Chapter 2
Annual reports of non-statutory authorities and government companies
Defence portfolio
Defence Materiel Organisation
2.1
The annual report of the Defence Materiel Organisation (DMO) is
contained in volume 2 of Defence's annual report. It was tabled in the House of
Representatives on 31 October 2011 and in the Senate on 1 November 2011.
2.2
The DMO is a prescribed agency under the Financial Management and
Accountability Act 1997. This means that although the DMO remains
inextricably linked to Defence, it is required to account directly to the
Minister for Defence on its financial management. The annual report noted:
Our status as a prescribed agency within the Defence
Portfolio, clarifies and confirms the DMO's role of delivering and maintaining
defence equipment using specialist commercial, engineering and project
management expertise. This construct provides the basis for effective
relationships with DMO's customers in Defence through clearer and more
transparent roles and accountabilities for the delivery of the DMO outcomes.[1]
2.3
Mr Warren King, then Acting Chief Executive Officer, DMO, drew attention
to the achievements gained through the formal Projects of Concern process. In
2010–2011, three projects were removed from the list, two because of 'marked
improvements in performance'; and one which was cancelled. He reported that
project schedule delays continued to be the greatest issue for both DMO and
industry. Mr King attributed these delays to 'overly-optimistic schedules at
the outset of a project, the emergence of unidentified risks, the scale and
rate of technical advancement, and industry capacity or quality issues'.[2]
2.4
In his review of the year, Mr King referred to DMO's skilling
initiatives, indicating that the organisation 'continues to achieve positive
outcomes across its own workforce and in partnership with industry'. He noted
that during the reporting year 'more than 2,000 DMO participants were trained
in core skill areas of project management, scheduling, logistics, procurement
and contract management through the DMO Institute'.[3]
2.5
Dr Stephen Gumley retired as Chief Executive Officer (CEO) of DMO with
effect from 1 July 2011. The annual report acknowledged Dr Gumley's
'outstanding contribution to the organisation'.[4]
It noted that as CEO and in his role as National Armaments Director
(Australia), Dr Gumley 'was globally recognised and respected for his tireless
efforts to encourage the DMO to deliver the best outcomes for the ADF and
Australia'.[5]
Australian War Memorial
2.6
The Australian War Memorial was established as a statutory authority
under the Australian War Memorial Act 1980. The performance of the
memorial and the accountability of its council and management are subject to
the Commonwealth Authorities and Companies Act 1997. The Memorial is
also subject to other legislation that bear on its operation, and is
accountable to the government through the Minister for Veterans' Affairs. The
Council of the Australian War Memorial is responsible for the conduct and
control of the activities of the Memorial. Its numerous functions and
responsibilities include:
-
establishing the Memorial's strategic direction and vision;
-
approving the Memorial's goals and key objectives;
-
approving the annual budget and monitoring expenditure and
reporting; and
-
ensuring that the Memorial has adequate financial resources to
meet known and planned future resources.[6]
2.7
The Australian War Memorial's Annual Report 2010–2011 was tabled in the
House of Representatives on 13 October 2011 and in the Senate on 1 November
2011. Among the Memorial's most significant achievements during the reporting
period included the re-opening of the Second World War galleries in August 2011
following their half-life update and the redevelopment of the Hall of Valour.[7]
The Memorial also held a number of major ceremonies in the grounds, notably the
dedication ceremony for the new National Service Memorial in the Eastern
Precinct, the Anzac Day and Remembrance Day services.[8]
2.8
Volume 2 of the Official History of Peacekeeping, Humanitarian and
Post-Cold War Operations, Australia and the 'new world order': from
peacekeeping to peace enforcement 1988–1991 was launched in April 2011.[9]
ASC Pty Ltd
2.9
The ASC Report for 2010–2011 was tabled in the House of Representatives
on 31 October 2011 and in the Senate on 1 November 2011. ASC is a proprietary
company limited by shares registered under the Corporations Act 2001 and
is subject to the CAC Act. On 11 June 2004, ASC was proclaimed as a Government
Business Enterprise under the CAC Act.
