House of Representatives Committees

Foreword
Membership of the Committee
Membership of the Sectional Committee
List of abbreviations
Glossary
List of recommendations
Chapter 1 Introduction
Chapter 2 Investment of Public Funds and Commonwealth Debt Management
Chapter 3 Regulation of Commonwealth Radiation and Nuclear Activities
Chapter 4 The Edge Project
Chapter 5 Centrelink’s Customer Feedback Systems
Appendix A - Conduct of the Committee’s review
Appendix B – List of Submissions
Appendix C – List of Exhibits
Appendix D – Witnesses Appearing at Public Hearings
Appendix E - Action taken by ARPANSA on Report 30
Appendix F - ARPANSA Statement of Regulatory Policy
Appendix G - Action taken by Centrelink on Report 31

Foreword

The Joint Committee of Public Accounts and Audit, as prescribed by its Act, the Public Accounts and Audit Committee Act 1951, examines all reports of the Auditor-General, and reports the results of the Committee’s deliberations to the Parliament. This report details the findings of the Committee’s examination of five performance audits tabled by the ANAO in early 2005.

The JCPAA considered 21 audit reports presented to the Parliament by the Auditor-General between 12 January and 19 April 2005, and selected these five reports for further scrutiny.

The reviews undertaken by the Committee have covered a number of Government agencies and included subjects such as customer service; regulatory functions; and contract management. The JCPAA has made recommendations within these reviews to improve the efficiency and effectiveness of the agencies and to ensure that the Auditor-General’s recommendations are implemented.

In conducting these reviews the Committee has remained aware of the themes it has previously stated it will pursue, including agencies’ financial management, accountability and reporting responsibilities.

As a result of the investigation into the investment of public funds, the JCPAA believes there may be some benefit from a central register of information about the investments being undertaken by FMA Act agencies and CAC Act agencies. This would allow interested parties to keep track of the investment of public monies and could also facilitate further information-sharing between agencies on investment practices.

The review of ARPANSA’s regulation of Commonwealth radiation and nuclear activities covered a number of issues including regulatory business processes; licensing; conflict of interest; cost recovery; and the identification and enforcement of unlicensed activity. The JCPAA has made several recommendations aimed at improving the standards and procedures for regulatory functions within the organisation; increasing transparency in the formulation of national policies, codes and standards; and facilitating greater sharing of information on uniform national standards for licensing and compliance monitoring of radiation sources and nuclear facilities.

In addition the Committee emphasised the importance of the Department of Health and Ageing providing an adequate level of monitoring and support to its portfolio agencies. This is in response to similar issues being raised in this audit as were previously examined for the regulation of non-prescription medicinal products by the Therapeutic Goods Administration (TGA), another agency within the Health and Ageing portfolio. Agencies such as ARPANSA and TGA have significant roles in terms of the health and safety of the Australian public.

Centrelink has again been the focus of the JCPAA, with two areas subject to review. Firstly, the Edge project, which was to incorporate the thousands of rules within the family tax benefit system in order to improve the accuracy of the assessment of customer entitlements, was terminated before completion. The Committee is disappointed that a system which appeared to hold such promise was developed but never fully implemented, and believes Centrelink should maintain its momentum to improve the systems in place overall to reduce the rate of errors in its data. This review also highlighted the difficulties in implementation for agencies, including Centrelink, created by large numbers of rapid legislation changes.

The second Centrelink review examined a series of ANAO reports into Centrelink’s major individual customer feedback systems. This report highlighted such issues as sample selection processes which may lead to bias and ultimately unreliable data; the reporting of such data without transparent reporting of the source of the data and its limitations; the lack of comprehensive costings across all the systems examined; and the possible under-participation of Centrelink’s more vulnerable customers in processes such as the Value Creation Workshops.

The Committee is concerned that for Centrelink’s customers, their rights are less well understood than their obligations, and would like to see this imbalance needs to be rectified by Centrelink.

I would like to acknowledge the work of the Auditor-General and the staff at the Australian National Audit Office. The Committee looks forward to continuing its reviews of the Auditor-General’s reports.

