Introduction


Introduction

1.1       This report provides the reader with an overview of the Committee's examination of annual reports for the 2004-05 financial year. This is the Committee's first report for 2006. Copies of this and other committee reports can be obtained from the Senate Table Office, Committee Secretariat or online at the following address: https://www.aph.gov.au/Senate/committee/fapa_ctte/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:

  1. examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;
  2. 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;
  3. investigate and report to the Senate on any lateness in the presentation of annual reports;
  4. in considering an annual report take into account any relevant remarks about the report made in debate in the Senate;
  5. if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;
  6. 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;
  7. draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and
  8. 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 Senate last amended the continuing order relating to the allocation of departments and agencies to committees on 9 February 2006.[1] In accordance with that resolution, the Finance and Public Administration Legislation Committee has responsibility for the oversight of the following portfolios:

  • Parliament;
  • Prime Minister and Cabinet; and
  • Finance and Administration (including the Department of Human Services and agencies).

Annual reports referred

1.4       In accordance with Senate Standing Order 25(21)(f) this report must examine those annual reports presented by 31 October 2005.

1.5       During that period one annual report of a Parliamentary department, three reports of departments of State, nine reports of statutory agencies and/or authorities, two reports of prescribed agencies, two reports of Commonwealth companies, and four other miscellaneous reports were received.

Method of Assessment

1.6       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'.[2] To this end, there are guidelines mandating what information must be included in the report and how the information should be presented.

1.7       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 principal Acts are:

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

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

1.9       The Committee has also assessed whether reports comply with the Requirements for Annual Reports (the 'guidelines'), June 2005, 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/guidelines/index.cfm

Reports Examined

1.10      The following 21 reports for the financial year 2004-05 were tabled or presented 'out of session' to the President of the Senate by 31 October 2005 and referred to the Committee:

Parliamentary Departments
  • Department of the Senate—Report for 2004-05—pursuant to section 65 of the Parliamentary Service Act 1999.
Executive Departments
  • Department of the Prime Minister and Cabinet—Report for 2004-05—pursuant to subsection 63 of the Public Service Act 1999;
  • Department of Finance and Administration—Report for 2004-05—pursuant to subsection 63 of the Public Service Act 1999; and
  • Department of Human Services—Report for 2004-05—pursuant to subsection 63(2) of the Public Service Act 1999.
Statutory Agencies or Authorities
  • Australian Electoral Commission—Report for 2004-05—pursuant to section 17 of the Commonwealth Electoral Act 1918;
  • Australian Hearing—Report for 2004-05—pursuant to the Commonwealth Authorities and Companies Act 1997;
  • Australian National Audit Office—Report for 2004-05—pursuant to section 28 of the Auditor-General Act 1997;
  • Centrelink—Report for 2004-05—pursuant to section 40 of the Commonwealth Services Delivery Agency Act 1997;
  • Commonwealth Grants Commission—Report for 2004-05—pursuant to section 63 of the Public Service Act 1999;
  • Commonwealth Ombudsman—Report for 2004-05—pursuant to section 19 of the Ombudsman Act 1976 and section 38 of the Complaints (Australian Federal Police) Act 1981;
  • ComSuper—Report for 2004-05—pursuant to section 5 of the Financial Management and Accountability Act 1997;
  • Inspector-General of Intelligence and Security—Report for 2004-05—pursuant to section 35 of the Inspector-General of Intelligence and Security Act 1986; and
  • National Water Commission–Report for 2004-05–pursuant to section 45 of the National Water Commission Act 2004.
Prescribed agencies
  • Commonwealth Superannuation Scheme Board—Report for 2004-05—pursuant to section 161 of the Superannuation Act 1976; and
  • Public Sector Superannuation Scheme Board—Report for 2004-05—pursuant to section 28 of the Superannuation Act 1990.
Commonwealth Companies, including Government Business Enterprises
  • Health Services Australia—Report for 2004-05—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997; and
  • National Australia Day Council—Report for 2004-05—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997.
Other
  • ASC Pty Ltd– Statement of corporate intent 2005-08;
  • Centrelink—Data-matching Program—Report on progress 2004-2005;
  • Health Services Australia—Statement of corporate intent 2005-08; and
  • Parliamentary Service Commissioner—Report for 2004-05—Pursuant to subsection 42(1) of the Parliamentary Service Act 1999.

1.11      The following reports were tabled in the Senate after 31 October 2005. These reports will be reviewed in the Committee's second report on annual reports due to be presented to the Senate in September 2006.

