Introduction

1.1 This is the Senate Finance and Public Administration Committee's (the committee) second report on annual reports for 2008. It provides an examination of annual reports for the 2006–07 financial year tabled in the Senate between 1 November 2007 and 30 April 2008. Copies of this and other committee reports can be obtained from the Senate Table Office, the committee secretariat or online at: www.aph.gov.au/senate_fpa.

Terms of reference

1.2 Under Senate Standing Order 25(20) the annual reports of departments and agencies stand referred to 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;

(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 Senate last amended the continuing order relating to the allocation of departments and agencies to committees on 13 February 2008.[1] In accordance with that resolution, the committee has responsibility for the oversight of the following portfolios:

Parliament;[2]
Prime Minister and Cabinet (including Climate Change);
Finance and Deregulation; and
Human Services.

Restructure of portfolios

1.4 Since the committee's most recent report on annual reports (March 2008) there have been several changes to the allocation of agencies within the Prime Minister and Cabinet (PM&C) and Finance and Deregulation (Finance) portfolios. These changes are reflected in the Administrative Arrangements Order of 1 May 2008.

1.5 The PM&C portfolio now includes the National Archives of Australia (NAA), transferred from Finance, and the Old Parliament House (OPH) which was established on 1 July 2008 under the Public Service Act 1999 as an executive agency. Previously OPH resided within the Environment, Water, Heritage and the Arts portfolio.

1.6 As mentioned above the NAA was removed from the Finance portfolio. The Commonwealth Grants Commission was also removed from Finance and currently resides within the Treasury portfolio.

1.7 For a detailed discussion of the affect of the restructure on agencies under the committee's oversight, see paragraphs 1.3 to 1.11 in the committee's previous report: Budget estimates 2008–09.[3]

Annual reports referred

1.8 In accordance with Senate Standing Order 25(20)(f) this report must examine the annual reports presented to the Senate, under the portfolios in which the committee has oversight, for the period between 1 November 2007 to 30 April 2008.

1.9 During this period one report of a department of state, three annual reports of statutory agencies and three reports of Commonwealth authorities or companies were received. For details of the reports examined by the committee see paragraph 1.18.

Method of assessment

1.10 Annual reports, together with the estimates process, provide a mechanism for parliamentary (and public) scrutiny of the operations of government. As the official Commonwealth requirements state:

(1) The primary purpose of annual reports of departments is accountability, in particular to the Parliament.

(2) Annual reports serve to inform the Parliament (through the responsible Minister), other stakeholders, educational and research institutions, the media and the general public about the performance of departments in relation to services provided. Annual reports are a key reference document and a document for internal management. They form part of the historical record.[4]

1.11 To meet the Parliament's accountability requirements, annual reports 'should provide sufficient information and analysis for the Parliament to make a fully informed judgement on departmental performance'.[5] To this end, there are requirements, outlined below, which mandate what information must be included in the report and how the information should be presented.

1.12 Senate Standing Order 25(20) requires that the committee examine reports referred to it and determine whether they are timely and 'apparently satisfactory'. In forming its assessment, the committee considered whether the reports comply with the relevant legislation and requirements for the preparation of annual reports.

1.13 The principal Acts which apply to departments of state, statutory agencies and Commonwealth authorities and companies are the:

Acts Interpretation Act 1901
Commonwealth Authorities and Companies Act 1997 (CAC Act);
Corporations Act 2001;
Financial Management and Accountability Act 1997 (FMA Act);
Public Service Act 1999; and
Parliamentary Service Act 1999.

1.14 Statutory authorities also have reporting requirements under their respective enabling legislation, for example, the Australian Electoral Commission reports under section 17 of the Commonwealth Electoral Act 1918.

1.15 The committee also assessed whether reports comply with the Requirements for Annual Reports: for Departments, Executive Agencies and FMA Act Bodies (the PM&C Requirements), issued by 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.[6] In determining whether a report is satisfactory, the committee applied the PM&C Requirements. In particular an assessment is made to determine whether the reports adequately address the checklist at Attachment F in the requirements.

1.16 Where applicable, the committee paid particular attention to agencies reporting against outcomes as set down in their respective Portfolio Budget Statements (PB 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.

