Overview
2.1
In 2016–17, the Joint Standing Committee of Public Accounts and Audit (the Committee) tabled four reports, including Report 459: Annual Report 2015–16. The Committee held 21 meetings, all of which were in Canberra. Nine of those meetings included public hearings. As the 2016-17 year commenced with an election period, the Committee’s substantive work began late in 2016. Table 2.1 shows some key measures of the Committee’s activities.
2.2
In 2016–17, the Committee received 39 responses to recommendations it had made as part of eight inquiries (see Appendix A). The Committee sought and received clarification on some of those responses. It also received updated information at a later period as requested in some of the recommendations. The responses are published on the Committee’s website, on the pages of the relevant inquiries.
2.3
The government has committed—and the Committee expects—that Commonwealth entities will respond to its recommendations within six months. In 2016–17, 92 % of responses were submitted on time.
Table 2.1: The Committee's inquiry activities in 2016-17 can be compared to previous years according to some key measures.
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Number of sitting weeks
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21
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16
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17
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Committee reports tabled in Parliament
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5
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10
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4
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Recommendations made
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26
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50
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17
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Government responses received
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49
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27
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39
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Government responses submitted on time
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78 %
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85 %
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92 %
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Recommendations agreed to by agencies
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44
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24
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38
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Auditor–General’s reports selected for detailed inquiry
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9
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12
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18
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Total meetings held
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22
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17
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19
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Public hearings held
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11
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12
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8
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Submissions received
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23
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56
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111
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Source: Committee secretariat
Reviews of Auditor–General’s reports
2.4
The Committee tabled three reports into matters raised in four ANAO reports. It also commenced five inquiries into matters raised in 14 ANAO reports. The Auditor–General tabled 61 performance audit reports in Parliament in 2016‑17. The Committee considered all of these reports.
Report 460 - Public Sector Governance
2.5
The Committee tabled this report on 16 February 2017. The focus of the report was the governance of the Deregulation Agenda: how it was implemented and reviewed.
2.6
The Committee conducted this inquiry based on the Auditor-General's Report No. 29 (201516)‑
: Implementing the Deregulation Agenda: Cutting Red Tape.
2.7
The Committee found that good governance principles were implemented. This included consultation with stakeholders; clear reporting requirements; the creation of identified units with responsibility; information sharing; and responsiveness to reviews. The Committee supported the ANAO’s recommendation that the Department of Prime Minister and Cabinet take steps to implement the Australian Government’s December 2013 decision that the economic impacts of the Deregulation Agenda be assessed within three years.
Report 461 - Commonwealth Risk Management
2.8
The Committee tabled this report on 10 May 2017. The report examined the risk management, assessment and review processes of the Disability Support Pension (DSP) program.
2.9
The Committee conducted the inquiry based on the Auditor-General's Report No. 18 (201516)‑
: Qualifying for the Disability Support Pension.
2.10
After the ANAO audit, the Government introduced Budget measures to increase the number of medical reviews of people receiving the DSP and new assessment and review processes. Therefore, the Committee’s inquiry considered two related but distinct phases: the ANAO audit period and recommendations; and the implementation of the new processes and increased number of medical reviews.
2.11
The Committee concluded there is further scope for administrative and risk management improvements to the DSP program. The report’s nine recommendations go to managing two risks: efficiency in the administration of the DSP, and burdens placed on individuals with disabilities.
Report 462 - Commonwealth Infrastructure Spending
2.12
The Committee tabled this report on 21 June 2017. The inquiry examined the approval and administrative processes supporting the funding provided by the Commonwealth to the East West Link and WestConnex road projects.
2.13
The Committee conducted the inquiry based on the Auditor-General's reports:
No. 14 (201516)‑
Approval and Administration of Commonwealth Funding for the East West Link Project
No. 38 (2016–17) The Approval and Administration of Commonwealth Funding for the WestConnex Project
2.14
The primary recommendation made by the ANAO related to improving the quality of departmental advice for concessional loans. This was based on deficiencies it identified in advice on a loan provided to the WestConnex project.
2.15
The Committee’s report reinforced the need for established infrastructure assessment processes to be followed and made a number of recommendations aimed at improving the: quality of advice to Ministers; drafting of project approval instruments; management of project payments and milestones; and recording and validating of project information and expenditure. The report also recommended a review of the funding recoupment provisions in the Federal Financial Relations Act 2009. The Committee recommended that the Auditor-General consider a performance audit into whether these deficiencies were addressed in a subsequent loan to the Sunshine Coast Airport expansion project.
