Chapter 2

Individual 2014–15 Annual Reports

2.1        As noted in the reface, on 25 June 2015, PM&C released the new 'Requirements for Annual Reports'. The JCPAA has foreshadowed the development of consolidating all mandatory reporting requirements for the following year. The committee has decided to examine a select number of the annual reports for the financial year 2014–15. The following annual reports selected for examination were tabled by 31 October 2015 and some after that date, but before the tabling of this Report on Annual Reports:

2.2        For the Industry portfolio:

• Australian Institute of Marine Science (AIMS);
• Australian Nuclear Science and Technology Organisation (ANSTO);
• Commonwealth Scientific and Industrial Research Organisation (CSIRO);
• National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA)

2.3        For the Treasury portfolio:

• Australian Bureau of Statistics (ABS);
• Australian Charities and Not-for-profits Commission (ACNC);
• Australian Competition and Consumer Commission ACCC [incorporating the report of the Australian Energy Regulator (AER)];
• Australian Prudential Regulation Authority (APRA)
• Australian Securities and Investments Commission (ASIC);[1]
• Commissioner of Taxation (Australian Taxation Office or ATO); and
• Commonwealth Grants Commission (CGC);

Reports under the Industry portfolio

Australian Institute of Marine Science

Operational matters

2.4        The Australian Institute of Marine Science (AIMS) was established by the Australian Institute of Marine Science Act 1972 (AIMS Act) and is a corporate Commonwealth entity under the PGPA Act.[2]

2.5        AIMS' objective is to undertake scientific research in support of the protection and sustainable development of Australia's marine resources.[3] It operates from bases in Perth and Darwin, which allows it to undertake research across northern Australia—spanning two oceans and three regional seas.[4]

2.6        AIMS' total revenue for 2014–15 was $62.3 million, which is an 18 per cent increase on the previous reporting period's revenue. The increase of $9.6 million was mainly attributed to securing additional Australian government appropriation for operations, including $5.5 million for the National Sea Simulator; a $0.5 million increase in external funding, and $4.5 million in non-cash revenue from the acquisition of a 50 per cent share of Arafura Timor Research Facility at no cost; and forgiveness of debt by the Queensland government as part of long-term repayment.[5]

2.7        Some highlights recorded in the annual report for 2014–15 included:

• contribution to the development and implementation of the Reef 2050 Long-Term Sustainability Plan—this is part of its strategic plan to work towards a healthy and resilient Great Barrier Reef;[6]
• leading the Dredging Synthesis Report, which documented known and unknown impacts of dredging on the Great Barrier Reef;[7]
• recognition from industry for work with Woodside Energy on the environmental impact of the North Ranking gas platform after 30 years of operation;[8]
• dividends from AIMS' investments in Darwin and Perth bases as more industry players recognise the value of reliable, impartial, baseline data on tropical ecosystems for measuring the impact of development;[9]
• completion of first full year of operation of the National Sea Simulator (SeaSim), a state of the art marine research aquarium facility that enables researchers to conduct experiments which could not be undertaken previously;[10] and
• publication of high-impact research papers that included reports on: the impact of 'green zones' on fish stocks; the genetics of coral heat tolerance; the increasing frequency of extreme floods; and tiger shark migration.[11]

2.8        As previously reported, AIMS researchers continued their strong publication record within their fields of expertise—climate change and ocean acidification, biodiversity, ecosystem processes, ecosystem status and trends, water quality and marine microbiology. For the 2014 calendar year, AIMS scientists produced 218 publications, including high profile articles in some of the world's most prestigious multidisciplinary journals.[12]

Reporting requirements

2.9        AIMS' annual report was prepared in accordance with reporting obligations set out in the AIMS Act and the provisional arrangements contained in PGPA (Consequential and Transitional Provisions) Rule which stipulate that for the 2014–2015 period, annual reports be prepared in accordance with the CAC Act, and in particular Part 2 of the Finance Minister's Commonwealth Authorities (Annual Reporting) Orders 2011.[13]

2.10      The committee commends AIMS for a well presented, comprehensive and accessible report. The information in the report is both user-friendly and thorough. The inclusion of an assessment of its deliverables against KPIs is very helpful. The use of trend information, graphs and tables enhances the report's content. The committee is also pleased to note AIMS' detailed adherence to the list of reporting requirements and its inclusion of background information detailing the provisional reporting arrangements.[14] The committee considers the annual report 'apparently satisfactory'.

