Chapter 1
Annual reports of departments
Department of Defence
1.1
The Defence Annual Report 2007–2008 was presented on 31 October 2008 and tabled in the Senate on 10 November 2008.
Military justice system
1.2
The committee draws attention to the chapter in Defence's annual report devoted to justice and fairness in Defence, particularly the section on
military justice reforms. It notes the end of the two–year period to implement
the agreed recommendations arising from the Senate Foreign Affairs, Defence and
Trade References Committee's 2005 Report into the Effectiveness of Australia's Military Justice System. The two year implementation period set out to
deliver impartial, rigorous and fair outcomes through better oversight, greater
transparency and improved timeliness. Responsibility for the oversight of the
remaining reform initiatives passed to the Inspector General ADF (IGADF).[1]
According to the annual report:
Although impressive progress was made with the implementation
of most of the agreed recommendations to December 2007, for various reasons,
including the need for legislative changes, a number of the recommendations
could not be completed within the two–year implementation period. At June 2008,
six of the 32 agreed recommendations from the Senate Committee report remained
to be fully implemented. It is expected that the majority of these will be
completed by the end of 2008.
...
The 32 recommendations that were agreed for implementation
are not minor. The changes to the military justice system that will result from
these initiatives are the most far reaching since the introduction of the Defence Force Discipline Act (DFDA) in 1985.[2]
1.3
The committee notes that one of the final recommendations to be
implemented in response to the Senate report is the requirement 'to provide for
periodic independent review of the military justice system by a suitably qualified
eminent person or persons'.[3]
1.4
The review team was led by former Chief Justice of NSW, Sir
Laurence Street CK KCMG QC, and former Chief of the Air Force, Air Marshal Les
Fisher AO (Ret'd).
1.5
The report on the first independent review was handed to the
Chief of the Defence Force on 23 January 2009.
Their report will be an important indicator as to whether the
many reforms to the military justice system have been, or are likely to be,
appropriate and effective and whether further evolutionary change is required.[4]
Significant matters relating to the
operations and performance of the department
Defence's financial statements
1.6
The committee is required to note any significant matters
relating to the operations and performance of the bodies presenting their
annual reports. The committee draws attention to the department's financial
statements.
1.7
It is mandatory under section 57 of the Financial
Management and Accountability Act 1997 for the annual report to include a
copy of the audited financial statements and the Auditor–General's report
thereon.
1.8
Over recent years, Defence's financial statements have shown
significant deficiencies.[5]
The committee notes that this financial year, the Auditor–General has provided Defence with an unqualified audit report for its 2007–2008 financial statements. The Defence report states:
This is the first unqualified financial audit for Defence since 2000–2001. The department has successfully addressed several areas of audit
qualification, including general stores inventory explosive ordnance,
repairable items, infrastructure, plant and equipment assets and leave
provisions.[6]
1.9
The Australian National Audit Office also referred to the history
of qualified audit reports. It noted that the unqualified audit report for
2007–08 represents 'a significant achievement by Defence and is the culmination
of considerable activity over the past several years enhancing Defence's financial management framework through continued remediation activity'.[7]
1.10
Nonetheless, the audit of Defence's financial statements
highlighted a number of significant and moderate risks. These are covered
thoroughly in the audit report and the committee notes just a few of the
concerns. With regard to the pricing of general stores inventory, the audit
drew attention to issues with the integrity and reliability of pricing
information in the Standard Defence Supply System. It stated:
In particular, specific remediation over purchasing and
pricing processes including workshop order processes will be required. As such,
the adequacy and reliability of the SDSS control environment remains an ongoing
issue. This will be an important issue to address in 2008–09.