Chairman's Report
2.10
The Chairman, Vice Admiral Chris Ritchie AO RANR, noted that after
significant changes to the business, board and management in the previous year,
the current reporting period 'started with a fresh outlook on the challenges
and tasks that lay ahead'.[10]
He drew attention to the close collaboration and hard work between ASC, DMO and
the Royal Australian Navy (RAN) which, in his view 'has enabled a significant
improvement in meeting Navy's demand for submarines'. On financial matters, he
reported that:
The Company achieved annual revenue of $700 million (2010:
$516 million) and profit after tax of $10.6 million (2010: $4.3 million).[11]
Dates of establishment
2.11
ASC Pty Ltd in their annual report described the dates of establishment,
stating that:
Initially established in 1985, ASC was subsequently chosen in
1987 as the prime contractor for the design, manufacture and delivery of the
Royal Australian Navy's (RAN) fleet of six Collins Class submarines.[12]
Collins Class Submarine Project
2.12
ASC Pty Ltd carries out maintenance, upgrades and engineering activities
for the Collins Class submarines. To date this has been under a multi-billion
dollar through life support agreement with DMO.[13]
2.13
According to the report, during 2009–2010 an Integrated Project Team
comprising the Royal Australian Navy, DMO and ASC personnel was established as
part of the Australian Submarine Program Office (ASPO) to manage jointly the
Collins Class maintenance and upgrade project to meet required submarine
availability and capability objectives. Maintenance activities on the
submarines included:
-
two full cycle dockings at ASC North; and
-
the completion of two intermediate maintenance availabilities,
one certification extension docking and one intermediate docking at ASC West.
The report also noted that
an emergency docking, to replace a damaged propeller, was turned around in one
week at ASC West which, with the docking of the two submarines, proved 'the
capability of the facility'.[14]
Hobart Class Destroyer Project
2.14
ASC Pty Ltd is the Shipbuilder for the Hobart Class Air Warfare
Destroyer (AWD) project. The report noted that the three AWDs will be
consolidated at the company's Osborne shipyard in South Australia.[15]
It recorded that, in the last quarter of the 2010–2011 period, the federal
government, on the Alliance's recommendation, announced the relocation of
construction work that was intended to relieve the pressure on the BAE
shipyard. As a consequence, ASC and Forgacs would share the construction and
completion of additional blocks for the first three AWDs. A small number of
blocks would be reallocated to Spain to be built under subcontract by AWD
design partner Navantia. According to the report, the pace of construction
'rapidly increased at the three shipyards across Australia'—New South
Wales-based Forgacs, Victorian-based BAE Systems and ASC. The report identified
the following milestones:
-
construction of all blocks for Ship 1 under ASC's responsibility
commenced in 2010/2011 financial year;
-
construction of Ship 2 commenced in April 2011;
-
structural completion of the first blocks for Ship 1;
-
completion of the first block rotation event; and completion of
the first full 'pre-fit out' activity including pipe, heating, ventilation and
air conditioning and cable tray installation; and
-
completion of the blast and paint facility.[16]
Deep Blue Tech
2.15
Deep Blue Tech (DBT)—a wholly owned subsidiary of ASC Pty Ltd—was
established in 2007 as part of ASC's preparation for possible involvement in
Australia's SEA 1000 Future Submarine project. During the reporting period, DBT
continued to conduct research and develop concepts for the project.[17]
2.16
The report explained that in 2010–2011 Deep Blue Tech focused on
exploring what the market for submarine systems and technology has to offer and
established non disclosure agreements with potential providers.[18]
Looking to the coming year, the Chairman explained:
ASC will increase the staff capability of DBT during 2011/12
to ensure that we can build on our capacity and capability to assist the
Government in any way we can when a decision is made on the acquisition of the
next generation of submarines for Australia.[19]
Summary
2.17
The committee finds that the ASC Pty Ltd Annual Report adequately
complies with all reporting requirements for a non-statutory company.
