REVIEW OF ANNUAL REPORTS


REVIEW OF ANNUAL REPORTS

Introduction

1.1       Annual reports of departments and agencies are referred to Senate legislation committees under Senate Standing Order 25(20) in accordance with an allocation of departments and agencies in a resolution of the Senate.

1.2       The Economics Legislation Committee is responsible for the scrutiny of departments and agencies in the following portfolios:

  • Innovation, Industry, Science and Research;
  • Resources, Energy and Tourism; and
  • Treasury.[1]

1.3       The current structures and outcomes for each of these portfolios are summarised in Appendices 2, 3 and 4, respectively. Lists of the annual reports considered in this report are provided in Appendices 5, 6 and 7.

1.4       Standing order 25(20) requires the committee to:

  • examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;
  • consider in more detail, and report to the Senate on, each annual report which is not apparently satisfactory, and on the other annual reports which it selects for more detailed consideration;
  • investigate and report to the Senate on any lateness in the presentation of annual reports;
  • in considering an annual report, take into account any relevant remarks about the report made in debate in the Senate;
  • if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;
  • report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year;
  • draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and
  • report to the Senate each year whether there are any bodies which do not present annual reports to the Senate and which should present such reports.[2]

Purpose and requirements of annual reports

1.5       Annual reports provide information on the success (or otherwise) of departments and agencies in meeting targets outlined in budget statements, their primary function being to assist in ensuring the public accountability of government departments and agencies. This is undertaken through the tabling of annual reports in the Parliament; and their scrutiny by Senate committees in accordance with Senate Standing Order 25(20). This process thus allows Parliament to make informed judgments on the executive's performance in administering government programs.

1.6       Departments of State and Executive Agencies present their annual reports pursuant to sections 63(2) and 70(2) of the Public Service Act 1999, respectively. For 2007­-08, these were required to comply with the Department of the Prime Minister and Cabinet's Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies, approved by the Joint Committee of Public Accounts and Audit on 18 June 2008 (hereafter referred to as 'the Requirements for Annual Reports').[3]

1.7       Section 3(1) of the Requirements for Annual Reports states that 'As a matter of policy, they [the annual reporting requirements] also apply to prescribed agencies under section 5 of the Financial Management and Accountability Act 1997' (FMA Act)[4]. The 2007-08 financial statements of departments and agencies subject to the FMA Act must be produced in accordance with the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2007).

1.8       Commonwealth authorities and companies present their annual reports pursuant to their own enabling legislation and/or sections 9 and 36 of the Commonwealth Authorities and Companies Act 1997 (CAC Act), respectively.
2007-08 reports of Commonwealth authorities subject to the CAC Act must be produced in accordance with the Commonwealth Authorities and Companies (Report of Operations) Orders 2008 and the Commonwealth Authorities and Companies Orders (Financial Statements for reporting periods ending on or after 1 July 2007). Annual reports of Commonwealth companies are required to be based on the reporting requirements under the Corporations Act 2001.

1.9       The Department of Finance and Deregulation (Finance) publishes a chart that shows which agencies are subject to the FMA Act and the CAC Act. This information is available on the Finance website at
http://www.finance.gov.au/financial-framework/fma-legislation/fma-agencies.html; and http://www.finance.gov.au/financial-framework/cac-legislation/cac-bodies.html.

1.10       The enabling legislation of some agencies may require that agency to report on matters other than those included in the guidelines, or impose different reporting requirements, for example in relation to the date by which the report should be presented. The committee's view is that such agencies, while bound by their enabling legislation, should also comply with the requirements imposed under the government's policy, to the extent that the requirements do not conflict.

Reports referred to the committee

1.11       Under Standing Order 25(20)(f), the committee is required to report on the annual reports of departments and agencies tabled in the Senate between 1 November and 30 April of the following year by the tenth sitting day after 30 June of that year. This year that date is 9 September 2009. The committee is also required to report on annual reports tabled in the Senate between 1 May and 31 October each year by the tenth sitting day of the following year.

