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Monday, 21 May 2012
Page: 4693

Mr OAKESHOTT (Lyne) (10:29): On behalf of the Joint Committee of Public Accounts and Audit, I present the committee's report entitled Report 430: Review of Auditor-General's reports Nos. 47 (2010 11) to 9 (2011-12) and reports Nos. 10 to 23 (2011-12), and an executive minute received by the committee, which constitutes the government response to JCPAA Report 418—Review of Auditor-General’s reports Nos 04 to 38 2009-10, recommendations 2 and 3.

The Joint Committee of Public Accounts and Audit, as prescribed by its act, 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 three performance audits selected for further scrutiny from the 34 audit reports presented to parliament by the Auditor-General between June 2011 and February 2012.

The committee's focus in examining these audit reports was on transparency and accountability—particularly in terms of decision-making and performance measurement. Following the committee's policy inquiry into national funding agreements and our ongoing interest in performance measurement, we continue to examine the findings of the ANAO's multi-agency review of key performance indicators. The outcomes and programs framework is in its third year yet the audit showed that agencies continued to find it challenging to develop meaningful and measurable KPIs.

After hearing evidence from the ANAO and the Department of Finance and Deregulation, we concluded that Finance needs to do more to engage and support agencies, improve guidance and include best practice models for developing KPIs. Work also needs to be done to improve the integration of KPIs in key accountability documents to ensure a clear read.

Another area of ongoing concern is grant administration. With the release of a damning audit report on the $150 million Infrastructure Employment Projects stream of the Jobs Fund, we felt it was necessary to further examine the findings. This stream did not achieve the anticipated economic stimulus objectives within the designated timeframe. There were questions over the project selection process and a range of administrative deficiencies were identified, including departure from the Commonwealth grant guidelines.

In its appearance before the committee, the Department of Infrastructure and Transport provided some indication that it was now working to implement sounder governance structures. However, the lack of acknowledgement of the problems found in this audit and the provision of incomplete responses to questions on notice provided little reassurance that adequate steps have been taken to ensure that identified problems would not be repeated in future programs. As such, we have recommended that the ANAO include the department in an audit that is currently underway into agencies' implementation of audit recommendations. The committee will continue to watch closely for evidence of improvement from this particular department.

The IEP audit report raised questions more broadly regarding the Commonwealth grant guidelines, so the committee has decided to examine a subsequent ANAO report on the administration of grant reporting obligations. The billions of dollars provided each year through grants require full transparency and accountability. The Commonwealth grant guidelines must be clear and there must be support for agencies to implement the guidelines and other requirements. In turn, ministers should have sufficient support from their agencies to ensure decisions can stand up to full public scrutiny. Yet the ANAO found that agencies did not seem clear on the requirements and did not take advantage of best practice models and this seems to be repeating itself over time. Competitive grant selection processes are being significantly underutilised, and ministers are receiving inadequate departmental support.

The committee acknowledges the work of the Department of Finance and Deregulation in developing the guidelines, providing updates and, most recently, in the release of model chief executive instructions. Nevertheless, we continue to see noncompliance and confusion.

Following the committee's release of ANAO's supporting documentation relating to ministerial under-reporting of grant approvals, there were a number of exchanges between the ministers named and the Auditor-General. These statements and letters disputed the categorisation of grants that should have been reported to the finance minister. The committee has since agreed to the public release of these letters on the JCPAA website in the interests of transparency and accountability.

Clearly, there are still practical problems with the system. Not only do the guidelines need to be clarified, but agencies need sufficient support to follow them. The finance department was provided ongoing funding to support agencies through the grants framework unit, but chose to redirect the funding to areas reviewing the broader financial framework. While we accept that grants are a subset of the framework, Finance missed the opportunity to maximise momentum following the introduction of the Commonwealth grant guidelines.

I have more to say but in closing I would like to sincerely thank each committee member for the non-partisan spirit of the work done and once again thank the committee secretariat for their work. (Time expired)

In accordance with standing order 39(f), the report was made a parliamentary paper.