Senate Community Affairs Legislation Committee
ESTIMATES REPORT
June 1998
© Commonwealth of Australia 1998
ISSN 1323-3750
Membership of the Committee
| Senator Sue Knowles, Chairman |
LP, Western Australia |
| Senator Andrew Bartlett, Deputy Chair |
AD, Queensland |
| Senator Kay Denman |
ALP, Tasmania |
| Senator Alan Eggleston |
LP, Western Australia |
| Senator Michael Forshaw |
ALP, New South Wales |
| Senator Ross Lightfoot |
LP, Western Australia |
Senate Community Affairs Legislation Committee
ESTIMATES REPORT
1. INTRODUCTION
1.1 On 14 May 1998 the Senate referred the following documents to the
Committee for examination and report in relation to the portfolios of
Health and Family Services, and Social Security:
- particulars of proposed expenditure for the service of the year ending
on 30 June 1999;
- particulars of certain proposed expenditure in respect of the year
ending on 30 June 1999.
1.2 The Committee has considered the expenditure of the portfolios set
out in their respective Portfolio Budget Statements 1998-99. Explanations
relating to the estimates were received from Senator the Hon Jocelyn Newman,
Minister for Social Security and Senator the Hon John Herron representing
the Minister for Health and Family Services and officers from the portfolio
Departments at hearings held on 2, 3, 4 June 1998. The Committee expresses
its appreciation for the assistance of the Ministers, the Departmental
Secretaries Dr David Rosalky (DSS) and Mr Andrew Podger (DHFS),
and the officers who appeared before it.
1.3 In accordance with Standing Order 26, the Committee has agreed on
the following dates:
- final date for submission to the Committee of written answers or additional
information relating to the expenditure is 26 June 1998
- the Senate agreed on 26 March 1998 that the dates for supplementary
hearings of the Committee to consider the 1998-99 Budget estimates are
3 and 4 August 1998
- final date for lodgement of notice of matters which Senators wish
to raise at the supplementary meetings of the Committee relating to
the written answers or additional information, or otherwise relating
to the proposed expenditure referred to the Committee is 28 July
1998.
1.4 A copy of the Senate Hansard transcripts of 2, 3, 4 June
1998 will be tabled in the Senate separately. Hansard transcripts
of estimates proceedings are also available on the Internet.
1.5 Volumes of Additional Information received by the Committee containing
answers to questions taken on notice prior to, and at the Committee's
hearings, will also be tabled separately in the Senate.
2. DEPARTMENT OF SOCIAL SECURITY – PORTFOLIO BUDGET STATEMENTS
AND CENTRELINK
2.1 The Department of Social Security included further refinements to
the Portfolio Budget Statements (PBS). These included:
- a table illustrating how the appropriations are spent, by showing
expenditure in each Appropriation Bill disaggregated by program; and
- a new section providing a brief description of non-budget measures
and other variations affecting program outlays. When combined with the
Budget Measures and Program Resources Sections, the addition of this
section provided a comprehensive picture of the Department's activities.
2.2 However, while this additional information was most useful, the Committee
experienced difficulties in two major areas during its consideration of
the estimates. Firstly, the separation of Department and Centrelink expenditure;
and secondly, with the distribution of the previous corporate program
now across six income support programs there was difficulty in comparing
previous and proposed expenditure in particular programs and areas.
2.3 The Department detailed its financial implications in the Portfolio
Budget Statements:
Income support programmes are delivered through a network of customer
service centres in Centrelink which cover functions ranging across the
programme structure. These operational arrangements are essential to
the effective delivery of services to customers whose situations and
needs are diverse, and enable the portfolio to efficiently address the
changing priorities and competing demands for resources for the several
large Social Security programmes. This means that estimates or outlays
for operating funds (running costs) cannot be accounted for strictly
according to elements.
