Annual reports (No. 2 of 2004)


Annual reports (No. 2 of 2004)

Introduction

1.1 This report provides the reader with an overview of the Committee's examination of annual reports for the 2002-03 financial year. This is the Committee's second report for 2004. The first report, tabled on this 10 March, examined the bulk of the annual reports referred to the Committee. Copies of both Committee reports can be obtained from the Senate Table Office, Committee Secretariat or online at the following address: www.aph.gov.au/Senate/committee/fapa_ctte/completed_inquiries/index.htm

Terms of Reference

1.2 Under Senate Standing Order 25(21) the annual reports of departments and agencies stand referred to legislation committees in accordance with the allocation of departments and agencies in a resolution of the Senate. Each committee is required to:

(a) examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;

(b) consider in more detail, and report to the Senate on each annual report which is not apparently satisfactory, and on the other annual reports which it selects for more detailed consideration;

(c) investigate and report to the Senate on any lateness in the presentation of annual reports;

(d) in considering an annual report take into account any relevant remarks about the report made in debate in the Senate;

(e) if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;

(f) report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year;

(g) draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and

(h) 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.

Allocated Portfolios

1.3 The allocation of departments and agencies to committees was last amended by the Senate on 13 February 2002. In accordance with that resolution, the Finance and Public Administration Legislation (FPAL) Committee has responsibility for the oversight of the following portfolios:

  • Parliament;
  • Prime Minister and Cabinet; and
  • Finance and Administration.

Annual reports referred

1.4 In accordance with Senate Standing Order 25(21)(f) this report examines those annual reports presented between 31 October 2003 and 30 April 2004. During that period one annual report of a statutory authority, one report on the operation of legislation, four annual reports of government companies, one report of a independent non-statutory body and one report of parliamentary appointed council were received.

Method of Assessment

1.5 Annual reports, together with the estimates process, provide a mechanism for parliamentary (and public) scrutiny of the operations of government. Annual reports 'should provide sufficient information and analysis for the parliament to make a fully informed judgement on departmental performance'.[1] To this end, there are guidelines mandating what information must be included in the report and how the information should be presented.

1.6 The Senate Standing Order referred to above requires that the Committee examine reports referred to it to determine whether they are timely and 'apparently satisfactory'. In forming its assessment, the Committee has considered whether the reports comply with the relevant legislation and guidelines for the preparation of annual reports. The relevant Acts are:

  • Public Service Act 1999;
  • Parliamentary Service Act 1999;
  • Financial Management and Accountability Act 1997; and
  • Commonwealth Authorities and Companies Act 1997.

1.7 Statutory authorities report under their respective acts, for example, the Australian Electoral Commission reports under section 17 of the Commonwealth Electoral Act 1918.

1.8 The Committee has also assessed whether reports comply with the Requirements for Annual Reports (the 'guidelines'), June 2004, issued by the Department of the Prime Minister and Cabinet (PM&C) with the approval of the Joint Committee of Public Accounts and Audit. This is the authoritative source outlining the requirements for preparing and presenting annual reports. These guidelines may be found on the Internet at http://www.pmc.gov.au/docs/govt_index.cfm#Requirements.

Reports Examined

1.9 The following eight reports for the financial year 2002-03 were tabled or presented 'out of session' to the President of the Senate by 30 April 2004 and referred to the Committee:

Parliamentary Departments
  • Nil-All reports of Parliamentary departments were presented by 31 October 2003 and consequently examined in the Committee's first report on annual reports for 2004.
Executive Departments
  • Nil-All reports of executive departments were presented by 31 October 2003 and consequently examined in the Committee's first report on annual reports for 2004.
Statutory Agencies or Authorities
  • Inspector-General of Intelligence and Security (IGIS).
Commonwealth Companies, including Government Business Enterprises
  • Bankstown Airport Limited;
  • Camden Airport Limited;
  • Employment National; and
  • Hoxton Airport Limited.
Reports on the operation of legislation
  • Australian Public Service Commission-State of the Service Report 2002-03.
Other reports
  • Australian Political Exchange Council; and
  • Official Establishments Trust.

