Introduction
1.1
This is the Senate Finance and Public Administration Committee's (the
committee) first report on annual reports for 2009. It provides an overview of
the committee's examination of annual reports for the 2007–08 financial year.
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:
examine each annual report referred to it and report to the
Senate whether the report is apparently satisfactory;
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;
investigate and report to the Senate on any lateness in the
presentation of annual reports;
in considering an annual report take into account any relevant
remarks about the report made in debate in the Senate;
if the committee so determines, consider annual reports of
departments and budget-related agencies in conjunction with examination of
estimates;
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;
draw to the attention of the Senate any significant matters
relating to the operations and performance of the bodies furnishing the annual
reports; and
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 committee has responsibility for the oversight of the following
portfolios:
1.4
There have been no changes to these portfolios as they relate to the
production of annual reports since the committee's last report on annual
reports, No. 2 of 2008.
1.5
Appendices 1–4 provide the relevant extracts of the Administrative
Arrangements Order relating to the Prime Minister and Cabinet, Finance and
Deregulation and Human Services portfolios and the Department of Climate
Change, respectively.
Annual reports referred
1.6
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 May 2008 to 31 October 2008.
1.7
During this period the annual reports of four departments of state, two
Parliamentary departments, twelve statutory agencies, one executive agency, two
other agencies under the Financial Management and Accountability Act 1997 (FMA
Act), one Commonwealth authority and three Commonwealth companies were
received.
Method of assessment
1.8
Annual reports, together with the
estimates process, provide a mechanism for parliamentary (and public) scrutiny
of the operations of government. As the official Commonwealth guidelines state:
-
The
primary purpose of annual reports of departments is accountability, in
particular to the Parliament.
-
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.[2]
1.9
Senate Standing Order 25(20) requires that the committee examine reports
referred to it to determine whether they are timely and 'apparently
satisfactory'. In forming its assessment, the committee considered whether the
reports comply with the relevant legislation and guidelines for the preparation
of annual reports. The principal Acts which apply to departments, statutory
agencies and authorities, and Commonwealth companies are:
-
Public Service Act 1999;
-
Parliamentary Service Act 1999;
-
Financial Management and Accountability Act 1997 (FMA
Act); and
-
Commonwealth Authorities and Companies Act 1997 (CAC Act).
1.10
Statutory authorities report under their respective enabling legislation,
for example, the Australian Electoral Commission reports under section 17 of
the Commonwealth Electoral Act 1918.
1.11
The committee also assessed whether reports comply with the Requirements
for Annual Reports: for Departments, Executive Agencies and FMA Act Bodies
(the PM&C Guidelines), June 2008, issued by the Department of 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.[3]
1.12
The principles underlying the annual report requirements issued by
PM&C are as follows:
The content of annual reports should:
-
be
consistent with the purposes of annual reports – in particular, annual reports
should be written in plain English and provide sufficient information and
analysis for the Parliament to make a fully informed judgement on departmental
performance;
-
align
with the overall accountability framework;
-
reflect
the harmonisation, as far as practicable, of reporting regimes within
government (including PBSs and PAESs) and between the government and
non-government sectors; and
-
merit
reporting – the relative benefits and costs of reporting should be considered.[4]
1.13
For bodies reporting under the CAC Act, compliance with the Commonwealth
Authorities and Companies (Report of Operations) Orders 2008 was
considered.[5]
Reports examined
1.14
In 2008, the last sitting week of the Senate before October 31 was from
13 October until 16 October. It was not possible to table reports in the
Senate after this date as Supplementary Budget Estimates hearings were then
held from 20 October until 23 October, with no subsequent sitting days for the
rest of October. Several reports were thus not tabled before 31 October 2008 in the Senate, but were tabled before that date in the House of
Representatives. These reports are considered by the committee to have been
tabled within the time limit for this report.
1.15
The following 25 reports for the financial year 2007–08 were tabled in
the Senate, or the House of Representatives, or presented 'out of session'
to the President of the Senate by 31 October 2008 and referred to the
committee:
Departments of State
-
Department of Climate Change Report for the Period 3 December
2007–30 June 2008—pursuant to section 63 of the Public Services Act 1999;
-
Department of Finance and Deregulation Annual Report
2007–08—pursuant to section 63 of the Public Services Act 1999;
-
Department of Human Services Annual Report 2007–08—pursuant to
section 63 of the Public Service Act 1999; and
-
Department of the Prime Minister & Cabinet Annual Report
2007–08—pursuant to section 63 of the Public Service Act 1999.