In addition, under the agency wide running costs guidelines instituted
by the Department of Finance and Administration, departments are allowed
considerable flexibility to allocate resources and to adapt more flexibly
to changing priorities. It is not possible to allocate the impact of
running costs to specific programmes, sub-programmes or components,
other than where the measure impacts solely on one programme element
within a single programme. However, a notional amount of running costs
for each particular measure is included in the total resources for the
measure. For each measure, a table is included where the special appropriations
impact of that measure has been attributed to all affected programmes,
sub-programmes and components. [1]
2.4 Unfortunately, the notional attribution of estimates across programs
resulted in the comparative figures provided in the resource tables for
each program having significant variations. Senators had difficulty in
using these tables for annual comparative purposes and to understand the
reasons for apparently dramatic variations proffered without explanation.
[2]
2.5 The Secretary, Dr Rosalky, noted that in relation to Centrelink this
has been a transitional year and the Department's role `has been defined
progressively both in respect of our policy delivery and in the nature
of our purchaser role with Centrelink'. [3]
Dr Rosalky conceded that the tables were `singularly unhelpful as an explanatory
document' and commented:
There are reasons why these tables are like this, and to a large extent
we have presented them in the way that the guidelines say we should,
but we should have had a parallel set of tables so that they were actually
comparable between the years…
Some of the guidelines are emerging ones that relate to how the financial
relationship between DSS and Centrelink is actually being displayed
in terms of the fees we pay, et cetera. That is something we are having
ongoing discussions with the Department of Finance [and Administration]
about. We do not find them satisfactory yet either, but they may still
develop in coming months. [4]
2.6 The Department recast its resource information tables and Summary
of Outlays for the Portfolio Table in the same format as the PBS's but
with a transparent link between the tables and showing management components
such as salaries and other elements of the running costs for each of DSS
and Centrelink. The Department reappeared at the conclusion of the Committee's
hearings to present this revised information and respond to questions.
The Committee greatly appreciates the time and effort expended by offers
in expeditiously producing these revised figures and tables. After the
hearings, the Department provided a further amended Summary of Outlays
for the Portfolio Table rectifying transpositional errors and making other
corrections to the figures.
2.7 The Department explained the difficulties that presenting the figures
for Centrelink created:
We are presenting here the figures covering the whole of the portfolio
of social security so it does include payments appropriated to and for
the Department of Social Security but also appropriations to the Department
of Social Security to be paid to Centrelink as a fee. The very large
part of the moneys appropriated for running costs in bills No. 1 and
No. 2…is the fee the department pays to Centrelink for the services
that Centrelink provides for our programs. So those payments are made
and appear as a particular line in this table of outlays–it is
the line that has $1,361.628 million in the first year and goes across.
As both the Department of Social Security and Centrelink are on the
public account, we are obliged to present these outlays as they flow
in and out of the public account. So what we see in that first column
is that, in the 1997-98 budget, Appropriation Bill (No.1) appropriated
$1,361.628 million to the Department of Social Security. That appears
as an expenditure for us. We pay that to Centrelink and because they
receive it on the public account you see it below the line…as being
received by Centrelink under section 31 of the Financial Management
Accountability Act and then it is paid out by Centrelink again as they
actually expend it on services–their salaries and all those sorts
of things. So it appears again as an annotated appropriation for Centrelink…Because
all those fees are moving between the department and Centrelink, and
are on the public account, they actually appear three times. It is really
in the presentation of those flows that we ourselves made some mistakes
in the earlier table. More importantly, the fact that these payments
appear three times does add to the complexity of the presentation of
these tables. In the bottom line they appear only once because only
once are they expended from the budget to the public.
So I needed to explain why those lines appear three times. You will
see that Centrelink is mentioned several times in that table and nearly
all the entries for Centrelink are annotated appropriations because
they are appropriations that accumulate to Centrelink on the basis of
moneys they actually receive from other organisations, be they DSS or
other Departments. [5]
2.8 These difficulties were exemplified when the Committee was unable
to obtain satisfactory information about the expenditure on computing
needs and equipment as the Department purchases computing services from
Centrelink. Reasons for variations were attributed to Centrelink, as Centrelink
holds the whole of the computing operation and provides computing services
for a fee to DSS. The fee paid is included in the money paid by DSS to
Centrelink for running costs – it is not separately identified. [6]
2.9 The Committee is concerned at the difficulty in adequately scrutinising
the operations of Centrelink as it is represented to varying degrees across
a number of portfolios. The Committee understands the transitional nature
of this year's arrangements with Centrelink and that guidelines covering
the financial relationships between DSS and Centrelink, and Centrelink
and its other clients including DHFS, DVA, DEETYA and DPIE, are the subject
of ongoing discussion and refinement. The Committee expects that the finalisation
of such guidelines would enable the funding spent on and by Centrelink
to be readily identifiable.
