Reference
1.1
Under Senate Standing Order 25(20), the annual reports of departments and agencies under the Senate Foreign Affairs, Defence and Trade Legislation Committee's (the Committee) allocated portfolios stand referred to the Committee for examination and report. Under the Standing Order, in this year's first report, the Committee is required to examine those annual reports presented to the Parliament between 1 May and 31 October 2020. On this occasion, the Committee has chosen to also include reports tabled after 31 October 2020 that were available at the time of preparing this report.
1.2
Copies of this and other Committee reports can be obtained from the Senate Table Office or online at the Committee's webpage.
Terms of reference
1.3
Under Standing Order 25(20) the Committee is required to:
(a)
Examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory.
(b)
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.
(c)
Investigate and report to the Senate on any lateness in the presentation of annual reports.
(d)
In considering an annual report, take into account any relevant remarks about the report made in debate in the Senate.
(e)
If the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates.
(f)
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.
(g)
Draw the attention of the Senate to any significant matters relating to the operations and performance of the bodies furnishing the annual reports.
(h)
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
1.4
In accordance with the resolution of the Senate on 4 July 2019, the Committee has oversight of the following portfolios:
Defence, including Veterans' Affairs; and
Foreign Affairs and Trade.
Role of annual report
1.5
The key purpose of annual reports is accountability through informing the Parliament, stakeholders and other interested parties of the operations and performance of public sector departments, agencies, companies and statutory office holders. Annual reports are a key publication under the Commonwealth performance framework where Commonwealth entities and companies are required to report on actual performance against planned performance information. Additionally, annual reports are an important reference document and form a critical part of the historical record.
Reports examined
1.6
During the period 1 May 2020 to 5 February 2021, 24 annual reports of bodies were presented to the Parliament and referred to the Committee for examination. Reports examined included those from the categories of bodies under the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and those which are prepared by statutory offices or office holders. These annual reports are listed in Appendix 1.
Assessment of annual reports
1.7
Senate Standing Order 25(20) requires the Committee to examine reports referred to it to determine whether they are timely and 'apparently satisfactory'. The Committee must consider whether the reports comply with the relevant legislation or requirements for the preparation of annual reports in forming its assessment.
Annual reporting requirements
Public Governance, Performance and Accountability Act 2013
1.8
The PGPA Act is the legislative basis of the Commonwealth performance framework which governs how the Commonwealth public sector uses and manages public resources. It sets out the key requirements for governance, performance reporting and accountability required of Commonwealth entities and companies. A brief description of the different governance structures of these bodies for the purposes of the PGPA Act is set out in Appendix 2, which provides a summary of annual reporting requirements.
Annual reports
1.9
Section 46 of the PGPA Act sets out the annual reporting requirements in relation to Commonwealth entities, which states that annual reports must comply with any requirements prescribed by rules. Section 97 sets out the annual reporting requirements for Commonwealth companies, including those of the Corporations Act 2001 and any additional information prescribed by the rules.
Corporate plans and annual performance statements
1.10
The Commonwealth performance framework also includes the requirement for Commonwealth entities and companies to prepare and publish corporate plans each year, pursuant to sections 35 and 95 of the PGPA Act. Under section 39 of the PGPA Act, Commonwealth entities must prepare an annual performance statement and include this statement in the annual report. Entities use the annual performance statement to report on results achieved against the targets, goals and measures established at the beginning of a reporting year in its corporate plan, in addition to key performance indicators set out in portfolio budget/additional estimates statements.
1.11
It is noted that Commonwealth companies are not required to prepare annual performance statements. However, companies are required to include in their annual report a report on the actual performance results achieved against the performance information published in their corporate plan.
Public Governance, Performance and Accountability Rule 2014
1.12
The Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) sets out the detailed mandatory requirements for the preparation of corporate plans, annual performance statements and annual reports for Commonwealth entities and, where relevant, Commonwealth companies.
1.13
The Department of Finance (Finance) publishes resource management guides (RMGs) for Commonwealth entities on a wide range of topics, including on the annual reporting obligations under the PGPA Act and mandatory requirements for the content of annual reports as prescribed by the PGPA Rule.
Changes to the PGPA Rule
1.14
The Public Governance, Performance and Accountability Amendment (2020 Measures No. 1) Rules 2020 includes enhanced audit committee disclosure requirements applicable to Commonwealth entities and companies in relation to an annual report for a reporting period that begins on or after 1 July 2019.