Defence Housing Australia
2.18
Defence Housing Australia (DHA) was established as a statutory authority
in 1988. In 1992 DHA became a Government Business Enterprise. The Defence
Housing Australia Annual Report 2010–2011 was tabled in the Senate on 7
November 2011.[20]
Chairman and Managing Director's
report
2.19
The Chairman and Managing Director reported that:
During 2010–11, DHA provided and maintained 18,394 dwellings
of which 17,663 were for Defence members with dependents
...
The middle part of the year was dominated by natural
disasters in Queensland with more than 800 DHA houses affected by floods in
South East Queensland and by Cyclone Yasi in North Queensland
...
DHA completed its part of the Government's Nation Building—Economic
Stimulus Plan with the construction of the final 185 houses in 2010–11.
...
In terms of its financial performance, DHA achieved a Net
Profit after Tax of $87.3 million and a Return on Equity of 6.7% against a
Corporate Plan target of 6.3%.[21]
DHA financial performance
Capital structure
2.20
The Annual report recorded that DHA has $1,325.7 million in equity.
Financial Statements
2.21
The ANAO stated that the financial statements of DHA had been prepared
in accordance with the Finance Minister's Orders made under the CAC Act and gave
a true and fair view of the matters required by the Finance Minister's Orders.
Summary
2.22
DHA complied with the requirements of the CAC Act with respect to
reporting to Ministers and Parliament; contents of the Annual Report; audit of
DHA's financial statements by the Auditor-General; banking and investment
powers of authorities; general policies of the Australian Government; and
conduct of directors and officers.
The Army Amenities Fund Company
2.23
The Army Amenities Fund (AAF) Company Report for 2010–2011 was tabled in
the Senate on 22 November 2011. The AAF Company was incorporated on 17 July
1987 to administer the assets of the Army Central Amenities Fund and is subject
to the Corporations Act 2001.
Financial Statements
2.24
The ANAO reported that the financial report of the AAF Company is in
accordance with the Corporations Act 2001, including giving a true and
fair view of the AAF Company's financial position as at 30 June 2011 and
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
Summary
2.25
The committee finds that the Army Amenities Companies Annual Report
adequately complies with all reporting requirements.
Foreign Affairs and Trade portfolio
Australian Agency for International Development
2.26
The Annual Report of the Australian Agency for International Development
(AusAID) for the financial year 2010–2011 was tabled in the Senate on 31
October 2011.[22]
2.27
The annual report included the Director General's review; a departmental
overview; a report on performance; management and accountability information;
financial statements; and other mandatory information.
Departmental Overview
2.28
The Director General of AusAID, Mr Peter Baxter, listed the highlights
of the year:
On 8 July 2010, AusAID was established as an executive agency
by order of the Governor-General, on the advice of the Prime Minister.
...
In February 2011, AusAID introduced a new organisational
structure that included establishing new corporate, audit and program
management functions.
...
The Australian Civilian Corps [was created] in October
2010...The first deployment was in April 2011 to the interim Haiti
Reconstruction Committee.[23]
Report on performance
2.29
The Agency uses four types of performance review—AusAID's internal
quality reporting system; Office of Development Effectiveness; Australian
National Audit Office; and the Organisation for Economic Co-operation and
Development (OECD) Development Assistance Committee Peer Review.
AusAID's internal quality reporting
system
2.30
AusAID's internal quality reporting system involves three types of
performance reports—annual performance reports at the country, regional or
thematic level; quality reports on individual aid activities and independent
evaluations.
Office of Development Effectiveness
2.31
The Office of Development Effectiveness (ODE) independently checks the
robustness of AusAID's internal quality reporting system.
