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Finance and Government Operations - Senate Standing Committee - Reports - Special Broadcasting Service - Report on the First and Second Annual reports, dated 17 May 1982


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The Parliament of the Commonwealth of Australia

SENATE STANDING COMMITTEE ON FINANCE AND GOVERNMENT OPERATIONS

Report on the First and Second Annual Reports of the Special Broadcasting Service

May 1982

Presented and

ordered to be printed 27 May 1982

Parliamentary Paper No. 134/1982

SENATE STANDING COMMITTEE ON FINANCE AND GOVERNMENT OPERATIONS

Report on the First and Second Annual Reports of the Special Broadcasting Service

27 May 1982

MEMBERS OF THE COMMITTEE

Senator P. E. Rae, Chairman (Tasmania), B. A., LL.B. (Hons) (Tas.) Senator A.W.R. Lewis (Victoria), LL.B. (Melb.) Senator J. Coates (Tasmania), B.Sc. (Syd.) Senator the Rt Honourable R. G. Withers (Western Australia), LL.B. (W.A.)

Senator P. A. Walsh (Western Australia) Senator B. K. Childs (New South Wales) Secretary R. J. Diamond, B. A. (Acc.), C.C.A.E.

The Senate Parliament House Canberra Telephone: (062) 72 6975

CONTENTS

Chapter Page

1. Introduction ............................................................................ 1

2. First Annual Report for period 1 January 1978 to 30 June 1979 2

3. Reasons given for delay in presentation of r e p o r t .................... 3

4. Matters raised by SBS first Annual R e p o r t .............................. 5

5. C o n c lu s io n s ................................................................................ 6

6. Second Annual Report for the period 1 July 1979 to 30 June

1980 7

7. Reasons given for delay in presentation of r e p o r t .................... 8

8. C o n c lu s io n s ................................................................................ 9

Appendixes 1. Copy of letter of 3 August 1979 from Dr G. Sklovsky, Chairman of the SBS to the Hon. A. A. Staley, Minister for Posts and T elecom m unications................................................................. 10

2. Letter of 5 November 1979 from Dr Sklovsky to the Hon. A. A. S t a l e y .......................................................................................... 10

Letter of 14 November 1979 from the Hon. A. A. Staley to Dr Sklovsky ........................................................................... 10

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CHAPTER 1

1. Introduction 1.1 These reports were referred to this Committee by the Senate in accordance with recommendations from Senate Estimates Committee B following consideration of proposed additional expenditure for the year 1980-81 for the Department of Com­

munications. The recommendations made by the Estimates Committee were: • that the first Annual Report of the Special Broadcasting Service for the period 1 January 1978 to 30 June 1979 be referred to the Standing Committee on Finance and Government Operations for examination and report;

® that the Standing Committee examine and report on similar instances where de­ partments and authorities may have breached statutory reporting requirements; • that the second Annual Report of the Special Broadcasting Service for the period 1 July 1979 to 30 June 1980 be referred to the Committee for examination and

report.

1.2 The matters were referred to the Committee by the Senate on 28 May 1981. 1.3 The Committee confined its inquiry to ascertaining the reasons for the delay in presentation of the first and second Annual Reports of the SBS. It sought and obtained additional explanations from the SBS for the delay to those provided to Estimates Com­

mittee B in April 1981. The Committee also sought and obtained advice from the De­ partment of Communications, as it was maintained in evidence to Estimates Com­ mittee B that the then Minister for Communications consented to the SBS preparing its first Annual Report for a period of eighteen months. The Committee sought and

obtained the opinion of the Attorney-General on that section of the Broadcasting and Television Act 1942 which set out the requirement for the SBS to report to the Parlia­ ment. Finally, the Committee sought advice from the Department of Finance regarding authorities that have been authorised by legislation to report to Parliament for periods of more than twelve months. The Committee thanks the SBS, the Attorney-General

and the departments concerned for their assistance. 1.4 The second recommendation made by Estimates Committee B was as follows: that the Standing Committee examine and report on similar instances where departments and authori­ ties may have breached statutory reporting requirements.

The terms of reference given to this Committee by the Senate on 6 October 1977 are as follows: The continuing oversight of the financial and administrative affairs or undertakings of Commonwealth statutory authorities, and other bodies which the Commonwealth owns or controls wholly or substan­

tially, and on the appropriateness and significance of their practice in accounting to the Parliament. The Committee believes that the Estimates Committee recommendation that this Committee examine this matter is another indication of the need for continuing and close scrutiny of statutory authorities by Parliament.