Non-Reporting Bodies

1.10 Standing Order 25(21)(h) requires that the Committee inquire into, and report on, any bodies which do not present annual reports to the Senate but should present such reports.

1.11 The Committee continues to approach this in two ways. First, the Committee checked the Administrative Arrangements Orders (dated 18 December 2003, and amended by Orders in Council dated 24 June and 21 July 2004) for the list of legislation administered by portfolio ministers and consequently, departments and agencies. Extracts of the relevant text from the Orders are at Appendix 2 and 3.

1.12 Second, the Committee consulted DoFA's List of Australian Government Bodies. The list identifies the agencies that are required to report and the Acts under which they report. This list may be found at the following internet addresses: http://www.finance.gov.au/finframework/fma_agencies.html and http://www.finance.gov.au/finframework/cac_bodies.html

1.13 Based on the above checks, the Committee is not aware of any bodies that have neglected to furnish a report for presentation to the parliament.

1.14 On this matter, the Committee has considered whether the Office of National Assessments (ONA) should table an annual report in the Parliament. Presently, ONA has a statutory obligation to furnish the Prime Minister with an annual report on its operations. This obligation does not appear to extend to the Prime Minister having to table the report in the Parliament. The Committee understands that the ONA annual report is a classified document which explains, in part, why it is not tabled in Parliament.

1.15 Nonetheless, the Committee observes that the Australian Security and Intelligence Organisation (ASIO) produces annual reports that are tabled in the Parliament. These reports are presumably based on declassified information which enables them to be tabled and published.

1.16 At the same time, as the Committee has noted elsewhere in this report (see the discussion of the annual report of the Inspector-General of Intelligence and Security) that the role and performance of intelligence agencies have attracted the heightened attention of the Parliament and its committees in recent years. In this regard, the Committee considers that it would be timely and in line with the accountability arrangements governing other intelligence agencies for the ONA to produce a declassified version of its annual report to the Prime Minister for tabling in the Parliament. The tabling of such a report would bring ONA into step with other agencies and also enhance the accountability of the Australian intelligence community to the Parliament.

Recommendation

The Committee recommends that the ONA, in consultation with the Prime Minister, consider producing a declassified annual report on its activities and performance for tabling in the Parliament.

Timeliness

1.17 Most reports must be tabled in parliament by 31 October each year unless another date is specified, for example, in an agency's legislation, charter and/or terms of reference.

1.18 Where a department or agency cannot meet its deadline for reporting, it must apply to the minister for an extension. Where an extension is granted, the minister must table in the parliament a copy of the application together with a statement specifying the length of the extension and the reasons for granting the extension. The Committee is not aware of any extensions during this reporting period.

1.19 All reports were tabled on time. For each report referred to it the Committee recorded the following dates:

  • date of letter of transmittal;
  • date report submitted to minister;
  • date report received by the minister; and
  • date report is tabled or presented to the President or a temporary chair of committees.

1.20 Appendix 1 shows these key dates.

Assessment of Reports

1.21 In determining whether a report was satisfactory, the Committee applied the PM&C guidelines. In particular, to assess whether the reports adequately met reporting requirements, they were assessed against the checklist at Attachment E in the guidelines.

1.22 Where applicable, the Committee paid particular attention to agencies reporting against outcomes as set down in their respective portfolio budget statements (PBS) and portfolio additional estimates statements (PAES). The Committee notes that the majority of agencies report performance against outcome structures as set out in these documents.

1.23 The Committee has found that all the reports are 'apparently satisfactory'. It notes also that all financial statements included in the reports received an unqualified report from the Auditor-General.

Senate Debate

1.24 Few annual reports are debated in the Senate, but many remain on the Senate Notice Paper for future consideration. The Committee notes procedural changes adopted this 11 May on the recommendation of the Procedure Committee: namely, that 'government documents tabled on any day of the week are to be carried over for consideration each day until they appear on the list for consideration under General Business on Thursday (Standing Order 61)'.[2] Annual reports fall into this category of government documents.