With the planned introduction of a replacement logistics
system to SDSS, there also remains an exposure that poor quality data within
SDSS may be uploaded into this replacement system. Therefore the establishment
of a robust effective control environment around the new system will need to be
supplemented by ongoing remedial action to identify and eliminate these
deficiencies.[8]
1.11
The audit also commented on the Financial Management Framework
which encompasses ongoing monitoring of the controls and reporting processes in
place over financial transactions and balances within Defence. It stated that
at the beginning of the 2006–07 audit, the ANAO had reported two issues
relating to:
1.12
The audit noted that at the completion of its 2007–08 audit the
issues remained unresolved.[9]
1.13
Turning to Human Resource Management, the audit noted that there
are two systems—PMKeyS for all civilian personnel transactions and military
leave processing and recording and ADFPay for military payroll processing. It
reported that at the completion of the 2007–08 audit, the following matters
remained outstanding:
-
the need to improve record keeping procedures, exception
processing and payroll processes for civilian employees;
-
the need to improve the performance and review of input reports
in ADFPay; and
-
the need to reconcile records from the PMKeyS interface with
ADFPay.[10]
Other matters
1.14
Further to the financial statements, the committee also notes
that for the period under review, Defence's governance reform included a
revised Defence business model, which provides a strategic framework for
identifying and implementing improvements in authority and accountability,
performance management and assurance.
The Defence authority and accountability framework has been
strengthened through new Group Head and Service Chief charters and Group
organisational performance agreements. With new membership, the Defence Audit Committee has a greater focus on targeted governance and assurance processes. A
draft enterprise risk management plan has been developed, along with a new Defence base management model which separates responsibility for capability and force generation
from support services. The model will improve efficiency, accountability and
transparency in cost and performance outcomes.[11]
Summary
1.15
The committee was pleased to note the department's progress outlined
in the section entitled 'Defence's financial performance'. The section provides
an overview of the department's financial operating environment without the
reader needing any technical expertise.[12]
1.16
This annual report presents the activities of the department in a
clear, concise manner, which helps the reader to locate any issue or subject of
interest with a minimum of effort. The committee finds Defence's annual report
to be both an informative and a well–produced account of the department's
activities over the past year and that it meets all the requirements for departmental
annual reports.
Department of Foreign Affairs
1.17
The Department of Foreign Affairs and Trade Annual Report 2007–2008
was presented on 29 October 2008 and tabled in the Senate on 10 November 2008.
1.18
In the Secretary's review, Mr Michael L'Estrange stated that 'in
2007–2008 the department actively pursued Australia's foreign and trade policy interests
as a creative middle power':
We worked in support of the government's priorities to strengthen
Australia's alliance with the United States, to engage productively in
multilateral processes and outcomes, and to intensify Australia's interaction with the Asia–Pacific region. We also focused on advancing Australia's interests in meeting key global challenges on issues such as climate change,
trade liberalisation, counter–terrorism, food security, and nuclear non–proliferation
and disarmament.[13]
1.19
The Secretary stated that DFAT pursued an active agenda in
support of Australian foreign policy and trade interests beyond Australia's region, particularly in Europe, the Americas, the Middle East and Africa.
We [also] worked in support of Australia's trade policy
priorities of achieving liberalised trading arrangements through multilateral,
regional and bilateral negotiations and implementing effective economic reform
'behind the borders'. Multilateral trade reform, particularly an ambitious
outcome to the World Trade Organisation Doha Round of trade negotiations,
remains Australia's most important trade policy priority and one which the
department pursued with concerted activism in 2007–2008.[14]
1.20
The committee notes that the department, 'in the face of a
challenging security environment', gave priority to the security of Australian staff
and infrastructure at overseas missions.
We strengthened the security features of a number of
chanceries in unstable security environments and delivered security training to
ensure a high level of security awareness and vigilance among staff.
...
