or the Financial Management and Accountability Act 1997 (the FMA Act); and other important issues such as implementation of appropriate risk strategies; proper project planning; and thorough record-keeping.

These are issues that the Committee intends to pursue throughout its reviews of Auditor-General’s reports in this Parliament. We hope to see an improvement in agencies’ adherence to their financial management, accountability and reporting responsibilities.

During the term of this inquiry Mr Pat Barrett AO retired as Auditor-General, following a ten-year term. On behalf of the Committee I would like to extend my thanks to Mr Barrett for his service to the Commonwealth, and wish him well in his retirement. For the first time, the Committee was involved in the selection of the new Auditor-General, due to the introduction of the Auditor General Act 1997. Following receipt of a nomination for Auditor-General from the Prime Minister, the Committee deliberated on the nomination, and was pleased to endorse Mr Ian McPhee PSM as the new Auditor-General. This process is outlined further in the Committee’s annual report to Parliament, which will be tabled shortly.

The Committee extends its congratulations to Mr McPhee and looks forward to working with him.

Finally, I would like to acknowledge the work of the previous Committee in initiating the review of three Auditor-General’s reports which was suspended due to the election in late 2004. I would like to thank my colleagues on the Committee of the 41 st Parliament for the work they have undertaken in completing this large review of eleven Auditor-General’s reports.

The Committee looks forward to continuing its reviews of Auditor-General’s reports throughout this Parliament.

Bob Baldwin MP

Chair

Membership of the Committee (40 th Parliament)

Chair

Mr Bob Charles MP

 

Deputy Chair

Ms Tanya Plibersek MP

 

Members

Senator Richard Colbatch
(from 14/02/02 , until 25/05/03 )

Mr Steven Ciobo MP

 

Senator Stephen Conroy
(from 5/02/03 , until 10/09/03 )

Mr John Cobb MP

 

Senator John Hogg
(until 5/02/03 , from 10/09/03 )

Mr Petro Georgiou MP

 

Senator Gary Humphries
(from 25/02/03 )

Ms Sharon Grierson MP

 

Senator Kate Lundy
( from 19/11/02 , until 1/04/04 )

Mr Alan Griffin MP

 

Senator Claire Moore
(from 1/07/02 , until 19/11/02 and from 1/04/04 )

Ms Catherine King MP

 

Senator Andrew Murray

Mr Peter King MP

 

Senator Nigel Scullion

The Hon Alex Somlyay MP

 

Senator John Watson

 

Membership of the Committee(41 st Parliament)

Chair

Mr Bob Baldwin MP

 

Deputy Chair

Ms Sharon Grierson MP

 

Members

Senator John Hogg

Hon. Bronwyn Bishop MP (from 17/8/2005 )

 

Senator Gary Humphries

Mr Russell Broadbent MP

 

Senator Claire Moore

Ms Anna Burke MP
(to 14/9/2005 )

 

Senator Andrew Murray

Dr Craig Emerson MP
(from 14/9/2005 )

 

Senator Fiona Nash
(from 7/9/2005 )

The Hon Jackie Kelly MP

 

Senator Nigel Scullion
(to 7/9/2005 )

Ms Catherine King MP

 

Senator John Watson

Mr Andrew Laming MP

 

Senator Andrew Murray

Hon. Alex Somlyay MP
(to 10/8/2005 )

 

 

Mr Lindsay Tanner MP

 

 

Mr Ken Ticehurst MP

 

 

 

Membership of the Sectional Committee (40 th Parliament)

Chair

Mr Bob Charles MP

 

Deputy Chair

Ms Tanya Plibersek MP

 

Members

Senator Andrew Murray

Ms Sharon Grierson MP

 

Senator John Watson

Mr Catherine King MP

 

 

Mr Peter King MP

 

 

 

Membership of the Sectional Committee (41 st Parliament)

Chair

Mr Bob Baldwin MP

 

Deputy Chair

Ms Sharon Grierson MP

 

Members

Hon. Bronwyn Bishop MP
(from 17/8/2005 )

Mr Andrew Laming MP

 

Mr Russell Broadbent MP

Mr Lindsay Tanner MP

 

Ms Anna Burke MP
(to 14/9/2005 )

Senator John Hogg

 

Hon. Jackie Kelly MP

Senator Claire Moore

 

Ms Catherine King MP

Senator John Watson

 

Hon. Alex Somlyay MP
(to 10/8/2005 )

 

