Chapter 2Review of selected annual reports
2.1This 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 Climate Change, Energy, the Environment and Water;
Snowy Hydro Limited
North Queensland Water Infrastructure Authority
Department of Infrastructure, Transport, Regional Development, Communications and the Arts;
Australia Council for the Arts (now known as Creative Australia)
Australian Postal Corporation
2.2In 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.
Climate Change, Energy, the Environment and Water portfolio
Department of Climate Change, Energy, the Environment and Water
2.3The Department of Climate Change, Energy, the Environment and Water (DCCEEW) annual report for 2022-23 was presented out of sitting in the Senate on 20 October 2023, and tabled in the House of Representatives on 16 November 2023.
2.4In his review of the first annual report of the Department of Climate Change, Energy, the Environment and Water, the departmental secretary, Mr David Fredericks stated that the creation of the new department ‘marks the start of a new era of government action to ensure Australia’s future prosperity by driving climate and environmental sustainability’.
2.5Mr Fredericks set out the department’s significant work projects for the 2022-23 reporting period, including:
assisting with the passage into law of Australia’s Nationally Determined Contribution of 43 per cent below 2005 levels by 2030, along with net zero emissions by 2050.
collaborating with industry on the Safeguard Mechanism reforms;
delivering a National Electric Vehicle Strategy to facilitate the adoption of a fuel efficiency standard and increase the uptake of cleaner cars;
working with the states and territories on delivery of the Government’s Energy Price Relief Plan;
commencing delivery of the Nature Positive Plan, with the establishment of Environment Protection Australia and Environment Information Australia, and the progression of planning for the global nature positive summit in Sydney in October 2024;
collaborating with state and territory governments to deliver the Murray-Darling Basin Plan in full; and
partnering with First Nations organisations to provide safe drinking water to remote First Nations communities.
2.6Noting that the new department would be improving internal policies and processes, Mr Fredericks stated that there would be a transition to ‘new systems, including establishing ICT services that can meet the needs of our growing organisation’.
Performance reporting
2.7The department made several minor revisions to the performance measures set out in its Corporate Plan 2022-23 which are relevant to its 2022-23 annual report. The below examination is based on the performance measures which appear in the annual report.
2.8Each of the performance measures was presented with a summary of the results achieved against the criteria and targets. Each measure corresponds to one of the departments four outcomes: ‘Climate change and energy’, ‘Environment’, ‘Antarctica’, ‘Water’. Of the 19 listed performance measures, the department reported ten as achieved, eight as partially achieved, and one as not achieved.
2.9The performance measure stability or improvement in trajectory of the Threatened Species Main Index (TSX),which sits within theEnvironment outcome, was not achieved, as continued decline was recorded. The 2022 update to the TSX, which used 2019 data, showed a 60 per cent decline in threatened species since 1998. However, the department noted that ‘trend information from the TSX provides encouraging evidence that management interventions work.’
Financial reporting
2.10The annual report provided a summary of DCCEEW’s financial performance in 2022-23. The department reported a total comprehensive loss of $75.7 million, against a revised comparator figure of $89.9 million. The revised comparator figure used by the department is the figure published in the 2023-24 Portfolio Budget Statements, while the original figure provided in the 2022-23 Portfolio Budget Statements was calculated before the transfer of certain assets and liabilities to the new department had been finalised.
2.11DCCEEW explained a number of major budget variances in the year ended 30June 2023. These variances include:
higher than expected employee expenses compared to revised budget due to the department’s rapid workforce expansion to support the Government’s climate change, energy, environment and water priorities;
lower than budgeted grant payments for the Hydrogen Funding Agreements and increased Commonwealth contributions to international organisations such as the United Nations;
changes in the key economic and engineering assumptions used to calculate the provision for Antarctic solid waste disposal restoration; and
lower than budgeted computer software costs due to delays in ICT projects, and the use of shared ICT service arrangements with the Department of Agriculture, Fisheries and Forestry.
2.12The Secretary and Chief Finance Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that DCCEEW will be able to pay its debts when they come due.
2.13The Australian National Audit Office (ANAO) independent report found that DCCEEW’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.14Overall, the committee considers DCCEEW’s 2022-23 annual report to be ‘apparently satisfactory’.
Snowy Hydro Limited
2.15The 2022-23 annual report for Snowy Hydro was tabled in the House of Representatives on 16 November 2023 and in the Senate on 20 October 2023.
