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Community Affairs Legislation Committee—Senate Standing—Reports on annual reports referred to legislation committees—No. 1 of 2019, dated May 2019


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The Senate

Community Affairs

Legislation Committee

Annual reports (No. 1 of 2019)

May 2019

ii

 Commonwealth of Australia 2019

ISBN 978-1-76010-922-6

Secretariat

Ms Jeanette Radcliffe (Committee Secretary)

Mr Michael Kirby (Senior Research Officer)

Ms Kathleen McGarry (Acting Senior Research Officer)

Mr Michael Finch (Research Officer)

Ms Carol Stewart (Administrative Officer)

PO Box 6100 Parliament House Canberra ACT 2600

Phone: 02 6277 3515

Fax: 02 6277 5829

E-mail: community.affairs.sen@aph.gov.au Internet: www.aph.gov.au/senate ca

This document was produced by the Senate Community Affairs Committee Secretariat and printed by the Senate Printing Unit, Parliament House, Canberra.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

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MEMBERSHIP OF THE COMMITTEE

45th Parliament

Members

Senator Lucy Gichuhi, Chair South Australia, LP

Senator Rachel Siewert, Deputy Chair Western Australia, AG

Senator Wendy Askew Tasmania, LP

Senator the Hon Lisa Singh Tasmania, ALP

Senator Dean Smith Western Australia, LP

Senator Murray Watt Queensland, ALP

iv

TABLE OF CONTENTS

Membership of the committee ......................................................................... iii

Abbreviations ....................................................................................................vii

Chapter 1.............................................................................................................. 1

Overview .................................................................................................................... 1

Terms of reference .................................................................................................. 1

Annual report requirements and purpose ............................................................... 2

Allocated portfolios and functions ......................................................................... 2

Reports examined ................................................................................................... 4

Report structure ...................................................................................................... 5

Chapter 2.............................................................................................................. 7

Annual reports of Commonwealth departments ................................................... 7

Department of Health ............................................................................................. 7

Department of Social Services ............................................................................. 11

Department of Human Services............................................................................ 14

Chapter 3............................................................................................................ 17

Annual reports of Commonwealth entities and companies ................................ 17

Health Portfolio .................................................................................................... 17

Social Services Portfolio ...................................................................................... 22

Appendix 1 ......................................................................................................... 25

Dates relating to the presentation of annual reports between 1 May 2018 and 31 October 2018 ............................................................................................... 25

Health Portfolio .................................................................................................... 25

Social Services Portfolio ...................................................................................... 27

vi

Appendix 2 ......................................................................................................... 29

List of additional documents presented to the Senate and referred to the committee that are not required to be examined under Senate Standing Order 25(20) ........................................................................................................... 29

ABBREVIATIONS

ACQSC Aged Care Quality and Safety Commission

ADHA Australian Digital Health Agency

ASADA Australian Sports Anti-Doping Authority

committee Senate Community Affairs Legislation Committee

DHS Department of Human Services

DoF Department of Finance

DoH Department of Health

DSS Department of Social Services

FOI Act Freedom of Information Act 1982

NDIA National Disability Insurance Agency

NDIS National Disability Insurance Scheme

NHFB National Health Funding Body

NICNAS National Industrial Chemicals Notification and Assessment Scheme

PBS Pharmaceutical Benefits Scheme

PGPA Act Public Governance, Performance and Accountability Act 2013

PGPA Rule Public Governance, Performance and Accountability Rule 2014

Quality Agency Australian Aged Care Quality Agency

TGA Therapeutic Goods Administration

viii

Chapter 1 Introduction

1.1 The Community Affairs Legislation Committee (committee) is responsible for examining the annual reports of departments and agencies of the Health Portfolio and the Social Services Portfolio (including the Department of Human Services).1

1.2 This report on annual reports (No. 1 of 2019) provides an overview of the committee's examination of annual reports presented to the Parliament between 1 May 2018 and 31 October 2018.