1.17 For bodies reporting under the CAC Act, compliance with the Commonwealth Authorities and Companies (Report of Operations) Orders 2005 was considered.[7]

Reports examined

1.18 The committee found that all reports are 'apparently satisfactory'. The following reports for the financial year 2006–07 were tabled or presented 'out of session' to the President of the Senate by 30 April 2008 and referred to the committee:

Departments of State

Department of the Prime Minister and Cabinet—Annual report 2006–07—pursuant to section 63 of the Public Service Act 1999[8]

Statutory agencies

Australian Institute of Family Studies—Annual report 2006–07—pursuant to section 114LC of the Family Law Act 1975
Australian Public Service Commissioner—Annual report 2006–07—Incorporating the annual report of the Merit Protection Commissioner—pursuant to section 44 of the Public Service Act 1999
Inspector-General of Intelligence and Security—Annual report 2006–07—pursuant to subsection 35 of the Inspector-General of Intelligence and Security Act 1986

Commonwealth authorities and companies

Albury-Wodonga Development Corporation—Annual report 2006–07—pursuant to section 32 of the Albury-Wodonga Development Act 1973
Australian Industry Development Corporation—Annual report for 2007—pursuant to section 36 of the Commonwealth Authorities and Companies Act 1997
Telstra Sale Company Limited—Annual report for the period ended 30 June 2007—pursuant to subsection 36(4) of the Commonwealth Authorities and Companies Act 1997

Reports not examined

1.19 The committee is not obliged to report on Acts, statements of corporate intent, surveys, corporate plans or errata. The following document was referred to the committee but not examined:

Australian Public Service Commission—State of the Service Report 2006–07—Report—pursuant to section 44 of the Public Service Act 1999

Reports held over

1.20 The committee received a report from the Office of the Renewable Energy Regulator which was tabled on 26 August 2008. This report will be examined in the committee's next report which will consider reports tabled between 1 May 2008 and 31 October 2008.

Non-reporting bodies

1.21 Standing Order 25(20)(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.

1.22 The committee continues to approach this in two ways. First, the committee examined the Administrative Arrangements Order (dated 1 May 2008) for the list of legislation administered by portfolio ministers and consequently, departments and agencies.[9]

1.23 Second, the committee consulted Finance's flipchart of Australian Government agencies and bodies governed either by the FMA Act or the CAC Act.[10]

1.24 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

1.25 For each report referred to it, the committee recorded the following dates:

submitted to minister;
received by the minister; and
tabled in the Senate or presented to the President or a temporary chair of committees.

1.26 Appendix 5 shows these key dates (where available).

1.27 Most annual reports are required to 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.[11]

1.28 The Government's preferred tabling date for annual reports of Commonwealth authorities reporting under the CAC Act, that operate on a 1 July to 30 June financial year, is also 31 October each year.[12]

1.29 The tabling dates for Commonwealth companies may vary due to differing operational circumstances. The PM&C publication Guidelines for the Presentation of Government Documents to the Parliament states:

Under section 36 of the CAC Act, Commonwealth companies are required to give the responsible Minister a copy of the company's annual report, which is prepared according to the requirements of the Corporations Act 2001, at least 14 days before its annual general meeting. For wholly-owned Commonwealth companies (which include all companies limited by guarantee, and companies limited by shares where the Commonwealth is the sole shareholder), the Minister must table the report as soon as practicable after the annual general meeting.

1.30 However, it remains general Government policy that all annual reports should be tabled by 31 October to facilitate the scrutiny of annual reports before Supplementary Budget Estimates hearings by relevant Senate standing committees.[13]

Lateness

1.31 It appears that one statutory agency did not fulfil the requirement for its responsible Minister to table its annual report before the Senate 'as soon as practicable' (by 31 October 2007). The committee notes that the annual report of the Inspector-General of Intelligence and Security (IGIS) was sent to the Prime Minister on 31 October 2007 and subsequently presented out-of-sitting on 20 November 2007.

1.32 The committee has previously discussed the importance of tabling reports on time in order to assist Senators with the examination of the performance of agencies prior to Supplementary Budget Estimates. It is common practice for Senators to use the reports to assist the examination of ministers and their officials in relation to the financial position and operations of departments and agencies. This is a key reason why departments and agencies should take care to ensure that annual reports are available on time.

1.33 The committee notes that in the case of the tabling of the IGIS annual report, the Parliament was not sitting due to the announcement of a Federal election. Nonetheless the committee is of the view that it is essential that Senators and the public have access to the agency performance information contained in annual reports so they can adequately assess the performance of government during election campaigns.

1.34 Where a department or agency cannot meet its deadline for reporting it must apply to the minister for an extension.[14] Where an extension is granted, the minister must table in 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 aware of one extension sought for this reporting period:

Australian Public Service Commissioner (notification of delay received 23 November 2007).