2.16In their joint foreword, Chair David Knox and Chief Executive Officer Dennis Barnes reflected on some of the challenges faced in the 2022-23 period as well as some achievements. These included:
energy received through Snowy’s wind and solar offtakes continued to grow towards a target of 5,200 GWh per annum;
solid progress continued to be made on Snowy 2.0, which is expected to begin commercial operation of all units by December 2028;
total estimated costs for Snowy 2.0 and the Hunter Power Project (HPP) increased beyond the initial proposed costs; and
retirement of Snowy Board Director Tony Shepherd, who also served as the Chair of the Projects Advisory Committee.
Performance reporting
2.17The Company’s purpose for the reporting period was to ‘deliver Australia’s renewable energy future’.
2.18The Company assessed its performance in 2022-23 against four strategic areas, which together contain 14 performance measures. Out of these measures, nine were met and five were not met.
2.19While the table outlining the Company’s non-financial operational performance measures provided the targets and the results, there was no explicit, easy to identify indication of whether the target was met. To determine how many performance criteria the Company has achieved, each target column would need to be assessed against the respective results.
2.20The performance measure Fatalities – Snowy 2.0 Project (contractor) and HPP (contractor) was not achieved. In 2022-23, the Company set out a target of zero fatalities and reported one fatality for that period.
2.21The performance measure Staff satisfaction(percentage of employees very/extremely satisfied as determined by survey) was not achieved. In 2022-23, the Company set a target ranking in the top quartile of the Global Benchmark Index and ranked in the second quartile of the Index.
2.22The performance measure Retail Regulatory financial penalties was not achieved. In 2022-23, the Company set out a target of zero penalties and received two penalties. These were Red Energy Pty Ltd and Lumo Energy Australia Pty Ltd paid energy efficiency shortfall penalties in December 2022 in relation to energy efficiency certificate shortfalls pursuant to the Victorian Energy Efficiency Target Act 2007 (Vic).
2.23The performance measure Publicly reportable environmental licence breaches (number of) was not achieved. In 2022-23, the Company set out a target of zero environmental licence breaches and received one breach. It related to a non-compliance event at the Cabramurra sewage treatment plant in December 2022 where treated effluent was discharged from the plant with elevated levels of total nitrogen not in accordance with limits specified in the environmental protection licence.
2.24The performance measure Gas generator forced outage factor (%; MWh of lost capability due to forced outage/annual capability in MWh) was not achieved. In 2022-23, the Company set out a target of <1.0 per cent of forced outage factor and instead reached 2.98 per cent of forced outage factor.
Financial reporting
2.25The annual report provided a summary of the Company’s financial performance in 2022-23. It reported a total comprehensive income of $465.0 million in 2023, which was lower than the 2022 reporting period income figure of $614.5million.
2.26The Chair and Managing Director stated that the financial statements provided in the annual report comply with the Corporations Act 2001 and other mandatory professional reporting requirements, and that they have reasonable grounds to believe that the Company will be able to pay its debts when they come due.
2.27The ANAO independent report found that the Snowy Hydro’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.28The committee considers Snowy Hydro’s 2022-23 annual report to be ‘apparently satisfactory’.
North Queensland Water Infrastructure Authority
2.29The 2022-23 annual report of the North Queensland Water Infrastructure Authority (NQWIA) was tabled in the Senate on 24 October 2023 and in the House of Representatives on 16November 2023.
2.30In his review, the acting Chief Executive Officer highlighted that this is NQWIA’s final annual report as the functions of the agency are being transferred to DCCEEW. He also noted several of the achievements of the agency its final year including:
Delivering the final detailed business case for the Hells Gates Damn project;
Continuing NQWIA's oversight of the progression of Big Rocks Weir pre‑construction activities in collaboration with the Queensland Government;
Working with project proponents Hughendon Irrigation Project Corporation to assist with the future potential progression of the Hughenden Irrigation Scheme project;
Actively engaging with the Traditional Owners, the Queensland Government, local Councils, business groups and academic sector on development options for the Burdekin Basin; and
Completing the transition of NQWIA’s projects to DCCEEW.
Performance Reporting
2.31NQWIA’s purpose this reporting period was to progress the development of water resource projects in North Queensland through strategic planning and coordination of information sharing among relevant regulatory authorities and stakeholders.
