Chapter 1
Annual reports of departments
Department of Defence
1.1
The Department of Defence annual report 2011–12 was tabled in the House
of Representatives and in the Senate on 30 October 2012.
Matters relating to the operations
and performance of the department
Defence's financial statements
1.2
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.
1.3
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.
Australian National Audit Office
audit
1.4
The Australian National Audit Office (ANAO) report for the Department of
Defence stated:
During the final phase of the 2011–12 audit, Defence resolved
seven moderate audit issues identified in prior years that had been outstanding
for a number of years. The resolved issues relate to the reporting and
management of General Service Inventory (GSI) and Repairable Items (RIs), and
the verification and reporting of particular categories of SME [Specialist
Military Equipment] assets known as Non‐MILIS
[Military Integrated Logistics Information System] Non‐Platform and DMO service delivery.
Four moderate audit issues and a legislative compliance
matter were identified during the 2011–12 final audit phase. The moderate audit
issues relate to asset reporting and revaluation processes, accounting for
special public monies and privileged user access to the financial management
information system (ROMAN). The legislative compliance issue relates to
potential breaches of section 83 of the Constitution...
At the conclusion of the 2011–12 audit, ten moderate issues
and a legislative compliance matter remained outstanding. In addition to the
four new moderate audit issues referred to above, six moderate audit issues
relating to Defence’s inventory and asset management and the supporting IT
systems remained outstanding. [1]
1.5
The areas where moderate issues remain outstanding in the 2011–12 audit were:
- Inventory and assets management;
- Military information logistics information system (MILIS); and
-
Business continuity management.[2]
1.6
Four new moderate audit issues were identified in the following areas during
the 2011–12 audit:
- Internal control and financial reporting;
- General assets management; and
- Financial management information system (ROMAN) [Resource and
Output Management and Accounting Network].[3]
Financial reporting framework
1.7
The committee's reviews of the 2009–10 and the 2010–11 annual reports referred
to the outstanding matter of management and oversight of service bureau
arrangements between Defence and the Defence Materiel Organisation (DMO).
1.8
The ANAO noted in its Audit Report No.16 2012–13 that Defence had satisfactorily
addressed these issues:
The business
and operational arrangements between Defence and DMO includes requirements for
DMO to manage and process financial transactions and business processes on
behalf of Defence. This issue related to weaknesses in Defence’s monitoring and
oversight of these financial transactions and business processes. During the
2011–12 final audit phase, the ANAO confirmed Defence had satisfactorily
addressed these issues.[4]
Strategic Reform Program
1.9
The committee has previously noted the significance of the roll-out of
the Strategic Reform Program (SRP). Now in its third year, Defence reported
that the SRP 'continues to make substantial progress'.[5]
The Secretary and Chief of the Defence Force (CDF) stated in their overview
that:
Defence met the first two years of cost reductions targets
without any adverse impact on capability or safety. The Secretary and the Chief
Financial Officer conducted a comprehensive stocktake of the Defence budgeting
system, taking into account all budget processes, estimation methods and
underlying budget assumptions. This included the way in which Defence’s capital
equipment budgets are formulated and managed, including the ongoing utility of
contingency, slippage and most importantly over-programming. During the course
of the 2011–12 financial year, Defence also implemented a number of critical
project management and accountability reforms to enhance the delivery of
Defence capability projects, strengthen Australian Defence industry and improve
accountability. Defence continues to bring into service the projects identified
in the Defence Capability Plan and the Defence White Paper 2009.[6]
Operations
1.10
The Secretary and CDF's overview noted that Defence had conducted 16 operations
in 2011–12 ranging from combat deployments overseas to border protection and
disaster relief within Australia and the surrounding region.[7]
1.11
The Defence annual report outlined Defence's recent activities under
Operation SLIPPER, the Australian Defence Force's (ADF) contribution to the North
Atlantic Treaty Organisation-led International Security Assistance Force (ISAF)
in Afghanistan. Operation SLIPPER represented the most significant operation
for the ADF with around 1550 personnel based within Afghanistan and another 830