Committee Secretariat

40 th Parliament

Secretary

Mr James Catchpole

Inquiry Secretary

Mr Frederick Cook

Research Officer

Mr Alex Stock

Administrative Officer

Ms Jessica Butler

41 st Parliament

Secretary

Mr Russell Chafer

Inquiry Secretaries

Ms Bronwen Jaggers
Ms Rebecca Gordon

Research Officers

Mr Muzammil Ali
Ms Penne Humphries

Administrative Officer

Ms Frances Wilson

List of abbreviations

ABS

Australian Bureau of Statistics

ADC

Australian Dairy Corporation

AFCP

Alternative Fuel Conversion Program

AGD

Attorney-General’s Department

AGO

Australian Greenhouse Office

ANAO

Australian National Audit Office

ASO

Area Service Office

ATO

Australian Taxation Office

ATSIC

Aboriginal and Torres Strait Islander Commission

ATSIS

Aboriginal and Torres Strait Islander Services

CALD

Culturally and Linguistically Diverse

CBOs

Community Based Organisations

CEF

Container Examination Facilities

CEO

Chief Executive Officer

CFO

Chief Finance Officer

CIU

Cabinet Implementation Unit

CNG

Compressed Natural Gas

CRF

Consolidate Revenue Fund

CSC

Customer Service Centres

CSIRO

Commonwealth Scientific and Industrial Research Organisation

Customs

Australian Customs Service

DA

Dairy Australia Limited

DAA

Dairy Adjustment Authority

DAFF

Department of Agriculture, Fisheries and Forestry

DCITA

Department of Communications, Information Technology and the Arts

DEH

Department of Environment and Heritage

DIMIA

Department of Immigration, Multicultural and Indigenous Affairs

DMO

Defence Materiel Organisation

DNSDC

Defence National Storage and Distribution Centre

DOTARS

Department of Transport and Regional Services

DSAP

Dairy Structural Adjustment Program

DVA

Department of Veterans’ Affairs

EXAMS

Examination Data Management System

FaCS

Department of Family and Community Services

FCoA

Family Court of Australia

Finance

Department of Finance and Administration

FMA Act

Financial Management and Accountability Act 1997

FMC

Federal Magistrates’ Court

G-Gap

Greenhouse Gas Abatement Program

IP

Intellectual Property

JCPAA

Joint Committee of Public Accounts and Audit

KPI

Key Performance Indicator

LPG

Liquefied Petroleum Gas

LTO

Land Titles Office

MOU

Memorandum of Understanding

PBS

Portfolio Budget Statements

PDR

Primary Dispute Resolution services

PMKeys

Personnel Management Key Solution

PVRP

Photovoltaic Rebate Program

PwCC

Price Waters Coopers Consulting

RECP

Renewable Energy Commercialisation Program

REEF

Renewable Energy Equity Fund

SCA

Supply Customer Accounts

SDA

Supplementary Dairy Assistance Program

SDSS

Standard Defence Supply System Upgrade

SME

Specialised Military Equipment

SRLs

Self-Represented Litigants

TGA

Therapeutic Goods Administration

List of recommendations

Chapter 2: Intellectual Property Policies and Practices in Commonwealth Agencies

Recommendation 1

The Committee recommends that the Attorney-General’s Department commence development of a whole-of-government approach and guidance for the management of the Commonwealth’s intellectual property, for completion by May 2006. The Attorney-General’s Department should consult widely with Commonwealth agencies, particularly those which are major generators of intellectual property.

Recommendation 2

The Committee recommends that the whole-of-government approach to the management of the Commonwealth’s intellectual property within a framework for IP management should leave each Commonwealth agency free to optimise its role within the framework.

Recommendation 3

The Committee recommends that the Department of Finance and Administration, in consultation with the Attorney-General’s Department, develop guidelines to assist agencies in developing valuation systems for their intellectual property.

Chapter 3: The Administration of Major Programs - Australian Greenhouse Office

Recommendation 4

The Committee recommends that the Australian Greenhouse Office provide to the Committee a copy of the guidelines for administration of the new greenhouse abatement programs announced in the Energy White Paper and the 2004-05 Federal Budget; and an outline of how the new guidelines meet the ANAO’s recommendations regarding assessment and selection procedures for project funding.

Recommendation 5

The Committee recommends that the Australian Greenhouse Office include the following elements in all future agreements for project funding:

Chapter 4: The Commonwealth’s Administration of the Dairy Industry Adjustment Package

Recommendation 6

The Committee recommends that the Department of Agriculture, Fisheries and Forestry ensure that future assistance packages have a clause in relevant legislation which allows for incorrect payments made in error to be reclaimed by the appropriate agency or authority.