1.15
The purpose of these enhancements were to:
align the disclosure of Commonwealth public sector audit committee member’s information in relation to names, qualifications, skills, attendance at meetings and remuneration with better practice in the corporate sector. For example, the ASX Corporate Governance Principles and Recommendations (4th edn, recommendation 4.1) recommends that listed companies disclose much of the information included in these items. Therefore, these amendments ensure that Commonwealth practice matches recommended better practice in the private sector and the Commonwealth continues to demonstrate a high standard of governance of Commonwealth entities and companies.
1.16
The Committee also notes other amendments to the PGPA Rule which will apply to annual reports for the reporting period beginning on or after 1 July 2020 in relation to the inclusion of performance information for a Commonwealth company; and enhanced disclosure of consultancy and non-consultancy contracts for non-corporate Commonwealth entities.
Statutory office holders and statutory bodies
1.17
Statutory office holders are engaged or employed under an Act which may prescribe annual reporting requirements pursuant to the office. It is also noted that there may be reporting requirements in the enabling legislation for statutory bodies (which may also be Commonwealth entities).
Non-Statutory bodies
1.18
Non-statutory bodies (NSBs) are established by a Minister and are not pursuant to a statute. Annual reporting requirements for NSBs are contained in the government response to the Senate Standing Committee on Finance and Public Administration Report on Non-Statutory Bodies, dated 8 December 1987.
Timeliness
1.19
Under Standing Order 25(20)(c), the Committee must report to the Senate any lateness in the presentation of annual reports. The Committee notes that different reporting timeframes apply to different categories of bodies. These are set out in detail in Appendix 3.
COVID-19
1.20
The Committee notes advice provided to entities and companies on options available where it was not practical to meet the reporting deadlines for the 2020-21 corporate plans or the 2019-20 annual reports due to the prioritisation of allocation of resources to meet the Government's response to the COVID-19 pandemic.
1.21
In relation to the tabling of the 2019-20 annual report, guidance from Finance noted that entities and companies that were not significantly impacted by COVID-19, or still had the capacity to meet existing annual report deadlines, were expected to adhere to the current tabling requirements.
Review of timeliness of reports examined
1.22
Standing Order 25(20)(c) requires the Committee to investigate and report to the Senate on any lateness in the presentation of annual reports. The Committee considers the timely presentation of annual reports to the Parliament an important element of accountability.
1.23
Appendix 1 lists the annual reports tabled between 1 May 2020 and 5 February 2021 and referred to the Committee for examination. This table includes the dates the reports were tabled in the Senate (or received by the President out of session) and the House of Representatives. For the purposes of the Committee's examination of timeliness, the earlier date is taken as the presentation date to the Parliament. The table also includes the dates the reports were submitted to, and received by, the Minister, if available.
1.24
There are two elements regarding the timeframe for the preparation and presentation of annual reports: the provision of the report to the Minister and the presentation of the report to the Parliament. Both of these elements were examined by the Committee in investigating any lateness in presentation of the annual reports.
Commonwealth entities and companies
1.25
All of the 2019-20 annual reports examined except one met the required date for the provision of the report to the Minister. The report of the Australian Trade and Investment Commission was submitted to the Minister on 23 October 2020, not meeting the 15 October deadline.
1.26
All of the 2019-20 annual reports of Commonwealth entities were presented in the Parliament before 31 October. In relation to the reports of Commonwealth companies examined, the reports of the Royal Australian Air Force Welfare Recreational Company and the AAF Company were presented promptly on 19 October and 20 October 2020 respectively. The report of the Australian Strategic Policy Institute (ASPI) was presented on 19 November 2020.
1.27
All but five annual reports were presented to the Parliament prior to the commencement of the Committee's Budget Estimates hearings on 26 October 2020. Those presented after the commencement of the hearings were Tourism Australia (27 October), Australian Trade and Investment Commission (Austrade) (29 October) Veterans' Review Board (29 October), Australian Centre for International Agricultural Research (30 October) and ASPI (19 November). However, in the case of Tourism Australia and Austrade, it is noted that their appearance at Budget Estimates was 29 October, and those reports were available at that time.
1.28
The Committee appreciates those bodies and the relevant ministers whose annual reports were presented to the Parliament before the Budget Estimates hearings, particularly those bodies presenting reports early enough to allow sufficient time for examination before the hearings. Recognising the demands COVID-19 placed on the operations of the departments and agencies in the Committee's portfolios, the Committee was pleased to receive the majority of annual reports ahead of estimates. (See paragraphs 1.34-1.39 for further discussion on the impact of COVID-19 on departments and agencies.)
Statutory office/office holders
1.29
The annual reports of statutory office/office holders follow less prescriptive tabling requirements. (See Appendix 3) While the Minister, upon receipt of the annual report, must present the report to the Parliament within 15 sitting days, the preparation and furnishing of the report to the Minister is 'as soon as practicable' or 'as soon as possible' after the end of the reporting period. The tabling timeframe for reports falling into this category were considered to have generally met the legislative requirements.