Terms of reference 1.3 Under Senate Standing Order 25(20), the annual reports of certain departments and agencies stand referred to committees for examination and assessment. Each committee is required to:

(a) examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;

(b) consider in more detail, and report to the Senate on, each annual report which is not apparently satisfactory, and on the other reports which it selects for more detailed consideration;

(c) investigate and report to the Senate on any lateness in the presentation of annual reports;

(d) in considering an annual report, take into account any relevant remarks about the report made in debate in the Senate;

(e) if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;

(f) report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year;

(g) draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and

(h) report to the Senate each year whether there are any bodies which do not present annual reports to the Senate and which should present such reports.2

1 Journals of the Senate, No. 2, 31 August 2016, pp. 75-76; Journals of the Senate, No. 84, 12 February 2018, p. 2668.

2 The Senate, Standing Orders and other orders of the Senate, August 2018, SO 25(20).

2

Annual report requirements and purpose 1.4 Annual reports are key documents under the Australian Government's performance framework for Commonwealth entities (corporate and non-corporate) and Commonwealth companies.3 Commonwealth entities and companies are obligated to report on their operations to the Parliament and, through the Parliament, to the Australian public.4

Requirements

1.5 Annual reporting requirements of Commonwealth entities and companies are specified in the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).5 Requirements for annual reporting are also made in other documents and the committee has previously reported on these requirements.6 In summary, annual reports of Commonwealth entities and companies should:

• meet the requirements of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the PGPA Rule;

• be in accordance with the reporting requirements of primary legislation; and

• be compliant with guidelines relevant to the production of annual reports.

1.6 Guidelines for the production of annual reports are produced by the Department of Finance (DoF) and provide detailed information on the reporting obligations for the different types of Commonwealth entities: non-corporate Commonwealth entities;7 corporate Commonwealth entities;8 and Commonwealth companies.9

1.7 The Senate refers annual reports to the committee for examination and report with respect to an 'apparently satisfactory' standard.10 The committee generally

3 Note, the enhanced Commonwealth performance framework is established in accordance with paragraph 5(b) of the Public Governance, Performance and Accountability Act 2013.

4 Department of Finance (DoF), Resource management guide no. 130: Overview of the enhanced Commonwealth performance framework, July 2016, p. 3.

5 There have been two updates to the PGPA Rule since the committee tabled its previous report on annual reports, see, Public Governance, Performance and Accountability Amendment (2018 Measures No. 1) Rules 2018, and Public Governance, Performance and Accountability Amendment (2019 Measures No. 1) Rules 2019.

6 See, for example, Senate Community Affairs Legislation Committee (Committee), Annual reports (No. 1 of 2017), March 2017, pp. 2-7; Committee, Annual reports (No. 1 of 2018), March 2018, pp. 2-4.

7 DoF, Resource Management Guide No. 135: Annual reports for non-corporate Commonwealth entities, May 2017.

8 DoF, Resource Management Guide No. 136: Annual reports for corporate Commonwealth entities, May 2017.

9 DoF, Resource Management Guide No. 137: Annual reports for Commonwealth companies, May 2017.

10 The Senate, Standing Orders and other orders of the Senate, August 2018, SO 25(20)(a).

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considers an annual report to be apparently satisfactory when the report is presented in accordance with relevant legislation and Australian Government guidelines, and presents information in a logical way that allows for a clear read between the entity's portfolio budget statement, corporate plan and its annual report.

Purpose

1.8 Information on the performance of Commonwealth entities provided in annual reports supports the accountability of Australia's executive government and the transparency of the allocation of public resources. The publication of annual reports is a principal opportunity for Commonwealth entities, companies, and executive governments to present information to Parliament and the broader public.

1.9 Senate committees have systematically examined annual reports since 1989, following a report by the Senate Standing Committee on Finance and Public Administration.11 The committee considers its examination of annual reports is important to ensure that annual reports include the relevant information for public accountability.

Timeliness

1.10 Commonwealth entities and companies are required to present annual reports to the relevant minister, in accordance with the timeframes provided in applicable legislation. The minister is then required to table the annual report in Parliament.12 The committee considers that it is best practice for ministers to table annual reports in Parliament no later than 31 October each year, in accordance with DoF annual reporting guidelines.13

1.11 The 2017-18 annual report of the Australian Sports Anti-Doping Authority (ASADA) was first presented to Parliament (out of sitting) on 8 November 2018.14

1.12 A document was tabled in the Senate on 12 November 2018, pursuant to subsection 34C(7) of the Acts Interpretation Act 1901, explaining that there had been a delay in providing the report to the Minister.15 ASADA stated:

For the first time in eight years, ASADA reviewed processes and sought efficiencies in relation to our survey service provider. We consequently engaged a new firm to conduct the 2018 survey which necessitated extended setup time and led to an unavoidable delay in disseminating the survey for completion and subsequent analysis of the results. This delay

11 Senate Standing Committee on Finance and Public Administration, The Timeliness and Quality of Annual Reports, June 1989, p. 41.

