Chapter 2


Chapter 2

Annual reports of Commonwealth Departments

2.1        For the financial year of 2011–12, the annual reports of the following departments were referred to the committee for examination and report:

  • Department of Families, Housing, Community Services and Indigenous Affairs
  • Department of Health and Ageing
  • Department of Human Services

Department of Families, Housing, Community Services and Indigenous Affairs

Tabling of the report

2.2        The 2011–12 annual report was tabled on 10 October 2012 which made it available to senators for examination at the supplementary budget estimates 2012–13 hearings.

Secretary's review

2.3        The secretary, Mr Finn Pratt, noted several significant achievements during 2011–12, both within the department and in collaboration with other portfolios including:

  • Stronger Futures in the Northern Territory which will be implemented over ten years from 2012–13 as part of Closing the Gap for Indigenous Australians. FaHCSIA led the Commonwealth agency National Partnership Agreement negotiations with the Northern Territory government;
  • working with communities and other government agencies to begin development of the Remote Jobs and Communities program which from July 2013 will integrate existing services under a single provider with a permanent presence in remote regions;
  • establishing the taskforce for the National Disability Insurance Scheme to begin laying the foundations for disability reform;
  • leading implementation of the National Carer Strategy;
  • implementing new immunisation requirements linked to Family Tax Benefit Part A;
  • launching the new Family Support program;
  • introducing income management in five sites across Australia;
  • developing the Household Assistance Package;
  • introducing the new Work Bonus that offers eligible pensioners an incentive to participate in the workforce;
  • leading the whole-of-government program to integrate a gender perspective into peace and security as part of the National Action Plan on Women, Peace and Security 2012-2018; and
  • delivering social housing through the Social Housing Initiative and the National Partnership Agreement on Social Housing.[1]
Changes in administrative arrangements

2.4        There were changes to the FaHCSIA portfolio during 2011–12. Under the Administrative Arrangement Order of 14 December 2011, responsibility for the following functions was transferred from the Department of Sustainability, Environment, Water, Population and Communities to FaHCSIA:

  • Housing Affordability Fund
  • National Rental Affordability Scheme
  • Building Better Regional Cities[2]
Changes in ministerial responsibilities

2.5        There were changes to ministerial responsibilities within the FaHCSIA portfolio during the 2011–2012 reporting period. As at 30 June 2012, the ministers and parliamentary secretaries responsible for the portfolio and its agencies were:

  • The Hon Jenny Macklin MP, Minister for Families, Community Services and Indigenous Affairs and Minister for Disability Reform
  • The Hon Brendan O'Connor MP, Minister for Housing and Minister for Homelessness
  • The Hon Julie Collins MP, Minister for Community Services, Minister for Indigenous Employment and Economic Development and Minister for the Status of Women
  • Senator the Hon Jan McLucas, Parliamentary Secretary to the Prime Minister and Parliamentary Secretary for Disabilities and Carers
Performance reporting

2.6        The annual report addresses the key performance indicators (KPIs) as listed in the Portfolio Budget Statements 2011-12. The committee recognises that the department has assisted the assessment of program performance by developing quantitative indicators for KPIs and deliverables, and that quantitative targets were set for some of the KPIs and deliverables. The committee notes that all KPIs were assessed by the department as being achieved or substantially achieved, and that the vast majority of targets were met or exceeded.

Financial performance

2.7        FaHCSIA's financial performance was described as strong in an era of tight financial resourcing. Financial management measures taken by the department included the reduction of staff levels, the quarantining of funds for the enterprise agreement, the reduction of property holdings, and staff consolidation.[3]

2.8        The department reported a $61.7 million deficit for 2011–12 compared to a deficit of $63.5 million in 2010–11. As in the last financial year, the deficit was attributed to the:

revised net cash appropriation arrangements introduced from 2010–11, whereby asset replacement is now funded through a capital appropriation rather than the departmental operating appropriation.[4]

Allowing for these revised arrangements, and after 'accounting for the effect of the decrease in the 10-year bond rate on employee provisions', FaHCSIA would have had a small operating surplus of $0.5 million.[5]