1.25 One arena in parliament where annual reports are often used is during estimates hearings. It is common practice for senators to use annual reports in their context as references for lines of examination.

Selected Reports

Inspector-General of Intelligence and Security (IGIS)

Reporting requirements

1.26 Section 35 of the Inspector-General of Intelligence and Security Act 1986 requires the Inspector-General to 'as soon as practicable after each 30 June, prepare and furnish to the Prime Minister a report of the operations of the Inspector-General during the year that ended on that 30 June'.[3] This report was prepared within reasonable time (see Appendix 1 for dates) and tabled in a timely manner in the Parliament in accordance with Section 34(2), (3) of the Acts Interpretation Act 1901.

1.27 The Committee considers that the report adequately meets the reporting requirements as stipulated in the Guidelines.

Comments

1.28 In its second report on annual reports of 2003, the Committee noted that the prominence of security issues, intelligence matters and the role of Australia’s intelligence agencies has attracted growing interest within the Parliament and community. Since then this interest has grown considerably, particularly with parliamentary committees examining the intelligence surrounding the Bali bombings and the pre-war intelligence on Iraq.

1.29 IGIS is not an intelligence-gathering agency, rather its role is to help the ministers responsible for Australia’s major intelligence agencies to oversee and review their activities. Those six agencies are:

  • Australian Security Intelligence Organisation (ASIO);
  • Australian Secret Intelligence Service (ASIS);
  • Defence Signals Directorate (DSD);
  • Defence Imagery and Geospatial Organisation (DIGO);
  • Defence Intelligence Organisation (DIO); and
  • Office of National Assessments (ONA).

1.30 According to the report, ‘the purpose of this oversight and review is to ensure that the agencies act legally and with propriety, comply with ministerial guidelines and directives and respect human rights’.[4]

1.31 The Inspector-General's overview of the year in review highlights increased activity within the intelligence agencies, in particular, combating global terrorism within and outside of Australia's borders. The Inspector-General states that, throughout the inspections and inquiries undertaken during the course of the year, '[he] observed no diminution in the agencies' adherence to appropriate standards of legality, propriety and respect for human rights'.[5]

1.32 During the year, amendments to the ASIO Act were enacted, empowering ASIO 'to obtain warrants for the detention and questioning of people reasonably believed to be able to provide important information relating to terrorism'.[6] Several amendments directly relate to IGIS's role. In moves to enhance the checks and balances of these powers, the Inspector-General reported that:

in addition to the statutory procedures, ASIO will put in place measures to ensure that the Inspector-General has adequate advance notice of any proposals to exercise the powers provided under the legislation.[7]

1.33 IGIS has been working with ASIS and DSD in improving the operational design of the Intelligence Services Act by way of developing internal checks and balances that uphold and safeguard the requirements of the Act and the privacy of citizens. The Inspector-General states that:

It was necessary, following passage of the Act, to develop protocols to ensure that, in the event of any claim for immunity under the legislation, there would be an appropriate mechanism, involving consultation with the Inspector-General, to enable law enforcement agencies to consider the legitimacy of the claim.[8]

1.34 The Inspector-General goes on to say:

experience [based on the first year of operation] with the Act and privacy rules has revealed some deficiencies and unintended consequences that should be rectified by legislative amendment in due course. As the second anniversary of the Act’s passage approaches it would be timely to review its operation to develop a package of such amendments'.[9]

1.35 IGIS reports that the number of new complaints increased in the reporting period-a continuing trend from past years-stating that:

There were 29 new complaints leading to preliminary or full inquiries (26 in 2001-02) and 32 new complaints nominating a specific agency that were dealt with without the need for inquiry action (27 in 2001-02).[10]

1.36 The annual report suggests two possible reasons for these increases: first, increasing use of the IGIS internet site to lodge complaints and follow the progress of inquiries; and second, the media attention paid to several IGIS inquiries has raised the community's awareness of the office and its role.[11] A third factor is the increased investigative work by intelligence agencies following global terrorist attacks and heightened threat environment over recent years, leading to more contact between intelligence bodies and the community.