Australian Nuclear Science and Technology Organisation

Operational matters

2.11      The Australian Nuclear Science and Technology Organisation (ANSTO) reported a strong performance in 2014–15. During the reporting period, ANSTO recorded the following achievements:

• The completion of the Centre for Accelerator Science  and the commissioning of three neutron beam instruments at the Bragg Institute. This expansion in national infrastructure will deliver national benefits from developments in nuclear science and technology.[15]
• The OPAL multipurpose research reactor set a new performance benchmark operating continuously for 307 days—this achievement and reliability establishes it as one of the highest performing research reactors. It also gives ANSTO a competitive edge in the supply of critical lifesaving radiopharmaceuticals and the availability of beam lines for research and collaboration.[16]
• ANSTO formalised a number of relationships with its Japanese counterparts, including the signing of memoranda of understandings with the Japan Atomic Energy Agency, the Institute of Solid State Physics at the Tokyo University, the National Institute of Materials Science and Tsukuba University. These partnerships will strengthen research collaborations and the exchange of scientific and technical information.[17]
• A number of ANSTO researchers received awards both at home and overseas.[18]
• ANSTO continuing to make progress in its commitment to a friendly workplace that offers equal employment opportunities—a Gender Equity Committee was formed in 2014 with a mandate and strategy to support the delivery of improved employment flexibility, challenge outdated work practices and foster opportunities for multiple career paths. There are over 50 ANSTO employees from across the agency advancing the Gender Equity Program.[19]

2.12      It should also be noted that ANSTO received additional funding from the Australian Government of $20.5 million for the ANSTO-operated Australian Synchrotron to continue operations over the 2017 period while long-term ownership and operations are being finalised with stakeholders.[20] The Chairman's Report noted that the Australian Synchrotron remains one of the most important research infrastructure elements to be resolved in the current deliberations initiated in the Research Infrastructure Review.[21]

Reporting requirements

2.13      ANSTO's annual report is well presented, comprehensive, and user-friendly in its use of accessible language and inclusion of appropriate pictures, graphs and trend information. The addition of relevant information in the appendices, such as the various legislative requirements governing ANSTO and an index of compliance with reporting guidelines is very useful. An acronym page and ANSTO's assessment of actual performance against strategic objectives is also helpful.[22] ANSTO received an unqualified audit report from the Auditor-General for its 2014–15 financial statements.[23]

2.14      The committee considers that ANSTO has met its reporting requirements under the Acts and its annual report is 'apparently satisfactory'.

Commonwealth Scientific and Industrial Research Organisation

Operational matters

2.15      During the annual reporting period the Commonwealth Scientific and Industrial Research Organisation (CSIRO) conducted extensive engagement with its customers, partners and staff to elicit input into the new CSIRO Strategy 2020 (Strategy), which took effect from 1 July 2015. The annual report explained this strategy sought to position CSIRO for longer term differentiation and sustainability, with particular focus on playing a role in significantly lifting Australia's innovation performance while delivering against areas of national challenge.[24]

2.16      In the new Chief Executive's report, Dr Larry Marshall noted that progressing the organisation's strategy was a priority. He observed that industries can and must reinvent themselves and that the CSIRO must be vigilant of disruptive innovation affecting Australia. According to Dr Marshall, CSIRO would seek to work more collaboratively at a global level to increase its market vision and market access for customers, and to increase its capacity for breakthrough innovation. It was therefore important for CSIRO to boost Australia's innovation performance, which on most indices was poor compared to other advanced economies.[25]

2.17      In 2014–15, CSIRO reported a deficit from ongoing operations of $14.5 million, which is a decrease from the previous period's deficit of $25.7 million. CSIRO's total revenue of $1,230.8 million (compared to $1,244.9 million in
2013–14) included $745.3 million in appropriation from government and $485.5 million in revenue generated from other sources.[26]

