Chapter 2

Annual reports of statutory and non–statutory authorities and government companies

Defence portfolio

Defence Materiel Organisation

2.2      The annual report of the Defence Materiel Organisation (DMO) is contained in volume 2 of Defence's annual report. It was presented on 31 October 2008 and tabled in the Senate on 10 November 2008.

2.3      On 1 July 2005, the organisation became a prescribed agency under the Financial Management and Accountability Act 1997. It has a CEO with statutory responsibilities and authority under the Act. The CEO also has 'joint responsibilities to the Secretary and the Chief of the Defence Force under section 9A of the Defence Act 1903 and is provided with significant delegation powers from the Secretary to manage and allocate staff resources under the Public Service Act 1999. The majority of its funding comes from Defence under agency agreements.

2.4      DMO is one of Australia's largest project management organisations. Its key function is to 'acquire and sustain equipment to support the ADF'. As with similar large project management organisations, it faces problems with the timely delivery of complex, multifaceted equipment projects. The current CEO, Dr Stephen Gumley, noted that the particularly challenging projects are 'characterised by systems integration issues and other risks inherent with developmental technology':

Contrary to some public reporting, the biggest challenge with equipment acquisition continues to be the management of schedule, not cost overruns. Of the projects that were closed during 2007–08, 94 per cent of the projects came in on or under budget.[1]

2.5      He said that under his leadership, the DMO, in conjunction with industry, would 'continue to pursue improvement in our processes and outcomes to ensure that the best available equipment is provided to the ADF, on time'.[2]

2.6      The Australian National Audit Office in its Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2008, reported one significant and ten moderate audit issues during the final phase of the audit. They related to the financial reporting framework; asset management (including AUC); the Standard Defence Supply System (SDSS); and the management of bureau service arrangements for key financial systems, including the Defence personnel recording and reporting system, PMKeyS. These include three new moderate issues which relate to the financial reporting framework and SDSS and are covered thoroughly in the audit:

• limited internal audit coverage; the quantum, disparity, lack of consistent application and integration across project management systems;

• lack of timely access to supporting documentation for transactions; and

• limited benefit from the financial statement hard close process.

2.7      The audit noted that DMO had implemented improvements to the control framework with the establishment of a controls and assurance framework for financial reporting. It suggested, however, that 'further management testing is required to enable reasonable assurance to be placed on the systems and business process controls, by both management and other users of the information'.[3]

2.8      The committee considers that DMO fully met its respective reporting requirements.

Australian War Memorial

2.1       The Australian War Memorial Annual Report 2007–2008 was presented on 29 October 2008, and tabled in the Senate on 10 November 2008. The Australian War Memorial (AWM) is a statutory authority within the Veterans' Affairs portfolio and functions in accordance with the requirements of the Australian War Memorial Act 1980 and the Commonwealth Authorities and Companies (CAC) Act 1997.[4]

2.2      The purpose of the AWM is 'to commemorate the sacrifice of those Australians who have died in war'.[5]

2.3      In his first report as Chair, General Peter Cosgrove AC MC (Ret'd), was pleased to report that the 2007–2008 financial year was another of outstanding achievement for the War Memorial.[6] General Cosgrove stated that:

...the highest standards of corporate governance, in conjunction with experience and skill of the director, his senior management team and staff, resulted in a year of many highlights, including the opening of the new Conflicts 1945 to today gallery space.

Towards the end of 2007—under the stewardship of Major General Adrian Clunies–Ross as Council Chair—the final stages of the gallery redevelopment program were completed. This major initiative had been underway since 2005. The new galleries contain displays dealing with all commitments since 1945, particularly the Korean War, the Malayan Emergency, the Indonesian Confrontation, the Vietnam War, Australia's many peacekeeping commitments, and post–Cold War conflicts such as Iraq and Afghanistan.[7]

2.4      The committee notes that the AWM is now focusing on other corporate priorities, in particular the enterprise content management (ECM) system. The Chair explained:

This initiative will enable the Memorial more effectively to capture, manage, store, preserve, and deliver digital content across the institution in support of our business processes. Enhanced management of the Memorial's digital assets, web content, and organisational records will enable us not just to meet internal administrative needs but to offer greater public access.[8]

2.5      The Chairman stated that during the year, the Council was pleased with the financial performance of the Memorial, especially the finance staff in conjunction with the Finance, Audit and Compliance Committee.