3. DEPARTMENT OF HEALTH AND FAMILY SERVICES – PORTFOLIO BUDGET
STATEMENTS
3.1 In the preparation of their Portfolio Budget Statements, the Department
of Health and Family Services trialed a `more output based' presentation
in anticipation of the commencement of accrual accounting from the next
financial year.
3.2 The Secretary, Mr Podger, explained:
you will see in the whole nature of our portfolio budget statement
a significant move to try to work through how we might handle an output
based funding arrangement. So we have under every program a first go
at identifying what the outputs are, separate from the outcomes and
the outcome indicators, and we try to put down there what the output
measures are likely to be. That is forcing us within this financial
year to be able to report on that basis. The full move to accrual accounting
is not for another 12 months, but we are putting considerable investment
into the department into being able to manage this change over the coming
12 months. [7]
3.3 This move to accrual accounting will involve considerable change
to departmental accounting and reporting procedures, and will be reflected
in the presentation of PBS's. Mr Podger warned that there are going
to be a number of difficulties and noted that:
In a number of the things we do, the outputs are somewhat a simplification
of what the programs are really delivering, and there are issues of
quality and access and so on which are not clearly identified by the
specific output measures. [The Department of Finance and Administration
has] assured us that they do not want the output process to outweigh
the moves we have been making on identifying outcome focus and effectiveness
issues, but there is a risk as we go down the output process that you
start to lose sight of some of those quality and other measures. [8]
3.4 Comment was made on the Budget Measures section being included at
the end of the PBS. This section works well for DSS with the cross-program
implications of many budget measures, though with DHFS most measures relate
to a single program or sub-program. The Department noted that this format
was in accordance with issued guidelines and has been included with cross-reference
by sub-program and page reference. [9] The Senate
Finance and Public Administration Committee may wish to consider this
aspect as part of its examination of budget documentation.
3.5 The Committee experienced similar difficulties as those encountered
with DSS in utilising the comparative figures provided in resource tables,
even though the DHFS has a greater individual program focus than the cross-program
nature of DSS. [10]
3.6 DHFS also had difficulties in providing costing details relating
to he purchaser/provider arrangements with Centrelink. DHFS explained
that negotiations were continuing with Centrelink on the cost of the provision
of services, which had been complicated by rearranged commencement dates.
[11]
3.7 The difficulties expressed by Senators in utilising the data provided
in the PBSs is likely to be symptomatic of the difficulties to be encountered
as the presentation of budget documentation reflects the transition to
accrual accounting. Issues such as corporate services and running costs
will be attributed across individual programs as the focus will move primarily
to outputs. The conduct of estimates through comparative assessments of
information in the current format is likely to be significantly changed.
Senator Sue Knowles
Chairman
June 1998
Footnotes
[1] DSS, PBS, p.61.
[2] Committee Hansard, 2.6.98, eg pp.CA89-90.
[3] Committee Hansard, 2.6.98, p.CA92.
[4] Committee Hansard, 2.6.98, p.CA103.
[5] Committee Hansard, 4.6.98, pp.CA339-340.
[6] Committee Hansard, 2.6.98, pp.CA93-94,
107-08 and 4.6.98, p.CA343.
[7] Committee Hansard, 3.6.98, p.CA233.
See also p.CA126.
[8] Committee Hansard, 3.6.98, p.CA234.
[9] Committee Hansard, 3.6.98, p.CA242.
[10] Committee Hansard, 3.6.98, pp.CA163-65,
172 and 4.6.98, p.CA306.
[11] Committee Hansard, 3.6.98, pp.CA225-26.