Mr Tony Smith MP

Chair

Membership of the Committee

Chair	Mr Tony Smith MP (from 9/2/06 ) Mr Bob Baldwin MP (until 7/2/06 )
Deputy Chair	Ms Sharon Grierson MP
Members	Senator Mark Bishop (from 11/5/06 )	Hon Bronwyn Bishop MP (from 12/8/05 )
	Senator John Hogg	Mr Russell Broadbent MP
	Senator Gary Humphries	Ms Anna Burke (until 12/9/05 )
	Senator Fiona Nash (from 16/8/05 )	Dr Craig Emerson MP (from 12/9/05 )
	Senator Claire Moore (until 11/5/06 )	Dr Dennis Jensen MP (from 29/5/06 )
	Senator Andrew Murray	Hon Jackie Kelly MP
	Senator Nigel Scullion (until 16/8/05 )	Ms Catherine King MP
	Senator John Watson	Mr Andrew Laming MP
		Hon Alex Somylay (until 12/8/05 )
		Mr Lindsay Tanner MP
		Mr Ken Ticehurst MP (until 29/5/06 )

Membership of the Sectional Committee

Chair	Mr Tony Smith MP (from 9/2/06 ) Mr Bob Baldwin MP (until 7/2/06 )
Deputy Chair	Ms Sharon Grierson MP
Members	Senator John Hogg	Hon Bronwyn Bishop MP (from 17/8/05 )
	Senator Claire Moore (until 10/5/06 )	Mr Russell Broadbent MP
	Senator Fiona Nash (from 30/3/06 )	Ms Anna Burke (until 12/9/05 )
	Senator John Watson	Dr Craig Emerson MP (from 12/9/05 )
		Hon Jackie Kelly MP
		Ms Catherine King MP
		Mr Andrew Laming MP
		Hon Alex Somylay (until 12/8/05 )
		Mr Lindsay Tanner MP
		Mr Ken Ticehurst MP (until 30/5/06 )

Committee Secretariat

Secretary	Mr Russell Chafer
Inquiry Staff	Ms Katie Ellis
	Ms Bronwen Jaggers
	Ms Julia Searle
	Ms Penne Humphries
	Ms Anna Engwerda-Smith

List of abbreviations

ANAO	Australian National Audit Office
ANSTO	Australian Nuclear Science and Technology Organisation
AOFM	Australian Office of Financial Management
ARO	Authorised Review Officer
ARPANSA	Australian Radiation Protection and Nuclear Safety Agency
ATSIC	Aboriginal and Torres Strait Islander Commission
ATSIC Act	Aboriginal and Torres Strait Islander Commission Act 1989
Audit Act	Audit Act 1901
BBSW	Bank Bill SWap rate
BIC	Business Improvement Committee (Centrelink)
BPA	Business Partnership Agreement
CAC Act	Commonwealth Authorities and Companies Act 1997
CEIs	Chief Executive Instructions
CEO	Chief Executive Officer
CFAD	Centrelink’s complaints database
CFS	Customer Feedback Sheet
CRU	Customer Relations Unit
CSC	Customer Service Centre (Centrelink)
CSO	Customer Service Officer (Centrelink)
DCALB	Diverse Cultural and Linguistic Background
DEST	Department of Education, Science and Training
DEWR	Department of Employment and Workplace Relations
DIMIA	Department of Immigration and Multicultural and Indigenous Affairs
DOC	On-line documentation
DSHIS	Defence Service Homes Insurance Scheme
DVA	Department of Veterans’ Affairs
FaCS	Department of Family and Community Services
FAO	Family Assistance Office
Finance	Department of Finance and Administration
FMA Act	Financial Management and Accountability Act 1997
GBE	Government Business Enterprise
HIFAR	Hi-Flux Australian Reactor
I&T	Information and Technology [Committee (Centrelink)]
ISIS	Income Security Integrated System
IT	Information Technology
ITSA	Insolvency and Trustee Service Australia
JCPAA	Joint Committee of Public Accounts and Audit
JPA	Joint Project Agreement
KPI	Key Performance Indicator
Land Fund	Land Fund Special Account
LEES	Life Events Expert System
MCFF	More Choice for Families
MOU	Memorandum of Understanding
NMA	National Museum of Australia
NSB	Nuclear Safety Bureau
ODM	Original Decision Maker
SBS	Special Broadcasting Services Corporation
SMA	Statutory Marketing Authority
SOP	Standard operating procedure
SSA Act	Social Security (Administration) Act 1999
SSAT	Social Security Appeals Tribunal
Treasury	Department of the Treasury
VCG	Value Creation Group Pty Ltd
VCW	Value Creation Workshop