The Memorial will have new challenges in years ahead owing to the potential reduction in funding from Government. The full impact of the reduction in funding through the two percent increase in the efficiency dividend is yet to be felt in the operations of the Memorial. It also seems that the Memorial will have to maintain its grounds, a responsibility previously undertaken by the National Capital Authority. In addition, there is uncertainty over funding for the preservation of the Memorial's collection assets, which was previously provided through depreciation funding. Council is confident that a satisfactory resolution to these issues that impact on future funding for the Memorial can be achieved in the coming year.[9]

2.6      The committee finds that the AWM's annual report provides a comprehensive coverage of the organisation's activities during 2007–2008. It is an informative and well–produced document, which allows the reader to access information easily. The committee concludes that this report complies with all reporting requirements for statutory authorities.

Other reports

2.7      Other Defence portfolio authorities, agencies and/or companies which had their annual reports examined by the committee, but were not otherwise commented upon in this edition, include:

Army and Air Force Canteen Service (trading as Frontline Defence Services)

Australian Military Forces Relief Trust Fund

Australian Strategic Policy Institute

Defence Force Remuneration Tribunal

Defence Force Retirement and Death Benefits Scheme

Defence Housing Australia

Military Superannuation and Benefits Scheme

Repatriation Medical Authority

Royal Australian Air Force Veterans' Residences Trust Fund

Royal Australian Air Force Welfare Trust Fund

Royal Australian Navy Central Canteens Board

Royal Australian Navy Relief Trust Fund

Veterans' Review Board.

2.8      The committee considers that all the annual reports of the above–mentioned organisations fully met their respective reporting requirements.

Foreign Affairs and Trade portfolio

Australian Agency for International Development

2.9       The Australian Agency for International Development Annual Report 2007–2008 was presented on 29 October 2008, and tabled in the Senate on 10 November 2008.

2.10       Australia's international development assistance helps developing countries reduce poverty and achieve sustainable development in–line with Australia's national interest. AusAID advises the government on international development policy and manages Australia's international development assistance programs. 'Australia's aid program is focused on achieving sustained improvements in peoples' lives by working with our partners—domestically, internationally and multilaterally—to achieve the Millennium Development Goals.'[10]

2.11       AusAID is an administratively autonomous agency within the Foreign Affairs and Trade portfolio. The Director General reports directly to the Minister for Foreign Affairs on all aspects of aid policy and operations and is responsible for the agency's financial and personnel management.[11]

2.12       In the Director General's review, Mr Bruce Davis stated that 2007–2008 was an exciting year for Australia's international development assistance program:

The government announced that Australia would increase its official development assistance (ODA) to 0.5 per cent of gross national income by 2015 to assist our developing country partners to make progress against the Millennium Development Goals (MDGs), building on growth over the previous budget. Australia's pledge came against a backdrop of renewed international commitment to accelerate MDG attainment globally.

New partnerships were initiated with some of our closest neighbours in the Pacific, and with a broad range of domestic and international stakeholders, to help implement this commitment. The year also saw significant progress towards improving the effectiveness, transparency and accountability of Australian aid.[12]

2.13       In the section entitled 'improving effectiveness', Mr Davis announced that the first Annual Review of Development Effectiveness, a product of the Office of Development Effectiveness, was tabled in Parliament in March 2008:

The review found that Australia managed its aid activities well and was achieving good results. It also found that Australian aid was increasingly consistent with partner government policies and aligned with the efforts of other donors. The review identified opportunities to increase aid effectiveness including by strengthening the performance orientation of the program, getting more from technical assistance, and meeting gender equality commitments.

In 2007–2008, the Office of Development Effectiveness also published an evaluation of approaches to anti–corruption and commenced a number of new evaluations, including examining efforts to address violence against women in Melanesia and East Timor and improving basic services for the poor in fragile environments.[13]

2.14       The committee notes that AusAID instituted a new performance assessment and evaluation policy in December 2007.