2.9        FaHCSIA experienced an increase in the net cost of services between 2010-11 and 2011–12 from $582.5 million to $594.1 million. At the same time, revenue from government increased from $519 million to $532.4 million.[6] The ANAO attributes these changes to 'an increase in contractor and consultancy expenses in 2011–12 associated with indigenous programs', and 'an increase in funding for new government measures relating to clean energy reforms and the National Disability Insurance Scheme.'[7]

2.10      The ANAO makes audit recommendations to government agencies, and rates its audit findings on a risk scale: Category, A, B and C, corresponding to significant, moderate and low business or financial management risks respectively.[8] The committee commends FaHCSIA on having no category A, B or C findings after the ANAO audit of the FaHCSIA 2011–12 financial statements.[9]

Transparency and Scrutiny

2.11      The committee notes that in their first report of 2012, the Finance and Public Administration Legislation Committee mentioned the work being undertaken by the Department of Finance and Deregulation and the Australian National Audit Office (ANAO) to draw attention to agencies that may be at risk of breaching section 83 of the Constitution.[10] Section 83 of the Constitution states that 'no money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law'.[11] In effect, all government spending from consolidated revenue must be in accordance with an authority given by parliament.[12]

2.12      FaHCSIA notes that the issue of Section 83 breaches arises 'where payments are made [to customers] from special appropriations that do not accord with conditions in the relevant legislation'.[13] FaHCSIA points out that it relies on information provided by customers to ascertain the appropriate entitlements. This information is not always accurate, and therefore the potential for some degree of Section 83 breaches will remain.[14] However, FaHCSIA states that the potential for breaches 'represent only a very small proportion of the total payments, both in value and number'.[15]

2.13      The annual report sets out the steps that FaHCSIA has undertaken to review its exposure to section 83 breaches, including identifying all special appropriations and special accounts and the relevant legislation. FaHCSIA is addressing the issue and notes that '[w]here possible, amendments to legislation will continue to be progressed'.[16]

Department of Health and Ageing

Tabling of the report

2.14      The department tabled their annual report on 11 October 2012 in the House, and tabled in the Senate on 30 October 2012. The department's early tabling in the House made it available to the committee for scrutiny during the supplementary budget estimates 2012–13 hearings.

Secretary's review

2.15      The secretary, Professor Jane Halton, noted numerous significant achievements in a busy year, including:

  • The introduction of the world's first plain packaging legislation for tobacco products as part of the preventive health program;
  • The implementation of the five year $2.2 billion National Mental Health Reform package that aims to move the mental health system away from crisis-driven activity towards prevention, early intervention and care in the community;
  • The ten year $3.7 billion Living Longer Living Better reform package aimed at providing older Australians with more choice, control and easier access to a full range of services;
  • Collaborating with State and Territory governments to transition of over 1 000 Home and Community Care service providers to Commonwealth funding arrangements;
  • Introducing measures resulting from the National Health Reform Agreement such as the activity-based funding systems for public hospitals to commence on 1 July 2012, and establishing 19 Medicare Locals on 1 July 2011, 18 Medicare Locals by 1 January 2012, and the remaining 24 Medicare Locals on 1 July 2012;
  • Establishing Rural and Regional Health Australia to provide information on rural and remote health and aged care programs, policies and services;
  • Delivering 42 projects under the National Rural and Remote Health Infrastructure Program;
  • Implementing the Indigenous Chronic Disease package including primary health care teams and social marketing campaigns;
  • Implementing Pharmaceutical Benefits Scheme pricing reforms and expanding Medicare funding of magnetic resonance imaging;
  • Continuing preparations for the launch of the Personally Controlled Electronic Health Record system on 1 July 2012; and
  • Collaborating with General Practice Education and Training Limited to train the future general practice workforce, and from 1 January 2012, implementing the Practice Nurse Incentive Program.[17]

2.16      The committee notes that the department led the Australian delegation in Geneva that drafted the first global public health treaty, the Protocol to Eliminate Illicit Trade in Tobacco Products.[18] The committee acknowledges that the department has been involved in various international health forums, both 'to promote and protect the health of the Australian population and to ensure Australia's health system is responsive to international best practice'.[19] The committee commends Professor Halton on her appointment to the position as chair of the Organisation for Economic Co-Operation and Development (OECD) Health Committee and her election to the executive board of the World Health Organisation in May 2012.[20]