Glossary

Abnormal occurrence	An unanticipated operational occurrence or an accident.
Appeal	A review, requested by the customer, of a decision made by a Centrelink officer.
Appeal Fatigue	‘Appeal Fatigue’ may occur when a customer finds that it is difficult and time consuming to take an issue through from the ODM reconsideration to a number of possible levels, including ARO, SSAT and beyond.
As low as reasonably achievable	The guiding principle behind radiation protection is that radiation exposures are kept as low as reasonably achievable (ALARA), economic and social factors being taken into account. This approach means that radiation doses both for workers and for the public are typically kept lower than their regulatory limits.
Authorised Review Officer	A Centrelink Officer responsible for reviewing a decision at the request of the customer.
Balanced Scorecard	A performance measurement system monitoring performance against key indicators across the goals set out in Centrelink’s Strategic Framework.
Bank bill swap rate	The average mid-point of banks’ bid and offer rates in the bank bill secondary market.
Benchmark portfolio	Portfolio management is concerned with managing the ongoing cost and risk of the Commonwealth debt portfolio. This requires a focus on changes in interest rates and exchange rates as these variables can have a significant impact on borrowing costs. A benchmark or model portfolio specifies the optimal exposure to foreign currencies and interest rates (as measured by modified duration) to achieve the AOFM’s debt management objective. The benchmark plays a role as a target towards which new debt issuance and Commonwealth swap activity has adjusted the composition of the debt portfolio over time.
Business Partnership Agreement	FaCS-Centrelink Business Partnership Agreement 2001–2004. This document provided the basis for the relationship between the two Commonwealth agencies, which is a unique arrangement characterised by purchaser/provider responsibilities as well as partnership and alliance.
Call Centre Survey	A rolling annual telephone survey of Centrelink customers who have contacted a call centre.
Confidence Interval	The confidence interval gives a range of values which are likely to cover the true but unknown value. A study which quotes a confidence interval of 95 per cent, is inferring that, should that study be repeated 100 times, the results will fall within the range of the confidence interval 95 times.
Controlled apparatus	Any of the following: (a) an apparatus that produces ionising radiation when energised or that would, if assembled or repaired, be capable of producing ionising radiation when energised; (b) an apparatus that produces ionising radiation because it produces radioactive material; (c) an apparatus prescribed by the regulations that produces harmful non-ionising radiation when energised.
Controlled facility	A nuclear installation; or a prescribed radiation facility.
Controlled material	Any natural or artificial material, whether in solid or liquid form, or in the form of a gas or vapour, which emits ionising radiation spontaneously.
Controlled person	A Commonwealth entity; a Commonwealth contractor; a person in the capacity of an employee of a Commonwealth contractor; or a person in a prescribed Commonwealth place.
Cross currency swap	The transfer between two parties of a principal amount plus associated ongoing interest payments from one currency to another, based on a fixed exchange rate. The principal is re-exchanged at maturity.
Customer Charter	The Customer Charter is Centrelink’s primary service offer to all its customers. The Charter sets out the type of service customers can expect, their basic rights and responsibilities, and how they can give Centrelink feedback.
Customer Experience Strategy	The Customer Experience Strategy document describes Centrelink’s Customer Experience Management Model and uses the model to build the Customer Experience Strategy for 2004–06. The focus is on the customer experience, encompassing the actual physical and emotional experience of Centrelink customers across all moments of contact with Centrelink.
Customer Relations Units	The central point for handling customer feedback in a Centrelink Area. It provides a medium for customers to raise issues and have them resolved. Feedback is received in the form of complaints, compliments and suggestions. CRUs also receive general information requests.
Customer Response Bias	A source of potential bias in a survey denoted by the behaviour and attitude of the people who respond to the survey. Possible reasons for this bias may be respondents’ poor recall of events, or respondents not answering openly because they are protecting their interests, or because they are fearful that there will be unintended consequences in providing a frank and open response.
Customer Service Centre Survey	A rolling annual telephone survey of Centrelink customers who have visited a Customer Service Centre.
Dealing	The activities of controlled persons in relation to controlled material and controlled apparatus. ‘To deal with’ means any of the following: (a) possess, or have control of, the apparatus or material; (b) use or operate the apparatus, or use the material; and (c) dispose of the apparatus or material.
Edge	The original contract for Edge was for a Life Events Expert System (LEES). The project was renamed Edge in 2001.
Exclusions	Customer records that are excluded from the final sample for a Centrelink survey. These exclusions include customers who have no phone, a silent phone number, those in an institution, or those who only have a mobile phone number.
Guiding Coalition	The Guiding Coalition is Centrelink's internal corporate Board. It comprises all the Senior Executive Staff (SES) officers of Centrelink and meets every six to eight weeks to discuss strategic issues of importance as well as make decisions about Centrelink's management and business directions. The role of the Guiding Coalition is to guide the organisation, set direction and lead change, establish a culture for the future, be an educative forum, and communicate decisions.