1.35 For a further discussion on the matter of the extension sought by the Public Service Commissioner see paragraph 1.31 in the committee's previous report Annual reports (No. 1 of 2008).

Changes to the format of Portfolio Budget Statements

1.36 The Minister for Finance and Deregulation sought to change the format of the 2008–09 PB Statements (May 2008) in line with the Government's Operation Sunlight policy. One of the Government's objectives for making these changes was to align the format of the 2008–09 PB Statements with agency annual reports. Specifically, in the formatting of Section Two: Outcomes and Planned Performance, the 2008–09 PB Statements are designed to enhance the 'clear read' principle between PB Statements and Annual Reports.[15]

1.37 The committee notes that it will have an opportunity to comment on these changes when 2008–09 annual reports are tabled in the Senate and referred to the committee for examination.

Senate debate

1.38 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)'.[16] Annual reports fall into this category of government documents.

1.39 The committee is not aware of any Senate debates relating to the reports examined.

Corrections

1.40 The committee wishes to acknowledge three errors printed in its previous report on annual reports: Annual reports (No. 1 of 2008).

1.41 In paragraph 1.27 the committee incorrectly identified that the Albury‑Wodonga Development Corporation (AWDC) did not fulfil its obligations to present an annual report to its responsible Minister on time. In actual fact the legislative requirement underpinning when the AWDC must furnish its report to the Minister for Finance states that this must take place within six months after the period for which their report ends.[17] This being six months from 30 June 2007, or 31 December 2007. This requirement was met by the AWDC (the Minister received its report on 13 December 2007).

1.42 In paragraph 1.32, PM&C was incorrectly identified as not having sought and received an extension to table its annual report after 31 October 2007. In fact the former Secretary of PM&C, Dr Peter Shergold AC wrote to the then Prime Minister, the Hon John Howard MP, who granted an extension until 19 November 2007. PM&C tabled its report on 19 November 2007, and the correspondence relating to the extension of its report was tabled in the Senate on 14 February 2008.[18] Also warranting correction is footnote 16 which attributed an incorrect month in reference to a passage of Estimates Hansard transcript. The footnote should identify the Estimates Hansard of 18 February 2008.

1.43 The committee also incorrectly identified the Australian River Company (ARCo) as not providing its 2005–06 annual report to its responsible minister on time. Section 9 of the CAC Act was identified as applying to ARCo when in fact it does not.[19] The correct reference to when ARCo is required to present an annual report to its responsible Minister is section 36 of the CAC Act.

Selected agencies and reports

Australian Institute of Family Studies

1.44 This is the first opportunity that the committee has had since the December 2007 restructure of the PM&C portfolio, to review an annual report of the Australian Institute of Family Studies (AIFS).

1.45 Notably the AIFS 2006–07 annual report states that this is the first report to address its corporate governance and performance since its transition from the CAC Act to the reporting and legislative requirements of the FMA Act:

This transition followed the assessment of the institute's governance arrangements against the templates derived from the Uhrig Report, Review of Corporate Governance of Statutory Authorities and Office Holders (2003). The necessary legislative, regulatory and administrative changes were made before 30 June 2006, including an exchange of Statements of Expectations and Intent between the Minister and the Director of the Institute.[20]

1.46 The committee found useful the publication of a compliance index that references each mandatory and suggested section of the PM&C Requirements.[21] The committee has previously commented on the usefulness of compliance indexes and reiterates that they are a useful device for Parliament to easily locate information on the performance of agencies.[22]

1.47 Bearing in mind the usefulness of the AIFS's compliance index there appears to be an anomaly whereby a page reference in the index to reports by the Auditor-General, a Parliamentary Committee or the Commonwealth Ombudsman leads to the mandatory independent Auditor-General's report on financial statements and not external arbitrary reviews by the bodies identified above.[23] Although such reviews may indeed not have taken place during the 2006–07 reporting period, the AIFS is encouraged to address this reporting requirement properly in its next annual report. The PM&C Requirements state:

The annual report must provide information on the most significant developments in external scrutiny of the [agency]...including particulars of judicial decisions and decisions of administrative tribunals that have had, or may have, a significant impact on the operations of the [agency]; and reports on the operations of the [agency] by the Auditor-General (other than the report on financial statements), a Parliamentary committee or the Commonwealth Ombudsman.[24]

1.48 The committee also identified another apparent anomaly whereby the reporting requirement 'Purchasing: assessment of purchasing against core policies and principles' is discussed in the AIFS's annual report but not cross referenced in the compliance index. This assessment is confined to a single paragraph stating that purchasing activities are consistent with the Commonwealth Procurement Guidelines. It would be beneficial if an elaboration of this statement was included allowing the reader to fully grasp what steps have taken place to support this claim.[25]