Recommendation 7

The Committee recommends that the Government place an overall budget limit on the cost of implementing new assistance packages to encourage administrative cost efficiencies and effectiveness.

Recommendation 8

The Committee recommends that the Department of Agriculture, Fisheries and Forestry report back to the Committee on the progress and evaluation of the Dairy Structural Adjustment Package and the Supplementary Assistance Program by 30 June 2006. The report should outline progress against each program’s original objectives and measurement indicators such as Key Performance Indicators. The report should also outline the Dairy Industry’s progress in adjusting to the new economic environment, including exits from the industry.

Recommendation 9

The Committee recommends that the Department of Agriculture, Fisheries and Forestry ensure that all future agreements with Statutory Authorities include a clause allowing the ANAO access to premises and records, for auditing purposes.

Chapter 5: Client Service in the Family Court of Australia and the Federal Magistrates Court

Recommendation 10

The Committee recommends that as a matter of urgency, the Family Court of Australia introduce toll-free phone numbers for each of its registries.

Recommendation 11

The Committee recommends that both the Family Court of Australia and the Federal Magistrates Court:

Recommendation 12

The Committee recommends that the Family Court of Australia and the Federal Magistrates Court continue to work towards minimising duplication in areas such as client processing, information available to the public via publications, websites and the like, and duplication of administration across the courts.

Recommendation 13

The Committee recommends that the Federal Magistrates Court:

Recommendation 14

The Committee recommends that the Family Court of Australia and the Federal Magistrates Court:

Chapter 6: Management of Federal Airport Leases

Recommendation 15

The Committee recommends that in future privatisation programs, government agencies include a clause in all sales contracts which provides for the Commonwealth’s cost-recovery of administrative expenses.

Government agencies should then ensure that they undertake cost-recovery of such expenses as a matter of course.

Recommendation 16

The Committee recommends that the Department of Transport and Regional Services adopts a procedure which ensures that follow up administration on all insurance reports from the audit contractor are finalised within a three month timeframe.

The Department’s annual report should include a report on the status of all insurance reports from the audit contractor, including the date of the report, and date of any departmental actions arising from the report.

Recommendation 17

The Committee recommends that the annual report of the Department of Transport and Regional Services include a matrix reporting on each airport lease – including the status of annual lease reviews, insurance reports, development obligations, letters of comfort and cost recovery of administrative expenses.

Where time extensions for development obligations have been granted, DOTARS must provide a comprehensive explanation detailing why the extension has been approved.

Chapter 7: Management of Customer Debt – Centrelink

Recommendation 18

The Committee recommends that Centrelink prioritise the implementation of its payment integrity strategy, to ensure that payments are right in the first instance, rather than relying on reactive processes.

Centrelink should report to the Committee on its progress in implementing the payment integrity strategy in February 2006 and July 2006.

Recommendation 19

The Committee recommends that Centrelink proceed with data-matching activities with academic institutions and major employers, in an effort to prevent debts incurred when clients change study courses or employment.

Recommendation 20

The Committee recommends that Centrelink review its methods of identifying customer debt, with a view to improving current methods of debt identification, or increasing the resources dedicated to compliance reviews. Centrelink should also take into consideration the ANAO’s suggestion that it consider other methods of debt identification, such as:

Recommendation 21

The Committee recommends that Centrelink provide training to all officers responsible for debt raising, on the correct circumstances in which to apply a debt waiver. The training should focus on empowering workers to make responsible decisions, and an emphasis on the importance of getting decisions right in the first instance, and not relying on downstream appeal mechanisms.

Centrelink should also introduce a standard operating procedure whereby debt raising officers refer any matter on which they are uncertain whether to apply a ‘special circumstances’ waiver, to a more senior officer for consideration.

Centrelink should undertake a review of the appropriateness of applying Debt Waivers throughout the Centrelink network, taking into account the matters raised in the ANAO report, as a matter of priority.

Recommendation 22

The Committee recommends that the debt waiver amount be raised from $50 to not more than $100. The Committee recommends that where small debts are raised and automatically waived, customers should be informed of this action and of steps they can take to prevent a debt being incurred in the future.

Where a customer continues to incur small debts of less than $100, that are continually waived, Centrelink should retain the right to recover these debts if a pattern of behaviour is apparent whereby the customer is not making any effort to prevent the incursion of small debts.

Recommendation 23

The Committee recommends that Centrelink monitor the work of its debt recovery officers, and those employed by its debt recovery agent, to ensure that customers are encouraged to repay debts via means other than credit cards.