In the money	The AOFM has, at current prices, made an unrealised profit by entering into the swap transaction, meaning that, after allowing for the time value of money, future swap receipts are expected to exceed future swap payments.
Indigenous Australians	Aboriginal and Torres Strait Islander Peoples.
Interest rate swap	The exchange between two parties of interest payments associated with a notional principal amount.
Ionising radiation	Electromagnetic or particulate radiation capable of producing ions directly or indirectly, but not including electromagnetic radiation of a wavelength greater than 100 nanometres.
ISIS	Income Security Integrated System. ISIS is a suite of systems for recording customer claims, and processing Centrelink payments. It operates on the Centrelink central computer (generally called the mainframe). In this report ISIS is sometimes referred to as the mainframe system.
Life Events Approach	This approach delivers services based on a customer’s ‘life events’. ‘Life events’ are experiences such as having a baby, looking for a job, planning for retirement or arriving to settle in Australia. The approach supports Centrelink’s mission to provide opportunities for individuals during transitional periods in their lives. Steps have been taken to focus on customer needs at particular points in their lives to progress the implementation of Centrelink’s service delivery model.
M204	Model 204: Centrelink’s main database management system. Model 204 is a powerful database management system for IBM-compatible mainframe systems, designed to handle large volumes of data with thousands of simultaneous users.
More Choice for Families	More Choice for Families is a policy package that was announced on 17 September 2002. It provides families who have been overpaid for part of the year, because of a change in income or circumstances, the opportunity to choose to be paid for the rest of the year at a rate that reduces the potential for any overpayment. Families can also choose to receive part of their entitlement to Family Tax Benefit and Child Care Benefit during the year and the rest as a lump sum after the end of the year.
National Customer Survey	An annual telephone survey of all Centrelink customers.
Non-ionising radiation	Electromagnetic radiation of a wavelength greater than 100 nanometres.
Non-probability Sample	A non-probability sample is one in which the probability of selection for each unit in the population is unknown, or cannot be calculated.
Non-response bias	A form of non-sampling error. Non-response occurs when customers included in the sample, are contacted, but for whatever reason do not complete the survey. The possibility of non-response bias occurs if there is any significant difference in the characteristics of those who completed the interview, and those who refused to have, or did not complete, the interview for other reasons.
Non-sampling Error	Non-sampling error consists of systematic and variable error.
Nuclear installation	Any of the following: (a) a nuclear reactor for research or production of nuclear materials for industrial or medical use (including critical and sub-critical assemblies); (b) a plant for preparing or storing fuel for use in a nuclear reactor; (c) a nuclear waste storage or disposal facility with an activity that is greater than an activity level prescribed in the regulations; (d) a facility for production of radioisotopes with an activity that is greater than the activity level prescribed in the regulations.
Original Decision Maker	The CSO who made the original decision regarding a customer’s payment or circumstances.
ODM reconsideration	The first stage of the review and appeals process where the Original Decision Maker reassesses his/her decision, and decides whether to revise the decision.
Out of the money	The AOFM has, at current prices, made an unrealised loss by entering into the swap transaction.
Prescribed radiation facility	A facility or installation that is prescribed by the regulations.
Principal	The initial, or current, amount borrowed or invested.
Quota Sampling	A type of non-probability sample with a quota on the number of interviews.
Reactive inspection	An inspection of a nuclear installation in response to a matter that arises from compliance monitoring activities, such as licence holder quarterly reports, incident reports or from whistleblower information. Such inspections are often carried out at short notice to the licence holder. They are not part of the pre-planned inspection program.
Source	Radioactive material or a radiation apparatus.
Swap	A financial transaction in which each party to the contract agrees to exchange (swap) their respective payment obligations.
Term premium	The margin over the implied path of cash rates that investors in long-term debt require to compensate them for bearing the market value risk and liquidity risk associated with long-term debt, as opposed to a series of short-term investments such as cash deposits. The term premium is typically estimated by calculating the difference between the cash rate and the ten-year bond rate on average through time.
Top-line Satisfaction Number	The top line satisfaction number is the percentage of Centrelink customers who rated the level of service received overall (including the quality of the people, services and information) as good or very good. The top line satisfaction numbers from the CSC and Call Centre Surveys are used in Centrelink’s Balanced Scorecard as a key performance indicator of the agency’s national performance under the Customer Goal. In addition, the CSC Survey top line satisfaction number is also used as a performance measure for individual CSCs.
Value Creation Workshop	VCWs are structured and facilitated focus groups that involve both the customers of the services delivered by Centrelink and the providers of these services (that is relevant Centrelink staff). The workshops are intended to allow customers to provide direct feedback to Centrelink and its staff regarding the services that they receive.
Vulnerable Customers	Vulnerable customers may include those customers who are homeless; have a drug or alcohol dependency; have low levels of literacy or numeracy; have a mental health condition; are Indigenous; and/or come from a diverse cultural and linguistic background.