12 Committee, Annual reports (No. 1 of 2017), pp. 4-5.

13 DoF, Resource Management Guide No. 130: Overview of the enhance Commonwealth performance framework, July 2016, p. 7.

14 Journals of the Senate, No. 126, 12 November 2018, p. 4023.

15 Journals of the Senate, No. 126, 12 November 2018, p. 4028.

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impacted timeframes around finalisation of content for the production of the report.16

1.13 ASADA noted that while the change in survey provider had delayed the report, the survey provided the agency with a significant increase in the number of responses to inform its performance statement.17

1.14 The committee recognises that the delay in presenting the report was minimal, just over one week from the due date of 31 October 2018, and that the correct process was followed for informing the Minister and, in turn, the Parliament of the delay.

Allocated portfolios and functions 1.15 The committee is allocated portfolio oversight of the Health Portfolio, Social Services Portfolio and Human Services Portfolio.18 The lead departments within those portfolios are the Department of Health, Department of Social Services (DSS) and the Department of Human Services.19 Information on the range of Commonwealth entities and companies within the committee's portfolio allocation is available on the DoF website.20

Reports examined 1.16 This report considers four annual reports of Commonwealth entities and companies within the committee's portfolio oversight that were presented to Parliament between 1 May 2018 to 31 October 2018.

1.17 A list of the annual reports of Commonwealth entities and companies referred to the committee for examination can be found at Appendix 1.

1.18 The committee notes that 2017-18 is the last full annual reporting period for the Aged Care Complaints Commissioner and the Australian Aged Care Quality Agency. The functions of these entities were incorporated into the Aged Care Quality and Safety Commission (ACQSC), which was established on 1 January 2019.21

16 ASADA, Subsection 34C(7)—Statement relating to the delay in presentation of a periodic report—Australian Sports Anti-Doping Authority—Report for 2017-18, November 2018, (tabled 12 November 2018), p. 1.

17 ASADA, Subsection 34C(7)—Statement relating to the delay in presentation of a periodic report—Australian Sports Anti-Doping Authority—Report for 2017-18, November 2018, (tabled 12 November 2018), p. 1.

18 Journals of the Senate, No. 2, 31 August 2016, p. 75-76; Journals of the Senate, No. 84, 12 February 2018, p. 2668.

19 Note, the Administrative Arrangements Order details the policy functions of those departments and is available online at https://www.legislation.gov.au/Details/C2018Q00021 (accessed 26 March 2019).

20 Accessible via the following web address: https://www.finance.gov.au/resource-management/governance/agor/.

21 Department of Health, Annual report 2017-18, p. 176.

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Comments made in the Senate

1.19 Pursuant to Senate Standing Order 25(20)(d), the committee is obliged to consider any relevant comments made about annual reports in the Senate. The committee notes:

• comments made by Senator Rachel Siewert on the 2017-18 annual report of the Aged Care Complaints Commissioner regarding the increase in complaints made in relation to residential aged care, Home Care Packages and the Commonwealth Home Support Program;22

• comments made by Senator Jenny McAllister on the DSS annual report

regarding the operation of the National Rental Affordability Scheme;23 and

• a question asked by Senator Siewert regarding whether annual reports of the

ACQSC will include information regarding the number of calls relating to My Aged Care, and assessments completed by the Regional Assessment Service and the Aged Care Assessment Team.24

Report structure 1.20 This report is structured in three chapters, as follows:

• Chapter 1—introduction to the examination of annual reports;

• Chapter 2—examination of annual reports of lead portfolio departments; and

• Chapter 3—examination of annual reports of certain Commonwealth entities.

22 Senate Hansard, 15 October 2018, pp. 7124-7125.

23 Senate Hansard, 15 November 2018, p. 8234.

24 Senate Hansard, 26 November 2018, pp. 8499-8500.

Chapter 2

Annual reports of Commonwealth departments 2.1 The committee was referred the 2017-18 annual reports of the following Commonwealth departments for examination and report:

• Department of Health (DoH);

• Department of Social Services (DSS); and

• Department of Human Services (DHS).

2.2 The committee considers that annual reports of these Commonwealth departments are of an apparently satisfactory standard.