Chief Medical Officer's Report

2.17      Professor Chris Baggoley, Chief Medical Officer, addressed three main issues in his report, namely risk factors, quality of care, and future challenges and opportunities. Professor Baggoley noted that although life expectancy in Australia compares well internationally, the incidence of 'somewhat preventable diseases' such as heart disease, stroke and cancer is increasing. Professor Baggoley identified a small number of preventable risk factors that account for much of the morbidity and mortality of these diseases, including tobacco use, excessive alcohol consumption, obesity and insufficient physical exercise.[21]

2.18      Recent changes under the National Health Reform identified by Professor Baggoley as important for improving access to clinically appropriate care included the Local Hospital Networks, Medicare Locals, and the transition to patient-centred care.[22]

2.19      The challenges and opportunities facing Australia's health system include the increasing prevalence of some diseases or conditions such as dementia, new health technologies such as personally controlled electronic health records, and new areas of medical research such as genetics.[23]

Changes in administrative arrangements

2.20      Changes in the Health and Ageing portfolio resulted from the Council of Australian Governments National Health Reform Agreement on 2 August 2011and the subsequent National Health Reform Act 2011.

  • The Australian Commission on Safety and Quality in Health Care which was previously contained within the department, commenced operations as an independent statutory authority on 1 July 2011;
  • The Independent Hospital Pricing Authority commenced operation on 15 December 2011[24] 'to determine a national efficient price for hospital services';[25] and
  • The National Health Performance Authority commenced operation on 21 October 2011[26] to develop performance reports on Local Hospital Networks, public and private hospitals, and other primary health care service providers.[27]

2.21      Since the establishment of the Australian National Preventive Health Agency (ANPHA) on 1 January 2011, responsibility for the National Tobacco Campaign and management of the expansion phase of the National Binge Drinking Strategy have been transferred from the department to ANPHA.[28]

Changes in ministerial responsibilities

2.22      On 12 December 2011, the Prime Minister announced that the Minister for Mental Health and Ageing would be included in the cabinet. This meant that the health portfolio now has two cabinet ministers.

2.23      On 14 December 2011, the Hon Tanya Plibersek MP replaced the Hon Nicola Roxon as Minister for Health. As at 30 June 2012, the ministers and parliamentary secretaries responsible for the portfolio and its agencies were:

  • The Hon Tanya Plibersek MP, Minister for Health
  • The Hon Mark Butler MP, Minister for Mental Health and Ageing
  • The Hon Warren Snowdon MP, Minister for Indigenous Health
  • The Hon Catherine King MP, Parliamentary Secretary for Health and Ageing
Performance reporting

2.24      The annual report addresses the key performance indicators (KPIs) as listed in the Portfolio Budget Statements 2011–12. The committee acknowledges that the Department of Health and Ageing has developed a significant number of quantitative measures across all outcomes for performance reporting and that this facilitates measuring many aspects of performance. The committee also acknowledges that the vast majority of performance indicators were met or substantially met.

2.25      The committee notes the work conducted by the department in the area of tobacco control and efforts to reduce the prevalence of smoking including approaches specifically targeted at Indigenous communities and people from culturally and linguistically diverse communities. The committee notes that the progress of the National Tobacco Campaign is discussed in the first ANPHA annual report. [29]

2.26      Beginning in June 2011, the department has been involved in the implementation of the Australia New Zealand Therapeutics Products Agency. Implementation will occur over a five-year period and is being overseen by a Ministerial Council that includes the Australian and New Zealand Health Ministers.[30]

2.27      Following a number of reviews of the Therapeutic Goods Administration (TGA), the Commonwealth released its response, TGA Reforms: a blueprint for the TGA's future (the Blueprint). The TGA has commenced implementing the reforms and recommendations contained in the Blueprint.[31]

2.28      The department supports the Closing the Gap target for Indigenous health by managing a range of initiatives. Over the period 1998–2009, the gap between Indigenous and non-Indigenous child mortality did narrow,[32] but the committee notes that a further closing of the gap is predicated on a greater reduction in Indigenous child mortality than has occurred over the previous decade. However, there was no significant narrowing of the gap between Indigenous and non-Indigenous chronic disease mortality rates over the same period.[33] Although Indigenous chronic disease mortality rates fell during the period (as did non-Indigenous mortality rates), there will need to be a significantly greater decrease in the incidence of Indigenous chronic disease mortality for the Closing the Gap target to be met.