List of recommendations

2 Investment of Public Funds and Commonwealth Debt Management

Recommendation 1

The Committee recommends that the Department of Veterans’ Affairs calculate the likely amount required by the Defence Service Homes Insurance Scheme to be withdrawn from a next-day account, and invest that amount accordingly.

To counter the possibility that a larger amount may need to be drawn in an emergency, the chosen next-day account should also have provision for an overdraft facility.

The remaining funds should be invested in institutions which may provide a higher rate of return than next-day accounts.

Recommendation 2

The Committee recommends that the Department of Finance and Administration develop a register of information about the investment of public monies by FMA Act and CAC Act entities. The register should include:

the dollar value of investments by each agency;

the rate of return on investments in the previous 12 months;

a copy of each agency’s investment strategy and credit risk strategy;

an outline of the investments made; and

an outline of the management of investments – via an external management agent (and any applicable fees), or in-house.

This register should be updated annually, at the conclusion of the financial year.

Recommendation 3

The Committee recommends that the Australian Office of Financial Management and the Department of the Treasury draw up a formal agreement which states that in the event of a large movement within the AOFM investment portfolio, AOFM will provide formal advice to the Treasury as soon as possible.

3 Regulation of Commonwealth Radiation and Nuclear Activities

Recommendation 4

The Committee recommends that ARPANSA’s new information system include standards and procedures for ARPANSA’s regulatory functions, and appropriate guiding documentation to ensure that the information system is correctly and consistently utilised to ensure accurate tracking.

Recommendation 5

The Committee recommends that the Minister for Health re-examine the process for appointment to the position of CEO of ARPANSA. In particular, the process needs to seek a person with management expertise sufficient to manage the technical expertise that exists within the organisation.

Recommendation 6

The Committee recommends that the Department of Health and Ageing review and report on their obligations and efforts regarding the monitoring and support of agencies within the portfolio.

