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Legal and Constitutional Affairs Legislation Committee
Australian Crime Commission

Australian Crime Commission


CHAIR: Mr Lawler and Mr Lacey, good evening. Do you have an opening statement?

Mr Lawler : No, I do not.

Senator BRANDIS: Mr Lawler, I take you to page 89 of the Portfolio Budget Statements 2011-12, and Table 1.1: Agency resource statement. As I read that, you have had a very big funding cut in this budget. Your available appropriation has gone down from $137,297,000 to $124,697,000, which on my calculation is a reduction of 9.1 per cent. Has there been 9.1 per cent less crime in Australia in the last 12 months or are you simply being less well resourced by the government.

Mr Lawler : I can certainly confirm the figures you have quoted on Table 1.1. As to your assertion of 9.1 per cent less crime—

Senator BRANDIS: I would not characterise it as an assertion. I was merely trying to dramatise the fact that this 9.1 per cent cut happened. I was inviting you to explain why.

Mr Lawler : Thank you. I would like to talk about the context of organised crime in relation to what national law enforcement and state and territory law enforcement is facing in that context. The simple fact of organised crime in this country is that it is growing in its threat and pervasiveness to the Australian community. It is being enabled by global forces, by technology and by new methods of communication, particularly the internet, and we are seeing forms, volume and complexity of crime that have not been with us previously. So I would characterise the organised crime context as growing in threat and dimension.

Going to your point in relation to table 1.1, I think it is important that I explain the breakdown in figures that make up that statement that you started to ensure that that position is a fairly and properly put. The first figure that makes up that particular figure of $124,697 relates to a prior year's operating appropriations that have not yet been used. It has reduced since last year, which was $36.166 million. This was used to cover the Australian Crime Commission's liabilities for employee and leasehold provisions and the balance of $8.5 million, due to prior year surpluses and savings by the commission, was used for capital and other investments.

The second figure of $91,727,000 is the net operating appropriation of $88.973 million and a departmental capital budget of $2.754 million. The other revenue from the intergovernmental agreement of $2.448 million relates to the proceeds of crime and also some money received by the commission for some important work we are doing scoping what the future of the nation's criminal intelligence systems should be. Finally, the $196,000 relates to capital appropriations for the new initiatives of Fusion at $150,000 and Wickenby at $46,000.

It is important senator, in the context of your stated figures, which were accurate, that a breakdown of those figures gives context as to what the appropriations relate to.

Senator BRANDIS: Thank you for that. That is a very thorough response. Bearing in mind everything you have told us to explain this 9.1 per cent reduction, can you please tell us what areas of the Australian Crime Commission's operations will be affected by the reduced funding available to it?

Mr Lawler : Funding for 2012-13 has been reduced by $1.69 million to $88.973 million. It is important to advise the committee that the commission has now, for a number for successive years, been on very significant cost reduction strategies, particularly in the context of the commission's supplier budget. I will give the committee some indication of those cuts. For travel in 2010-11 versus 2011-12, there was a reduction of 51 per cent, which a reduction of $1.884 million. There was a reduction of 52 per cent against those same years, which I will quote against. There was also a reduction of 48 per cent in consultancy costs, a reduction of 50 per cent in advertising costs and a reduction of $266,000 in printing costs.

The net import of that explanation to the committee is that we believe that, over now three years now, we have cut the supplier budget—the operating budget for supplier costs—about as much as we can do without seriously making the work of the people that remain ineffective. The reduction in spending that I spoke of will be taken from staff, and there will be staff reductions in the commission. We estimate the reductions at 20 full-time equivalent.

Senator BRANDIS: It is a little more than that, isn't it? If you go to page 90, table 2.1, the average staffing level number falls from 565 to 539. That is 26, isn't it?

Mr Lawler : I think the figures in all of the PBS statements are taken on an average staffing level, and I can talk to you about what those figures might look like. But, as far as full time equivalent staff are concerned, the figure is in the order of 20. The other important factor to be considered in this is that there has been a significant shift in the percentage of supplier costs and employee costs. In fact, it has shifted from 58.4 per cent of the total appropriations in 2009-10 for a staffing cost to 76 per cent in 2011-12. What that means in a practical context is that we have shifted suppliers to retain staff.

As far as your question as to specifically what will not be done in the commission or what sort of impact this might have is concerned, we have a scalable business model that can scale up or down depending on the resources available, and we have quite well developed internal mechanisms to assess the relative priorities of work that comes to the commission. Clearly, based on my earlier comments, the commission has an array of work that it could undertake and it is not always comparing like with like and it takes collective good judgement to understand where the commission's resources are best focused to deal with the highest-risk threats that the country faces.