1.37 The Committee notes that these three factors indicate why there is now a higher probability of complaints about the actions of intelligence agencies. However, none of these factors reveals the causes for an increase in complaints. The Committee believes that IGIS should examine the nature of the complaints made to see if any common reasons emerge. This would enable IGIS and the relevant agencies to identify if there are aspects of operational procedures or practice that need to be addressed.

1.38 According to the annual report, IGIS's work is measured against several performance indicators, the primary ones being:

  • Time taken to finalise complaint inquiries;
  • Acceptance of recommendations arising from inquiries;
  • Positive responses from agencies to issues raised arising from inspection activities; and
  • The level of assurance IGIS can give that the intelligence agencies are conducting their activities legally, with propriety, and with regard to human rights.[12]

1.39 The Committee notes that the latter performance indicator is additional to those set out in the Portfolio Budget Statement.[13] Although the purpose of this performance indicator is reasonably self-evident, under the annual report guidelines IGIS should explain why it has been included. The Committee considers that an explanation of how IGIS helps achieve such an outcome would benefit the reader insofar as understanding the nature of the assurance given.

1.40 Statistics included in the report show that the time to finalise inquiries has fluctuated over the past two years. The average time to finalise an inquiry in 2002-2003 was 123.5 days, above the average for the 1998-2003 period of 103.45 days.[14] IGIS argues that this does not reflect a drop in performance but, rather a number of factors such as the complexity of issues under investigation, immediacy of the matters to be inquired into, accessibility of necessary information, locating persons with specific/relevant knowledge and the need to observe the formal processes set out in the IGIS Act.[15]

1.41 Regarding the other performance indicators IGIS reports that:

  • All recommendations made by IGIS were accepted by agencies;
  • Intelligence and security agencies were responsive to issues raised by IGIS and agencies showed a willingness to seek and accept input from IGIS; and
  • Overall, agencies acted with authority, legally, ethically and with propriety.

1.42 The Committee also notes that IGIS says that its budget resources have remained 'relatively static' over past years and that the current resource level is adequate provided 'workload demands do not continue to increase'.[16]

Australian Public Service Commission-State of the Service Report 2002-03

1.43 In accordance with section 44 of the Public Service Act 1999, the Public Service Commissioner is required to prepare and present a report on the state (condition) of the Australian Public Service (APS). Like other annual reports, the State of the Servicereport has a deadline for its tabling in both Houses of Parliament. However, the Joint Committee on Public Accounts and Audit and the Secretary of PM&C agreed that the tabling deadline for the State of the Service report should be 'extended for one calendar month after the tabling date for agencies' annual reports'[17] (generally being 31 October). In practice, the State of the Service report will be tabled in November or December of each year.

1.44 The Committee considers the State of the Service report to be a very useful and necessary document. Essentially, the report provides a demographic, analytical and statistical review of the whole of the Commonwealth public service. In part, it draws out the strengths and weaknesses of the APS in terms of performance, management and adherence to the overarching APS values and code of conduct. It also notes, tracks and discusses various trends, identifying issues that pose future challenges.

1.45 The 2002-03 report identifies three 'critical' challenges facing the APS. The first is the impending retirement of substantial numbers of senior public servants and the APS's ability to plan and manage succession, and to pass on and retain its high knowledge base.[18] Second, emerging complex social problems are expected to affect service delivery. Many of these problems, the report notes, will require a 'good understanding of different cultures and respect for the views of different individuals and different communities'.[19] The third challenge comes from the need for the APS to be adaptive to change, responsive to government and the community, with a related increase in 'transparency and legitimate demand for good decision making within the APS that is impartial and open to review'.[20]

1.46 The report suggests that the APS is in a good position to address the above challenges. It states that:

The more devolved arrangements in place allow agencies considerable flexibility to gear their conditions, structures and approaches to their business objectives. They have facilitated a heightened focus on organisational performance, capability development and client services.[21]

1.47 However, devolution in itself, according to the report, raises new challenges. Namely, 'there is the need to strike an optimal balance between devolution and coordination to achieve whole of government activities and Service-wide capability objectives'.[22]

1.48 The report cites two examples where coordinated approaches are perhaps more beneficial and efficient. The first of these relates to whole of government information and communication technology. While agencies retain autonomy for decisions directly relating to their information technology (IT) matters, 'the IMSC [Information Management Strategy Committee] will take a lead role in facilitating learning and information exchange'[23] across the service.

