2.1
This chapter examines selected annual reports in greater detail in accordance with standing orders. The committee has selected the annual reports of the following non-corporate Commonwealth entities, corporate Commonwealth entities and non-statutory bodies for examination:
Department of Agriculture, Water and the Environment;
Department of Industry, Science, Energy and Resources;
Australian Renewable Energy Agency;
Department of Infrastructure, Transport, Regional Development and Communications;
Australian Broadcasting Corporation; and
2.2
In accordance with standing orders the following summaries of reports examined draw attention to significant matters relating to the operations and performance of bodies during the year under review.
Agriculture, Water and the Environment portfolio
Department of Agriculture, Water and the Environment
2.3
The Department of Agriculture, Water and the Environment annual report for 2020–21 was tabled in the House of Representatives and the Senate on 20 October 2021.
2.4
The Secretary of the department, Mr Andrew Metcalfe, provided an overview of some of the challenges faced and achievements made by the department in 2020–21, including:
releasing the final report of the independent review of the Environmental Protection and Biodiversity Conservation Act 1999 in January 2021 and developing a pathway and timeline for reforming national environmental law;
bushfire and natural disaster recovery, including ongoing support for wildlife and habitat recovery in the aftermath of the 2019–20 Black Summer bushfires;
working with the states and territories to support development of a single‑touch environmental approvals system, built on national environmental standards and strong assurance monitoring;
finalising the five-yearly review of the Reef 2050 Long-Term Sustainability Plan;
implementing a $100 million ocean conservation package to restore blue carbon ecosystems, expand and strengthen marine parks and establish new Indigenous Protected areas over sea country;
updating the National Climate Resilience and Adaptation Strategy for submission to the United Nations Framework Convention on Climate Change in November 2021;
working with the Director of National Parks to support an expanded work program in Commonwealth Marine Parks, island parks and Kakadu, Uluru-Kata Tjuta and Booderee national parks;
implementing the Recycling Modernisation Fund to develop domestic waste and recycling economic opportunities and jobs;
delivering the first milestones under the National Waste Policy Action Plan 2019 after export bans came into effect, on waste glass from 1 January 2021 and on mixed waste plastics from 1 July 2021; and
preventing COVID-19 from reaching the Australian Antarctic Program on Macquarie Island, while continuing to deliver Year 5 of the Australian Antarctic Strategy and 20-Year Action Plan.
Performance reporting
2.5
The annual performance statements in the 2020–21 annual report reflected the relationship between the purposes and activities contained in the department's corporate plan and the programs and outcomes outlined in the portfolio budget statement. Each of the performance measures was presented with a summary of the results achieved against the criteria and targets. Two of the department's five purposes related to outcomes under the environment portfolio: 'Environment and heritage' and 'Antarctic'. Of the 29 listed performance measures under these two purposes, the department reported 15 as achieved, 2 as substantially achieved, 9 as partially achieved, 2 as not achieved, and 1 as unable to report.
2.6
The performance measure Percentage of World Heritage listed properties being managed under management plans that are consistent with the management principles in the Environment Protection and Biodiversity Conservation (EPBC) Regulations was not achieved. A departmental stocktake found that, of Australia's 20 World Heritage properties, 16 had compliant management plans in place. Of the four properties that did not, one was newly listed in 2019 and had a management plan in development (Budj Bim Cultural Landscape) and three were due for review (K’gari (Fraser Island), Macquarie Island and Purnululu National Park). The department was working with property managers to clarify due dates for management plan reviews. When these reviews are completed, all management plans are expected to be fully consistent with World Heritage management principles.
2.7
The performance measure Reduction of baseline of non-compliant projects causing environmental harm was not achieved. The department attributed a 15 per cent increase in the identification of non-compliant projects causing environmental harm to strengthening the risk-based approach to using compliance monitoring to target monitoring and auditing activities.