Senator BRANDIS: I think I understand what you are saying. But, cutting to the chase, what that means, applying what you have described as your scalable model, is that there are going to be some activities which the commission would wish to undertake and has hitherto been undertaking but which, as a result of the funding and staffing reductions, it will not be able to undertake.

Mr Lawler : Yes.

Senator BRANDIS: Do those include operational activities?

Mr Lawler : Yes.

Senator BRANDIS: I do not think it would be prudent for me to ask you what particular operational activity has been cut back. Let me ask you to be the judge—if you feel, without impinging on areas which should not be in the public arena, you can say a little bit more about the operational activities which are being cut back, I invite you to do so. But, if you are of the view that that would not be prudent, I would understand.

Mr Lawler : I do not think it would be prudent.

Senator BRANDIS: Okay. That is what I thought.

Mr Lawler : But what I could say is that there will be particular issues that come before the commission which cannot be acted upon and there may be some matters which can be acted upon but where that action will have to be a staged response, or indeed a delayed response.

Senator BRANDIS: I suppose there is a deeper issue too, is there not? When you lose the capacity to do operational work because of budget cuts, not only is that work foregone but there is also a degrading of capacity, is there not, so that, if in years to come the commission were better resourced and there were a desire to re-enter those operational areas, the discontinuity in the commission's activities in a particular operational area would itself have a cost. It would be hard to quantify that cost, but there would be a cost in experience and capability.

Mr Lawler : I think that is certainly true and that is why the commission has, over the last several years, looked to try and drive as many efficiencies as we feasibly could from our supplier budget to retain staff. Indeed, we have a process underway—some very detailed capability work—so that we are very clear that, if we have to reduce staff to the quantum I spoke of, we are doing it against the context of understanding what our capability and needs are now and what our capability and needs will likely be into the future in the context of the sorts of challenges I spoke about in my opening remarks.

Senator BRANDIS: I understand that. You administer the Proceeds of Crime Act, do you not?

Mr Lawler : No, I do not believe we do.

Senator BRANDIS: Perhaps I put that badly. The disposition of proceeds of crime is something the Australian Crime Commission has an interest in, is it not?

Mr Lawler : We certainly have an interest in proceeds of crime and we work closely with the Australian Federal Police. We have a number of specialist officers from the commission attached to the Australian Federal Police's confiscated assets trust area. That should be no surprise to anybody because, as this committee has heard on many occasions and I have discussed publicly, the principal motivator for organised crime is money. So the best way of disrupting and dismantling organised crime is through their profit base.

Senator BRANDIS: Indeed, I remember a very vigorous discussion you and I had in Melbourne a few years ago about amendments to the Proceeds of Crime Act. I am well familiar with your views about this, Mr Lawler. Do you have a copy of Budget Paper No. 2—the budget measures budget paper? If you do not, it probably does not matter much, but I was—there you are; someone is helpfully bringing it to the table for you. If you go to page 83, this is the budget measure which, across the forward estimates, summarises savings or new measures in the budget—in this case, obviously, within the Attorney-General's portfolio. The very last item on page 83 has the heading 'Confiscated Assets Account—deferral of expenditure'. There are, across the forward estimates, amounts of $13.5 million for the first three out years and then $17.8 million for the last of the out years. The notation to the table is, rather cutely:

The Government will defer payments from the Confiscated Assets Account made under section 298 of the Proceeds of Crime Act 2002.

The Attorney-General's Department manages programs of expenditure under section 298 of the Act relating to crime prevention activities and provides advice to the Minister for Home Affairs on expenditure from the Account.

This measure will achieve savings of $58.3 million over four years.

Savings from this measure will be redirected to support other Government priorities.

What this means, if you pierce beneath the bureaucratic language, is that money that is in the confiscated assets account is basically being left in consolidated revenue and is not going to be paid out across the out years. That is right, isn't it? The way I have characterised it is correct, isn't it?

Mr Lawler : It is not my place to comment on this particular account or this program. As you pointed out on page 84, the Attorney-General's Department manages the program. They are here at the table, so it is best directed to them.

Senator BRANDIS: Perhaps I might wait until we have the Attorney-General's Department after dinner. But given your interest in the moneys that form the confiscated assets account I thought I would give you the opportunity to comment on this. The government has basically decided to pocket for the general revenue moneys that would otherwise be paid out on crime prevention and other related programs.

Mr Lawler : I understand your point.

Mr Lacey : I might just add that the commission has also benefited from that account in relation to the scoping study—

Senator BRANDIS: Not any more.

Mr Lacey : of $1.17 million.

Senator BRANDIS: Not under this budget. Thank you.