Chair's foreword

I’ll readily admit that performance reporting is not the most exciting of topics. But for public sector agencies charged with serious responsibilities and entrusted with spending billions of dollars wisely it really, really matters.

Unlike financial reporting, which has been subject to Australian National Audit Office (ANAO) audits for decades, performance reporting has been underdeveloped and under resourced.

As the old saying goes, ‘what is measured matters’, and how agencies assess and report on their performance impacts quite directly on what they value and do for the public. Performance reporting is also a key requirement of government entities to provide transparency and accountability to Parliament and the public.

Plainly speaking, while Australians can trust the accounts of government departments as they are thoroughly audited, for too long the Parliament and the public have had no reliable way of knowing whether what agencies report in their performance statements is true or not. Do all those often mind-numbing Key Performance Indicators and measures fairly represent what an agency does? Are there actually data sources underneath all the reports? Are they a fair measure of what’s been achieved, or did someone fudge the books?

The introduction of performance statements audits is therefore a big change for the ANAO, and it is a change the Committee has, and continues to, strongly support. The ANAO’s audits of the 2021–22 performance statements show both a clear improvement in the performance reporting of audited entities and increased engagement in the public sector more broadly. Sometimes entities need to know that someone might be checking their work, to check it themselves.

The Committee examined the key issues raised in the ANAO’s audit of the 2021–22 performance statements, including the impact of machinery of government changes, lack of robust methodologies or supporting information for performance measures and non‑compliance with the Public Governance, Performance and Accountability Rule. The Committee also examined how the ANAO conducts its performance statements audits and the impact on the entities, including issues related to the audit methodology, timing, and frequency.

The Committee’s report makes four recommendations, including that the Auditor-General Act 1997 be amended to remove the requirement for the Minister for Finance to request ANAO to conduct performance statements audits. This is not a new idea for the Committee. In fact we recommended that this requirement be removed twice before but the previous government took no action. While we appreciate it’s not the highest priority change to pursue, we continue to see it as important to streamline the ANAO’s work and hope the Minister will progress the change.

The Committee’s report makes three additional recommendations to improve the process and impact of performance statements audits, including that the:

ANAO share trends and lessons learnt in performance reporting with the sector
ANAO and the Department of Finance develop and publish a schedule for performance statements audits, and
ANAO and the Department of Finance update the Committee on their work on the audit methodology and guidance on performance reporting requirements.

The ANAO’s audits of the 2021–22 performance statements were the first iteration after the ANAO’s pilot program and both the ANAO and the audited entities understand that this process will mature. The ANAO is still developing its audit methodology and making sure it is driving entities to improve their performance reporting rather than complying with the minimum requirements. The Committee understands that ANAO will keep developing its performance statements audits as its rollout expands, and as such the Committee plans to continue its investigation of this work.

I would like to thank all inquiry participants and witnesses for assisting the work of the Committee, and the Deputy Chair and other Committee members for their participation in and engagement with this inquiry. I would also like to thank the Committee secretariat for their professionalism in supporting the work of the Committee.

Mr Julian Hill MP

Chair