Current inquiry - Commonwealth Financial Statements
2.16
The Committee commenced an inquiry based on the Auditor-General's Report No. 33 (2016–17): Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2016.
2.17
A total of 245 findings were reported to Commonwealth entities as a result of the 2015–16 financial statement audits, comprising four significant, 32 moderate and 209 minor findings.
2.18
The ANAO made a number of other findings relating to audit committees, disclosure of key management personnel remuneration and financial sustainability benchmarks.
Current inquiry – Commonwealth Grants Administration
2.19
The Committee commenced an inquiry based on the Auditor-General's reports:
No. 12 (2016–17) The Design of, and Award of Funding Under, the Living Safe Together Grants Programme
2.20
Across all four reports, the ANAO found that entities continue to deliver grant programs with significant administrative flaws. Audit Report No. 4 and Audit Report No. 12, specifically outlined limitations in the progress made by the two respective departments in implementing lessons learned from previous ANAO audits.
2.21
Across the four reports, the ANAO made 11 recommendations, including addressing shortcomings in entities’: assessment of grant applications (for eligibility and merit); advice to decision-makers regarding those applications that should be funded and those that should be rejected; and development of implementation plans to follow through on evaluation findings and recommendations.
Current inquiry – Commonwealth Performance Framework
2.22
The Committee commenced an inquiry based on the Auditor-General's reports:
No. 31 (2015–16) Administration of Higher Education Loan Program Debt and Repayments
No. 58 (2016–17) Implementation of the Annual Performance Statements Requirements 2015–16
2.23
Audit Report No. 31 found that the Higher Education Loan Program (HELP) is a mature program, based on a solid foundation of collecting student loan debt through the income tax system. Nevertheless, it identified scope for the Australian Taxation Office and the Department of Education and Training to make meaningful improvements to important aspects of the program’s administration.
2.24
Audit Report No. 6 found that the nine Commonwealth entities involved in the audit had made a solid start in implementing the requirements for the first corporate plan under the PGPA Act and Rule, with further work required to fully embed the requirements into future plans. The ANAO also found that the Department of Finance had provided effective support to entities in implementing the requirements.
2.25
Audit Report No. 58 found that the two selected Commonwealth entities for audit—the Australian Federal Police and the Department of Agriculture and Water Resources—had met the minimum requirements for preparation and publication of the first annual performance statements under the PGPA Act and Rule. The ANAO made a number of other findings relating to performance criteria, assurance processes and record keeping.
Current inquiry - Commonwealth Procurement
2.26
The Committee commenced an inquiry based on the Auditor-General's reports:
No. 1 (2016–17) Procurement of the International Centre for Complex Project Management to Assist on the OneSKY Australia Program
No. 16 (2016–17) Offshore Processing Centres in Nauru and Papua New Guinea: Procurement of Garrison Support and Welfare Services
2.27
Audit Report No. 1 found that a key shortcoming in the procurement policies and procedures of Airservices Australia is that they did not give appropriate emphasis to the use of competitive processes. As a result, Airservices’ procurement of services from the International Centre for Complex Project Management (ICCPM), on an exclusively sole-sourced basis, did not deliver value for money. The ANAO also found that Airservices demonstrated a lack of organisational commitment to the effective implementation of probity principles in respect to the ICCPM arrangements.
2.28
Audit Report No. 13 found that the administration of health services in onshore immigration detention by the Department of Immigration and Boarder Protection had been improved by the strengthening of contractual arrangements with the selected provider of health services. However, to be able to give assurance that contract objectives are being achieved, the ANAO found further scope for the department to improve its administration of health service delivery.
2.29
Audit Report No. 16 found that the management of procurement activity for garrison support and welfare services at the offshore processing centres in Nauru and Papua New Guinea (Manus Island) by the Department of Immigration and Border Protection had fallen short of effective procurement practice. The ANAO identified deficiencies in the three phases of procurement activity undertaken since 2012 to: establish the centres; consolidate contracts; and achieve savings through an open tender process.