2.8
The department was unable to report against the performance measure Threatened Bird Index improves relative to 2019–20 baseline. The Threatened Bird Index has been moved to the Terrestrial Ecosystems Research Network, after National Environmental Science Program funding for the Threatened Species Hub ended in June 2021. Due to the change in hosting arrangements, the index was not updated in 2021, which prevented reporting on changes against the baseline. The department anticipated the change in hosting arrangements to be completed by the end of 2021. As a result, the department expects to be able to report against this measure in 2022.
2.9
The department reported two corrections to errors in its 2019–20 annual report. The first correction was in relation to levy administration revenue and costs. The second correction was made to the number of products registered under the Water Efficiency Labelling and Standards scheme.
2.10
Overall, the committee considers the 2020–21 annual report of the department to be 'apparently satisfactory'.
Financial reporting
2.11
The department reported a surplus for the 2020–21 financial year, stating:
Revenue from cost-recovered services funds a significant part of our expenditure. The COVID-19 pandemic continued to impact these cost‑recovered services, but there was an increase compared with 2019–20. We continued to focus on these services to ensure they are efficient and appropriately funded.
Our internal budget aligned to the Portfolio Additional Estimates Statements 2020–21 (PAES), with an approved deficit position. The 2020–21 full-year result was a surplus of $136.7 million after allowable losses.
2.12
The Australian National Audit Office's (ANAO) independent report found that the department's financial statements for the year ended 30 June 2021 were compliant and presented fairly the financial position, financial performance, and cash flows of the department.
Industry, Science, Energy and Resources portfolio
Department of Industry, Science, Energy and Resources
2.13
The Department of Industry, Science, Energy and Resources 2020–21 annual report was presented to the Senate out of sitting on 1 October 2021 and tabled in the Senate on 18 October 2021, before being tabled in the House of Representatives on 19 October 2021.
2.14
The Secretary, Mr David Fredericks, gave a review of the department's work in transitioning the Australian economy from the COVID-19 pandemic to economic recovery, including:
implementing the $1.5 billion Modern Manufacturing Strategy through collaboration with industry-led taskforces to develop road maps for six National Manufacturing Priorities, including Recycling and Clean Energy;
facilitating signature of a Bilateral Energy and Emissions Reduction Agreement between the Australian and Tasmanian governments, which will provide a framework to progress the Marinus Link Interconnector project to a financial investment decision by 2023–24;
progressing the Hunter Power Project, which envisages construction of a 660 MW gas power plant at Kurri Kurri in the Hunter Valley;
developing a process to amend the National Gas Law, National Energy Retail Law and delegated legislation to bring hydrogen blends, biomethane and other renewable methane gas blends within the national energy regulatory framework;
designing and implementing a comprehensive fuel security package, including $302 million in support for major refinery infrastructure upgrades, in response to the COVID-19 pandemic showing the vulnerability of international fuel supply chains to major demand disruptions;
continuing to implement the National Hydrogen Strategy by allocating $314 million to support up to five clean hydrogen hubs and for up to ten design and feasibility studies to advance hydrogen hub concepts to investment‑ready projects;
building cyber security capability in the energy sector and helping the energy manage future threats through the 2020–21 Australian Energy Sector Cyber Security Framework, which has been expanded to include additional electricity grids and markets, and the gas sector; and
releasing the Technology Investment Roadmap, which focuses on reducing the costs of five key low emissions technologies to bring them to parity with existing high emissions technologies: clean hydrogen, energy storage, low carbon materials (steel and aluminium), carbon capture and storage, and soil carbon.
Performance reporting
2.15
The department reported on progress towards four purposes set out in its corporate plan and the alignment between the department's three outcomes and four purposes for the 2020–21 reporting period. Two of these four purposes relate to the energy portfolio, namely Purpose 3: Emissions Reductions and Clean Energy and Purpose 4: Energy Markets. Each purpose was assessed against intended results and performance criteria. Of the seven performance measures listed under these two purposes, the department reported six as achieved, with one unable to be determined.