1.49 The second area identified as more suited to a centralised approach is training and development. Again, while agencies legitimately identify and develop capabilities to address their objectives, '[w]here Service-wide objectives are to be addressed, relevant training activities may be best managed collaboratively, and on a whole of government basis'.[24] The Committee notes recommendations in the report of the Finance and Public Administration References Committee, Recruitment and Training in the Australian Public Service, tabled in September 2003, to this effect.

1.50 In addition, the State of the Service report notes the need for balance between 'agency and Service-wide cultures ... [in particular] how agencies are managing both agency-specific and APS Values'.[25]

1.51 With this in mind, the report pays some attention to the relationship between the APS, ministers and their staff, and the Parliament-an issue with public currency. The report cites the following three APS values central to the relationship between the APS, the government and the Parliament:

  • The APS is apolitical, performing its functions in an impartial and professional manner;
  • The APS is openly accountable for its actions, within the framework of ministerial responsibility to the Government, the Parliament and the Australian public; and
  • The APS is responsive to the Government in providing frank, honest, comprehensive, accurate and timely advice and in implementing he Government's policies and programs.[26]

1.52 The Committee notes that the relationship and interface between public servants and ministerial offices has attracted considerable attention in recent years. Two Senate committees in as many years have examined this relationship, with both recommending that a code of conduct be instituted for MOP(S) Staff (members of parliament staff) to complement those of the APS.[27] In this regard, the Committee notes the comments of the Public Service Commissioner, Mr Podger, who says that with the 'important role of ministerial advisers...in Australia's system of government...there would be benefit in a more formal articulation of their role through a set of values and a code of conduct'.[28]

Australian Political Exchange Council

1.53 According to its annual report, the Council's role is to 'provide opportunities for young Australians involved in politics to study the political systems of other countries as well as to offer a unique insight into the Australian political system to young people from participating exchange countries'.[29]

1.54 The Council is governed by the following terms of reference:

  • Arrange regular exchange visits for either individuals or groups of young people, drawn from the parties of the Principals, with the potential to make a significant contribution to political life, between Australia and other countries;
  • Provide learning experiences through study tours of Australia for young political leaders from countries important for trade or strategic relation;
  • Arrange related activities which provide developmental opportunities for the rising generation of Australian and other political leaders; and
  • Arrange for regular reporting on the Council's activities to Parliament, the Principals and sponsors.[30]

1.55 During the reporting period, the Council sponsored 25 young Australian political leaders on overseas delegations to the United States of America, Japan, Papua New Guinea and the United Kingdom.[31] During the same time, the Council hosted 29 delegates on five delegations from China (Eleventh), United Kingdom (Second), Japan (Tenth), Papua New Guinea (Sixth), and Vietnam (Seventh).[32] Details of the above delegations, including delegates, can be found in the Council's annual report.

1.56 The Council met on four occasions during the 2002-03 financial year. The Chairman receives a sitting fee-determined by the Remuneration Tribunal-and other members of the Council are not remunerated. The Ministerial and Parliamentary Services group of the Department of Finance and Administration staffs the secretariat.[33]

1.57 For the 2002-03 financial year, the Commonwealth appropriation for the Council was $784,000. Actual expenditure for the year was $457,940 leaving some $326,060 of the budget unutilised. Regarding this underspend, the Council states that:

The funds set aside for this financial year were under-utilised due to unforseen circumstances including the deferral of delegation visits and individual study tours until 2003-2004.[34]

1.58 The Committee will monitor the reappropriation of resources in the Council's next annual report.

1.59 The Committee notes that the Council's annual report was not available on its internet page in August 2004, some seven months after its tabling. The Committee reminds the Council that annual reports and similar documents should be available via the internet within a reasonable time after their public release.

Senator Brett Mason
Chair