The department continued to provide efficient and effective
communications and security services to many Australian government agencies (AGOs)
operating in Australia's diplomatic missions overseas. We enhanced and upgraded
the department's communications systems in Canberra and overseas as well as our
links with partner agencies, including through inter–agency forums and
contributions to whole–of–government initiatives. Within the department, we
developed a comprehensive information and communications technology (ICT)
strategy in 2007 aimed at better delivering ICT capability into the future [15]
1.21
Mr L'Estrange stated that the department had conducted an
extensive review of its resources, and that it had identified and implemented a
range of savings measures to meet the government's budget objectives. The
savings measures included:
...the withdrawal of some staffing resources in Australia and overseas, and a realignment of existing resources to match new policy
priorities. Work commenced on a further review of the department's resources
that is being jointly undertaken by the department and the Department of Finance and Deregulation. It is expected to be completed to enable consideration
in the context of the 2009–2010 budget.[16]
1.22
The Australian National Audit Office in its Audits of the
Financial Statements of Australian Government Entities for the Period Ended 30 June 2008 found no significant or moderate audit issues for the 2007–08 financial
year.[17]
Summary
1.23
Once again, for ease of reporting, the report of the Department of Foreign Affairs and Trade (DFAT) has been divided into two volumes. Volume 1,
which is examined in this chapter, deals with the DFAT annual report, while
volume 2 reports on the Australian Agency for International Development (AusAID).
1.24
The committee finds Foreign Affairs and Trade's annual report to
be both an informative and a well–produced account of the department's
activities over the past year and that it meets all the requirements for
departmental annual reports.
Department of Veterans' Affairs
1.25
The Department of Veterans' Affairs Annual Report 2007–2008 was presented
on 24 October 2008 and tabled in the Senate on 10 November 2008.
1.26
The annual report for Department of Veterans' Affairs (DVA) also includes the annual reports of the Repatriation Commission, the Military Rehabilitation
and Compensation Commission (MRCC), and the National Treatment Monitoring Committee (NTMC). The Secretary of the department is also the President of the Repatriation
Commission and Chair of both the MRCC and the NTMC.[18]
1.27
In the President/Secretary's overview, Mr Ian Campbell, in his
first report, stated that during 2007–2008, DVA built on the foundations
established by the 2004–2005 service delivery review and the restructures of oneDVA in 2006–2007. He stated that in a year marked by significant changes, the department's
sights are now set on 2015:
That year marks a watershed in the department's commemorative
history—the 100th anniversary of the Gallipoli landings, when the
department can expect the nation's and indeed the world's close attention—but
also a point where the department's vision, Towards 2015, should come to full
fruition. In parallel with the projected steady decline in the veteran
population in the next decade, the department is positioning itself to become a
smaller, cohesive organisation supported by strong partnerships, sophisticated
technologies and highly skilled and motivated staff.[19]
1.28
In previous reports on annual reports, the committee has taken an
interest in DVA's efforts to streamline and improve its information technology
infrastructure. The committee notes the department's veterans' service centre completed
its first full year of operation. Mr Campbell stated that:
After a slow start the telephone service, operated by staff
with the skills and experience to handle most calls as they arrive, has
received very positive feedback from clients. It is enabled by the significant
developments in IT that the department has made under its roll out of aDVAnce components as part of DVA's investment in the Curam integrated applications
framework which is firmly positioning the department's IT systems in the 21st
century.[20]
1.29
The committee notes that DVA acknowledges that it has more work
to do in other areas such as determining initial liability under the Military
Rehabilitation and Compensation Act 2004 (MRCA):
A 20 percent increase in claims in 2006–2007 caused some
delays in determinations, but this was balanced by an overall improvement in
the time taken to process claims last year. Processing times for primary claims
made under the VEA dropped by 89 to 75 days on average, the department's
benchmark levels, partly because of the successful use of predictive analysis
to streamline cases and realign staff resources. The implementation of the
special claims unit in late 2007 as part of the government's election
commitments was another significant element in DVA's improvements in claims
processing.[21]
1.30
The Australian National Audit Office in its Audits of the
Financial Statements of Australian Government Entities for the Period Ended 30 June 2008 found no significant or moderate audit issues in the non-material
entities in the portfolio for the 2007–08 financial year.[22]
1.31
In conclusion, the committee finds that the Department of Veterans' Affairs has submitted a comprehensive and well designed annual report
that meets all the reporting requirements for a Commonwealth department.
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