2.16
The performance measure Australian Government expenditure on clean energy research and development was unable to determined against a target of $216 million. The department reported that 'full data was not available due to the difficulty in obtaining consistent datasets from some agencies, in part due to the COVID-19 pandemic', which made it difficult to make accurate comparisons with baseline R&D expenditure data. The department planned to collect full data and report early in 2022 to assess performance against the 2020–21 R&D expenditure target.
2.17
Furthermore, the department noted that other data on research, development and demonstration (RD&D) might provide a useful base for comparison, with data collected in 2020 for the first Low Emissions Technology Statement (LETS) showing that 'total Australian Government expenditure on RD&D for low emissions technology averaged $280 million per year in the 5 years from
2014–15 to 2019–20'.
2.18
Overall, the committee considers the 2020–21 annual report of the department to be 'apparently satisfactory'.
Financial reporting
2.19
The department reported an improved financial position compared to the previous year:
The department recorded a surplus of $9.7 million in 2020–21 after excluding depreciation and amortisation and the impacts of AASB 16 Leases accounting adjustments. This surplus is largely due to delays in implementation of various budget measures.
After taking into account depreciation and amortisation, the impacts of AASB 16 Leases accounting adjustments and changes in the asset revaluation reserve, the department recorded a loss of $31.5 million for 2020–21. This reflects the introduction of the net cash appropriation arrangements where appropriation for depreciation and amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations.
2.20
With net assets of $212.0 million, the department stated that it has sufficient financial and non-financial assets to settle its payables as and when they fall due.
2.21
The ANAO's independent report found that the department’s financial statements for the year ended 30 June 2021 were compliant and presented fairly the financial position, financial performance and cash flows of the department.
Compliance index
2.22
While there were some minor errors in page numbers in the compliance index, all requirements were clearly presented and readily located.
Australian Renewable Energy Agency
2.23
The Australian Renewable Energy Agency (ARENA) 2020–21 annual report was tabled in the House of Representatives on 25 October 2021, after the commencement of Supplementary Budget Estimates, and in the Senate on 22 November 2021.
2.24
The Chair, Mr Justin Punch, and the Chief Executive Officer, Mr Darren Miller, provided an overview of some of the challenges faced and achievements made by ARENA in 2020–21, including:
developing ways to store variable renewable energy to preserve the robustness of the electricity networks as more renewables are integrated;
supporting the expansion of electric vehicle infrastructure via trials of smart charging and vehicle-to-grid charging, and funding more than 400 charging stations across the country through the Future Fuels Fund;
accelerating the development of renewable hydrogen technologies and projects such as ammonia production and power-to-gas; and
supporting emissions reduction in hard-to-abate sectors such as transport, buildings and industry through increased electrification and use of renewable energy.
2.25
ARENA also noted the September 2020 release of the LETS, which outlined the former Government's priorities for future energy and emissions reduction technologies. ARENA welcomed additional funding over the next ten years and an expanded mandate that would enable the agency to invest in a broader range of low emission technologies.
Performance reporting
2.26
According to ARENA's annual report, its purposes for the reporting period were 'to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy through innovation that benefits Australian consumers and businesses'.
2.27
These purposes are linked to Outcome 1 in the Portfolio Budget Statements:
Support improvements in the competitiveness of renewable energy and related technologies and the supply of renewable energy by administering financial assistance, developing analysis and advice about, and sharing information and knowledge with regard to, renewable energy and related technologies.
2.28
In accordance with its 2020–2021 corporate plan, ARENA engaged in two key activities:
Providing financial assistance to Australian scientists, innovators and businesses; and
Better informing the public about renewable energy technologies and the role they play in Australia's energy transition.
2.29
ARENA assessed its performance of those two activities in 2020–21 against nine performance measures, of which eight were achieved and one was not.