deployed across the broader Middle East Area of Operations. In 2011–12, the ADF
continued mentoring the Afghan National Army's 4th Brigade to enable
it to take on responsibility for security in Uruzgan Province. According to the
annual report, the key components of the ADF's contribution included the troops
in the Mentoring Task Force (recently replace by the 3 RAR Task Group) and
Special Operations Task Group; Air Force C-130, P-3 and C-17 Globemaster III
aircraft; and logistics, communication and movements personnel within the
Middle East. In addition, the Royal Australian Navy Major Fleet Unit
contributes to counter-terrorism, maritime security and anti-piracy in the
region.[8]
1.12
The Secretary and CDF's overview noted that July 2011 marked the formal
start of the process of transition of security responsibility from ISAF to the
Afghan National Security Forces (ANSF).[9]
The Secretary and CDF stated that the process of transition was 'now
well-advanced and on track for completion by the end of 2014'.[10]
1.13
The report acknowledged the deaths of five Australian soldiers on operations
in Afghanistan in 2011–12.[11]
1.14
Other overseas operations in 2011–12, included deployments of ADF
soldiers to Sudan, Iraq, South China Sea/Indian Ocean, East Timor, Solomon
Islands, Middle East, and South West Pacific.[12]
The Secretary and CDF's overview noted that planning is underway to cease
operations in East Timor, following the success of the July 2012 elections in
East Timor; and in the Solomon Islands as the Royal Solomon Islands Police
Force are able to manage their own security.[13]
1.15
Domestic operations included disaster relief efforts in Queensland, New
South Wales and Victoria; and border protection.[14]
Defence White Paper
1.16
The Secretary and CDF's overview noted significant announcements during
2011–12 including bringing the next White Paper forward to 2013, and
publication of a new Defence Capability Plan. Issues raised in the ADF
Posture Review, released this financial year, will be taken up in the White
Paper process. The ADF Posture Review examined:
...possible basing options in the north and northwest of
Australia, the possibility of arrangements that enhance access to commercial
ports and the potential for greater wharf capacity and support facilities at
HMAS Stirling to support major surface combatant capability and operations.[15]
Inquiry into allegations of
inappropriate vetting practices in the Defence Security Authority and related
matters
1.17
On Wednesday, 8 February 2012, the Minister for Defence, the Hon Stephen
Smith MP, presented to parliament the report of the Inspector-General of
Intelligence and Security on Inquiry into allegations of inappropriate
vetting practices in the Defence Security Authority and related matters. In
his speech to parliament, the Minister stated:
The government will ensure that the Department of Defence
fully addresses the issues identified by the Inspector-General of Intelligence
and Security and that all recommendations are implemented in a comprehensive
manner. Assurance of Defence's security-vetting efforts will be provided by
annual audits of compliance with security-vetting policy conducted by the
Defence chief audit executive for at least the next three years. The first
audit will be completed by 30 June this year and its results will be published
in the Defence annual report. This will provide ongoing public reporting and
assurance of Defence's security-vetting practices.[16]
1.18
While the committee welcomes the inclusion of the results of the annual
audit of compliance with security-vetting policy in the Defence annual report,
the committee notes the audit results do not appear to have been included in
this year's report.
Rizzo Review recommendations
1.19
Defence's progress on implementing the recommendations of the Rizzo
Review was discussed at the Additional estimates 2012–13 hearing on 13 February 2013.
During the discussion on the availability of information to parliament, the CDF
stated:
I think the Defence annual report is one vehicle in which a
report on progress of the Rizzo Review could be quite easily be included... I
think the Defence annual report would be a good place to place it.[17]
1.20
The committee endorses the inclusion of a report on the progress of implementation
of the Rizzo Review recommendations in the Defence annual report.
Summary
1.21
The committee finds the annual report of the Department of Defence to be
'apparently satisfactory' in complying with the relevant requirements for the
preparation of annual reports. The committee notes, however, that the annual
report does not provide detailed assessments of Defence capabilities. The
committee notes that the Joint Standing Committee on Foreign Affairs, Defence
and Trade is conducting a Review of the Defence Annual Report 2011-2012,
which includes 'Ongoing and Future Capability Requirements' in its terms of
reference.
