Chapter 1


Chapter 1

Overview

Introduction

1.1        This is the Senate Economics Legislation Committee's (the committee) second and final report on annual reports in 2013. It provides an overview of the committee's examination of annual reports for the 2011–12 financial year tabled after 31 October 2012.

Terms of reference

1.2        Annual reports of departments and agencies are referred to Senate committees under Senate Standing Order 25(20). During the reporting period, the Senate Economics Legislation Committee was responsible for the scrutiny of departments and agencies in the following portfolios:

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

1.3        The structures and outcomes for each of these portfolios are summarised in Appendices 4, 5 and 6 respectively.

1.4        Standing order 25(20)[2] requires the committee to:

  1. examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;
  2. 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;
  3. investigate and report to the Senate on any lateness in the presentation of annual reports;
  4. in considering an annual report, take into account any relevant remarks about the report made in debate in the Senate;
  5. if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;
  6. 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;
  7. draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and
  8. 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.

Purpose and requirements of annual reports

1.5        Annual reports provide information on the success of departments and agencies in meeting their targets and therefore assist in ensuring the public accountability of government departments and agencies. Their tabling in the Parliament and scrutiny by Senate committees allows Parliament to make informed judgments on the executive's performance in administering government programs.

1.6        Indeed, as highlighted in the Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies (Requirements for Annual Reports):

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.[3]

1.7        The annual reporting requirements are set down in the following instruments:

  • Departments of State and Executive Agencies present their annual reports pursuant to sections 63(2) and 70(2) of the Public Service Act 1999,[4] and the Department of the Prime Minister and Cabinet's (PM&C) Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies (Requirements for Annual Reports), revised 28 June 2012.
  • Commonwealth authorities and companies present their annual reports pursuant to their own enabling legislation and/or sections 9, 36 and 48 of the Commonwealth Authorities and Companies Act 1997 (CAC Act).
  • For non-statutory bodies, the requirements are contained in the Government response to the report of the Senate Standing Committee on Finance and Public Administration on Non-statutory bodies, Senate Hansard,
    8 December 1987, pp 2643–45.

1.8        The legislation governing the annual reports of various agencies and the tabling information is shown in Appendices 1, 2 and 3.

1.9        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. The committee's view is that such agencies, while bound by their enabling legislation, should also comply with the Department of the Prime Minister and Cabinet (PM&C) guidelines, to the extent that the requirements do not conflict.

Changes to reporting requirements

1.10      In preparing this report, the committee kept in mind the requirements released by the Department of PM&C, and approved by the Joint Committee of Public Accounts and Audit. Requirements for Annual Reports for 2011–12 include significant amendments relating to:

  • consultancy reporting;
  • carer recognition (applicable to public service care agencies);
  • work health and safety; and
  • freedom of information.[5]

1.11      Attention also needs to be given to other information to be included by legislation, including advertising and market research, as well as ecologically sustainable development and environmental performance.

1.12      The specific requirement for disability reporting in individual annual reports has been discontinued given that it occurs through other mechanisms. To preserve the level of parliamentary scrutiny of disability issues, each report must now include an explicit and transparent reference to other reporting mechanisms, noting where agency level information can be found. A suggested form of words to satisfy the requirement is set out in the PM&C Requirements for Annual Reports released in June 2012.

Organisational and operational changes

1.13      Due to the machinery of government changes of March 2013 and the subsequent amendment of the Administrative Arrangements Order, the Department of Climate Change and Energy Efficiency (DCCEE) was abolished and the Climate Change functions transferred to the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE), thereby creating the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE).

1.14      Despite this change, the portfolio coverage of the committee remains unchanged due to a motion passed in the Senate on 15 June 2013 determining that responsibility for climate change would stay with the Senate Environment and Communications Committee.[6]

1.15      Similarly, the Energy Efficiency functions from the DCCEE were transferred to the Department of Resources, Energy and Tourism (DRET). As such, the Resources, Energy and Tourism portfolio now encompasses matters relating to energy efficiency.