1.12       This report examines the following annual reports which were tabled in the Senate or presented to the President between 1 November 2008 and 30 April 2009:

  • Anglo-Australian Observatory (AAO) – Annual Report 2007-08
  • Australian Bureau of Statistics (ABS) – Annual Report 2007-08
  • Australian Institute of Marine Science (AIMS) – Annual Report 2007-08
  • Australian Prudential Regulation Authority (APRA) – Annual Report 2007-08
  • Australian Research Council (ARC) – Annual Report 2007-08
  • Australian Statistics Advisory Council (ASAC) – Annual Report 2007-08
  • Commonwealth Scientific and Industrial Research Organisation (CSIRO) – Annual Report 2007-08
  • Department of Innovation, Industry, Science and Research (DIISR) –
    Annual Report 2007-08
  • IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited (IIF companies) – Annual Reports 2007-08
  • Innovation Australia – Annual Report 2007-08
  • National Competition Council (NCC) – Annual Report 2007-08
  • Snowy Hydro Limited – Consolidated Financial Report 2007-08
  • Tourism Australia – Annual Report 2007-08

Timeliness

1.13       Standing Order 25(20)(c) requires the committee to report to the Senate on the late presentation of annual reports.

1.14       Section 4 of the Requirements for Annual Reports states that annual reports of departments and agencies under the FMA Act framework are to be presented to each House of Parliament on or before 31 October in the year the report is given.

1.15       Section 9 of the CAC Act stipulates that the deadline for furnishing the Minister with the annual reports of Commonwealth agencies is the 15th day of the 4th month after the end of the financial year, that is, 15 October where the end of the financial year is 30 June. Section 36 of the CAC Act stipulates that Commonwealth companies must give their annual reports to the responsible Minister by the earlier of the following:

  • four months after the end of the financial year, or
  • 21 days before the next annual general meeting of the company after the end of the financial year.

1.16       Government agencies reporting in accordance with their own legislation are often required to prepare for the relevant Minister their annual report 'as soon as is practicable' after a particular date. The committee draws attention to sections 34C(2) and 34C(3) of the Acts Interpretation Act 1901, which stipulate that where no date for providing a report to a Minister is specified, the report should be presented no more than six months after the reporting period, and the Minister must provide the report to the Parliament within 15 sitting days after he or she receives it.

1.17       While the legislative requirements for the tabling of annual reports vary between different types of agencies the Government's policy is 'that all annual reports should be tabled by 31 October'.[5]

1.18       The committee notes that none of the annual reports considered in this report have met the requirement set down by this policy. The committee is mindful that many of the reports were tabled on time in the House of Representatives. However, the committee suggests that it would be useful for all agencies to present their annual reports to both the Senate and House of Representatives on the same day so that reports are not received late in the Senate. This is consistent with section 4 of the Requirements for Annual Reports which states that annual reports are to be presented to each House of Parliament on or before 31 October. The committee brings to the attention of all departments and agencies the provision, under Standing Order 166, of presenting documents to the President of the Senate when the Senate is not sitting.[6] Documents presented in this manner are deemed to be tabled out of session on the date on which they are presented to the President.

1.19       While it is government policy that all annual reports should be tabled by 31 October, dates for the tabling of annual reports set in legislation vary between agencies and as such will be considered in the specific comments on annual reports below where necessary.

Remarks made in the Senate

1.20       Senate Standing Order 25(20)(d) directs the committee to take into account remarks made in the Senate when considering annual reports.

1.21       None of the annual reports considered in this report have been the subject of debate in the Senate.

Bodies not presenting annual reports to the Senate

1.22       The committee is required to report to the Senate each year under Standing Order 25 (20)(h) on whether there are any bodies not presenting annual reports to the Senate which should. The committee is satisfied that there are no such bodies within the Innovation, Industry, Science and Research; Resources, Energy and Tourism; or Treasury portfolios.

Other comments on reports

1.23       The Requirements for Annual Reports outlines the Government's view of the purpose of annual reports:

The primary purpose of annual reports of departments is accountability, in particular to the Parliament.

Annual reports serve to inform the Parliament (through the responsible Minister), other stakeholders, educational and research institutions, the media and the general public about the performance of departments in relation to services provided.  Annual reports are a key reference document and a document for internal management.  They form part of the historical record.[7]

1.24       In accordance with Standing Order 25(20)(a) the committee is required to examine reports and inform the Senate as to whether they are 'apparently satisfactory'. The committee considers compliance with the reporting guidelines specified by the legislation under which departments and agencies present their annual reports.