2.18      Some highlights as recorded in the annual report for 2014–15 included:

• a 3D printed titanium heel bone successfully implanted in Australian patient;[27]
• RV Investigator's recent discovery of extinct volcanoes off the coast of Sydney;[28]
• the Scientists and Mathematicians in Schools (SMiS) partnership program, whereby CSIRO shares its knowledge with students—1,799 scientists and mathematicians reached 1,263 schools, including 30 per cent of partnerships in rural and regional schools;[29]
• CSIRO's excellence in research output reflected by its publications being 48 per cent more cited than the global average;[30]
• CSIRO ranking in the top 1 per cent in 15 research fields globally;[31]
• CSIRO's work with approximately 3,000 customers including 500 major Australian companies and more than 1,200 Australian small and medium-sized enterprises (SMEs);[32]
• a three-fold increase (from 20 to 63) in the number of Indigenous employees over the 2011–15 CSIRO Strategy period; and
• Australian and international universities were partners in about 75 per cent of CSIRO's research publications.[33]

2.19      This is the last annual report under the chairmanship of Mr Simon McKeown's six-year term.

Reporting requirements

2.20      The committee commends the CSIRO on its user-friendly annual report. The well-presented report is easy to read and includes accessible information in the appendices, indexes containing acronyms, glossary, contacts and a compliance index. The committee considers the CSIRO has met its reporting obligations and the report is 'apparently satisfactory'.

National Offshore Petroleum Safety and Environmental Management Authority

Operational matters

2.21      The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) is an independent Commonwealth statutory authority which was established in 2012 to independently regulate offshore safety, well integrity and environmental management of offshore petroleum and greenhouse gas storage activities in Commonwealth waters. It also has responsibilities in coastal waters where state and territory regulatory powers and functions have been conferred on it.[34]

2.22      During the reporting period, NOPSEMA oversaw some substantial changes. One included the implementation of an organisational restructure—comprising two regulatory divisions, one regulatory support division, and a legal team.[35] Another was the effect of changes to the legislative regime, which took place on 1 October 2014.[36] These changes included the mandatory requirement of titleholders to demonstrate their capacity to financially proceed with proposed petroleum activities.[37]

2.23      In 2014–15, NOPSEMA was also the subject of two performance audits—one independent review of NOPSEMA's compliance with the environmental management authorisation process endorsed under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and an independent operational review in accordance with section 695(2) of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act). NOPSEMA reported it will use these reports' findings and recommendations to guide its priorities and activities when the final reports become available.[38]

2.24      Other matters covered over the reporting period included:

• industry's improved performance on personal safety measures;[39]
• an increase in environmental inspections from seven in 2012 to 29 in 2014;[40]
• NOPSEMA's attendance at the annual general meetings of the International Regulators' Forum and the International Offshore Petroleum Environment Regulators to share its expertise and insights, and to collaborate with other international regulatory bodies;[41]
• NOPSEMA's conclusion of two investigations into accidents—one of the accidents on a mobile offshore drilling unit in the Bass Strait resulted in two deaths and the other, a serious injury to a diver.[42]

Reporting requirements

2.25      The committee commends NOPSEMA on its comprehensive annual report. The well-presented report is easy to read and includes helpful information in the appendices—an alphabetical index and a compliance list of requirements. A glossary of abbreviations makes the report user-friendly to readers. The committee considers the NOPSEMA has met its reporting obligations and the report is 'apparently satisfactory'.

Reports under the Treasury portfolio

Australian Bureau of Statistics

Operational matters

2.26      The Australian Bureau of Statistics (ABS) has continued to work towards three main outcomes as described by the Australian Statistician, Mr David Kalisch. They are the continued delivery of rigorous, robust and timely data, an increase in innovation and the effective use of ABS by other national bodies.[43]

2.27      In 2014–15, the ABS has focused on its preparations for the 2016 Census, which is due to take place on 9 August of this year. In line with the ABS' digitisation agenda, the Census will be administered primarily online—with an expectation that approximately two thirds of respondents will use the online system whether that be through a desktop, laptop, tablet or smartphone.[44]

2.28      The Australian Statistician, Mr David Kalisch reports that the ABS has been successful in gaining Federal Government agreement for $250 million in additional funding for statistical infrastructure over the period 2015–16 to 2019–20. He noted that the ABS has not received this kind of funding in nearly two decades, and that such a large financial commitment demonstrates the government's confidence in the ABS. 