1.16      This report examines the final annual report by the Australian Centre for Renewable Energy (ACRE) Board. Projects and measures previously managed by the ACRE Board, the Australian Solar Institute, and DRET as part of the Clean Energy Future Package announced by the Prime Minister on 8 July 2011 have been incorporated into the Australian Renewable Energy Agency (ARENA). This new agency, established on 1 July 2012 as an independent statutory authority under the Australian Renewable Energy Agency Act 2011, comes under the Resources, Energy and Tourism portfolio.

Annual reports referred to the committee

1.17      The committee reported on annual reports tabled in the Senate by 31 October 2012 in its report Annual reports (No. 1 of 2013) tabled on 14 March 2013, which examined 36 annual reports.

1.18      Under Standing Order 25(20)(f), the committee is required to report on the annual reports of departments and agencies tabled in the Senate by 30 April each year by the tenth sitting day after 30 June of that year. Accordingly, this report examines the annual reports 2011–12 of the following seven bodies:

Prescribed agencies under the FMA Act
  • Australian Prudential Regulation Authority;

Statutory bodies/authorities not under the FMA Act

  • Australian Centre for Renewable Energy Board (independent statutory advisory board);
  • Innovation Australia (independent statutory body);
Non-statutory bodies
  • Foreign Investment Review Board;
Commonwealth authorities (under the CAC Act)
  • Australian National University (statutory authority);
Commonwealth companies (under the CAC Act)
  • IIF Investments Pty Limited; and

Other companies, limited by shares

  • Snowy Hydro Limited (statutory corporation).

1.19     Comments on these individual reports are contained in Chapter 2, where reports are listed in alphabetical order under each portfolio.

Additional reports referred to the committee

1.20      In addition to the aforementioned reports, the following reports were also referred to the committee in the reporting period. The committee notes that these reports are referred for information only, and the committee is not required to report on them by the terms of the Standing Order:

  • Australian Nuclear Science and Technology Organisation Act—Statement under section 7—Disclosure of the Australian Nuclear Science and Technology Organisation's interest in a company, tabled 19 November 2012;
  • Australian Research Council—Strategic Plan 2012–13 to 2014–15, tabled 5 February 2013;
  • Department of Finance and Deregulation—Consolidated Financial Statements for the year ended 30 June 2012, tabled 5 February 2013;
  • Finance—Advances provided under the annual Appropriation Acts—Report for 2011–12, tabled 5 February 2013;
  • Tax expenditures statement 2012, tabled 5 February 2013;
  • Productivity Commission—Inquiry Report No. 59—Barriers to Effective Climate Change Adaptation, dated 19 September 2012, tabled 19 March 2013;
  • Australian Government response to the Productivity Commission report: Barriers to Effective Climate Change Adaptation, dated March 2013, tabled 19 March 2013;
  • Productivity Commission—Report No. 61—Compulsory licensing of patents, dated 28 March 2013, tabled 18 June 2013;
  • Australian Research Council—Strategic plan 2013–14 to 2015–16, tabled 25 June;
  • Department of Resources, Energy and Tourism—Energy use in the Australian Government's operations—Reports for 2010–11 and 2011–12; tabled 26 June 2013; and
  • Productivity Commission—Report No. 62—Electricity network regulatory frameworks—Volume 1 and Volume 2, dated 9 April 2013, Government response, dated June 2013, tabled 26 June 2013.

Timeliness

1.21      Standing Order 25(20)(c) requires the committee to report to the Senate on the late presentation of annual reports. The annual reports considered in this report were tabled after 31 October 2012.

Departments and FMA Act entities

1.22      Subsection 4(1) of Part 1 of the PM&C 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. Furthermore, if Senate Supplementary Estimates hearings are scheduled to occur prior to 31 October, it is best practice for annual reports to be tabled prior to those hearings.

CAC Act entities

1.23      Section 9 of the CAC Act stipulates that the deadline for furnishing the minister with the annual reports of Commonwealth authorities is the 15th day of the 4th month after the end of the financial year; that is, 15 October.