1.25       The committee considers that the reports it has examined are generally 'apparently satisfactory'.

1.26       Despite this, the committee believes that some aspects of agency annual reports can be improved. In this report the committee has particularly focussed on examining whether or not agency annual reports contain:

  • appropriate compliance indexes; and
  • discussion of external scrutiny and parliamentary accountability.
Compliance indexes

1.27       While no longer mandatory under the reporting requirements, the committee recommends the inclusion of a compliance index in annual reports, which preferably should include a nil return entry where the agency has nothing to report under an item. A compliance index is a useful feature of reports and considerably assists the committee's task of assessing reports. It also assists agencies by clearly showing that their compliance obligations have been met.

1.28       Where agencies have reporting requirements under various Acts the inclusion of a comprehensive compliance index covering all relevant requirements is a useful addition to agency annual reports.

External scrutiny and parliamentary accountability

1.29       The Requirements for Annual Reports states that annual reports:

... must provide information on the most significant developments in external scrutiny of the department and the department's response, including particulars of:

(a) judicial decisions and decisions of administrative tribunals that have had, or may have, a significant impact on the operations of the department; and

(b) reports on the operations of the department by the Auditor-General (other than the report on financial statements), a Parliamentary committee or the Commonwealth Ombudsman.[8]

1.30       Clause 11 of Schedule 1 of the Commonwealth Authorities and Companies (Report of Operations) Orders 2008 states that the same requirements apply to Commonwealth authorities that present their annual reports in accordance with the provisions of section 9 of the CAC Act.

1.31       Annual reports should be a primary reference document for parliamentarians and others looking for information about external scrutiny of government agencies. As noted above, the primary purpose of annual reports is accountability to the Parliament – it is therefore important that details about external scrutiny are included in a clear manner in annual reports.  It is particularly important that details about parliamentary scrutiny are included in annual reports, including appearances at Senate estimates hearings (which are the subject of bi-annual reports to the Senate).

Anglo-Australian Observatory (AAO) – Annual Report 2007-08[9]

1.32       The Anglo-Australian Observatory (AAO) was established by the Agreement between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland to provide for the Establishment and Operation of a Large Optical Telescope (Canberra, 25 September 1969).  The Anglo-Australian Telescope Board (AATB) oversees the operations of the AAO and presents its annual report to both the Australian and United Kingdom Governments in accordance with Article 8 of the Agreement and section 19 of the Anglo-Australian Telescope Agreement Act 1970 (the AATA Act).

1.33       The committee considers that the AATB has met its reporting requirements under the Agreement and the AATA Act.

Australian Bureau of Statistics (ABS) – Annual Report 2007-08[10]

1.34       The Australian Bureau of Statistics (ABS) is a prescribed agency under the FMA Act. The ABS therefore presents its report in accordance with the Requirements for Annual Reports.  Further requirements are specified in sections 24(1) and 24(3) of the Australian Bureau of Statistics Act 1975.

1.35       The committee considers that the ABS has largely met its reporting requirements in relation to these Acts and commends the ABS for including a detailed compliance index at the beginning of its 2007-08 annual report.

1.36       In relation to external scrutiny, the committee notes that the ABS appeared before the committee at the June 2008 Senate estimates hearings.  The committee suggests that references to such appearances before Senate committees should be included in future reports as these appearances are an important aspect of external scrutiny of government agencies. Reports on the additional and budget estimates hearings are tabled in the Senate each year by all Senate committees.

Australian Institute of Marine Science (AIMS) – Annual Report 2007-08[11]

1.37       The Australian Institute of Marine Science (AIMS) is a Commonwealth authority and therefore presents its annual report in accordance with the provisions of section 9 of the CAC Act. 

1.38       The committee considers that AIMS has met its reporting requirements under the Act and commends AIMS for including a compliance index in its report.

Australian Prudential Regulation Authority (APRA) – Annual Report 2007-08

1.39       As a result of the passage of the Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 the Australian Prudential Regulation Authority (APRA) was brought under the FMA Act from 2007-08. APRA was therefore subject to the Requirements for Annual Reports for this report.  Further requirements are specified in section 59 of the Australian Prudential Regulation Authority Act 1998.