Departments of Parliament
-
Department of Parliamentary Services—Annual Report and Financial
Statements 2007–08—pursuant to paragraph 65(1)(c) of the Parliamentary
Service Act 1999 and subsection 65(3) of the Parliamentary Services Act
1999; and
-
Department of the Senate—Annual Report for 2007–08—pursuant to
section 65 of the Parliamentary Service Act 1999.
Other prescribed agencies under the FMA Act
-
Australian Electoral Commission—Annual Report 2007–08—pursuant to
section 17 of the Commonwealth Electoral Act 1918;
-
Australian Institute of Family Studies—Annual Report 2007–08—pursuant
to section 114LC of the Family Law Act 1975;
-
Australian National Audit Office—Annual Report 2007–08—pursuant
to section 28 of the Auditor-General Act 1997;
-
Australian Public Service Commission—Annual Report 2007–08,
Incorporating the Annual Report of the Merit Protection Commissioner —pursuant
to section 44 and section 51 of the Public Service Act 1999;
-
Australian Reward Investment Alliance—Annual Report 2007–08—section 162
of the Superannuation Act 1976, section 28 of the Superannuation Act
1990 and section 26 of the Superannuation Act 2005;
-
Centrelink—Annual Report 2007–08—pursuant to subsection 40(1) of
the Commonwealth Services Delivery Agency Act 1997;
-
Commissioner for Superannuation—Annual Report 2007–08—pursuant to
section 162 of the Superannuation Act 1976 and section 21 of the Papua
New Guinea (Staffing Assistance) Act 1973;
-
Commonwealth Ombudsman—Annual Report 2007–08—pursuant to subsections
19(1) and 19F(3) of the Ombudsman Act 1976;
-
Future Fund Management Agency—Annual Report 2007–08—pursuant to
section 81 of the Future Fund Act 2006;
-
Inspector-General of Intelligence and Security—Annual Report 2007–08—
pursuant to section 35 of the Inspector-General of Intelligence and Security
Act 1986;
-
Medicare Australia—Annual Report 2007–08—pursuant to subsection
70(1) of the Public Service Act 1999;
-
National Archives of Australia and National Archives of Australia
Advisory Council—Annual Report 2007–08—pursuant to section 70 of the Public
Service Act 1999;
-
Office of the Official Secretary to the Governor-General—Annual
Report 2007–08—pursuant to subsection 19(1) of the Governor-General Act 1974;
-
Office of the Privacy Commissioner—Annual Report 2007–08—
pursuant to section 97 of the Privacy Act 1988; and
-
Office of the Renewable Energy Regulator—Financial Annual Report
2007–08— pursuant to section 63 of the Public Service Act 1999.
Commonwealth authorities/companies
-
Australian Hearing—Annual Report 2007–08—pursuant to section 9 of
the Commonwealth Authorities and Companies Act 1997;
-
Health Services Australia Ltd—Annual Report 2007–08—pursuant to section 36
of the Commonwealth Authorities and Companies Act 1997;
-
National Australia Day Council—Annual Report 2007–08—pursuant to subsection
36(4) of the Commonwealth Authorities and Companies Act 1997; and
-
Medibank Private Limited—Annual Report 2007–08—pursuant to sections
9 and 36 of the Commonwealth Authorities and Companies Act 1997.
Reports not examined
1.16
The committee is not obliged to report on Acts, statements of corporate
intent, surveys, corporate plans or errata. The following documents were
referred to the committee but not examined:
-
ASC Pty Ltd–Statement of Corporate Intent 2008 to 2011;
-
Health Services Australia Limited (HSA Group)–Statement of
Corporate Intent 2008 to 2011;
-
Medibank Private Limited–Statement of Corporate Intent 2009 to
2011;
-
Renewable Energy (Electricity) Act 2000–Report for 2007 on
the Operation of the Act; and
-
Parliamentary Service Commissioner—Report for 2007–08—pursuant to
subsection 42(1) of the Parliamentary Service Act 1999.