2.29      The department has continued to work in collaboration with the National E-Health Transition Authority (NEHTA) to promote the use of Healthcare Identifiers and the PCEHR system. The department aimed to have 500 000 Australians registered in the first and second wave PCEHR lead implementation sites before the national launch of eHealth records in 2012–13. However, technical incompatibilities meant that only 100 000 people had consented to participate in the local sites.[34]

2.30      The committee has undertaken an inquiry into the supply of health professionals in rural areas,[35] and notes that the department delivers a number of initiatives designed to increase the supply of health professionals in regional Australia. The department administers the General Practice Rural Incentives Program (GPRIP) 'to provide financial incentives to encourage doctors to move to and/or remain in regional, remote and rural Australia'.[36] In the 2009–10 budget papers, the scheme was originally introduced as a $64.3 million program over four years.[37] The program was extended in 2012–13 with a further $34.9 million.[38] The program comprises a General Practitioner (GP) component, a Registrar component and a Rural Relocation Incentive Grant. The committee acknowledges that the vast majority of the program expenses are incurred in retention payments made to doctors already serving in remote and rural locations. The Department of Human Services administers GPRIP, and according to Medicare in 2011–12, $88.4 million was paid under the GP component, $18.4 million under the Registrar component, and $603 038 was paid under the Rural Relocation Incentive Grant.[39] The committee acknowledges that there has been an increase of 6.9 per cent in the number of GPs working in rural and regional Australia between 1 July 2010 and 30 September 2012,[40] but notes that in the financial year 2011–12, only 22 doctors out of a target of 70 relocated to rural or remote locations.[41] This follows on from the 2010–11 financial year when 39 out of a target of 70 doctors relocated to rural or remote locations.[42] Given that the relocation target of 70 doctors has been set through the forward estimates for each year until 2015–16,[43] the committee is keen to hear about what the Department has considered in terms of increasing the uptake of the relocation component of GPRIP.

Financial performance

2.31      In 2011–12, the department recorded an operating deficit of $28.6 million under the net cash appropriation model introduced by the Commonwealth in 2010–11. After allowing for the 'elimination of unfunded depreciation' within these revised arrangements and 'the increase in employee provisions as a result of discount movements', the department recorded an operating surplus of $0.194 million.[44]

2.32      John Barbeler, Chief Financial Officer, noted that at 30 June 2012, current assets exceeded current liabilities by $50.9 million.[45]

2.33      Following the 2011–12 budget, 159 Health and Ageing programs were consolidated into 18 flexible funds that commenced operation from 1 July 2011. Designed to improve the government's response to emerging health and ageing issues, the movement of the program into funds is outlined in the annual report.[46] Whilst the committee welcomes the reduction in red tape and the potential for greater flexibility in funding, the committee is keen to ensure that the allocation of monies under the new system can be traced without any loss of transparency.

Department of Human Services

Tabling of the report

2.34      The 2011–12 annual report was presented out of session on 16 October 2012 (and tabled on 29 October 2012). The department's early presentation made it available to senators for the supplementary budget estimates 2012–13 hearings.