Department of Foreign Affairs and Trade
1.22
The Department of Foreign Affairs and Trade (DFAT) annual report
2011–2012 was tabled in the Senate on 29 October 2012.[18]
Review by Departmental Secretary
1.23
The Secretary of the Department, Mr Dennis Richardson AO, used his
Secretary's Review to provide 'a better sense of the department itself and of
the people who pursue the national interest in this part of the government', as
well as highlighting the challenges ahead. [19]
The Department
1.24
The Secretary wished to highlight that DFAT is both a policy and a
functional department. The Secretary noted that 40 per cent of the department's
total staff provide functional services such as: passport and consular
services; overseas property management; providing and maintaining the
government’s global classified communications system; and providing common
services for departments and agencies represented at Australian Missions
abroad.[20]
Overseas representation
1.25
The Secretary noted the significant changes in the balance of policy and
non-policy officers abroad since 1996:
In 1996 there were 680 A-based officers posted abroad, of
whom 370
(54 per cent) were policy officers. Despite the fact that, as of 30 June 2012,
the number of officers posted abroad had reduced to 594, the number of policy
officers on posting had actually increased by 27 to 397 (67 per cent). So the
department has already undergone the sort of rebalancing which the Foreign
Office in the UK has undertaken with its downsizing over the past couple of
years and which the New Zealand Foreign Service is currently undergoing.[21]
1.26
The Secretary also noted that changes in the location of the
department's staff abroad reflect global and regional changes:
Relative to Australia’s size and our global interests and
regional priorities, the department’s resources are thinly spread, although the
spread does reflect those interests and priorities. For instance, about 52 per
cent of the department’s staff abroad are in Asia/Pacific, 16 per cent are in
Europe,
11 per cent are in the Americas, 15 per cent are in the Middle East and Africa
and six per cent are engaged in multilateral work e.g. UN, WTO, IAEA etc.[22]
The Policy Context
1.27
The department's work is shaped by changing economic and strategic
priorities in the global context. The Secretary stated:
The department’s work is being progressed within a global and
regional environment being reshaped by changing economic and strategic
relativities. And nowhere is this more important than in respect of the key
Trans-Pacific relationships involving the United States, China, Japan and
India. It is the interplay between these relationships, especially between the
US and China, which will fundamentally shape the politico strategic environment
in which we, as a country, live. Indeed, at the time graduates now joining the
department retire, the dynamic will still be being played out. It is the
dynamic which will dominate our world for longer than the Cold War dominated
the second half of the 20th Century.
We are also seeing big changes in the institutions the world
uses to organise itself. Organisations like the UN and the IMF are under
structural pressure. And the WTO is struggling with trade liberalisation. Newer
forums like the G20 and proto-groups like the BRICS reflect the changing order.
But nothing is yet fixed and the system is in flux.
Closer to home our interests in South East Asia and the South
Pacific are enduring and always require close and consistent engagement.[23]
The challenge
1.28
The Secretary states, that as well as the challenges flowing from the
changing policy context within which the department is working, there are four
big challenges which stand out. The four challenges are as follows:
- our own capacity as a nation to seize the opportunity of the
forums to which we now belong and to develop integrated strategies in the
pursuit of our national interests;
- securing a global and regional environment in which the private
sector can prosper;
- continuing to manage our near neighbourhood relations with
deftness and sensitivity, consistent with our national interests; and
- managing with limited resources in the tight fiscal environment.[24]
External Security
1.29
The annual report provided information on the significant developments
in external scrutiny of the department and the department's response.
1.30
In 2011–12, the Auditor-General tabled in parliament, five reports by
the ANAO relating to the department's operations:
- Report No.17: Audits of the Financial Statements of Australian
Government Entities for the period ended 30 June 2011;
- Report No. 29: Administration of the Australia Network;
- Report No. 31: Establishment and use of procurement panels;
- Report No. 33: Management of e-Passports; and
- Report No. 51: The Interim Phase of the Audit of Financial
Statements of Major General Government Sector Agencies for the year ending 30 June 2012.[25]
Summary
1.31
The committee finds that the DFAT annual report adequately complies with
all reporting requirements for a department.
Department of Veterans' Affairs
1.32
The Department of Veterans' Affairs (DVA) is the primary service
delivery agency that develops and implements programs to assist the veteran and
defence force communities. It provides administrative support to the
Repatriation Commission and the Military Rehabilitation and Compensation
Commission. The Repatriation Commission administers the Veterans'
Entitlements Act 1986, and is responsible for granting pensions, allowances
and other benefits, providing treatment and other services. The Military and
Rehabilitation and Compensation Commission is responsible for the
administration of benefits and arrangements under the Military
Rehabilitation and Compensation Act 2004.