1.49 Of general interest is the detailed explanatory information relating to the AIFS's research into an impressive range of subjects relating to four major themes: family relationships; children, youth and patterns of care (which includes a longitudinal study of Australian children); families and work; and families and community life.[26]

1.50 Also provided in the report is a very useful tabular form summary of research project performance across the AIFS's research themes. This summary provides information on performance outcomes and indicates that most of the planned outputs have been achieved or are ongoing.[27]

1.51 The AIFS report details that the findings of its research are accessible to practitioners, policy makers and academic researchers and the public through four clearinghouses designed to provide accessible summaries.[28] The four clearinghouses are the:

Australian Family Relationships Clearinghouse;
National Child Protection Clearinghouse;
Australian Centre for the Study of Sexual Assault; and
Communities and Families Clearinghouse Australia.[29]

1.52 The AIFS reported that it had experienced an increase in hits to the AIFS website of 17 per cent from 2005–06 to 2006–07 and pages downloaded of six per cent. By comparison increased visits to clearinghouse websites ranged from 9 to 89 per cent. Subscribers to email lists also increased.[30]

1.53 The committee notes that the AIFS states in its Research Plan 2006–2008, Families Through Life: Diversity, Change and Context, that it has identified a number of areas requiring greater emphasis and that progress has been made in addressing these areas during the year in review.[31] More detailed performance information is also provided in tabular form which addresses the level of performance of AIFS activities against key performance indicators.[32]

1.54 The AIFS's annual report also addresses reporting under various legislative requirements and Commonwealth Government strategies. This includes performance information in implementing the Commonwealth Disability Strategy and the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).

1.55 The performance report relating to AIFS's adoption of the Commonwealth Disability Strategy uses a template provided by the Department of Families, Housing, Community Services and Indigenous Affairs (FHCSIA).[33] The information provided is detailed and clearly demonstrates AIFS's commitment to maintaining equitable access to resources including recruitment processes. For example:

Providers have an established service charter that specifies the roles of the provider and consumer and service standards that address accessibility for people with disabilities: A free service to convert data files into an alternative format is available for people with vision impairment or other accessibility requirements.

Recruitment information for potential job applicants is available in accessible formats on request: All standard recruitment materials are provided in accessible formats and each recruitment panel is supported in handling requests for accessible information.[34]

1.56 The only exception to the high quality of the information provided that addresses the Commonwealth Disability Strategy is the absence of goals and actions for 2008–09.

1.57 In its previous report Annual reports (No. 1of 2008) the committee drew attention to the issue that many agencies are not adequately fulfilling their obligation to report their environmental impacts under the EBPC Act.[35]

1.58 Although some information relating to environmental impacts is discussed in the AIFS annual report it appears that the level of reporting could be improved.[36] The committee encourages the AIFS to provide more information in this regard, including statistical and numerical information, so that an objective assessment can be made of the claims that environmental impacts are being minimised.

Inspector-General of Intelligence and Security

1.59 The Annual Report 2006–07 produced by the Inspector-General of Intelligence and Security (IGIS) provides a thorough insight into the function and operation of the agency.

1.60 The report clearly presents an explanation of the enabling legislation underpinning the IGIS, the purpose for the agency's existence and the complaints review powers that it maintains over Commonwealth intelligence agencies.

1.61 The report states that the IGIS has the power to undertake reviews into six agencies within the Australian Intelligence Community (AIC). These include:

Australian Security Intelligence Organisation (ASIO);
Australian Secret Intelligence Service;
Defence Signals Directorate;
Defence Imagery and Geospatial Organisation;
Defence Intelligence Organisation; and
Office of National Assessments.[37]

1.62 The main goal of the IGIS is to make sure that the six AIC agencies under its purview act legally and with propriety, comply with ministerial guidelines and directives, and respect human rights. The IGIS annual report describes the three types of review that it undertakes in order to investigate the complaints that it receives. These are identified as 'administrative', 'preliminary inquiry' and 'full inquiry'.[38]

1.63 Notably, the IGIS identifies the rapid growth throughout 2006–07 of powers granted to AIC agencies. One example identified in the report is the use by ASIO of questioning and detention warrants and the IGIS's monitoring role:

My office [the office of the IGIS] plays a central role in monitoring what occurs. I have made it a personal practice to attend on at least the first day of questioning. When so attending, the legislation provides me with the capacity to raise any concerns about the process. These concerns must be addressed by the prescribed authority (usually a retired judge, who also monitors the questioning), if necessary by suspending the questioning.[39]

1.64 Furthermore the IGIS states that there are a range of legislative safeguards currently in place to prevent the indiscriminate issue of warrants against 'innocent people', and that these safeguards have in some circumstances been ignored by their critics.[40]

1.65 The analysis provided in a section titled 'Reflections on first term' (of appointment as the IGIS) also presents the reader with an insight into some possible administrative gaps facing the IGIS and AIC agencies more broadly. The IGIS suggests some options to overcome these problems. The committee found this information valuable, discusses three of these options below and makes a recommendation to government in this regard.