Its implementation has strengthened AusAID's own assessment of program quality and contributed to more effective and results–oriented program delivery.[14]

2.15       AusAID also continued its ongoing process of corporate reform during 2007–2008, following the direction set by the AusAID 2010 Director General's blueprint in early 2007. For example, the report stated that:

Implementation of the blueprint has brought about significant changes to the way AusAID does business, both in Canberra and overseas, to ensure it has the capacity to deliver an effective expanded program. Significant progress has been made in terms of the devolution of program and financial management functions to country offices. Regional hub offices under senior executive leadership were established in Bangkok for the Mekong regional and Suva for the Pacific.

These regional hubs have facilitated the devolution of regional programs and provided increased support to smaller country offices. Corporate service managers have been placed in larger country offices to provide dedicated support across all corporate functions. To support devolved operations AusAID has continued to strengthen its corporate services and systems covering financial and human resource management and information technology.[15]

2.16       The committee finds that AusAID's annual report provides a comprehensive coverage of the organisation's activities during 2007–2008. As usual the committee considers it to be of high quality: it is informative and well produced. The committee concludes that this report complies with all reporting requirements for non–statutory authorities.

Australian Trade Commission

2.17       The Australian Trade Commission Annual Report 2007–2008 was presented on 30 October 2008 and tabled in the Senate on 10 November 2008.

2.18       The Australian Trade Commission (Austrade) is a statutory authority established by the Australian Trade Commission Act 1985 and is responsible to the Minister for Trade and the Australian Government. On 1 July 2006, following amendments to the Australian Trade Commission Act 1985 and the Export Market Development Grants Act 1997, Austrade became an agency under the Financial Management and Accountability Act 1997 and the Public Service Act 1999 and is managed by a Chief Executive Officer.[16]

2.19       The annual report states that Austrade's mission is 'to contribute to community wealth by helping more Australians succeed in export and international business'.[17]

2.20       The Chief Executive Officer, Mr Peter O'Byrne, in his 'year in review', noted that the year had been an important one for Austrade from a number of perspectives:

...but most profoundly following the change of government on 24 November 2007. The new government took the decision to fold Invest Australia and the Global Opportunities program into Austrade. This has created a fully integrated trade and investment agency at the Commonwealth level. The Minister for Trade, the Hon Simon Crean MP, also moved quickly to revitalise the Export Market Development Grant Scheme, passing legislation in June 2008 to expand the scheme and committing a further $50 million to the scheme in 2009–10.

...

There was a strong demand for the EMDG scheme in 2007–08. Overall expenditure on the scheme totalled $160.88 million and 3,933 grants were paid to EMDG recipients.[18]

2.21       Mr O'Byrne also explained that, as well as refocusing its activities and programs to the priorities of the new government, Austrade continued to provide its core services to businesses throughout Australia:

During the year Austrade worked directly with over 15,500 businesses, helping 5,301 clients to achieve over $23 billion in export sales. Austrade assisted a further 1,648 exporters through partnerships and alliances with the private sector and another 1,031 businesses indirectly though traders, consolidators and agents.[19]

2.22       The committee notes that Austrade continued to support the work of the DFAT on trade policy, including promoting opportunities arising from free trade agreements with New Zealand, Singapore, Thailand and the United States, and providing input into other negotiations.[20]

2.23       The committee is satisfied with Austrade's tables which describe its performance and outcomes for the year and its descriptions of accountability and corporate governance requirements.[21]

2.24       The committee finds that Austrade's annual report provides a comprehensive coverage of the organisation's activities during 2007–2008. In keeping with previous examinations, the committee considers this annual report to be informative and produced in a manner that allows the reader easy access to information. The committee concludes that this report complies with all reporting requirements for statutory authorities.

Other reports

2.25       Other Foreign Affairs and Trade portfolio authorities and/or agencies which had their annual reports examined by the committee but were otherwise not commented upon in this edition, include:

Australian Centre for International Agricultural Research

Australian Safeguards and Non–Proliferation Office

Export Finance and Insurance Corporation.

2.26       The committee considers that all the annual reports of the abovementioned organisations fully met their respective reporting requirements.

 

Senator Mark Bishop
Chair

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