1.1
The Senate Economics Legislation Committee (the committee) is responsible for examining the annual reports of the Treasury Portfolio and the Industry, Science, Energy and Resources Portfolio (Industry Portfolio), excluding matters relating to energy and small business.
1.2
On 1 February 2020, Machinery of Government changes announced by
Prime Minister Scott Morrison on 5 December 2019 took effect with peripheral impact on the committee. Energy and small business matters were allocated to the renamed Department of Industry, Science, Energy and Resources. Following this, the Senate updated its allocation of departments and agencies to retain those matters with the committees they were previously allocated to, with energy matters allocated to the Senate Standing Committees on Environment and Communications and small business matters to the Senate Standing Committee on Education and Employment.
1.3
On 2 July 2021, Machinery of Government changes announced by
Prime Minister Scott Morrison on 18 March 2021 and amended on
15 April 2021, 10 June 2021, and 28 June 2021, took effect with peripheral impact on the committee. Northern Australia policy and coordination was removed from the Industry Portfolio and allocated to the Department of Infrastructure, Transport, Regional Development and Communications.
1.4
On 21 October 2021, the Senate agreed to amend the order of 13 February 2020, allocating departments and agencies to committees. The committee’s estimates examination now also includes the Department of Infrastructure, Transport, Regional Development and Communications (Northern Australia Only) Portfolio.
1.5
This report on annual reports (No. 1 of 2022) provides an overview of the committee’s examination of selected annual reports and, on this occasion, the committee has chosen to also include reports tabled after 31 October 2021 that were available at the time of preparing this report. The committee is required to report to the Senate by 16 May 2022, being the tenth sitting day in the following year.
Terms of reference
1.6
Senate Standing Order 25(20) refers annual reports of departments and agencies—in accordance with a resolution of the Senate—to committees and sets out the committee’s requirements. The committee’s requirements—(a) to (h)—are outlined and reported against below. The full text of Senate Standing Order 25(20) can be found in Appendix 1.
Role of annual reports
1.7
The tabling of annual reports is an important element of executive accountability to legislature. According to the Department of Finance, effective reporting is critical in ensuring transparency and accountability of the government to the Parliament and the public. Together with Portfolio Budget Statements, Portfolio Additional Estimates Statements and the estimates process, annual reports are a primary mechanism by which the Senate can scrutinise the operations of executive government.
Annual reporting requirements
1.8
Section 38 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) requires all Commonwealth entities to measure and assess their performance against its purpose and according to the requirements prescribed by the rules.
1.9
The PGPA Act establishes a performance reporting framework for all Commonwealth entities and companies and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) contains the minimum requirements that must be included. The performance framework includes the requirement for Commonwealth entities and companies to prepare a corporate plan and annual performance statements.
1.10
The following outlines the legislative authority and requirements for the difference types of bodies that prepare annual reports:
Non-corporate Commonwealth entities: section 46 PGPA Act, division 3A(A) PGPA Rule and relevant enabling legislation;
Corporate Commonwealth entities: section 46 PGPA Act, division 3S(B) PGPA Rule and relevant enabling legislation;
Commonwealth companies: section 97 PGPA Act, which also refers to requirements under the Corporations Act 2001 and Part 3-3 PGPA Rule and relevant enabling legislation; and
Non-statutory bodies: the annual reporting requirements are contained in the government response to the Senate Standing Committee on Finance and Public Administration’s report on non-statutory bodies.
Changes to Public Governance, Performance and Accountability Rule
1.11
In February 2020, the Minister for Finance amended the PGPA Rule which affected the annual reporting obligations for Commonwealth entities and companies.
1.12
The annual reports of Commonwealth entities and companies are now required to include new enhanced audit committee disclosure requirements:
a direct electronic address of the charter determining the functions of the audit committee for the entity;
the name of each member of the audit committee during the period;
the qualifications, knowledge, skills or experience of those members;
information about each of those members’ attendance at meetings of the audit committee during the period; and
the remuneration of each of those members.
1.13
In addition, Commonwealth companies are now required to report on their performance:
The results of a measurement and assessment of the company’s performance during the reporting period, including the results of a measurement and assessment of the company’s performance against any performance measures and any targets included in the company’s corporate plan for the reporting period.
Reports referred to and examined by the committee
1.14
All 2020–21 annual reports of Commonwealth entities and companies in the Treasury Portfolio, Industry Portfolio, and Infrastructure Portfolio (Northern Australia only), with the exception the Inspector-General of Taxation annual report, have been presented to Parliaments and referred to the committee.
1.15
The reports examined by the committee are listed in Appendix 2.