1.5 The Committee has examined and reported to the Senate a number of cases where authorities have failed to comply with statutory requirements placed on them, particu­ larly reporting requirements. The Committee’s existing and future program includes a number of similar inquiries. The Committee anticipates that its findings will continue to

identify the range of problems apparent in statutory authority and departmental administration. For this reason, the Committee makes no specific report on the second recommendation. In our view, the breadth and complexity of the problem revealed by the Committee’s continually developing experience of statutory authorities requires the systematic approach that we have adopted in the four reports on Commonwealth statu­

tory authorities that have been tabled to date.1

1

CHAPTER 2

Report for the period 1 January 1978 to 30 June 1979 2.1 The following is a chronological summary of the preparation of this report: 31 October 1978—financial statements for the period 1 January 1978 to 30 June 1978 submitted to the Auditor-General for audit.

26 February 1979—financial statements for the period 1 January 1978 to 30 June 1978 certified by the Chairman, SBS. 20 April 1979—financial statement for the period 1 January 1978 to 30 June 1978 certified by the Chairman of the SBS returned to the SBS by the

Auditor-General. 24 April 1979—SBS Board resolves that \ . . the Minister be asked to agree to the Service providing a consolidated report covering the period 1 January 1978 to 30 June 1979 in line with the practice adopted by other newly formed statutory

authorities . . . ’ 3 August 1979—letter from SBS to the Minister for Post and Communications, Hon. A. A. Staley, seeking approval for preparation and presentation of con­ solidated report. 5 November 1979—SBS Chairman advises the Minister for Communications by

letter that report for consolidated period would not be ready for tabling before end of 1979 budget session of Parliament. 14 November 1979—letter to SBS Chairman from the Minister acknowledging let­ ter of 5 November. 17 January 1980—revised draft of accounts for the year 1978-79 submitted to the

Department of Finance for approval. End January to 5 March 1980—further revised drafts of accounts submitted to the Department of Finance and Auditor-General for approval. 5 March 1980—SBS advised that Minister for Finance has approved form of

financial statements. Financial statements subsequently submitted to the Auditor-General. 30 April 1980—Auditor-General’s signed report on accounts for the year 1978-79 received by SBS. 20 May 1980—Report presented to Parliament in respect of the period 1 January

1978 to 30 June 1979.

2

CHAPTER 3

Reasons given for delay in presentation of report

3.1 Section 79ZH of the Broadcasting and Television Act 1942 requires the SBS to re­ port to the Minister responsible for its operations, and reads as follows: 79zh (1) The Service shall, as soon as practicable after each 30 June, prepare and furnish to the Minister a report of its operations during the year ended on that date, together with financial statements in re­

spect of that year in such form as the Minister for Finance approves.

The section further provides that: (2) Before furnishing financial statements to the Minister, the Service shall submit them to the Auditor- General, who shall report to the Minister (a) whether the statements are based on proper accounts and records:

(b) whether the statements are in agreement with the accounts and records; (c) whether the receipt and expenditure of moneys, and the acquisition and disposal of assets, by the Service during the year have been in accordance with this Part; and (d) as to such other matters arising out of the statements as the Auditor-General considers should be

reported to the Minister.

(4) The Minister shall cause — (a) copies of the report and financial statements of the Service furnished to him under sub-section (1), together with a copy of the report of the Auditor-General; and (b) copies of any report and financial statements furnished to him under sub-section (3), to be laid before each House of Parliament within 15 sitting days of that House after having been received from the Minister.

3.2 The Committee was given the following account of the Board’s deliberations with relation to the report in a letter from the SBS of 13 October 1981: At the SBS Board meeting of 24 April 1979 management advised its board that while the financial state­ ments would normally be incorporated in an Annual Report covering the period concerned it would be

more appropriate, having regard to the delay in obtaining the Auditor-General’s Report, to incorporate the report on the period 1 January 1978 to 30 June 1978 into the 1978/79 Annual Report. While the minutes of the SBS Board meeting concerned do not specifically refer to the matter, it appears that some advice was forthcoming to the effect that there was a precedent for such a course of action in relation to other newly formed statutory authorities which had been established during the course of a financial

year. This advice led, at the SBS Board meeting of 24 April 1979, to a resolution of the Board that: *. . . the Minister be asked to agree to the Service providing a consolidated report covering the period 1 January 1978 to 30 June 1979 in line with the practice adopted by other newly formed statutory authorities . . .'

The SBS advised the Committee that: It is apparent, from available records, that there was some management oversight of the abovemen- tioned resolution until 26 July 1979, when the then Executive Officer raised the matter by internal minute with the Executive Director. Subsequently the then Chairman of SBS wrote to the Minister on 3 August 1979 seeking his approval to the consolidated report.

3.3 The Chairman of the SBS, Dr G. Sklovsky, wrote to the Minister then responsible for SBS affairs, the Minister for Post and Communications, the Hon. A. A. Staley, on 3 August 1979 seeking his approval to the course of action envisaged by the Board’s resol­ ution. This letter is annexed as Appendix 1.

