Chapter 1


Chapter 1

Introduction

1.1        This is the Senate Finance and Public Administration Committee's (the committee) second report on annual reports for 2009. It provides an examination of annual reports for the 2007–08 financial year tabled in the Senate between 1 November 2008 and 30 April 2009. 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 certain departments and agencies stand referred to committees for examination and assessment. 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 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 2009) there have been no changes to the departments and agencies allocated to the committee's four portfolios. The committee notes that funding has been provided to the Department of the Prime Minister and Cabinet for the establishment of two new agencies: the Office of the Information Commissioner; and the National Security Legislation Monitor. The establishment of each of these agencies is contingent on the passage of the relevant legislation.[3]

1.5        There have been several changes with respect to authorities and companies allocated to each portfolio by the Commonwealth Authorities and Companies Act 1997 (CAC Act). Telstra Sale Company Pty Ltd has been wound up, with the last annual report published being for 2007–08. Health Services Australia, previously in the Human Services portfolio, has merged with Medibank Private, which falls within the Finance and Deregulation portfolio. The Albury-Wodonga Development Corporation, previously allocated to this committee under its own legislation has now been prescribed under the CAC Act. The corporation's annual report for 2008–09 will now have to fulfil the reporting requirements of the CAC Act.

1.6        For further discussion of changes made to agencies under the committee's oversight, see paragraphs 1.5–1.8 in the committee's previous report: Budget estimates 2009–10.[4]

Operation Sunlight reforms

1.7        As part of the government's implementation of the Operation Sunlight reforms, the Portfolio Budget Statements (PBS) for the 2009–10 financial year feature program-based rather than output-based reporting. This means that all agency outcome statements have been reviewed and replaced with statements that are more specific and targeted.

1.8        The committee notes the 'clear read' principle for annual reports, whereby information in the report should be easily comparable to the appropriations and targets contained in the Budget documents.

1.9        The government has advised that it has agreed to a number of changes to annual reports in response to the report of former Senator Andrew Murray into budget transparency.[5] These changes include:

  • disclosure of movements of appropriations by outcome;

  • details of departmental appropriations expected to be carried over in to the new financial year to meet future obligations; and

  • introduction of agency resource statements.

1.10      The committee expects to see these changes reflected in 2008–09 annual reports.

Method of assessment

1.11      Annual reports, together with the estimates process, provide a valuable mechanism for parliamentary (and public) scrutiny of the operations of government. As the official Commonwealth guidelines 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.[6]

1.12      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 considers 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).

1.13      Statutory authorities report under their respective enabling legislation. For example, the Australian Electoral Commission reports under section 17 of the Commonwealth Electoral Act 1918.

1.14      The committee also assesses whether reports comply with the Requirements for Annual Reports: for Departments, Executive Agencies and FMA Act Bodies (the PM&C Guidelines), 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 for bodies prescribed under the FMA Act.[7] 

1.15      The principles underlying the PM&C Guidelines are as follows:

The content of annual reports should:

  1. 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;

  2. align with the overall accountability framework;

  3. 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

  4. merit reporting – the relative benefits and costs of reporting should be considered.[8]

1.16      Commonwealth authorities and companies report under the CAC Act and thus have different reporting requirements.

1.17      The annual report of a Commonwealth authority must include a report of operations as set out in the Commonwealth Authorities and Companies (Report of Operations) Orders 2008,[9] financial statements and the Auditor-General's report on those financial statements.

1.18       Commonwealth companies must include in their annual report a copy of the company's financial report, director's report and auditor's report as required by the Corporations Act 2001.[10] Commonwealth companies that are wholly-owned by the Commonwealth must also supply any additional information or report required by the Finance Minister's Orders.

Reports examined

1.19      During the period between 1 November 2008 and 30 April 2009, 11 annual report that were tabled in the Senate, or presented 'out of session' to the President of the Senate were referred to the committee for examination. These comprised the annual reports of two Commonwealth authorities, three Commonwealth companies, and one organisation reporting under its own terms of reference. These reports are categorised as follows:

Commonwealth Authorities

  • Albury-Wodonga Development Corporation—Annual Report 2007–08—pursuant to section 32 of the Albury-Wodonga Development Act 1973;[11] and

  • Australian Industry Development Corporation—Annual Report 2008—pursuant to section 9 of the CAC Act.

Commonwealth Companies

  • ASC Pty Ltd—Annual Report 2008—pursuant to section 36 of the CAC Act;

  • Australian River Company Ltd—Annual Report 2007—pursuant to section 36 of the CAC Act; and

  • Tesltra Sale Company Ltd—Annual Report for the period ending 30 June 2008— pursuant to section 36 of the CAC Act.

Other

  • Australian Political Exchange Council—Annual Report 2006–07—pursuant to own terms of reference.

Reports not examined

1.20      In addition, three annual reports on the operation of legislation and two other annual reports were received. 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:

  • Australian Public Service Commissioner—State of the Service Report 2007–08;

  • Office of the Renewable Energy Regulator—Increasing Australia's Renewable Electricity Generation Annual Report 2007–08;

  • Freedom of Information Act 1982—Annual Report 2007–08;

  • Department of Finance and Deregulation—Issues from the Advance to the Finance Minister as a Final Charge for the year ended 30 June 2008; and

  • Member of Parliament (Staff) Act 1984—Annual Report 2007–08.

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 examines the Administrative Arrangements Order (last updated 1 July 2008) for the list of legislation administered by portfolio ministers and consequently, departments and agencies.

1.23      Second, the committee consults the Department of Finance's listing of Australian Government Bodies. The list identifies the agencies that are required to report and the Acts under which they report.[12] Based on the above checks, the committee considers it has received all reports that it is required to receive.

Timeliness

1.24      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.[13]  For example, where the company's financial year ends on 30 June, the report must be furnished to the Minister by 31 October.

1.25      Commonwealth authorities are required to report by the 15th day of the fourth month after the end of the financial year, which for authorities reporting on a standard financial year basis would be would be October 15.[14]

1.26      One report was received by the minister after the prescribed deadline. The Australian River Company's annual report for the year ended 30 November 2007 should have been received by the Minister by 31 March 2008, but was not received until 3 September 2008. A note in that annual report explains that after initial presentation to the Minister in March 2008, which would have been within the deadline, the report was redrafted to take into account recommendations made by this committee in Annual reports (No. 1 of 2008).[15]

1.27      The committee notes that the Australian Political Exchange Council (APEC) reports under its own terms of reference which simply state that the organisation should 'arrange for regular reporting on the Council's activities to Parliament, the Principals and sponsors.'[16] Though no deadline is specified, the committee encourages APEC to adopt the practice of reporting within 4 months of the end of the financial year.

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