Reports held over
1.17
The following reports were tabled in the Senate after 31 October 2008. These reports will be examined in the committee's second report on Annual
Reports due to be presented to the Senate in September 2009.
-
Albury-Wodonga Development Corporation Report for 2007–08 (received
5 November 2008);
-
ASC Pty Ltd Report of 2007–08 (received 3 December 2008);
-
Australian Industry Development Corporation Report of 2007–08
(received 4 February 2009);
-
Australian Political Exchange Council – Report for 2006–07
(received 22 December 2008);
-
Australian Public Service Commission—State of the Service Report
(received 2 December 2008);
-
Australian River Co. Ltd. Report for 1 December 2006–30 November 2007 (received 25 November 2008);
-
Department of Finance and Deregulation – Issues from the Advance
to the Finance Minister as a Final Charge for the Year (received 11 November 2008); and
-
Members of Parliament (Staff) Act 1984 – Report for 2007–08
(received 23 December 2008).
Non-reporting bodies
1.18
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.
1.19
The committee continues to approach this in two ways. First, the
committee examined the Administrative Arrangements Order (updated 1 July 2008) for the list of legislation administered by portfolio ministers and
consequently, departments and agencies.
1.20
Second, the committee consulted Finance's listing of Australian Government
Bodies. The list identifies the agencies that are required to report and the
Acts under which they report.[6]
Based on the above checks, the committee considers it has received all reports
that it is required to receive.
Timeliness
1.21
Most 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. Commonwealth companies reporting under the CAC Act are required to provide an annual report to the responsible Minister four months after the
end of the company's financial year.[7]
For example, where the authority's financial year ends on 30 June, the
report must be furnished to the Minister by 31 October. It appears all annual
reports submitted by Commonwealth companies in the committee's portfolio areas
fulfilled this requirement.
1.22
The committee does note however, that even where companies submitted
reports to the relevant Minister within the time limit, there is often a
significant delay before the report is tabled in the Parliament. For instance,
in the case of the Australian River Co. Ltd, the report was received by the
Minister on 8 September 2008, but was not tabled until 25 November 2008. The CAC Act specifies the following:
If the Commonwealth company is a wholly-owned Commonwealth company,
or is not required to hold an annual general meeting, the responsible Minister
must table the documents in each House of the Parliament as soon as practicable
after receiving them. In all other cases, the Minister must table the documents
in each House of the Parliament as soon as practicable after the annual general
meeting of the company.[8]
Recommendation 1
1.23 The committee recommends that Ministers ensure that annual
reports are tabled in the Parliament as soon as is practicable after receipt of
reports from agencies.
1.24
Concerns regarding the matter of timeliness have been discussed
previously by the committee. The committee noted that most agencies finalised
their reports sufficiently far in advance to allow for tabling in both Houses
prior to the 31 October deadline. For reasons mentioned above,
eight reports, though tabled in the House of Representatives on time, were
not able to be tabled in the Senate until after 31 October.
1.25
Annual reports play an integral part in the scrutiny of Government
activity. It is common practice for Senators to use the reports to assist in the
examination of the performance and financial positions 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, and preferably before
supplementary estimates hearings.
1.26
Where a department or agency cannot meet its deadline for reporting, it
must apply to the relevant minister for an extension.[9]
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 not
aware of any extensions granted for this period.
1.27
For each report referred to it, the committee recorded the following
dates:
-
submitted to minister;
-
received by the minister;
-
tabled in the Senate or presented to the President or a temporary
chair of committees; and
-
tabling date in the House of Representatives, where applicable.
1.28
Appendix 5 shows these key dates (where available).
Assessment of reports
1.29
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.
1.30
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.
1.31
The committee has found that all reports are 'apparently satisfactory'.
However, certain aspects of the reports the committee scrutinised could be
improved. These matters are discussed under the heading 'Selected Agencies'
below. The committee notes that all financial statements included in the
reports received an unqualified report from the Auditor-General.
Senate debate
1.32
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)'.[10]
Annual reports fall into this category of government documents.
1.33
The committee is not aware of any Senate debates relating to the reports
examined.
Selected agencies and reports
Department of Climate Change
1.34
The Department of Climate Change (Climate Change) was established on 3 December, 2007. As such, the 2007-08 Annual Report is the first published by
Climate Change. For this reason, the committee has chosen to comment on this
report.