Secretary's review

2.35      The secretary, Ms Kathryn Campbell, noted several achievements including customer payments, job placements for people with disabilities, and improvements and extensions of the department's mobile and outreach services. In particular the Department:

  • made payments totalling more than $144.7 billion on behalf of the government;
  • expanded the number of sites where Australians can access Medicare, Centrelink and Child Support services;
  • supported Australians affected by floods in New South Wales, Victoria and Queensland, with 56 000 claims paid to affected people, and payments totalling $69.9 million;
  • worked with separated parents to transfer more than $3.2 billion in child support payments;
  • helped more than 1300 job seekers find job placements through 14 Local Connections to Work sites;
  • made more than 14 200 job placements of people with disabilities;
  • improved and extended mobile and outreach services; and
  • made Clean Energy Advance payments of over $1.3 billion to more than six million families, pensioners and other income support recipients. [47]
Changes in administrative arrangements

2.36      There were changes to the Human Services portfolio during the 2011–2012 reporting period. On 1 July 2011, Centrelink and Medicare were integrated into the Department of Human Services under the Human Services Legislation Amendment Act 2011. Consequently, 'the department had to transform both its organisational structure and its organisational culture'.[48]

2.37      On 10 October 2012, the Department of Human Services briefed the committee on the changes and provided suggestions on how to most effectively structure the Senate estimates process to account for the changes. At the 2012–13 supplementary estimates hearings in October 2012 during questions to the Department of Human Services, the committee drew attention to the potential for a lack of transparency in the new departmental structure.[49]

Ministerial changes

2.38      On 14 December 2011, the Hon Brendan O'Connor MP replaced the Hon Tanya Plibersek MP as Minister for Human Services. On 5 March 2012, Senator the Hon Kim Carr was appointed Minister for Human Services.

Performance reporting

2.39      The annual report addresses the KPIs as listed in the Portfolio Budget Statements 2011–12. The committee acknowledges that the Department of Human Services met all of its KPIs.[50]

2.40      The committee has questioned Human Services about call centre waiting times.[51] The committee notes that the Department has strategies to improve call centre service delivery. The main strategies are to:

  • reduce the need for customers to call
  • increase the use of self-service
  • improve call centre technology
  • increase the efficiency of the call network
  • adjust resources to cope with demand.[52]

2.41      The Department plays a key role in service delivery and payments to Australians and their families. The range of payments includes $22.1 billion in family-related payments (such as Paid Parental Leave, Family Tax Benefit and Child Care Benefit), 750 000 payments to job seekers (such as Newstart), and Age Pension payments to over 2.2 million Australians.[53] The Department also supports 'more than 50 000 people with disability, injury or health conditions to get jobs and training through CRS Australia', and employs social workers to support 'young people at risk of homelessness'.[54]

2.42      Human Services delivers social, employment and health programs in partnership with works with other portfolio Departments. At supplementary estimates in October 2012 the committee drew attention to one of these partnership programs, the Pilot of Drought Reform Measures in Western Australia.[55] The pilot measure was delivered in partnership with the Western Australian Government and the Department of Agriculture, Fisheries and Forestry. The annual report stated that the pilot measure ceased on 30 June 2012.[56] The committee subsequently received a briefing from the Department of Human Services and the Department of Agriculture, Fisheries and Forestry regarding the future of drought reform programs. The committee was directed to a forthcoming communique, now available as a public document, by the Council of Australian Government's Standing Council on Primary Industries,[57] and a review of the pilot of drought reform measures in Western Australia.[58]

2.43      The Department notes that its top priority for the year was service delivery. New developments in regional, rural and remote Australia included Mobile Offices, Community Access Points and Community Agents.[59] Selected service centres now provide Self-Service Terminals that enable customers to conduct transactions with Medicare, Centrelink and Child Support services.

2.44      The Department aims to prevent incorrect payments through a range of measures that include education, support to customers and health professionals, and the detection and prosecution of non-compliance and fraud. In 2011–12 the Department 'achieved payment correctness of 97.62 per cent'.[60]

Financial performance

2.45      In 2011–12, the Department recorded an operating deficit of $14.8 million before depreciation. This compares with the combined operating deficit of Medicare, Centrelink and Human Services in 2010–11 of $128.1 million.[61] Total income was $4.3 billion, including $3.9 billion in government appropriation. Expenses were $4.6 billion of which staff expenses comprised 63 per cent of the total. Expenses therefore exceeded income in 2011–12 by $299.4 million, which includes depreciation and amortisation of $266 million.[62] Departmental assets of $2.02 billion exceeded departmental liabilities of $1.4 billion by $620 million.[63]

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