Reporting requirements

2.29      The committee considers the ABS has met its reporting requirements under the PGPA Act and congratulates it on a well presented and detailed report.

Australian Charities and Not-for-profits Commission

Operational matters

2.30      In 2014–15, the Australian Charities and Not-for-profits Commission (ACNC) worked towards several key goals. These included the creation of a more accurate Charity Register, ensuring compliance, reducing red tape in line with the government's initiative as well as increasing its online engagement.[45]

2.31      The agency concedes that it did not meet all of its service standards during the financial year due to an unexpectedly high volume of work. The standards affected were those relating to the allocation of charity applications to an analyst.[46]

2.32      In 2015–16, the ACNC will focus on 'improving the timeliness of responses to correspondence, processing forms and answering telephone calls'.[47]

2.33      The ACNC is a listed entity under the PGPA Act whose financial activities are reported through the Australian Taxation Office. However, the ACNC did receive a budget of $15.039 million in its Special Account for the operation of the ACNC in 2014–15 on which it underspent by $637,000.[48]

Reporting requirements

2.34      The committee considers the ACNC has met its reporting obligations and its annual report is considered 'apparently satisfactory'.

Australian Competition and Consumer Commission [incorporating the Australian Energy Regulator]

Operational matters

2.35      The Australian Competition and Consumer Commission's (ACCC) overall financial position remained sound for the reporting period 2014–15. It reported a modest operating deficit of $0.6 million excluding depreciation ($6.4 million including depreciation). This was largely due to an increase in the write down of property, plant and equipment after external evaluation.[49]

2.36      The net cost of services for 2014–15 was $173.8 million (compared with $181.9 million for 2014), with revenue from government of $167.4 million ($179.5 million in 2014).[50]

2.37      ACCC reported expenditure on activities decreased by $6.6 million in 2014–15, which was attributed to a decrease in separation and redundancies and legal settlements.[51]

2.38      As the ACCC is a knowledge-based organisation, in 2014–15, it spent approximately 55 per cent of total expenditure on employee costs—this compared to 58 per cent in 2013–14.

2.39      During the reporting period, the ACCC celebrated the 40-year anniversary of the Trade Practices Act 1974, which was superseded by the Competition and Consumer Act 2010. The milestone was marked by the Chief Justice of the High Court delivering the inaugural Ron Bannerman Competition Lecture—in honour of the inaugural Trade Practices Commissioner and Chairman of the Trade Practices Commission.[52]

2.40      The highlights for the ACCC recorded in its annual report in 2014–15 included:

• instituting proceedings against Informed Sources and five petrol retailers who subscribed to the Informed Sources petrol price information system, for alleged anti-competitive conduct in setting fuel prices;[53]
• administering over 596 product safety recalls. It initiated and negotiated 20 recalls, received and assessed 2601 mandatory reports, and conducted 3192 inspections, resulting in 29 recalls and 126 product types being withdrawn from sales;[54]
• managing several high profile consumer product safety issues, including—the recall of nearly a million faulty Takata airbags, Samsung's reworking of 63,000 fire-risk top loader washing machines and the ongoing work regarding Infinity cable;[55] and
• securing a penalty of $2.5 million against Coles Supermarkets for misleading claims on par-baked bread products, and a $300,000 penalty against Pirovic Enterprises for misleading claims on free range eggs.[56]

Australian Energy Regulator

2.41      The Australian Energy Regulator (AER) is the national energy market regulator and its annual reported is included in the ACCC's annual report. Its roles cover the retail and wholesale electricity and gas markets and energy network infrastructure. The AER's common legislative objective is to promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of end users.[57]