Australian National Audit Office
2.32
Recent performance audits by the ANAO include an assessment of AusAID's
management of the expanding aid program (2009–10) as well as AusAID's support
for tertiary training assistance, including scholarships (2010–11).
Organisation for Economic
Co-operation and Development (OECD) Development Assistance Committee Peer
Review
2.33
AusAID's annual report explained:
As a member of the OECD Development Assistance Committee,
Australia is subject to regular peer reviews by other bilateral donors. The
last OECD Development Assistance Committee Peer Review was in 2008.[24]
2.34
AusAID's report also included reporting of results for the key
performance indicators (KPIs) for departmental programs.
Pacific Partnerships for
Development
2.35
AusAID's performance information provided results of its relationships
with Pacific Island countries. The report explained the improved education,
health, infrastructure and economic governance. It stated:
In 2010–11, Australia helped more than 250 000 extra children
attend school by helping governments to remove school fees in Papua New Guinea,
Tonga, Vanuatu, Samoa and Solomon Islands...
In Papua New Guinea, HIV testing sites increased to 266 with
almost 135 000 people tested in 2010, compare to only 32 645 people
accessing testing services in 2006...
In 2010–11, AusAID helped maintain 2152 kilometres of
national roads and highways in Papua New Guinea, including a key 365 kilometre
section of the Highlands Highway from the industrial centre of Lae to Goroka.[25]
2.36
AusAID also reported on the performance of the Solomon Islands, Vanuatu,
Samoa, Fiji, Tonga, Kiribati and Nauru.
2.37
In 2010–11, AusAID's Pacific Regional Program aid totalled $193.3
million.[26]
Asia bilateral programs
2.38
In 2010–11, AusAID country program aid to Indonesia, including the
Australia-Indonesia Partnership for Reconstruction and Development (AIPRD),
totalled $342.1 million.[27]
2.39
AusAID's annual report detailed the amount of country program aid. In
2010–11, AusAID country program aid to the Philippines totalled $103.1 million;
to East Timor, $77 million; to Vietnam, $95.2 million; to Cambodia, $45.7
million; to Laos, $36.8 million; to Burma, $41.7 million; to China, $19.4
million; to Mongolia, $5.4 million; to South Asia, $156.4 million; of
which $55.7 to million Bangladesh; $34.3 million to Sri Lanka; $19.7 million to
Nepal; to Middle East and Central Asia, $227.8 million; of which $36.8 million to
Palestinian Territories; $38.8 million to Iraq; $77.7 million to Afghanistan; $68.7
million to Pakistan; to Latin America a total of $9.2 million; and to the
Caribbean, $17 million.[28]
Emergency, humanitarian and refugee
programs
2.40
In 2010–11, AusAID's core contributions and responses to appeals for
emergency, humanitarian and refugee programs totalled $353.2 million.[29]
Responding to emergencies
2.41
AusAID's report on performance made reference to facts, events and trade
influencing the department's performance. Key humanitarian achievements that
AusAID outlined in 2010–2011 included:
responding to 15 rapid-onset emergencies and conflicts in
Africa, Asia, the Pacific, Latin America and the Middle East. Non-government
organisations received funding to respond to 10 of these crises.
deploying 188 Australian humanitarian experts into overseas
disaster zones and to support ongoing disaster preparedness activities,
including nine members of the AusAID rapid response team and a 30-member
civilian medical team deployed as part of the 2010 Pakistan floods emergency
response.[30]
Australian Civilian Corps
2.42
AusAID's report stated that:
The past year has seen the Civilian Corps register grow
significantly, as well as the first civilian deployment to Haiti.