Current inquiry – Cybersecurity Compliance
2.30
The Committee commenced an inquiry based on the Auditor-General's Report No. 42 (2016–17): Cybersecurity Follow-up Audit.
2.31
The audit re-assessed the cyber resilience of three agencies that had previously been found to have not implemented the mandatory Australian Signals’ Directorate top four strategies to mitigate cyber security incidents: the Department of Human Services, Australian Taxation Office, and the Department of Immigration and Border Protection. The audit concluded that only the Department of Human Services complied with the mandatory “Top Four” mitigation strategies and was cyber resilient.
Inquiries into Defence Sustainment Expenditure and Major Projects Report
Inquiry into Defence Sustainment Expenditure
2.32
The Committee commenced an inquiry into any items, matters or circumstances connected with Defence Sustainment Expenditure. The inquiry is being conducted alongside the Committee's inquiry of Auditor-General’s Report No. 40 (2016-17) 2015-16 Defence Major Projects Report, and examines matters of both finance and public administration. This inquiry also considers the Auditor-General’s Report No. 2 (2017–18) Defence’s Management of Materiel Sustainment. This is a readopted inquiry that lapsed following the prorogation of the 44th Parliament.
Inquiry into the 2015–16 Defence Major Projects Report
2.33
The Committee commenced an inquiry into any items, matters or circumstances connected with Auditor-General’s Report No. 40 (2016-17) 2015-16 Defence Major Projects Report. The Defence Major Projects Report (MPR) is a joint report of the Auditor-General and the Department of Defence, and aims to improve the accountability and transparency of Defence acquisitions for the benefit of Parliament and other stakeholders.
Endorsing the 2016-17 MPR Guidelines
2.34
Every year the Committee endorses the guidelines within which the MPR is drafted. The ANAO submitted draft 2016-17 MPR Guidelines on 31 August 2016. The draft guidelines included an indicative timeline for tabling the MPR in November 2017 and a prospective list of 27 projects for consideration, with one removed and two added to the 2015-16 list.
2.35
The Committee endorsed the guidelines for the 2016-17 MPR on 9 November 2016. The guidelines will be published as part of the final MPR.
Commissioning an independent review of the PBO
2.36
Commissioned by the Committee after the 2016 election, the independent review explored the operations of the PBO in the period since its establishment in 2012, with a focus on how it could build on its work so far.
2.37
The independent review was chaired by Dr Ian Watt AC, former Secretary of the Department of the Prime Minister and Cabinet. Mr Barry Anderson, former Deputy Director of the US Congressional Budget Office, was the other member of the review team.
2.38
The review made a total of 16 recommendations, across themes including: a level playing field for costings; accuracy of policy costings; transparency and public understanding of budget and fiscal policy settings; and governance and resources.
Review of the annual budget of the ANAO
2.39
Under section 8(1) of the Public Accounts and Audit Committee Act 1951, the Committee is required to ‘consider the draft estimates for the Audit Office’ and to ‘make recommendations to both Houses of Parliament, and to the Minister who administers the Auditor-General Act 1997’ on the draft estimates. The Auditor-General submitted the ANAO’s 2017-18 draft budget estimates on 1 February 2017, for the Committee’s consideration. The Chair of the Committee made a statement to the Senate on 9 May 2017 and a corresponding statement was delivered by the Deputy Chair in the House of Representatives.
Review of the annual budget and work plan of the PBO
2.40
The Parliamentary Service Act 1999 requires the Committee to consider the budget estimates of the PBO and make recommendations to both Houses and the Presiding Officers. The Parliamentary Budget Officer submitted the PBO’s 2017–18 draft budget estimates on 27 January 2017, for the Committee’s consideration. The Chair of the Committee made a statement to the Senate on 9 May 2017 and a corresponding statement was delivered by the Deputy Chair in the House of Representatives.
Appointment of the Parliamentary Budget Officer
2.41
In accordance with the legislative requirements (s.64XA of the Parliamentary Service Act 1999) the Presiding Officers sought the Committee’s approval to appoint Ms Jenny Wilkinson as the next Parliamentary Budget Officer.
2.42
The Committee approved the appointment of Ms Wilkinson, who commenced her four-year term on 24 July 2017. The Chair of the Committee made a statement to the Senate on 19 June 2016 and a corresponding statement was delivered by the Deputy Chair in the House of Representatives.