2.42      The AER reported that, on the whole, it met its performance indicators in relation to providing effective network regulation, building confidence in retail energy markets, and supporting efficient wholesale energy markets.[58]

Reporting requirements

2.43      The committee considers that the ACCC and AER have met their reporting requirements under the relevant Acts and compliments them on a well-structured report.
The report's inclusion of case studies to highlight the diversity of the ACCC's work activities and its effect on communities across Australia adds value to the report's content.[59]

2.44      The annual report's inclusion of actual performance in relation to deliverables and KPIs set out in the PBS and the Portfolio Additional Estimates Statements provides a useful summary assessment of each organisation's achievements.[60]

2.45      The committee notes that although the report included a compliance index, the compliance index referred to the FMA Act instead of the PGPA Act.[61]

Australian Securities and Investments Commission

Operational matters

2.46      During the 2014–15 reporting period, ASIC reported that it raised $824 million for the Commonwealth in fees and charges, an increase of 8 per cent from 2013–14. The increase in revenue was driven by continued net company growth coupled with fee indexation.[62]

2.47      ASIC reported $312 million in appropriation revenue from government (including approximately $16 million from the Enforcement Special Account to fund investigations), which represents a 10 per cent reduction compared with 2013–14. Similar to 2013–14, it received approximately $5 million of own-source revenue.[63] This decrease in appropriation revenue relates to a net decrease in both operational funding and funding for special initiatives. The annual report noted that a permanent savings measure was applied to reduce operational funding by 10 per cent. In addition, there was a reduction in non-ongoing funding for operational support and other initiatives, including over-the-counter derivative reforms, dealing in carbon permits and superannuation reforms.[64]

2.48      ASIC incurred expenditure (excluding depreciation and amortisation) of approximately $313 million—a 10 per cent reduction compared with the preceding period.[65] According to the annual report, this decrease in expenditure was consistent with the reduction in appropriation revenue and represents a general reduction in staff and supplier expenditure.[66]

2.49      Over the same period, ASIC released its four-year corporate plan, which set out in more detail the challenges it will face and how it will meet them. Some of ASIC's long-term challenges identified by the Chair included:

• conduct risk and the balance between a free market-based system and investor and financial consumer protection;[67]
• digital disruption and cyber resilience in final services and markets;[68]
• structural change driven by superannuation;[69]
• complexity driven by financial innovation;[70] and
• globalisation—a more integrated financial system, which brings more complex issues.[71]

2.50      Following the Senate's inquiry into ASIC's performance, ASIC noted in its annual report that it took the following steps in 2014–15 to improve its practices:

• established an Office of the Whistleblower to monitor the handling of all whistleblower reports, manage staff development and training, and handle the relationship with whistleblowers on more complex matters;[72]
• redesigned ASIC's webpage to make it more user-friendly and accessible;[73] and
• updated its guidance on enforceable undertakings with information on independent experts and publicity for enforceable undertakings.[74]

2.51      Some key outcomes delivered by ASIC over the reporting period included:

• The launch of the Financial Advisers Register, which captures financial adviser qualification, training and professional membership details.
  The register provides consumers with information that will assist them in making an informed decision about their choice of adviser.[75]
• ASIC's participation in a number of parliamentary Senate and Joint Committee inquiries—lifting professional, ethical and education standards in the financial services industry; financial advice reforms; digital currency; and forestry managed investment schemes.[76]
• ASIC permanently banning 14 individuals from providing financial advice. A further 23 individuals were banned or agreed to stay out of the industry for shorter periods of time. ASIC conducted 321 funds management surveillances, including a review of risk management practices.[77]
• ASIC's monitoring of the marketing of financial products to make sure people were not misled, which resulted in 54 advertisements being changed or withdrawn.[78]

Reporting requirements

2.52      The annual report of ASIC is well-presented and comprehensive. The report's attractive lay-out containing sub-headings, indexes and appendices make information in the report easy to locate. The effective use of graphs, pictures and tables to depict trend and complex information enhanced the report's usability.

2.53      The committee considers ASIC to have met its reporting obligations and the annual report is 'apparently satisfactory'.