Chapter 8: Management of the Standard Defence Supply System Upgrade – Department of Defence

Recommendation 24

The Committee recommends that all Defence information system projects be subject to the appropriate levels of cabinet, ministerial or departmental approval, as per Defence’s own internal procurement guidelines and the 2003 Kinnaird review.

Where project managers fail to ensure that their project receives the adequate levels of cabinet, ministerial or departmental approval, disciplinary action should be undertaken by Defence.

Recommendation 25

The Committee recommends that the Department of Defence and the Defence Materiel Organisation institute a formal policy which excludes external contractors from being appointed as project managers for IT systems. Any performance bonuses paid to project managers must be directly linked to project milestones being met on-time and on-budget.

Recommendation 26

The Committee recommends that Defence continue with its planned rollout of Radio Frequency Portable Data Entry Terminals (handheld scanners) for use with the SDSS system in warehouses.

However, this rollout must only be undertaken when Defence is confident that the system can adequately support the new technology, to ensure that the system is not circumvented because of users’ frustrations at slow processing.

Defence must also ensure that adequate training is provided to all personnel who will be using the scanners.

Chapter 9: ANAO Inability-to-form-an-Opinion on the Department of Defence financial statements 2003-04

Recommendation 27

The Committee recommends that the Department of Defence report to this Committee every six months against the milestones of the 14 remediation plans outlined in the 2005-06 Portfolio Budget Statements. These reports are to continue until the end of the 41 st Parliament.

Recommendation 28

The Committee recommends that Defence outline to the Committee its plan to ensure that the Julian date problem associated with the SDSS program will be fixed prior to May 2007. Defence’s report to the Committee should include a project plan, costings, milestones, and details of the project management team.

Recommendation 29

The Committee recommends that Defence urgently review the security controls for the SDSS program to ensure that user access is set at the appropriate levels. Defence should report back to the Committee about its implementation of this recommendation by February 2006.

Recommendation 30

The Committee recommends that Defence and the ANAO conduct ongoing consultations to discuss areas of disagreement such as pricing within the SDSS system. Defence should aim to resolve the issue of pricing of items within SDSS by June 2006.

Recommendation 31

The Committee recommends that for Project JP 2077:

Chapter 10: Financial management of Special Appropriations

Recommendation 32

The Committee recommends that the Department of Finance and Administration continues to provide ongoing advice to all Commonwealth agencies in relation to the accurate management and reporting of special appropriations.

Recommendation 33

The Committee recommends that the Attorney-General’s Department and the Department of Finance and Administration resolve which agency is best equipped to administer the Special Appropriation in relation to Mirror Taxes.

Recommendation 34

The Committee recommends that all Chief Financial Officers’ performance bonuses should be linked to a proven understanding and application of correct procedures for the management and reporting of all relevant special appropriations.

Chapter 11: Container Examination Facilities – Australian Customs Service

Recommendation 35

The Committee recommends that the Australian Customs Service:

Recommendation 36

The Committee recommends that the Australian Customs Service:

Chapter 12: Regulation of Non-prescription Medicinal Products - Department of Health and Ageing and Therapeutic Goods Administration

Recommendation 37

The Committee recommends that the TGA provide this Committee with a copy of the audit frequency matrix, and any other documentation linked to determination of audits (such as procedures for undertaking an unannounced audit), when it is completed.

Recommendation 38

The Committee recommends that the Therapeutic Goods Administration document its procedures for implementation of enforcement action against manufacturers. This should include:

Recommendation 39

The Committee recommends that the Therapeutic Goods Administration increase its post-market laboratory testing for non-prescription medicinal products from overseas manufacturers, particularly with an emphasis on products from manufacturers who have not been subject to certification or audit in the past 18 months.

Recommendation 40

The Committee recommends that the Therapeutic Goods Administration urgently review its information management systems, including documentation of key decisions and correct electronic and hard copy filing of relevant documents. The importance of maintaining accurate and up-to-date records should also be communicated to all TGA staff.

Recommendation 41

The Committee recommends that the Therapeutic Goods Administration continue with its re-accreditation process for ISO 9000 and National Association of Testing Authorities (NATA) standards. When the TGA achieves these standards this information should be promulgated to manufacturers and other industry bodies.

Recommendation 42

The Committee recommends that the Therapeutic Goods Administration report to the Committee on the establishment and operation of the Trans-Tasman Therapeutic Products Agency, with regard to how the new agency will continue to regulate non-prescription medicinal products in accordance with the 26 ANAO recommendations. The TGA should also report on any changes to its governance and reporting arrangements. These reports should be forwarded to the Committee in February and July 2006.

 

Print Preliminary Page (PDF 210KB) < - Report Home : Chapter 1 - >