1.35
Overall, Climate Change is to be commended for a Report that has made
every effort to be accessible to the average reader. Evidence of this includes
comprehensive explanatory notes for the financial statements, logical structure
along outcome lines, and the inclusion of overviews of programs of interest.
The committee found that the annual report for 2007–08 fulfilled the
requirements outlined in the PM&C Guidelines.
1.36
The committee commends the annual report as an introduction to the
Department of Climate Change for members of the public. The report includes
helpful explanatory notes to assist reader comprehension, and for this reason
serves as a good example of what departments should aim for, not only in a
first annual report, but for any.
Accessibility
1.37
The report begins with an introduction and guide that explains how the
Department has handled reporting given the difficulties of having been
established in the middle of a financial year. The committee notes that the
Department has followed the PM&C Guidelines for reporting changes
made to the machinery of government during a reporting period.
1.38
Throughout the report, the Department appears to have adopted a plain
English approach, avoiding overly bureaucratic and complicated language. This
has been an issue in the past for some departments, and the committee continues
to encourage the use of simple language in annual reports.
1.39
The Department has made an effort to include explanatory notes with each
section. Though this leads to repetition, it enables most sections of the
report to be read independently, making it more accessible to readers who only
have time to read sections of interest.
1.40
The report includes single-page overviews of programs of current
interest such as the Carbon Pollution Reduction Scheme and the National
Greenhouse and Energy Reporting Scheme that serve as a good introduction to the
activities of the Department.
Structure of report
1.41
The Department's budget outputs have been used to structure the annual
report along thematic lines. The Department of Climate Change's three outputs
are:
-
reducing Australia's greenhouse gas emissions;
-
adapting to the impacts of climate change we cannot avoid; and
-
helping to shape a global solution.
1.42
By structuring the report along the lines of the outputs, the annual
report is more readily comparable with Portfolio Budget Statements, thus
enhancing accountability. This is a key requirement of the PM&C Guidelines.
1.43
The various programs and work-groups of the Department are linked
directly to outputs. This is particularly useful for the Senate estimates
process, as it enables Senators to establish under which outputs they should
direct questioning. Committees have often commented on the problems associated
with departments or agencies which have vaguely worded outcomes and a lack of
explanatory documentation.
1.44
Overall, the Department has produced a sound and readable first report.
The committee does note however, that some of the PM&C requirements were
unable to be met due to the recent establishment of the Department. For
instance, Climate Change currently operates under the Department of
Environment, Water, Heritage and the Art's Fraud and Risk Management policies
and practices and is yet to establish its own. The Department has undertaken to
develop its own Fraud Control Plan in the first quarter of 2008–09 and the
committee awaits an assessment of this and other developments in next year's
annual report.
General comments (various agencies)
Compliance Index
1.45
About half of the annual reports reviewed for this period include a
compliance index, indicating page references for each requirement listed in the
Requirement for Annual Reports. The committee supports the inclusion of
a compliance index in annual reports as this shows that the department or
agency is aware of the current PM&C Guidelines and that they have
taken those guidelines into account in the construction of the annual report.
1.46
The inclusion of a compliance index also allows readers to establish
whether the report is in accordance with the guidelines. However, the committee
notes that there is a tendency for agencies which include a compliance index to
omit guidelines that are not applicable. For instance, one of the guidelines
asks for any information on judicial decisions and decisions of administrative
tribunals. Some agencies neglected to provide information to fulfil this
guideline, presumably on the basis that they were not party to any judicial or
tribunal decisions. However, for the sake of accuracy and completeness, the
agency should conclusively state that it was not involved in any of these
decisions.
Recommendation 2
1.47 The committee recommends that all departments and agencies
include a compliance index in future annual reports.