Recommendation 7

The Committee recommends that a checklist of standards required for granting a licence be prepared, as part of the new information system, that identifies when all conditions have been met and a licence can be granted.

Recommendation 8

The Committee recommends that ARPANSA provide appropriate guidance to its staff on the circumstances under which a licence condition is appropriate, and the scope and application of licence conditions.

Recommendation 9

The Committee recommends that ARPANSA provide a quarterly report to the Parliament on licence breaches including incidences of non-compliance. This requirement should include a short statement to the Parliament even where no breaches have occurred.

Recommendation 10

The Committee recommends that ARPANSA includes in its matrix of responses to breaches:

clarification of responses appropriate to differing levels of breach, particularly when the safety of people is at risk; and

an appropriate system of delegation for dealing with breaches from less severe up to the CEO for serious breaches.

This matrix is to be included in the quarterly report to Parliament on licence breaches.

Recommendation 11

The Committee recommends that ARPANSA’s relationship with the relevant State and Territory bodies be strengthened to facilitate sharing of information in terms of uniform national standards for licensing and compliance monitoring of radiation sources and nuclear facilities.

Recommendation 12

The Committee recommends that the CEO of ARPANSA and the Radiation Health Committee more transparently fulfil their roles of formulating national policies, codes and standards for Commonwealth, States and Territories, by reporting on progress in the ARPANSA annual report.

4 The Edge Project

Recommendation 13

The Committee recommends that Memoranda of Understanding between all parties be signed before any joint agency contracts are entered into.

Recommendation 14

The Committee recommends that Centrelink ensure that identified risks are actively managed and that all contracts include provisions to reassess payments where such risks cannot be mitigated.

Recommendation 15

The Committee recommends that external analysis and pre-evaluation of the contract and scoping study be undertaken prior to any major project contacts being developed by agencies in the Human Services portfolio.

Recommendation 16

The Committee recommends that Centrelink ensures a probity check is conducted of the contract/project management on the IT Refresh project before the next contract is signed.

Recommendation 17

The Committee recommends that the ANAO prioritise a re-examination of Centrelink’s processes in relation to contracting within next year’s audit work program.

Recommendation 18

The Committee recommends that the Department of Human Services coordinate feedback from its agencies, including Centrelink, to legislators regarding difficulties in implementation created by large numbers of rapid legislation changes. This information should be put to the Minister and to the Joint Committee of Public Accounts and Audit.

5 Centrelink’s Customer Feedback Systems

Recommendation 19

The Committee recommends that Centrelink put in place rigorous cost systems, to ensure that comprehensive cost records are kept for all of its feedback systems.

Recommendation 20

The Committee recommends that Centrelink monitor the cost of re-work and duplication of services across the agency and report this in its annual report, with the aim of identifying areas for improvement and reducing re-work expenditure in all Areas.

Recommendation 21

The Committee recommends that Centrelink compile information on the return on investment expected from the implementation of each of the ANAO recommendations as a priority, and that this information be provided to the Committee.

Recommendation 22

The Committee recommends that Centrelink include a public report, annexed to its annual report every year, on all surveys undertaken; the major findings from each survey; Centrelink’s response to and actions arising from these survey findings.

Recommendation 23

The Committee recommends that Centrelink include specific focus groups of vulnerable customers in such mechanisms as the Value Creation Workshops, in order to provide these people with a more comfortable atmosphere and to balance the focus groups dominated by those less vulnerable.

Recommendation 24

The Committee recommends that Centrelink ensure that a ‘complaints’ link be a permanent and prominent feature of the main Centrelink webpage.

Recommendation 25

The Committee recommends that the Centrelink webpage:

Provide a simple pathway for customers to locate a postal address to which complaints may be sent; and

includes a freepost address for lodging complaints.

Recommendation 26

The Committee recommends that the ‘Message Us’ page on the Centrelink website includes the term ‘complaint’ and that the ‘Service Feedback’ electronic form include a space for the customer’s email address should they wish to be contacted in this manner.

Recommendation 27

The Committee recommends that the Centrelink Customer Charter be accessible permanently from the main Centrelink webpage by a simple and obvious process.

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