1.40       The committee considers that APRA has largely met its reporting requirements under these Acts. The committee commends APRA for its inclusion of a 'statutory report' which systematically addressed its reporting requirements under a number of Acts and incorporated detailed information relating to parliamentary scrutiny.

1.41       However, in relation to timeliness the committee notes that APRA's 2007-08 annual report was tabled in the Senate on 10 November 2008 – ten days after the 31 October deadline specified in the Requirements for Annual Reports.

Australian Research Council (ARC) – Annual Report 2007-08[12]

1.42       The Australian Research Council (ARC) is a prescribed agency under the FMA Act. The ARC therefore presents its report in accordance with the Requirements for Annual Reports.  Further requirements are specified in section 46 of the Australian Research Council Act 2001 (ARC Act).

1.43       The committee considers that the ARC has met its reporting requirements in relation to these Acts and commends the ARC for including a comprehensive compliance index which included annual reporting requirements stipulated in the ARC Act. The committee also commends the ARC for providing a comprehensive overview relating to external scrutiny, including comprehensive details relating to scrutiny by parliamentary committees.

Australian Statistics Advisory Council (ASAC) – Annual Report 2007-08[13]

1.44       The Australian Statistics Advisory Council (ASAC) is required to present an annual report in accordance with sections 24(2) and 24(3) of the Australian Bureau of Statistics Act 1975. The committee notes that there are only a few requirements in the Act relating to ASAC's annual reports, and considers the report to be satisfactory.

Commonwealth Scientific and Industrial Research Organisation (CSIRO) – Annual Report 2007-08[14]

1.45       The CSIRO is a Commonwealth authority and therefore presents its annual report in accordance with the provisions of section 9 of the CAC Act. Further requirements for its report are specified in section 51 of the Science and Industry Research Act 1949 (the SIR Act).

1.46       The committee considers that the CSIRO has largely met its reporting requirements under these Acts and commends the CSIRO for including a comprehensive compliance index which included annual reporting requirements stipulated in the SIR Act.

1.47       In relation to external scrutiny, the committee notes that the CSIRO appeared before the committee at Senate estimates hearings twice during 2007-08. The committee suggests that references to such appearances before Senate committees should be included in future reports as these appearances are an important aspect of external scrutiny of government agencies. Reports on the additional and budget estimates hearings are tabled in the Senate each year by all Senate committees.

Department of Innovation, Industry, Science and Research (DIISR) – Annual Report 2007-08[15]

1.48       The Department of Innovation, Industry, Science and Research (DIISR) is a Department of State under the Public Service Act 1999 and presents its annual report in accordance with the provisions of section 63 of that Act, the FMA Act and the Requirements for Annual Reports. The report also includes the annual report of IP Australia.

1.49       The committee considers that DIISR has largely met its reporting requirements under the above Acts and commends the Department for the inclusion of a comprehensive compliance index.

1.50       In relation to external scrutiny, the report provided useful details about relevant Australian National Audit Office audit reports and a report by the Commonwealth Ombudsman. However, the committee notes that DIISR appeared before the committee at Senate estimates hearings twice during 2007-08.  The committee suggests that references to such appearances before Senate committees should be included in future reports as these appearances are an important aspect of external scrutiny of government agencies. Reports on the additional and budget estimates hearings are tabled in the Senate each year by all Senate committees.

IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited (IIF companies)  – Annual Reports 2007-08[16]

1.51       IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited (the IIF companies) are Commonwealth companies and are therefore required to report under section 36 of the CAC Act.

1.52       The committee considers that the IIF companies have largely met these requirements. However it notes that the letter of transmittal to the Minister is dated 24 December 2008, well after the four-month deadline specified in section 36(1A) of the CAC Act.

Innovation Australia – Annual Report 2007-08[17]

1.53       On 27 September 2007 a new statutory body, Innovation Australia, was established to consolidate the administration and oversight of Commonwealth innovation and venture capital programs that were previously the responsibility of the Industry Research and Development Board (IRDB) and the Venture Capital Registration Board (VCRB).  As a result, from the 2007-08 financial year Innovation Australia will report on the combined activities that were previously the responsibility of the IRDB and VCRB. Innovation Australia is required to present its annual report in accordance with section 46 of the Industry Research and Development Act 1986 (the IRD Act).