2.30
The performance measure ARENA operates efficiently in the administration of public funds was not achieved. ARENA's operating costs over the five-year period to 2020–21 were 14.6 per cent of total expenditure, compared to a target of 12 per cent. ARENA noted that this measure 'was introduced a number of years ago when it was expected that ARENA would have fully committed its legislated funding by now and would have started to wind down certain parts of its operations'.
2.31
In light of ARENA being funded for a further 10 years, the Board and Management decided to preserve the market-facing functions of the agency and views the additional expense of retaining skills and resources as a 'necessary and prudent investment' in ARENA's role in supporting Australia's energy transition. Management therefore views the 12 per cent target as no longer fit for purpose and 'has been exploring alternative measures to demonstrate the efficient use of public funds'.
Financial reporting
2.32
The annual report provided a summary of ARENA's financial performance in 2020–21. ARENA reported an operating surplus of $52.4 million for the year ended 30 June 2021, noting a lower level of grant spending than the previous year.
2.33
The board, chief executive and chief financial officer stated that the:
financial statements for the year ended 30 June 2021 comply with subsection 42(2) of the [PGPA Act], and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.
In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Renewable Energy Agency will be able to pay its debts as and when they fall due.
2.34
ARENA reported a number of major budget variances for the year ended 30 June 2021, with explanations for each, including:
regular project variations due to the complexity of investing in emerging and developing technologies;
variation in timing of grants expenditure due in part to the impact of COVID-19;
supplier variance lower than budget, because of COVID-19 leading to lower travel costs, meeting expenses, industry engagement and worker expenses;
cash balance higher than budget, due to money returning to ARENA and timing differences on grant expenditure commitments;
trade and other receivables higher than budget, due to higher than expected GST receivable; and
fair value of the Renewable Energy Venture Capital Fund higher than budget due to additional investment.
2.35
The ANAO's independent report found that ARENA's financial statements for the year ended 30 June 2021 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
Compliance index
2.36
As a corporate Commonwealth entity, ARENA is required to prepare its annual report in accordance with the legislative requirements under the PGPA Rule. Entities are required to include the table set out in the PGPA Rule. ARENA provided a slightly modified version of the table which omitted references to particular information required by the PGPA Rule. While other required contents of the table were present, including the references to the relevant provisions of the PGPA Rule would assist committee members in verifying reporting compliance.
2.37
The committee considers that ARENA has met its reporting obligations as a corporate Commonwealth entity under the PGPA Act and PGPA Rule and its annual report for 2020–21 to be 'apparently satisfactory'.
Infrastructure, Transport, Regional Development and Communications portfolio
Department of Infrastructure, Transport, Regional Development and Communications
2.38
The Department of Infrastructure, Transport, Regional Development and Communications 2020–21 annual report was tabled in the House of Representatives on 21 October 2021, before being tabled in the Senate on 22 November 2021.
2.39
The Secretary of the department, Mr Simon Atkinson, presented an overview of the ongoing challenges presented by the COVID-19 pandemic and the department's achievements, including:
implementing the new Online Safety Act 2021 to expand the scope of the eSafety Commissioner to cover adult cyber abuse and strengthen the department's ability to make online platforms and other technology companies improve online safety for users;
initiating a significant media reform process with the release of a green paper in December 2020;
working closely with Telstra, emergency service organisations and carriers to introduce Advanced Mobile Location to the Triple Zero Emergency Call Service, enabling mobile phones to send GPS location coordinates when a call to Triple Zero is made;
funding 132 high-speed broadband and mobile projects through Round 1 of the Regional Connectivity Program;
implementing the Australian 5G Innovation Initiative to support businesses to test productivity-enhancing applications of 5G technologies, with 19 successful applicants across the agriculture, construction, manufacturing, transport, and education and training sectors to receive grants in 2021–22;
commencing the Strengthening Telecommunications Against Natural Disasters program, with $37.1 million to fund more temporary telecommunication activities, a Mobile Network Hardening Program, additional NBN Sky Muster satellites and a public awareness campaign to improve communications during emergencies; and
supporting the arts, entertainment and screen industries face the challenges of COVID-19 through funding packages including the Restart Investment to Sustain and Expand fund and COVID-19 Arts Sustainability Fund.