Key development achievements for 2010–11 including:
building the register to more than 120 civilian specialists
by 30 June 2011. This is an increase of nearly 100 members in 12 months.
deploying the first Civilian Corps register member to Haiti
in April 2011...who is working with the Interim Haiti Reconstruction Commission
as a donor liaison officer.[31]
Recovering from disasters – dealing
with landmines
2.43
AusAID's annual report recorded that:
Australia has committed $100 million over 2010–2014 to reduce
the threat and socio-economic impact of landmines, cluster munitions and other
explosive remnants of war.[32]
Corporate Governance
2.44
AusAID's annual report provided a statement of the structures and
processes that the department had in place during the year to implement the
principles and objectives of corporate governance. The report included the
names of the senior executives and their responsibilities.
Corporate reform
2.45
AusAID stated that:
During 2010, a major review was undertaken to improve the
effectiveness of the aid program's use and remuneration of advisers. A review
of the use of advisers confirmed that the majority of positions are focused on
high priority areas for partner governments. Of the 952 positions considered,
it was recommended that 257 be phased out within two years.
....
In support of the newly introduced organisational structure,
AusAID commissioned a review of its broader governance arrangements, commenced
an internal review of human resource governance, and revised its business
planning arrangements. The outcomes of these activities have resulted in
identifying a number of enhancements to agency committee structures.[33]
Internal audit
2.46
AusAID stated that:
The Audit Committee was expanded and given a higher profile
through the appointment of an independent chair and an independent financial
statements expert. As part of the AusAID-wide organisation restructure in February
2011, the new position of Chief Auditor was created, and at the same time, the
Performance Review and Audit Section was expanded to become a branch.[34]
External Scrutiny
2.47
The annual report included the required information for external
scrutiny.
Management of human resources
Workforce planning
2.48
AusAID stated that:
As a newly established executive agency, one of the important
corporate activities undertaken in 2010 was the release of an agency-wide
workforce plan.[35]
Assets Management
Purchasing
2.49
In 2010–11, AusAID entered into 2763 new agreements to deliver the aid
program to a value of approximately $4.06 billion.[36]
Procurement contracts awarded and
managed
2.50
A total of 1432 new procurement contracts were entered into during the
year with a value of approximately $920 million.
Assets
2.51
AusAID held $115 million in departmental assets at 30 June 2011.
Exempt contracts
2.52
No contracts in excess of $10,000 or standing offers were exempted by
the Director General from being published in AusTender.
Financial Statements
2.53
The ANAO reported that the financial statements of AusAID have been
prepared in accordance with the Finance Minister's Orders made under the Financial
Management and Accountability Act 1997, and give a true and fair view of
the matters required by the Finance Minister's Orders including AusAID's
financial position as at 30 June 2011 and of its financial performance and cash
flows for the year then ended.
Summary
2.54
The committee finds that the AusAID Annual Report adequately complies
with all reporting requirements for an agency.
Australian Trade Commission
2.55
The Australian Trade Commission's (Austrade) Annual Report for the
financial year was tabled in the Senate on 31 October 2011.[37]
2.56
Austrade was established by the Australian Trade Commission Act 1985.
It is a Prescribed Agency subject to the Financial Management and
Accountability Act 1997 and the Public Service Act 1999.
Changes in ministerial
responsibility
2.57
The Hon Stephen Smith MP held the position of Minister for Trade until
14 September 2010. The Hon Dr Craig Emerson MP was appointed to the position
for the remainder of the reporting year.
International marketing and
promotion of Australian education and training
2.58
In June 2011, the Hon Justice Elliot MP, Parliamentary Secretary for
Trade, announced a new brand for Australia's international education sector
called Future Unlimited, part of the Australian Unlimited nation
branding. It was designed to refocus attention on the benefits of Australian
educational qualifications and the doors they open for international students.[38]
Report on performance
2.59
The annual report met the requirements of performance reporting.
Assets Management
Financial statements
2.60
The ANAO stated that the financial statements of Austrade have been
prepared in accordance with the Finance Minister's Orders made under the Financial
Management and Accountability Act 1997, and give a true and fair view of
the matters required.
Summary
2.61
The committee finds that the Austrade Annual Report adequately complies
with all reporting requirements for a FMA Act body.