1.24      According to section 36(1) of the CAC Act a Commonwealth company must give the responsible Minister:

  1. a copy of the company’s financial report, directors’ report and auditor’s report that the company is required by the Corporations Act 2001 to have for the financial year (or would be required by that Act to have if the company were a public company); and
  2. any additional report under subsection (2); and
  3. in the case of a wholly‑owned Commonwealth company—any additional information or report required by the Finance Minister’s Orders.

1.25      Section 36(1A) of the CAC Act stipulates that a Commonwealth company must give the report to the responsible Minister by:

  1. if the company is required by the Corporations Act 2001 to hold an annual general meeting—the earlier of the following:
    1. 21 days before the next annual general meeting after the end of the financial year;
    2. 4 months after the end of the financial year; and
  2. in any other case—4 months after the end of the financial year;
  3. or the end of such further period granted under subsection 34C(5) of the Acts Interpretation Act 1901.

1.26      It should be noted that 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'.[7]

1.27      The committee notes in particular that the Australian National University 2012 annual report was tabled in the House of Representatives on 27 June 2013 but was tabled in the Senate on 13 November 2013.

Other entities

1.28      Entities 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 subsections 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 the Minister receives it.

Remarks made in the Senate

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

1.30      One annual report considered in this report was the subject of debate in the Senate chamber:

  •  On 27 February 2013, Senator Fiona Nash referred to the Foreign Investment Review Board's (FIRB) 2011–12 annual report. In her speech, Senator Nash commented on the level of foreign investment in Australian agricultural land and businesses, and the increase in foreign proposals and approvals in that year.[8] Senator Nash again referred to the FIRB annual report in the same context on 28 February 2013 during Questions without notice.[9]

Other comments on reports

1.31      Under Standing Order 25(20)(a), the committee is required to examine the annual reports of departments and agencies and report to the Senate on whether they are 'apparently satisfactory'. Taking into account the reporting guidelines specified by the legislation under which departments and agencies present their annual reports, the committee considers that the reports it has examined are generally 'apparently satisfactory'.

1.32      Despite this, the committee considers that some aspects of agency annual reports could be improved. One of the things that the committee examines is whether annual reports contain discussion of external scrutiny and parliamentary accountability.

External scrutiny and accountability

1.33      It is required 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:

  1. judicial decisions and decisions of administrative tribunals that have had, or may have, a significant impact on the operations of the department; and
  2. 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.[10]

1.34      Annual reports should be a primary reference document for parliamentarians and others looking for information about external scrutiny of government agencies. As noted, 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. Details on parliamentary scrutiny should be included in annual reports, including appearances at Senate estimates hearings (which are the subject of biannual reports to the Senate) and any evidence or submissions made to parliamentary inquiries. The reports should also note that they are subject to scrutiny by this and any other committee.

1.35      During the reporting period, Australian Prudential Regulation Authority (APRA) included in its annual report information relating to two performance audits by the Australian National Audit Office (ANAO) in which APRA was a respondent —Administration of Grant Reporting Obligations and Development and Approval of Grant Program Guidelines.[11] APRA also noted the three outstanding investigations from 2010/11 by the Commonwealth Ombudsman relating to applications for the early release of superannuation benefits will be reported on by the Department of Human Services as the early release function has been transferred to them.[12]

1.36      One of the key requirements for an annual report is that it should 'be written in plain English and provide sufficient information and analysis for the Parliament to make a fully informed judgement on departmental performance'.[13]

Compliance indices or lists of requirements

1.37      The inclusion of a compliance index or a list of requirements in annual reports is mandatory for all departments and agencies under the FMA Act and CAC Act. The index 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. It can be particularly useful for agencies with reporting requirements under various Acts.

1.38      The committee notes that only one annual report examined in this report included a compliance index. The committee wishes to draw to the attention of portfolio departments and agencies that the inclusion of the reporting requirements, particularly the mandatory elements contained in the Requirements for Annual Reports, is an essential part of the reporting and accountability mechanism.

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