Performance reporting
2.40
The department reported on progress towards five purposes set out in its corporate plan and the alignment between those purposes and its six outcomes and ten programs for the 2020–21 reporting period. Overall, the department reported meeting 46 of 71 performance targets.
2.41
Of the department's five purposes, two relate to the communications and arts portfolio, including 'Communications connectivity' and 'Creativity and Culture'. Of the 31 performance measures listed under these two purposes, the department reported 23 as achieved, five as partially achieved, and three as 'no target'.
2.42
The target for NBN consumer experience and ACCC performance data of 'positive consumer experience and maintained or improved speed performance data' was partially met. Although network speeds increased significantly over the reporting period, the impacts of COVID-19 and workforce scheduling issues caused temporary declines in some NBN consumer experience measures during 2021.
2.43
Although the department found that the performance of NBN services improved significantly in 2020–21, the performance measure Minimum peak fixed broadband download speeds available to Australian premises was partially met, with 98.55 per cent of premises receiving peak wholesale speeds of at least 25 Mbps (against a target of 100 per cent) and 90.45 per cent of fixed lines premises receiving at least 50 Mbps (against a target of 90 per cent). The department reported that 'ongoing proactive and reactive measures were in place to resolve the remaining lines unable to achieve 25 Mbps', including ending coexistence with legacy services and maintaining an ongoing network assurance program.
2.44
The performance measure Number of students successfully completing courses at national elite performing arts training organisations was partially met because of course deferrals and delayed graduations due to the COVID-19 pandemic.
2.45
Engagement with the national cultural institutions was partially met because of the effects of ongoing social distancing, congregation limits, lockdowns and travel restrictions on visitor numbers.
2.46
For the performance measure Value of private sector investment and philanthropic funding to the creative and cultural sector, no target was set, due to the impact of COVID-19 on the sector.
2.47
Overall, the committee considers the 2020–21 annual report of the department to be 'apparently satisfactory'.
Financial reporting
2.48
The department reported an operating surplus of $6.5 million, or $21.3 million after adjusting for depreciation and amortisation, and lease expenses. The department stated that:
The surplus is largely due to lower than budgeted employee expenses and the effect of changes in the 10-year government bond rate on the long service leave provision balance at 30 June 2021.
Departmental expenses decreased by $34.4 million mainly due to the payment of Drought Communities Programme Extension grants from departmental appropriations in the previous financial year.
Changes to the Statement of Financial Position (Balance Sheet) are mainly due to an increase in appropriations receivable as a result of the operating surplus and a decrease in lease liabilities associated with property leases under AASB 16.
2.49
The ANAO's independent report found that the department's financial statements for the year ended 30 June 2021 were compliant and presented fairly the financial position, financial performance and cash flows of the department.
Australian Broadcasting Corporation
2.50
The Australian Broadcasting Corporation (ABC) annual report 2021 was tabled in the House of Representatives on 21 October 2021, before being tabled in the Senate on 22 November 2021.
2.51
The Chair, Ms Ita Buttrose, noted the ABC's impending 90th anniversary and reflected on the challenges faced and achievements made during 2020–21, including:
signing letters of intent with Google and Facebook for payments under the news media bargaining code that will enable the ABC to make significant new investments in public interest journalism in regional Australia;
the Government's suspension of Australian content quotas for commercial free-to-air broadcasters, and its implications for Australian stories and creativity;
maintaining ABC News as the leading digital news brand; and
working with state education departments and school teachers to create content suitable for children learning at home during the COVID-19 pandemic.
Performance reporting
2.52
The ABC's purpose for the reporting period was 'to deliver valued services that reflect and contribute to Australian society, culture and identity', with a vision 'to be the home of Australian stories – accessible, bold, creative'.
2.53
This purpose is linked to Outcome 1 in the Portfolio Budget Statements: Informed, educated and entertained audiences – throughout Australia and overseas – through innovative and comprehensive media and related services.