2.32NQWIA assessed its performance in 2022-23 against four performance criteria, two of which were met, one was partly achieved, and one was not applicable.
2.33The performance criterion of Oversight completion of Big Rocks Weir pre‑construction was only partially completed as changes in local conditions and additional project requirements delayed completion of pre‑construction activities.
2.34The performance criterion of Progressing priority business cases in North Queensland as determined by the Australian Government was not applicable as NQWIA was abolished as part of the 2023–24 budget process.
Financial Reporting
2.35The annual report summarises NQWIA’s financial position as at 30 June 2023. NQWIA had a net surplus of $1.556 million compared to a surplus of $577,027 in the previous reporting period of 2021-22.
NQWIA detailed several budget variances in the year ended 30 June 2023, and provided explanations, including:
Lower than expected staff resourcing requirement and no project consultants were used with the winding down of project activities;
Assets were higher than in the original budget due to the increase in appropriation receivable reflecting the lower than expected expenses in 2022-23;
Total liabilities were lower than in the original budget due to the lower than expected supplier payables at 30 June 2023.
2.36The acting Chief Executive Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the entity will be able to pay its debts when they fall due.
2.37The ANAO independent report found that NQWIA’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.38Overall, the committee considers the NQWIA’s 2022-23 annual report to be ‘apparently satisfactory’.
Communications and the Arts Portfolio
Department of Infrastructure, Transport, Regional Development, Communications and the Arts
2.39The 2022-23 annual report of for the Department of Infrastructure, Transport, Regional Development and Communications (DITRDCA) was tabled in the Senate on 20 October 2023 and in the House of Representatives on 16 November 2023.
2.40In his review, the Secretary Mr Jim Betts outlined the departments work across its diverse outcomes. In the Communications and Arts areas, the achievements set out included:
establishing the First Nations Digital Advisory Group to bridge the gap between First Nations peoples and the wider population;
launching the Access Beta Hub to provide information to people with hearing and speech difficulties and access to the National Relay Service;
settling a ‘sustainable agency funding model’ for the eSafety Commissioner; and
the launch of the five-year National Cultural Policy, Revive.
Performance Reporting
2.41The department revised several performance measures set out in its Corporate Plan 2022-23 related to its 2022-23 annual report. The below examination is based on the performance measures which appear in the annual report.
2.42Of the DITRDCA’s six outcomes, two relate to the communications and arts portfolio, namely ‘Communications connectivity’ and ‘Creativity and Culture’. Of the 14 performance measures listed under these two outcomes, the department reported four as met, two as substantially met, one as partially met, one as not met, one as ‘no target’, one ‘data not available’, and four as ‘unable to make an assessment.
2.43The target for the performance measure Progress against the National Arts and Disability Associated Plan was not met. The report states that progress is underway to renew and develop a new Associated Plan which will replace the National Arts and Disability Strategy, with $5 million being committed by the Australian Government.
2.44The performance measure related to the securing and funding agreements relating to the Indigenous Repatriation Program did not have a quantifiable target, with the target listed as: activities are responsive to domestic and international negotiations. The result listed is ‘no target’, while the report does outline work done in this area. It is unclear whether or not this target was met.
2.45For the performance measure Impact of our activities to support Indigenous visual arts, languages, and culture,data was not available as they would not be available until December 2023. The results will be reported on in the 2023-24 annual report.
2.46For the performance measures Effectiveness of support for sustainability of news and media industry and Affordability of telecommunications services (mobile and fixed) on offer, the department was unable to make an assessment as to whether the targets were met. The department stated that it is unable to provide assurance that reporting against the affordability indicators is a valid measure of performance and will be reconsidering this measure in the future.
2.47The department was also unable to make an assessment as to whether the targets for Number of students enrolled in courses at national performing arts training organisations and Impact of our arts and cultural activities to support regional access and participation,were met. This was due to the department determining that the data sources for these targets could not be verified within the reporting timeframe to ensure reliable reporting of the measure.
Financial reporting
2.48The annual report provided a summary of DITRDCA’s financial performance in 2022-23. DITRDCA reported a total comprehensive loss of $15.1 million against the original Budget figure of $17.0 million, which was published as part of the 2022-23 October Portfolio Budget Statements.
2.49The Secretary and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the DITRDCA will be able to pay its debts when they come due.