Certification of compliance with Commonwealth Fraud Control Guidelines
1.48
The PM&C Guidelines state that agency heads are required to
certify that their agency complies with the Commonwealth Fraud Control
Guidelines. In practice, many annual reports simply included a statement that
they were in compliance with the guidelines, and do not include certification
by the agency heads themselves. This approach is not in compliance with the
Commonwealth Fraud Control Guidelines themselves:
Chief Executive Officers (CEOs) are responsible, under
section 44 of the FMA Act, for promoting efficient, effective and ethical use
of Commonwealth resources. Section 45 of the FMA Act requires CEOs to implement
a fraud control plan for their agency. CEOs have principal responsibility for
fraud control within their agencies and for complying with the Commonwealth
Fraud Control Guidelines. This includes:
...certifying, in their agency’s annual reports to their
Minister or Presiding Officer, that they are satisfied that:
-
fraud risk assessments and fraud control plans have
been prepared that comply with the Commonwealth Fraud Control Guidelines;
-
appropriate fraud prevention, detection,
investigation and reporting procedures and processes are in place; and
-
annual fraud data has been collected and reported
that complies with the Commonwealth Fraud Control Guidelines.[11]
1.49
Though it could perhaps be considered ambiguous as to whether this
requires actual certification by the agency head in an annual report, the
committee commends the approach of agencies such as the Commissioner for
Superannuation, who included a signed statement by the CEO certifying fraud
control initiatives.
Recommendation 3
1.50 The committee recommends that agencies adhere to the Commonwealth
Fraud Control Guidelines by including a signed statement by the CEO or agency
head certifying that they are satisfied that their agency is in compliance with
the guidelines.
Accountability for outcomes and outputs in annual reports
1.51
The central function of an annual report is to provide accountability
and an essential factor in this is the ease with which the Portfolio Budget
Statements and the annual report can be compared. The PM&C Guidelines
state that:
(1) Annual Reports and Portfolio Budget Statements (PBSs) are
the principal formal accountability mechanisms between government and
departments and from departments through (or on behalf of) government to the
Parliament. Annual reports are reports from departmental secretaries to the portfolio
minister, for tabling in the Parliament. PBSs are authorised by ministers for
use by the Parliament in the consideration of the Budget.
(2) PBSs set out performance targets for departmental outputs
and contributions to outcomes when funds are appropriated, and annual reports
report on achievement. PBSs and annual reports provide the Government and the
Parliament with detailed information about the actual performance of
departments and forecasts of future needs and expectations. The 'clear read' between
PBSs and annual reports is an essential part of the accountability system that
compares budgeted targets and figures to those actually achieved, and places a
strong emphasis on compatibility between the two documents regarding budget and
performance information.[12]
1.52
The broad nature of outputs and outcomes remains a problem for agencies
and departments as they seek to align annual reporting with Portfolio Budget
Statements in accordance with PM&C Guidelines. An example of this is
Centrelink, which was singled out for attention in this committee's report,
Annual Reports (No. 1 of 2008). That report stated that:
Centrelink's lack of a detailed outcome and output structure
may also explain why its annual report is at times difficult to navigate. There
is a risk that without the clear guidance of a comprehensive outcome and output
structure, an assessment of progress towards achieving outcomes can be replaced
by descriptions of process and activities. As stated in the PM&C
Guidelines this should be avoided.
The committee expresses concern about the difficulty in
linking Centrelink's broadly devised, single outcome and output structure, with
its organisational structure and the production of a clear and accessible
annual report.[13]
1.53
For agencies with vague or 'catch-all' outcomes, it can be very
difficult to structure the annual report in a way that provides a coherent
performance review and reports against the outputs at the same time. For this
reason, the committee continues to encourage the improvement of agency outcomes
and outputs so that they become more targeted and specific. The committee notes
the Government's proposals in relation to outcomes made in Operation
Sunlight – Enhancing Budget Transparency.[14]
Adherence to PM&C requirements by CAC Act bodies
1.54
The PM&C Guidelines apply to government departments,
executive agencies, and FMA Act bodies. Companies and authorities listed under
the Commonwealth Authorities and Companies Act 1997 have different
reporting requirements, with content specified in the Corporations Act 2001.
1.55
Nevertheless, the committee considers that CAC Act bodies should take
into account the PM&C Guidelines where possible. The committee
commends the Health Services Australia Group, which voluntarily adhered to the PM&C
Guidelines in its Annual Report 2007–08.
Recommendation 4
1.56 The committee recommends that Commonwealth Authorities and
Companies Act 1997 bodies consider adhering to the Requirements for Annual
Reports issued by the Department of Prime Minister and Cabinet.
Senator Helen Polley
Chair
Navigation: Previous Page | Contents | Next Page