  • Albury-Wodonga Development Corporation–Report for 2004-05–pursuant to section 32 of the Albury-Wodonga Development Act 1973;
  • ASC Pty Ltd—Report for 2004-05—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian Industry Development Corporation—Report for 2004-05—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian Political Exchange Council–Report for 2004-05;
  • Australian Public Service Commission—Report for 2004-05—pursuant to sections 44 and 51 of the Public Service Act 1999;
  • Australian Public Service Commission—State of the Service Report 2004-05;
  • Department of Parliamentary Services—Report for 2004-05—pursuant to section 65 of the Parliamentary Service Act 1999;
  • Health Insurance Commission—Report for 2004-05—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Office of the Official Secretary to the Governor-General—Report for 2004-05—pursuant to section 19 of the Governor-General Act 1974; and
  • Telstra Instalment Receipt Trustee Ltd–Report for 2004-05.

Non-Reporting Bodies

1.12      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.

1.13      The Committee continues to approach this in two ways. First, the Committee checked the Administrative Arrangements Orders (dated 21 July 2005 and 27 January 2006) for the list of legislation administered by portfolio ministers and consequently, departments and agencies.

1.14      Second, the Committee consulted the Department of Finance and Administration'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

1.15      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.

Timeliness

1.16      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.

1.17      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.

1.18      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.

1.19      Appendix 1 shows these key dates (where available).

Assessment of Reports

1.20      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 F in the guidelines.

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

1.22      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

1.23      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 by the Senate on 11 May 2004 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)'.[3] Annual reports fall into this category of government documents.

1.24      Annual reports are also often used by senators during estimates hearings. It is common practice for senators to use the reports for examination of ministers and their officials.

Selected Agencies

Department of Finance and Administration – financial statements

1.25      The annual report noted that the department's financial statements were audited by the Australian National Audit Office (ANAO) and an unqualified audit opinion was issued. However, in the course of a general performance audit of the management of net appropriation agreements made under section 31 of the FMA Act, the ANAO found that the department's section 31 agreements, upon which it was relying for an appropriation authority, were invalid. As a result of the invalidity of the agreements, the department had no valid appropriation for the expenditure of some amounts (an inadvertent breach of section 83 of the Constitution) and the ANAO found that the accounts and records were not kept as required (a breach of section 48 of the FMA Act).[4]

1.26      The report noted that these breaches are of a 'technical nature' and did not lead to a qualification of the financial statement figures or affect the provision of a true and fair audit opinion. A section 31 agreement, which has been recognised by the ANAO as valid, was signed into effect on 29 June 2005.

1.27      While the ANAO has also described these breaches as 'technical' in a legal sense, the Committee notes that the ANAO has raised concerns about the causes and consequences of such breaches. The ANAO's audit of section 31 agreements across a number of departments and agencies revealed, in its words, 'widespread shortcomings' in the administration of these arrangements. The ANAO also stated that breaches of this nature raise important considerations of accountability and transparency to the Parliament.[5] While it may be correct to label these breaches as technical issues, this should not detract from the underlying problems that they reflect.

Other agencies – financial statements

1.28      The ANAO also reported similar contraventions of section 83 of the Constitution and of section 48 of the FMA Act in the financial statements of Centrelink and the Inspector-General of Intelligence and Security.[6]

1.29      The Committee notes that, although the breaches referred to above maybe of a 'technical nature', occurrences such as these underline the importance of departments and agencies adhering to correct procedures in relation to both spending and accounting for public monies. The Committee also notes concerns about the adequacy of the financial management and disclosure framework for net appropriation agreements have been raised at recent estimates hearings.[7] The management of these appropriations, and the manner in which they are reported to the Parliament, can be expected to be of ongoing interest to the Committee.

Department of Human Services – performance reporting

1.30      This is the first annual report of the department which was established in October 2004 to improve the development, delivery and coordination of Australian Government social and health-related services. Human Services brings together six agencies, the Child Support Agency (CSA), CRS Australia, Centrelink, the Health Insurance Commission, Australian Hearing and Health Services Australia and also includes a small 'core department'.

1.31      The report provides a review of the department's outcomes and activities. Information is provided on performance and governance in the core department, the CSA and CRS Australia (the other entities publish their own annual reports). The sections on performance, most particularly in relation to the core department, however, largely concentrate on 'achievements'. The Committee believes there needs to be more transparent performance reporting with more explicit information provided on areas where outcomes have not been achieved or where the department has found there is scope for improving its operations and performance. In this regard, the section on the CSA provides a more balanced approach to its operations, highlighting a number of 'achievements' but also stating that CSA 'recognises the need to significantly improve in a broad range of areas'.[8]

1.32      As the department sees its annual report as providing sufficient information to answer matters taken on notice in the estimates process,[9] the department must make the corresponding effort to produce a report that meets the accountability and transparency requirements of the Parliament and its committees.

1.33      In relation to external scrutiny of CSA activities, the report notes that the Ombudsman received 2105 complaints in 2004-05, an increase of seven percent over the previous year. The report noted, however, that the number of instances in which the Ombudsman identified an agency defect decreased from 164 in 2003-04 to 130 in 2004-05. The report also noted that CSA draws valuable lessons from issues raised through the Ombudsman, and uses these to improve the quality of its service.[10]

Senator Brett Mason

Chair