Schedule of Special Purpose Flights
1.30
The Committee notes that the presentation of the report Schedule of Special Purpose Flights 1 July to 31 December 2019 on 3 July 2020, was later than the requirement for reports covering the six months ending the previous 31 December to table in June, in accordance with the Guidelines for the Use of Special Purpose Aircraft.
Senate debate
1.31
In accordance with Standing Order 25(20)(d), the Committee is required to take into account any relevant remarks about the reports made in debate in the Senate. The Committee notes that none of the annual reports examined in this report have been the subject of comments or debate in the Senate at the time of preparing this report.
Non–reporting bodies
1.32
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. The Committee makes no recommendation for any bodies not presenting an annual report to do so.
Assessment of reports
1.33
Under Standing Order 25(20)(a), the Committee is required to examine the annual reports of departments and agencies and report to the Senate on whether they are 'apparently satisfactory'. In its examination of the annual reports referred, the Committee found them to be of a satisfactory standard and largely adhering to relevant requirements. The Committee considers the reports examined to be 'apparently satisfactory'.
The effects of the bushfires and COVID-19 on operations and performance
1.34
2019-20 has been a challenging year, including across the public sector, with the combined impacts of the devastating summer bushfires followed by the worst pandemic in a century impacting on the operations of a number of bodies which were required to quickly adapt and respond to fast changing circumstances. The Committee noted the support provided by the diverse range of bodies it oversees as set out in the 2019-20 annual reports. The Committee believes it is worth recording some examples of the impact of these crises on the operations and performance of bodies as highlighted in the 2019-20 annual reports.
1.35
The Chief of the Defence Force (CDF), General Angus Campbell AO DSC, described the 2019-20 bushfire season as an 'unprecedented challenge', with Defence tasking about 6,500 full-time and over 2,500 part-time ADF personnel, with assistance from nearly 500 personnel from Australia's international defence force partners, to support the emergency response and recovery operation. The CDF also noted Defence's assistance to Federal, State and Territory Governments to support the response to the COVID-19 pandemic, with more than 2,200 Defence personnel supporting the whole-of-government response to the pandemic during the reporting period.
1.36
The Secretary of the Department of Foreign Affairs and Trade, Ms Frances Adamson, advised of the enormous impact of the COVID-19 crisis on the work of the department, including keeping Australians safe and helping them return to Australia, securing vital medical and protective equipment and keeping Australian businesses trading and the economy open. While noting that the crisis is ongoing and the full impact is not yet known, Ms Adamson advised that 'already it is the most disruptive and multifaceted crisis we have ever experienced'. She also addressed the impact on the department's performance:
The extraordinary conditions we confronted affected our ability to deliver against our performance measures. When we rate the department's performance as 'on track' in this report it can reflect incremental progress, or holding the line against sliding backwards. In some cases—including because of COVID-19—progress has been more difficult and we have rated our performance as 'partially on track'.
1.37
Tourism Australia's annual report spelled out the enormous combined impact of both the bushfires and COVID-19 on Australia's tourism industry and the agency's performance in 2019-20, after a positive start in the first six months of the year. The Managing Director, Ms Pip Harrison, advised that:
I never would have thought that in closing out the 2019-20 financial year…we as an industry would find ourselves grappling with the most significant disruption to have occurred in our lifetimes, and an unprecedented new reality where international travel to Australia was effectively nil.
1.38
It was noted that the results for all six performance criteria for Program 1 – 'Grow demand for Australia as a tourism destination', were not achieved in 2019-20, with results for some measures significantly below target. The annual performance statement advised:
At the time of writing, Australia's tourism industry remains in the grip of the worst crisis it has ever faced.
1.39
Export Finance Australia's annual report outlined how its operations contributed to support its impacted customers affected by both the bushfires and COVID-19. The Chairman, Mr James Millar AM, and the Chief Executive Officer, Ms Swati Dave, advised that in the immediate aftermath of the bushfires EFA played a role in assisting its impacted customers and also offering financial support to other affected businesses. It also advised that it had responded 'quickly and decisively to lead with purpose and in alignment with [its] mandate' following the rapid spread of COVID-19 and subsequent global shutdown, which created a difficult operating environment for Australian exporters:
In March 2020, we offered financial relief to all our existing customers through payment extensions and repayment holidays.
In April 2020, we redoubled our efforts, working alongside the Government to establish a new $500 million COVID-19 Export Capital Facility on the Government's [National Interest Account].