Export Finance and Insurance Corporation
2.62
The Export Finance and Insurance Corporation (EFIC) Annual Report
2010–2011 was tabled in the Senate on 31 October 2011.[39]
2.63
Section 9 of the Commonwealth Authorities and Companies Act 1997 (CAC
Act) requires the directors of a Commonwealth authority to prepare an annual
report in accordance with Schedule 1 of the CAC Act.
2.64
EFIC is a Commonwealth authority and its Board members and employees are
subject to various obligations under the Export Finance and Insurance
Corporation Act 1991 and the Commonwealth Authorities and Companies Act
1997.
Report of Operations
2.65
EFIC entered into more than 100 facilities to support Australian
exporters and investors in over 40 countries. EFIC stated that:
During the year, EFIC provided facilities totalling $593.1
million (2009–10: $971.3 million) and supported export contracts and
overseas investments of over $3.4 billion (2009–10: over $5.9 billion). EFIC's
profit on the Commercial Account was $30.2 million (2009–10: $38.3 million).[40]
Financial Statements
2.66
ANAO stated that the EFIC financial statements have been prepared in
accordance with the Finance Minister's Orders made under the Commonwealth
Authorities and Companies Act 1997, and give a true and fair view of the
matters required by the Finance Minister's Orders including the Export Finance
and Insurance Corporation's financial position as at 30 June 2011 and of its
financial performance and cash flows for the year then ended.
Australian Centre for International Agricultural Research
2.67
Australian Centre for International Agricultural Research's (ACIAR)
governing legislation is the Australian Centre for International
Agricultural Research Act 1982. The ACIAR Annual Report 2010–2011 was
tabled in the Senate on
31 October 2011.[41]
Commission Chair's and Chief
Executive Officer's Review
2.68
The Commission Chair and Chief Executive Officer stated that:
A recent report by the Centre for International Economics suggests
that the benefits generated...from a suite of 120 ACIAR projects is $31.6
billion. Of this amount $29.4 billion accrues to developing countries within
ACIAR's mandate, and the remainder back to Australian agriculture. This was
from a total ACIAR investment of $372 million.[42]
Financial Statements
2.69
The ANAO stated that the financial statements of the ACIAR have been
prepared in accordance with the Finance Minister's Orders made under the
Financial Management and Accountability Act 1997 and give a true and fair view
of the matters required by the Finance Minister's Orders including ACIAR's
financial position as at 30 June 2011 and of its financial performance and cash
flows for the year then ended.
Summary
2.70
The committee finds that the ACIAR Annual Report adequately complies
with all reporting requirements.
Other reports
2.71
Other portfolios 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 (tabled 31 October 2011)
-
Australian Strategic Policy Institute Limited (tabled 7 November
2011, received out of session 4 November 2011)
-
Defence Force Remuneration Tribunal (tabled 31 October 2011)
-
Defence Force Retirement and Death Benefits Authority (tabled
31 October 2011)
-
Military Superannuation and Benefits Board of Trustees (tabled
31 October 2011)
-
Royal Australian Air Force Veterans' Residences Trust Fund
(tabled
7 February 2012, received out of session 29 November 2011)
-
Repatriation Medical Authority (tabled 21 November 2011)
-
Royal Australian Air Force Welfare Recreational Company (tabled
21 November 2011)
-
Royal Australian Navy Central Canteens Board (24 November 2011)
-
Services Trust Funds—Royal Australian Navy Relief Trust Fund,
Australian Military Forces Relief Trust Fund and Royal Australian Air Force
Welfare Trust Fund)—Reports for 2010-11 (tabled 21 November 2011)
-
Australian Safeguards and Non-proliferation Office (tabled
2 November 2011)
-
Veterans' Review Board (tabled 31 October 2011, received out of
session
25 November 2011).
Senator the Hon Ursula Stephens
Chair
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