External engagement
Australasian Council of Public Accounts Committees (ACPAC) Conference
2.43
Membership of ACPAC includes Public Accounts Committees of all jurisdictions in Australia and New Zealand, Papua New Guinea, Fiji and the Solomon Islands. The Chair and Deputy Chair attended the biennial ACPAC conference in Brisbane in April 2017 on behalf of the Committee. The Conference was an opportunity to exchange ideas and knowledge on public administration issues with other public accounts committees. The Chair gave a jurisdictional update on the Committee’s work during the 45th Parliament. The Deputy Chair gave a presentation on the theme ‘parliamentarian v politician’.
2.44
The next biennial conference is due to be hosted by the Committee in Canberra in 2019.
Commonwealth Association of Public Accounts Committees (CAPAC)
2.45
The Committee resolved to become a member of CAPAC. CAPAC supports the work of Commonwealth Public Accounts Committees in promoting good governance. There are currently 23 members of CAPAC, including the United Kingdom, Canada, Kenya and Sri Lanka.
Audit priorities of the 45th Parliament for 2017–18
2.46
On 25 May 2017, the Committee advised the Auditor–General of the audit priorities of the 45th Parliament for 2017–18 (see Table 2.2). The Committee determined these priorities following consultation with all other parliamentary committees, with reference to the ANAO’s draft Audit Work Program for 2017–18.
2.47
The Parliament identified 35 audits as priorities that were proposed in the ANAO’s draft Audit Work Program for 2017–18. The Parliament also identified several audit priorities that were not listed in the ANAO’s draft Audit Work Program for 2017–18.
2.48
The Committee noted its continued support of the ANAO conducting audits of Government Business Enterprises. The ANAO’s Audit Work Program for 2017–18 was published on 19 July 2017.
Table 2.2: Audit priorities of the 45th Parliament for 2017-18
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Agriculture and Water Resources
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Managing Agricultural Export Quotas
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Australian Taxation Office
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Unscheduled Taxation System Outages
Aggressive Tax Planning
Tax Avoidance Taskforce
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Attorney-General’s
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Administration of the Data Retention Program
Addressing Illegal Phoenix Activity (cross entity)
Statements of Compatibility with Human Rights
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Communication and the Arts
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Migration of Telecommunication Services from Fixed Line to the National Broadband Network
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Defence
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Defence’s Implementation of the First Principles Review
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Education and Training
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Effectiveness of Grant Programs Administration–Follow-up audit
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Employment
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Investigating Compliance with Workplace Laws–Follow-up audit
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Environment and Energy
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Administration of the Renewable Energy Target
Construction of the Perth Freight Link
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Foreign Affairs and Trade
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Economy of the Export Finance & Insurance Corporation
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Health
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Administration of the Aged Care Funding Instrument
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Human Services
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Department of Human Services’ Delivery of Program, Services on Behalf of Other Entities (cross entity)
Human Services’ Systems’ Redevelopment Strategy
Human Services’ Enforcement and Compliance Strategies
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Immigration and Border Protection
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Citizenship function administration
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Industry, Innovation and Science
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Northern Australian Infrastructure Facility-Follow-up audit (cross entity)
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Infrastructure and Regional Development
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Efficiency of the Airport Master Plan Approval Process
Efficiency of the Investigation of Transport Accidents and Safety Occurrences
Collection of Airways Revenue
Progressing Finance & Governance Reform: Norfolk Island
Service Delivery Arrangements with the Western Australian Government for the Indian Ocean Territories
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Prime Minister and Cabinet
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Implementation of the Indigenous Affairs Regional Network
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Treasury
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Risk Management in the Australian Bureau of Statistics
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Social Services
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National Disability Insurance Scheme-Fraud and Compliance Program
Decision-making Controls for Financial Sustainability-National Disability Scheme Participant Plans
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Veterans’ Affairs
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Administration Prime Minister’s Employment Program
Efficiency of the Department of Veterans' Affairs
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Cross Entity Audits
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Complying with Foreign Investment Obligations
Streamlining Grants Administration Program
Implementation of Recommendations–Follow-up audit
The Management of Risks by Public Sector Entities
Cyber Resilience in Government Entities
Indigenous Procurement Policy
Regional Australia Impact Statement process
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Source: Committee secretariat
XX September 2017