3.4 The SBS advised that no response was received to this letter.

3

3.5 The Committee wrote to the Department of Communications asking whether this letter, or record of any consequent telephone conversations between Dr Sklovsky and the Minister was on departmental files. A reply dated 15 January 1982 from the Sec­ retary of the Department, Mr R. B. Lansdown, advised:

We have examined our files and have been unable to establish whether the letter from Dr Sklovsky was received by the Minister or whether the Minister subsequently replied. We have also been unable to lo­ cate a copy of any relevant record of conversation between the Minister and any member of the SBS.

3.6 On 5 November 1979, Dr Sklovsky wrote to the Minister in terms which clearly assumed that the SBS intended its first Annual Report was to cover the period 1 January 1978 to 30 June 1979. The second paragraph of that letter reads: However, the fact* that this First Report covers six months of the previous year as well as one full year

causes accountancy bumps which are now being ironed out by the various authorities involved. •Committee’s emphasis

3.7 A copy of this letter was provided to the Committee by the Department of Com­ munications. The copy shows that the Minister made a handwritten note on the letter which reads: Ackn.

U nderstand your problems. Grateful if report could be available at earliest next session. AAS The Minister’s reply to Dr Sklovsky’s letter of 5 November 1979 was dated 14 November 1979 and read in part:

I understand the problem you have had in this regard but would be grateful if the Report could be avail­ able early in the next session.

Copies of the letters referred to in this paragraph are attached as Appendix 2. 3.8 The Committee asked the SBS for its reasons as to why this report was delayed. It advised as follows: 1. From the period of its establishment on 1 January 1978 up to and including 24 April 1979 when the

SBS Board discussed the Annual Report, SBS had not sought to ascertain from the Attorney-General's Department, or other appropriate sources: (a) the precise meaning of section 79ZH(i) of the Broadcasting and Television Act 1942; (b) the Minister for Post and Telecommunications powers in relation to SBS Annual Reports and SBS relied too heavily on unsubstantiated ‘precedents’ in relation to activities of other newly formed

statutory authorities. 2. Having made the decision to seek the Minister’s agreement to a consolidated report on 24 April 1979. SBS was remiss in not communicating this proposal to the Minister until 3 August 1979. 3. Notwithstanding 1. and 2. above, it is reasonable to suggest that the view of the SBS Board at the time was that the Minister, in approving or disapproving the course of action proposed by SBS, i.e. a con­ solidated report, would take this decision having regard to the provisions of the Broadcasting and Tele­

vision Act 1942 concerning SBS Annual Reports.

4

CHAPTER 4

Matters raised by SBS First Annual Report

4.1 Two matters of concern to the Committee are raised by the SBS decision to pre­ pare this Annual Report for a period of eighteen months. 4.2 The first matter was the apparent belief by the SBS Board, as indicated in its resol­ ution of 24 April 1979, that there were precedents for newly established authorities

presenting a report for a consolidated period which was in excess of its statutory report­ ing period. 4.3 Legislation requiring an authority to report annually generally provides that the authority’s financial and operating years are the same. In the case of the SBS, this

period is from 1 July to 30 June of the succeeding year. This Committee wrote to the Department of Finance seeking advice as to whether it was aware of any precedents for the consolidation of report periods of more than twelve months, when an authority was required by legislation to report on activities to a certain date. 4.4 The Department replied that it knew of no such precedents. It noted that report­

ing provisions such as those imposed on the SBS may be modified by specific legislative provisions regarding transitional arrangements. For example, the Museum o f Australia Act 1980 in Section 38 (3) provided that the first report of the Museum would relate to a period of less than twelve months ending on 30 June 1981. The De­

partment further commented: It is, of course, conceivable that should an Act be proclaimed a few days prior to the statutory balance date of a new authority (and that authority technically if not physically comes into being) a decision could be made to delay an annual report to the end of the succeeding year. In such cases, other consider­

ations being equal, commonsense dictates that it would be both extravagant and futile to produce and publish financial statements and an annual report which related to a period where few or no transactions took place.

The Committee agrees with this view but believes that the SBS was not in such a situation. 4.5 The second matter of concern to the Committee was that neither the SBS nor the Minister, when he was informed, apparently had regard to the terms of section 79ZH of

the Broadcasting and Television Act, which is set out above in paragraph 3.1. The Com­ mittee wrote to the Attorney-General seeking his opinion on the interpretation of the section. The questions asked by the Committee and the Department’s answers are set out below:

Q. (i) D oess.79znof the Broadcasting and Television Act 1942 oblige the SBS to furnish the Minister with a report for the period ending each 30 June? (ii) In particular, does the section oblige the SBS to report on a period of its existence of less than twelve months ending on 30 June, viz. 1 January 1978 to 30 June 1978? A. (i) and (ii): Yes. Section 79zn requires a report of its operations ‘during’ each year that ends on

30 June. 1 see no basis for thinking that this refers only to years during the whole of which the SBS was operating. If it has been operating at all during any part of a year (including the year 1977-78), then a report was required to be furnished ‘as soon as practicable’after the relevant 30 June. Q. Under what circumstances and in what manner is the Minister able to waive or alter the obligation

imposed upon the SBS to furnish a report pursuant to S.79ZH? A. None. The statutory obligation is not qualified by any such Ministerial power. If a Minister did pur­ port to excuse the SBS from compliance, it would be nothing but a ‘pretended power of dispens­ ing with laws’ that has been unfounded at least since the brief reign of James II (Bill of Rights,

1969).