2.50DITRDCA reported several budget variances for the year ended 30 June 2023 compared with the original 2023 Budget figure, and provided explanations, including:
lower supply costs due to delays and decreased demand across a number of programs;
increase in grants line item due to a Government decision to bring forward payments to local governments; and
higher provision under the Regional Broadband Scheme (RBS) than anticipated, mainly due to the process of forecasting total expected changes to be collected under the scheme, which is greatly influenced by the increase in the consumer price index used to determine the levy under RBS legislation.
2.51The ANAO’s independent report found that DITRDCA’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.52Overall, the committee considers DITRDCA’s 2022-23 annual report to be ‘apparently satisfactory’.
Australia Council for the Arts (now Creative Australia)
2.53The 2022-23 annual report for the Australia Council for the Arts was tabled in the Senate on 27 October 2023 and in the House of Representatives on 16 November 2023.
2.54In his review, Chair Robert Morgan outlined some of the major changes the Council had undergone in 2022-23, as well as the focus of its work, including:
release of the Government’s National Cultural Policy – Revive: A place for every story, a story for every place;
working closely with Creative Partnerships Australia to incorporate its functions and staff into what will be Creative Australia;
the departure of Board members Leigh Carmichael, Don Harwin, Mario D’Orazio, Marie-Louise Theile, and Tina Arena AM, as well as welcoming new Board member Wesley Enoch AM; and
ongoing consultation with the sector on shaping the organisation’s priorities following the announcement of Creative Australia.
2.55Chief Executive Officer Adrian Collete AM referred to challenges and reflected on the Council’s new chapter as Creative Australia in his review, including:
continued shortage of skilled workers and rising cost of living are putting pressures on audiences and artists;
marking 50 years of First Nations leadership at the Council by holding a national gathering and celebration of Aboriginal and Torres Strait Islander arts and culture;
support to Marco Fusinato, who represented Australia at the Venice Biennale, performing DESASTRES, an experimental noise project, for 200 days between April and November 2022; and
dedication and collaboration of all staff and the executive team as the Council undergoes transformation and transition into Creative Australia.
Performance reporting
2.56The Council’s purpose for the reporting period was to ‘champion and invest in arts and creativity to benefit all Australians’.
2.57The Council assessed its performance in 2022-23 against five strategic objectives, which together contained 23 performance measures. Of these 23 measures, 17were met, three were on track, one was too early to report, one was delayed, and one was not achieved.
2.58The performance measure Live attendances at Council supported activities each year was not achieved. In 2022-23, 13.9 million Australian audiences attended Council supported activities, below the Council’s target of 15million. The Council explained that the effects of COVID-19 continued to be felt by the creative sector and by Australian audiences, with cost-of-living pressures affecting audiences in all ages groups.
2.59The performance measure The proportion of Australians agreeing ‘the arts are not really for people like me’ as captured in the National Arts Participation Survey (29% in 2019) was too early to report. The National Arts Participation Survey is conducted every three years, with no data to report within this reporting period.
2.60The performance measure Enact and monitor the Council’s Reconciliation Action Plan (and associated metrics) was delayed. In 2022-23 the Council completed an evaluation of its Reconciliation Action Plan (RAP) (2018–21), while continuing to implement the RAP. Insights from this process will inform Creative Australia’s first RAP, which will be implemented in 2023‑24.
Financial reporting
2.61The annual report provided a summary of the Council’s financial performance in 2022-23. It reported a total comprehensive income of $142,000 in comparison to an income of $378,000 in the previous reporting period of 2021-22.
2.62The council reported several budget variances for the year ending 30 June 2023 and provided explanations, including:
Employee benefits were lower than budget by $160,000 primarily due to savings from staff vacancies.
Supplier expenses were higher than budget by $1,087,000 due to additional program costs, funded by additional interest income and other revenue not budgeted.
Grants expenditure was higher than budget by $3,412,000 as a result of additional investment, funded by higher interest income and other revenue.
Interest income was higher than budget by $1,909,000 due to higher interest rates than anticipated.
Other revenue was higher than budget by $2,463,000 due to:
(a)$462,000 of returned grants mainly from Playing Australia for unused funds,
(b)$649,000 income received for Purrumpa First Nations gathering, and
(c)Other income received for various programs not anticipated in the original budget.
2.63The Chief Executive Officer, the Chair, and the Executive Director of Corporate Resources stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the Council will be able to pay its debts when they fall due.