2.54
The ABC assessed its performance in 2020–21 against 20 performance measures, of which 1 was exceeded, 12 were met and 7 were not met.
2.55
The target for Awareness of the ABC among all Australians was not met. Ninety-four per cent of Australians polled were aware of and ABC product or service, against a target of 96 per cent. The ABC is engaging in targeted advertising campaign and improving brand attribution of ABC content on third party platforms to grow awareness.
2.56
Although the ABC noted that it remains the most trusted media source in Australia, it fell short of its target for The ABC is trusted by all Australians, with 78 per cent of Australians trusting the ABC as a source of news and information, against a target of 80 per cent. The ABC said it will continue to improve 'transparency of its efforts to ensure accurate and impartial journalism' to increase public trust.
2.57
The ABC's target for strengthening local connections was narrowly missed, with 64 per cent of those polled agreeing that 'The ABC connects me to my local community', against a target of 65 per cent. The ABC said it is implementing new branding campaigns targeting local radio stations, establishing a dedicated ABC Emergency website and increasing local news coverage of outer suburban areas to increase local community engagement.
2.58
The ABC did not meet a number of new targets for workforce diversity outlined in its Corporate Plan 2020–21. For instance, the measure for Indigenous employees of 3.2 per cent did not meet the target of 3.4 per cent. The ABC noted the effect of the COVID-19 pandemic in delaying a specialist Indigenous recruitment strategy in 2020 and outlined a number of initiatives to increase representation including targeted recruitment campaigns, talent databases, industry and tertiary networks and social media campaigns.
2.59
The ABC did not meet its target for representation of culturally diverse content makers of 13 per cent, with representation of 11.3 per cent at 30 June 2021. The ABC noted that its Diversity and Inclusion Plan 'outlines various methods to recruit and retain high-quality, culturally diverse content makers and as such, continues to work towards achieving these targets'.
2.60
The measure for employees with a disability was not met, with a result of 4.7 per cent, against a target of 7 per cent. The ABC said it was reviewing its internal policies and practices to support an inclusive work environment, and noted initiatives including accessible workplace refurbishments, partnering with Job Access and the Australian Network on Disability to attract more candidates with disability, participating in the Access and Inclusion Index, and improving the organisational approach to workplace adjustments.
Financial reporting
2.61
The annual report provided a summary of the ABC's financial performance in 2020–21. The ABC reported total comprehensive income of $2,331,000 for the year ended 30 June 2021, which was more than $5 million above the budgeted total comprehensive loss of $3,449,000.
2.62
The directors and chief financial officer stated that the:
financial statements for the year ended 30 June 2021 comply with subsection 42(2) of the PGPA Act, and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.
In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Broadcasting Corporation will be able to pay its debts as and when they become due and payable.
2.63
The ABC reported a number of major budget variances for the year ended 30 June 2021 and gave explanations for each. These variances included:
cash and other investments balance higher than budget, mainly due to timing variances of payments to suppliers and employees;
supplier and other payables balance higher than budget, and cash used to pay suppliers higher than budget, mostly due to timing variances in large payments for production milestones, acquired content, marketing campaigns and royalties, noting the impact of COVID-19 on production schedules;
employee provisions balance higher than budget, partly due to the timing of payments for historical wage and superannuation entitlements, as well as higher leave balances due to reduced leave taken during the COVID-19 pandemic; and
cash used on payments for building improvements, plant and equipment and intangibles lower than budget, due to timing variances in capital project completion.
2.64
The ANAO's independent report found that the ABC's financial statements for the year ended 30 June 2021 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
Compliance index
2.65
As a corporate Commonwealth entity, the ABC is required to prepare its annual report in accordance with the legislative requirements of the PGPA Rule. Entities are required to include the table set out in the PGPA Rule. The ABC presented this information across two tables, but this did not significantly detract from usability, as all requirements were clearly signposted with the relevant paragraphs of subsection 17BE.