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CHAPTER 7

Reasons given for delay in presentation of report

7.1 The essential cause of delay in presentation was attributed to time taken in final printing. The SBS advised that: On 28 November 1980 SBS asked The Consultancy Pty Ltd, which was arranging design and printing of the Annual Report, to arrange a printing and publication schedule based on the anticipation that the

final copy required, the Auditor-General’s Report, would be received by the first week in January. The schedule then developed foreshadowed that the Annual Report would be ready for presentation by early March 1981.

In the event, however, the Auditor-General’s Report was not provided until 16 January 1981. The full manuscript was delivered to the typesetting [s/c], corrections and printing had been lost and it became necessary for work on the SBS Annual Report to be accommodated in between other commercial work being carried out by the selected typesetters and printers. 7.2 A secondary cause was apparently a continuation of the negotiations on the form of SBS accounts with the Department of Finance.

8

CHAPTER 8

Conclusions 8.1 The fact that final printing of this report took almost three months is quite unac­ ceptable. We particulary note that the SBS engaged a private consultant to both pre­ pare the copy of the Annual Report and arrange a contract for printing. The Com­

mittee trusts that, when planning production schedules for future reports, the SBS recalls the difficulties it encountered with this report. 8.2 The Committee intends to keep a watching brief on future reports from the SBS. It believes that the SBS has an increasingly important role in communications and com­ munity relations. The timely presentation of a report to Parliament with either draft or

final financial statements attached is essential to this role.

ENDNOTES 1. Australia, Senate, Statutory Authoritories o f the Commonwealth: Senate Standing Committee on Finance and Government Operations (Senator P. E. Rae, Chairman), First Report, Pari. Paper 1, Can­ berra, December 1978; Second Report Pari. Paper 285, Canberra, October 1979; Third Report Pari.

Paper 2, Canberra, January 1980; Fourth Report Pari. Paper 107, Canberra, May 1980. 2. Third Report, op. cit

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APPENDIX 1

Letter from Dr G. A. Sklovsky to the Hon. A. A. Staley, M.P., dated 3 August 1979 3 August 1979 The Hon. A. A. Staley M.P. Minister for Post and Telecommunications

Parliament House Canberra, A.C.T. 2600 Dear Minister ANNUAL REPORT

The SBS feels that in view of its relatively brief period of activity from 1 January to 30 June 1978 it would be desirable to report on this period concurrently with the Service’s Annual Report for 1978/79. It was therefore resolved at a meeting of SBS to seek your agreement to this approach which 1 understand is not uncommon in the case of statutory authorities whose initial period of operation covered only part of a financial year.

1 would be grateful if you would let me know, at your convenience, whether you would agree with such an approach. If so, a consolidated report, covering the period 1 January to 30 June 1978, will be forwarded to you at the earliest possible date. Yours sincerely

Dr G. A. Sklovsky

APPENDIX 2

Letter of 5 November 1979 from Dr Sklovsky to the Hon. A. A. Staley Office of The Chairman 5 November 1979 The Hon. A. A. Staley

Minister for Post and Telecommunications Parliament House Canberra, A.C.T. 2600 My dear Minister

The First Annual Report of SBS was to be completed before the end of the present Parliamen­ tary Session. However, the fact that this First Report covers six months of the previous year as well as one full year causes accountancy bumps which are now being ironed out by the various authorities in­ volved. Consequently I regret that it will not be completed as planned, but 1 hope to have it ready early for the next Session.

Yours sincerely Dr G. A. Sklovsky cc Mr R. E. Fowell

Letter of 14 November 1979 from the Hon. A. A. Staley to Dr Sklovsky Minister for Post and Telecommunications Parliament House Canberra, A.C.T. 2600

14 November 1979 Dear Dr Sklovsky, Thank you for your letter of 5 November advising me of the delay in the expected completion date of the First Annual Report of the SBS.

1 understand the problems you have had in this regard but would be grateful if the Report could be available early in the next Session. Yours sincerely, A. A. Staley

Dr G. A. Sklovsky Chairman Special Broadcasting Service 9th Floor

150 Queen Street Melbourne, Vic. 3000