1.54       The committee considers that Innovation Australia has largely met its reporting requirements under the Act. However, the committee notes that the report was sent to the Minister on 29 January 2009 – well after the six-month deadline specified in section 34C(2) of the Acts Interpretation Act 1901 which applies where 'an Act requires a person to furnish a periodic report to a Minister but does not specify a period within which the report is to be so furnished'.

1.55       Furthermore, as the requirements in the IRD Act are quite detailed the committee suggests a specific compliance index should be included in future reports.

National Competition Council (NCC) – Annual Report 2007-08[18]

1.56       The National Competition Council (NCC) is a prescribed agency under the FMA Act. The NCC therefore presents its report in accordance with the Requirements for Annual Reports. Further requirements for its report are specified in section 29O of the Trade Practices Act 1974 (the TP Act).

1.57       The committee considers that the NCC has largely met its reporting requirements in relation to these Acts.  The committee commends the NCC for including a compliance index against FMA Act reporting requirements, although suggests that the requirements in section 29O of the TP Act could also be included in the compliance index in future reports.

1.58       In relation to external scrutiny, the committee notes that the NCC appeared before the committee at the June 2008 Senate estimates hearings.  The committee suggests that references to such appearances before Senate committees should be included in future reports as these appearances are an important aspect of external scrutiny of government agencies. Reports on the additional and budget estimates hearings are tabled in the Senate each year by all Senate committees.

Snowy Hydro Limited – Consolidated Financial Report 2007-08

1.59       Under section 55 the Snowy Hydro Corporatisation Act 1997 Snowy Hydro Limited is required to table its financial reports in Parliament. Given that there are no further requirements imposed on Snowy Hydro by the legislation, the committee considers the report to be satisfactory.

Tourism Australia – Annual Report 2007-08[19]

1.60       Tourism Australia is a Commonwealth authority and therefore presents its annual report in accordance with the provisions of section 9 of the CAC Act.  Further requirements for its report are specified in section 39 of the Tourism Australia Act 2004 (the TA Act).

1.61       The committee considers that Tourism Australia has largely met its reporting requirements under these Acts.  However, the committee suggests that future reports could be improved by including a specific compliance index, particularly given the additional reporting requirements imposed on Tourism Australia in section 39 of the TA Act.

1.62       In relation to external scrutiny, the committee notes that Tourism Australia appeared before the committee at Senate estimates hearings twice during 2007-08. The committee suggests that references to such appearances before Senate committees should be included in future reports as these appearances are an important aspect of external scrutiny of government agencies. Reports on the additional and budget estimates hearings are tabled in the Senate each year by all Senate committees.

Future developments

1.63       As noted in the committee's Report on Annual Reports (No. 1 of 2009), the Governance Review Implementation (AASB and AUASB) Act 2008 was assented to on 30 June 2008. As a result, the Australian Accounting Standards Board and Auditing and Assurance Standards Board will be brought under the Financial Management and Accountability Act 1997 (FMA Act) from the 2008-09 financial year.  Under the new arrangements, two agencies prescribed under the FMA Act will be established to support the operations of the AASB and AUASB.  The agencies will be referred to as the 'Office of the Australian Accounting Standards Board' and the 'Office of the Auditing and Assurance Standards Board'.  Under the previous arrangements the Financial Reporting Council was responsible for financial and administrative matters of the two boards in addition to providing strategic oversight.  Under the new arrangements the FRC will still be responsible for providing strategic oversight, but will undertake only an advisory role with respect to financial and administrative matters.[20]

1.64       On 3 November 2005 representatives of the Governments of Australia and the United Kingdom signed the Supplementary Agreement between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland concerning the Anglo-Australian Optical Telescope at Siding Spring, New South Wales, Australia. Under the Supplementary Agreement the United Kingdom Government will cease its involvement in the Anglo-Australian Observatory (AAO) from 1 July 2010. From this date the Anglo-Australian Telescope Board (AATB) will cease to exist and the Australian Government will become the sole owner of AATB assets. It is expected that legislation to establish new governance arrangements for the AAO will be introduced into Parliament by the end of 2009.[21]

 

Senator Annette Hurley
Chair

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