1.16
It should be noted that the Parliamentary Joint Committee on Corporations and Financial Services is required by section 243 of the Australian Securities and Investments Commission Act 2001 to report on select annual reports for agencies within the Treasury Portfolio. These reports are distinguished in Appendix 2.
1.17
The committee notes that the Superannuation Complaints Tribunal ceased operations on 31 December 2020, and therefore the committee will no longer be receiving annual reports from the organisation.
1.18
The committee also notes that on 9 December 2020 the Government announced that the Financial Advisor Standards and Ethics Authority’s (FASEA) functions would be transferred to the Treasurer and the Australian Securities and Investments Commission (ASIC), and FASEA would cease operations. FASEA confirmed that, at the time of preparation of the annual report for 2020–21, legislation to enact this change, contained in the Financial Sector Reform (Hayne Royal Commission Response-Better Advice) Bill 2021 had passed through the House of Representatives and had received bi-partisan support.
1.19
On these grounds, the report was prepared on the assumption that the changes and cessation of FASEA. After the passage of the Government’s Better Advice Bill through Parliament, from 1 January 2022, FASEA’s powers transferred to the Minister for Superannuation, Financial Services and the Digital Economy, Senator the Hon Jane Hume.
1.20
FASEA’s report is consequently deficient in the reporting criteria examined by the committee but does provide adequate financial reporting and management and accountability reporting based on a non-going concern.
Additional reports referred to the committee
1.21
The committee is not obliged to report on acts, statements of corporate intent, surveys, policy papers, budget documents, corporate plans, or errata. The committee notes the following documents were referred for information:
The Auditor-General Report No. 10 2021–22 Performance Audit, Administration of the Research and Development Tax Incentive,
November 2021; and
The Auditor-General Report No. 14 2021–22 Performance Audit, Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2021, December 2021.
Timelines
1.22
Standing Order 25(20)(c) requires the committee to report to the Senate on the late presentation of annual reports. To assess the timeliness of the presentation of annual reports, the committee considers the presentation against the requirements of the PGPA Act, the PGPA Rule and other legislative requirements:
Presentation to ministers—on the 15th day of October, the annual report is to be given to the responsible Minister.
Tabling in Parliament—the Department of Finance’s Resource Management Guides for non-corporate and corporate Commonwealth entities advise that ‘[n]ormally annual reports are tabled prior to the October Estimates hearings.’
1.23
Agencies reporting in accordance with their own legislation are often required to prepare their annual report for the relevant Minister ‘as soon as is practicable’ after the end of the period to which the report relates. The committee draws attend to subsection 34C(2) and 34C(3) of the Acts Interpretation Act 1901, which stipulate that, where no date for providing a report to a Minster is specified, the report should be presented no more than six months after the reporting period, and the report must be provided to the Parliament within 15 days after receipt by the Minister.
Timeliness of reports examined
1.24
The committee considers the timely presentation of annual reports to be an important element of accountability to the Parliament and continues to encourage departments and agencies to endeavour to meet the relevant reporting timeframes.
1.25
As outlined in paragraph 1.4 above, this report will be reporting on all reports of the Treasury Portfolio, Industry Portfolio, and Infrastructure Portfolio (Northern Australia only), including those presented after 31 October 2021.
1.26
The committee notes that the annual reports for 2020–21 were presented in a timely manner. The only annual report not presented by 31 October 2021, and still yet to be presented is from the Inspector-General of Taxation (IGTO).
Senate debate
1.27
The committee is required to ‘take into account any relevant remarks about the report[s] made in debate in the Senate’. The committee notes that none of the annual reports examined in this report have been the subject of comment or debate in the Senate.
Non-reporting bodies
1.28
The committee is required to ‘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’.
1.29
The committee makes no recommendations for any bodies not presenting an annual report to do so.
Apparently satisfactory
1.30
Standing Order 25(20)(a) requires that the committee report to the Senate on whether the annual reports of departments and agencies in its portfolios are ‘apparently satisfactory’. In making this assessment, the committee considers such aspects as timeliness of presentation and compliance with relevant reporting requirements.
1.31
The committee has examined all annual reports referred during the reporting period and considers that with the exception of FASEA and IGTO, are ‘apparently satisfactory’.
Report structure
1.32
This report is structured as follows:
Chapter 1—provides background to the committee’s examination of annual reports;
Chapter 2—reports topical requirements and compliance with reporting requirements;
Chapter 3—reports on a select few annual reports;
Appendix 1—Standing Order 25(20); and
Appendix 2—table of departments’ and agencies’ presentation dates for annual reports.