Regular disclosure

1.66 Bering in mind the increase in powers granted to AIC agencies, the IGIS states that there is a need for the IGIS to reassure Parliament and the public that expanded powers are being properly administered.[41] The IGIS speculates that such reassurance could be reinforced if the IGIS had a greater ability to disclose the results of its investigations:

There might also be merit in reviewing whether some greater capacity for disclosure in the period between the annual reports to Parliament than the IGIS Act currently permits...[42]

1.67 The committee notes this suggestion and believes that this option should be considered by the Government. The IGIS's comments are indicative of a commitment to greater disclosure and accountability which in the committee's view should be supported.

Scope of jurisdiction

1.68 Another reflection made by the IGIS is on the scope of jurisdiction relating to the Inspector-General of Intelligence and Security Act 1986. The IGIS states:

...the span of agencies which can be involved in issues such as counter-terrorism can be considerable and this has caused me to reflect on whether there should be some capacity to extend an inquiry under the IGIS Act to include intelligence and security activities of other agencies in special circumstances.[43]

1.69 The committee notes that one example of an agency with increased counter‑terrorism powers is the Australian Federal Police. The IGIS also states that there may be occasions when an issue goes beyond the purview of the six AIC organisations under the oversight of the IGIS. The committee believes that the IGIS's comments should be evaluated and responded to by the Government.

Administrative appeal

1.70 Another issue of accountability raised by the IGIS is the availability of merits review for non-Australian citizens to the Administrative Appeals Tribunal (AAT).[44] Where this issue intersects with the operations of the IGIS is in relation to the accountability of AIC agencies more broadly:

While people who are Australian citizens or permanent residents can appeal to the AAT on decisions such as the refusal or cancellation of a passport because of an ASIO security assessment, people outside these categories (such as refugee claimants for a visa) do not have resort to the AAT. My predecessor had recommended that the legislation be changed to provide for AAT review for refugee applicants where appropriate Australian authorities find that applicants have a well-founded fear of persecution if returned to their country of origin.[45]

1.71 The IGIS states that this suggestion was not taken up at the time and that it would be 'worthwhile revisiting the proposal'.[46] The committee also supports this suggestion. Although an assessment of the proposal in question is beyond the scope of this report, the committee believes it is important for the Government to respond to the suggestions put forward by the IGIS to improve the transparency of the operations of AIC agencies.

Recommendation 1

1.72 The committee recommends that the Government review the merits of the various suggestions put forward in the Inspector-General of Intelligence and Security's 2006–07 Annual Report, including the following transparency and accountability issues:

amending the Inspector General of Intelligence and Security Act 1986 to provide, where appropriate, more frequent reporting of the IGIS's activities in the period between its annual reports;
expanding the agency oversight of the Inspector-General of Intelligence and Security; and
allowing, in certain circumstances, refugee applicants access to appeal to the Administrative Appeals Tribunal.

1.73 This review should be undertaken and its findings reported to the Senate by the last sitting day of September 2009.

1.74 In terms of the internal administration of the Office of the IGIS, the report informs the reader that there has been a growth in the number of staff that undertake investigation activities. The report states that the reason for this is because of the growth in size of AIC agencies. Specifically, that staff numbers have grown from four in 2004 to ten at 30 June 2007.[47]

1.75 Informative statistics are also provided that outline the number of complaints (149 approaches from individuals) dealt with by the IGIS, and own motion inquiries (three) during 2006–07.[48] A summary of these results states that a 'small number' of cases were found where agencies had acted beyond their authority:

While any instance where an intelligence agency has acted without authority is a matter for concern, the instances detected were almost invariably due to technical or human error and appropriate remedial action was either already initiated by the affected agency, or put in train immediately an agency was made aware of the problem.[49]

1.76 Generally the committee found the information provided in the report of the IGIS addresses the PM&C Requirements and is 'apparently satisfactory'.[50]

Senator Helen Polley
Chair

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