Australian Prudential Regulation Authority

Operational matters

2.54      During the reporting period, the Australian Prudential Regulation Authority (APRA) reported it remained a relatively lean and efficient supervisory agency. APRA reported constant levels of expenditure and staffing, with growth in its operating costs substantially lower than its peers overseas.[79]

2.55      APRA's income, which was sourced primarily from annual levies on supervised institutions, was directed towards its ongoing supervisory and enforcement activities, as well as implementing and enhancing Australia's prudential regulatory framework.[80]

2.56      APRA reported little change in its operating expenditure over the past five years. APRA's total operating expenditure over the reporting period was $117.3 million against a budget of $122.4 million. This under-expenditure related mainly to a lower-than-budgeted average staffing level, no general remuneration increases being paid to staff as a consequence of delays in establishing APRA's new workplace agreement, savings from productivity and efficiency initiatives, and the deferral of certain activities to 2015–16.[81]

2.57      APRA's total income for the reporting period was $125.4 million against a budget of $122.4 million. The income surplus was largely attributed to higher than budgeted industry levies collected. The over- or under-collection of levies in any year would be factored into the determination of levies in subsequent years, and is therefore returned or recouped from industry in this manner.[82]

2.58      In 2014–15 APRA formally took on additional responsibilities for the prudential supervision of private health insurance. The transfer took effect on 1 July 2015, following the passage of the Private Health Insurance (Prudential Supervision) Act 2015.[83] APRA Chairman, Mr Wayne Byres, noted that while the transfer was 'ultimately relatively seamless', much work went into the preparation to realise the move. This required a considerable amount of work from both APRA and the Private Health Insurance Administration Council (PHIAC), as well as assistance from both the Departments of the Treasury and Health. APRA also implemented a new set of prudential standards that, to the maximum extent possible, replicate PHIAC's existing standards.[84]

Reporting requirements

2.59      Overall, the committee commends APRA for a well presented and user friendly annual report containing comprehensive information on the range of work activities undertaken by the agency. The committee considers that APRA has met its reporting requirements under the legislation and its annual report is 'apparently satisfactory'.

Commissioner of Taxation (Australian Taxation Office or ATO)

Operational matters

2.60      In his 2014–15 annual report, the Commissioner of Taxation, Mr Chris Jordan, noted that the ATO had made a significant effort to reinvent the way it interacts with its clients. An important part of this reinvention is the use of digital technologies, including myTax and myGov online as well as the ATO app and voice authentication for calls to the ATO. This last initiative led to the ATO receiving innovation awards from the Australian Business Awards and Auscontact.[85]

2.61      The ATO also implemented administrative changes resulting in savings of nearly $318 million, in line with the government's deregulation agenda.[86] 

2.62      The ATO reported an operating surplus of $52 million (1.6 per cent) in 2014–15.[87]

2.63      As at 30 June 30 2015, the ATO had 21,251 employees, 1.4 per cent of whom identified as Indigenous. This figure is a 0.2 per cent increase on 2013–14.[88] 

Reporting requirements

2.64      The committee considers that the ATO has met its reporting requirements under the FMA Act, noting the comprehensive work undertaken in addressing Indigenous workforce and Small Business. The committee compliments the ATO on a well-structured report. The report is considered 'apparently satisfactory'.

Commonwealth Grants Commission

Operational matters

2.65      The CGC sole outcome for the year 2014–15 was informing government decisions relating to horizontal fiscal equalisation.[89] This is to ensure the correct distribution of goods and services tax (GST) to the States and Territories whilst allowing for differences in economic means and resources in each state or territory.

2.66      The CGC's main focus of work during 2014–15 was the Report on GST Revenue Sharing Relativities 2015 review, presented to the Treasurer in February 2015.[90]

Reporting requirements

2.67      The CGC is a non-corporate Commonwealth entity under the PGPA Act. The committee considers that the CGC has met its reporting requirements to a satisfactory standard but that more attention to detail could be made to ensure the accuracy of the list of requirements.

Senator Sean Edwards
Chair

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