2.64The ANAO independent report found that the Council’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
Compliance index
2.65As a corporate Commonwealth entity, the Council 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.
2.66While most of the requirements were present in the table, the Council did not include page references in its compliance index and the reference to a section titled ‘Changes affecting the Council’ did not appear to exist in the report.
2.67Additionally, information on executive renumeration was not disaggregated.
2.68Overall, the committee considers the Council’s 2022-23 annual report to be ‘apparently satisfactory’.
Australia Post
2.69Australia Post’s 2022-23 annual report was tabled in the Senate on 27October 2023 and in the House of Representatives on 19 November 2023.
2.70In the Chair’s message, Siobhan McKenna reflected on her first year in the role and outlined key challenges and achievements of Australia Post in 2022-23, including:
first financial loss recorded since 2015, as customers continue to move away from letters in favour of digital communications;
work to implement the Post26 Strategy, which seeks to modernise and reshape the organisation;
move Australia Post towards becoming a modern eCommerce, digital, retail and mail business; and
the departure of Board Members: former chair, Lucio Di Bartolomeo, and formers Directors Andrea Staines OAM and Deidre Willmott; and welcoming new Members Robyn Clubb AM and Dr Jodie Auster.
Performance reporting
2.71Australia Post provided a summary of its results against the community service and commercial objectives as set out under the Australian Postal Corporation Act 1989.The related performance standards as prescribed by the Australian Postal Corporation (Performance Standards) Regulations 2019 were summarised in a table and are listed below.
On-time letters delivery exceeded the target of 94 per cent by 2.69 per cent
Letters delivered frequency, has two prescribed measures. For delivery to delivery points every business day, they exceeded the target of 98 per cent by 0.55 per cent. For letters delivered to delivery points at least two days per week they exceeded the target of 99.7 per cent by 0.22 per cent.
Delivery timetables prescribedperformance standard was listed as ‘maintained’.
Street posting boxes had a target of 10000, this was exceeded by 4,934.
Retail outlets had two metrics, one for total number of retail outlets had a target of 4000, this was exceeded by 271. The second metric was distance of residences from an outlet for both metropolitan and rural areas. For metropolitan areas it exceeded the target of 90 per cent by 3.9 per cent, for rural areas, the target of 85 per cent was exceeded by 4.2 per cent.
2.72Australia Post considers the arrangements it has in place to monitor and carry out its community service obligations to be appropriate and adequate. The monitoring is coordinated by the office of the Corporate Secretary with input from deliveries and retail areas.
2.73Based on the information provided, Australia Post exceeded all of the prescribed performance standards for 2022-23. These results are independently audited by the ANAO, who found that the reporting was sufficient and accurate.
2.74As part of its annual performance statement Australia Post outlined three strategic imperatives. These were linked to key performance indicators (KPIs) as outlined in the renumeration report and indicated whether or not each was met.
2.75The three strategic imperatives were as follows:
Creating a financially sustainable future was related to the Profit Before Tax (PBT) KPI. This outcome was not met;
Supporting each other was related to the Group People Engagement and Safety Index KPIs. Both of these KPIs were met; and
Delighting our customers & communities was related to the Consumer and Business Net Promoter Score and Delivery in full on time KPIs. These KPIs were all met.
Financial Reporting
2.76Australia Post’s financial reporting differs from other agencies slightly as the organisation does not receive direct funding through the annual appropriations acts.
2.77The annual report provides a summary of Australia Post’s financial performance in 2022-23. Australia Post reported a total comprehensive loss of $215.7 million compared to the previous reporting period where it recorded a profit of $125.6 million.
2.78The report outlined that the Profit Before Tax (PBT) of the 2023 financial year was $255.6 million below the previous year’s PBT. Revenue was below budget, and driven and offset by several factors:
Lower than forecast parcel volume;
Redundancy provisions from the structural changes due to the Future Operating Model and the decision to exit non-core businesses compounded the loss in earnings before income and tax;
Losses were partly offset by benefits from yield-increasing initiatives, reductions in variable costs and ongoing focus on cost containment across operational and support functions.
2.79The Directors, the Group Chief Executive Officer, Managing Director and Group Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the council will be able to pay its debts when they fall due.
2.80The ANAO independent report found that Australia Post’s financial statements for the year ended 30 June 2023 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.81Overall, the committee considers Australia Post’s 2023 annual report to be ‘apparently satisfactory’
Senator Karen Grogan
Chair