1.33
DVA's annual report 2011–2012 was presented to the parliament on 31 October
2012. The report also included separate reports of both the Repatriation
Commission and the Military Rehabilitation and Compensation Commission. They
described how each commission interrelates with DVA, its membership and main
activities for the reporting period. The reports do not include performance
reporting, which is covered in DVA's report.
Overview
1.34
In the Secretary's Year in Review, Mr Ian Campbell stated that funding allocated
to DVA in the May 2012 Budget was broadly consistent with 2010–11, with $12.3
billion available for the portfolio. He noted, however, that like many other
agencies, the department has faced a difficult operating environment, with the
efficiency dividend increased from 1.5 per cent to 4 per cent.[26]
The Secretary stated:
Highlights for the year, which all have significant benefits
for the veteran and Australian Defence Force (ADF) communities, include the
implementation of the On Base Advisory Service (OBAS), MyAccount online
service, recommendations from the response to the parliamentary inquiry into
the F-111 and the continued implementation of the Coordinated Veterans’ Care
(CVC) Program.
At the same time, DVA has undertaken an internal restructure
to better align priorities, programs and service delivery capabilities with the
changes we have witnessed in the veteran and Defence Force communities.
Extensive work has been carried out on the continued development of new service
models, strengthening links with the Department of Defence (Defence), enhancing
IT capabilities and the use of new communication technologies.[27]
Departmental restructure
1.35
In March 2012, the Secretary implemented a new departmental structure,
which will allow DVA to have greater flexibility and capacity to respond to the
new environment. The Secretary explained:
In the latter part of last century, the ADF entered into a
period of intense deployment, the like of which we have not seen since the
1960s and 1970s. This has seen significant numbers of soldiers, sailors and
airmen and women deployed, numbers that are now equivalent to those deployed in
the 12 years of the Vietnam conflict. For a number of reasons, including age,
gender and simply different service experiences, veterans from these
deployments have very different perspectives and service delivery expectations
from those veterans from earlier conflicts.
The challenge DVA faces is ensuring that services and
programs are adapted and tailored to meet the needs of all veterans, whether or
not they have been with the Department for a while, they are accessing our
services for the first time today or they will access our services in the
future. This includes providing a high level of support for those with
warlike/non-warlike service, those with peacetime service, and their
dependants.[28]
Anzac Centenary
1.36
The Secretary noted that one of the major commemorative focal points
during the last 12 months has been the preparations for the Anzac Centenary
Program, which will run from 2014 to 2018. The Secretary stated:
In responding to the report of the National Commission on the
Commemoration of the Anzac Centenary, and in consultation with the Anzac
Centenary Advisory Board, on 24 April 2012, the Prime Minister and the Minister
Assisting the Prime Minister on the Centenary of Anzac announced that the
government will provide $83.5 million over seven years to implement the Anzac
Centenary Program.[29]
Data-matching program
1.37
The Department of Veterans' Affairs Data-matching Program Report on Progress
2011–2012 is included in the annual report at Appendix D. This report focuses
on the operation of the program within DVA during the financial year. Under
subsections 12(2B) and 12(2C) of the Data-matching Program (Assistance and
Tax) Act 1990, DVA is required to table in parliament a standard report
every year and a comprehensive report every three years. A comprehensive report
was last submitted by DVA in 2010 and will next be submitted in 2013.[30]
Report on Progress
1.38
The report on data-matching shows the prosecution statistics; the
discrepancy statistics; the departmental expenses for the 2011–12 reporting
year; the projected savings statistics; the total savings for the 2011–12
financial year; and cumulative savings from the data matching program.
List of requirements
1.39
The Requirements for annual reports for departments, executive
agencies and FMA Act bodies states:
The List of Requirements must be included as an appendix to
the annual report. If an item specified in the checklist is not applicable to
an agency, it should be reported as not applicable rather than omitted from the
list. Agencies should include a column indicating the location of the
information in the annual report. [31]
1.40
The committee notes that compliance index included in the DVA annual report
appears to be incomplete.
Summary
1.41
The committee finds that the DVA annual report complies adequately with
all reporting requirements for a department.
Navigation: Previous Page | Contents | Next Page