2.66
However, for the requirement 'any significant activities and changes that affected the operation or structure of the entity during the reporting period', the compliance index refers to 'all sections' of the report. The committee recommends that future reports provide a short list of major activities and changes, referred to with an accurate and specific page reference.
2.67
Overall, the committee considers the ABC’s 2021 annual report to be 'apparently satisfactory'.
NBN Co
2.68
The NBN Co 2021 annual report was tabled in the House of Representatives on 2 September 2021, before being tabled in the Senate on 19 September 2021.
2.69
The Chairman, Dr Ziggy Switkowski, and Chief Executive Officer, Mr Stephen Rue, gave an overview of the challenges faced and achievements made by NBN Co in 2020–21, including:
the NBN network being declared built and fully operational by the Minister in December 2020;
commencing work on a plan to make the highest wholesale speed plans available to up to 75 per cent of households and businesses by 2023;
securing inaugural credit ratings of A1 from Moody's and AA from Fitch, and raising capital to begin repaying the entity's Commonwealth loan;
launching the fourth Wholesale Broadband Agreement, which defines commercial and access terms between NBN Co and retail service providers; and
increasing network capacity to manage surges in data demand, noting the effects of lockdowns in New South Wales and Victoria.
Performance reporting
2.70
NBN Co's purpose for the reporting period was 'to lift the digital capability of Australia', supported by six strategic pillars:
ensure all Australians have access to high-speed, resilient and secure broadband;
keep NBN Co a great place to work, underpinned by a customer-led culture;
deliver a customer experience that drives satisfaction, use and network preference;
develop a product and pricing portfolio that addresses our customers' diverse needs;
strengthen relationships with government, industry and communities to optimise customer benefits; and
build capabilities for the future and grow profitability to enable reinvestment to benefit our end customers.
2.71
As a Commonwealth company, NBN Co is required to prepare its annual report in accordance with the requirements under the PGPA Rule. Commonwealth companies are required to report on:
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.
2.72
The annual report noted 19 performance measures and evaluated the company's performance under each measure. In most cases, however, performance was not evaluated against pre-established targets. In future, it would be useful if targets for each of those measures were expressed in the Corporate Plan, and performance against those targets evaluated in the annual report.
2.73
The annual report provided a clear overview of risks for the company, across categories including network, people, customer, partnerships and capabilities. Risks in each category were clearly identified and mitigation strategies proposed.
2.74
Overall, the committee considers the NBN Co 2021 annual report to be 'apparently satisfactory'.
Financial reporting
2.75
The annual report provided a summary of NBN Co's financial performance in 2020–21. NBN Co reported revenue of $4.6 billion, increased 21 per cent from the previous year, with growth driven primarily by an additional 933,000 customers connecting to the NBN network. Increased revenue and reduced subscriber costs led to earnings before interest, taxes, depreciation and amortisation (EBITDA) of $1.355 billion, which was a $2 billion improvement on the previous year. Net profit after tax was a loss of $3.8 billion, which was a 27 per cent improvement on the previous year. Revenue, EBITDA and profit results all exceeded projections in the organisation's corporate plan. NBN Co explained that the improvement was 'in line with management expectations and reflects the current stage of the Company's lifecycle.'
2.76
The chairman and the chief executive officers gave their opinion that:
(1) The financial statements and notes… are in accordance with the Corporations Act 2001 and the PGPA Act, including:
(i)
Complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii)
Giving a true and fair view of the Group's financial position as at 30 June 2021 and of its performance for the financial year ended on that date.
(2) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2.77
The ANAO's independent report found that NBN Co's financial statements for the year ended 30 June 2021 were in accordance with the Corporations Act 2001, including: giving a true and fair view of the NBN Co Group’s financial position as at 30 June 2021 and of its performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001.
Compliance index
2.78
The compliance index was complete and accurate, including both section and page references for all requirements.
Senator Karen Grogan
Chair