Department of Health 2.3 The 2017-18 annual report for DoH was tabled on 15 October 2018.1

Secretary's review

2.4 The Secretary, Ms Glenys Beauchamp PSM, reported on DoH's key areas of work for 2017-18, including:

• administration of Medicare and the Pharmaceutical Benefits Scheme (PBS) to

ensure Australians' access to healthcare, particularly: the 414 million services provided through Medicare; over 293 prescriptions filled under the PBS; and Australian Government investment of over $1 billion to restore the indexation of Medicare rebates;

• $1.78 billion of investment in Australia's health and medical research sector

through the Medical Research Future Fund, including to the Genomics Health Futures Mission and Zero Childhood Cancer clinical trial;

• support for sport and physical activity, including the 2018 Commonwealth

Games and development of a national sport plan in conjunction with Sport Australia;

• funding for public hospitals, including a five year agreement that will provide $130.2 billion from 2020-21 to 2024-25; and

• reform in the aged care sector, including over 100 000 home care packages

and over 210 000 residential aged care packages provided.2

Chief Medical Officer's report

2.5 The Chief Medical Officer, Professor Brendan Murphy, reported on clinical priorities, including:

1 Journals of the Senate, No. 122, 15 October 2018, p. 3871; House of Representatives, Votes and Proceedings, No. 141, 15 October 2018, p. 1869.

2 Department of Health (DoH), Annual report 2017-18, pp. 4-7.

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• the global challenge of antibiotic resistance, for which the over-prescription of

antibiotics is a key contributor;

• strengthening Australia's ability to respond to public health emergencies,

including development of a national action plan for health security; and

• coordinating efforts to address an outbreak of infectious syphilis in northern

and central Australia, predominately affecting indigenous communities.3

Ministerial responsibilities

2.6 As at 30 June 2018, ministers of the Health Portfolio were:

• the Hon. Greg Hunt MP—Minister for Health;

• Senator the Hon. Bridget McKenzie—Minister for Sport and Minister for

Rural Health; and

• the Hon. Ken Wyatt AM MP—Minister for Aged Care and Minister for

Indigenous Health.4

2.7 The committee notes that Senator McKenzie ceased to be the Minister for Rural Health on 28 August 2018 and that the rural health ministry no longer appears on the Australian Government ministry list.5

Reporting against performance criteria

2.8 DoH reported its key performance results across its six department-specific outcomes in its annual performance statements. DoH met the majority of its 2017-18 performance targets as follows:

• Outcome 1: Health policy, design and innovation—all 11 targets were met;

• Outcome 2: Health access and support services—11 targets were met, three

targets were substantially met, two targets were not met and five targets were reported as not having data available;

• Outcome 3: Sport and recreation—two targets were met and one target was substantially met;

• Outcome 4: Individual health benefits—28 targets were met and one target was substantially met;

• Outcome 5: Regulation, safety and protection—14 targets were met and five

targets were substantially met; and

3 DoH, Annual report 2017-18, p. 11.

4 DoH, Annual report 2017-18, pp. 22-130.

5 See, Parliament of Australia, Senator the Hon Bridget McKenzie, https://www.aph.gov.au/Senators and Members/Parliamentarian?MPID=207825 (accessed 27 February 2019); Department of Prime Minister and Cabinet, Ministry List (2 March 2019), https://www.pmc.gov.au/resource-centre/government/ministry-list (accessed 27 March 2019).

9

• Outcome 6: Ageing and aged care—13 targets were met and four were

substantially met.6

2.9 The committee observed that DoH did not meet two of its performance targets relating to reducing the child (age 0-4) and chronic disease related mortality rates for Aboriginal and Torres Strait Islander people (compared to non-Aboriginal and Torres Strait Islander people).7 The committee recognises that these performance measures account for particularly complex areas of public health. However, as the measures are not met, the committee suggests DoH should provide more detailed information in its report around the work being done towards meeting these outcomes in future years.

2.10 The committee commends DoH on meeting the majority of its performance targets. DoH provided substantive discussion around most of its performance targets and the committee considers that this provides valuable insight into the vital work of DoH during 2017-18. In its previous report on annual reports, the committee commented on the value of summarising performance targets information, and the committee welcomes DoH's inclusion of tables summarising key performance criteria results. DoH's department-specific outcomes represent complex policy and administrative responsibilities, and the use of summarised information to present performance information, coupled with more detailed discussion of results, is an effective method of reporting.

Financial reporting

2.11 In 2017-18, DoH managed over $65.6 billion in administered expenses.8 Compared to the 2016-17 financial year, administered expenses increased by $2.2 billion.9 Liabilities for 2017-18 were $3.0 billion inclusive of amounts payable under administered programs and $1.5 billion of un-submitted claims for Medicare Benefits Schedule and Pharmaceutical Benefits Scheme items.10

2.12 Of the total government expenditure in 2017-18, expenditure on health functions accounted for 16 per cent, or $76.2 billion.11 This was an increase of $1.7 billion of health expenditure from the previous financial year, although the proportion of health expenditure remained the same at 16 per cent.12

2.13 DoH achieved an operating surplus for 2017-18 of $30.2 million.13 By comparison, DoH ran an operating loss of $55.5 million in the previous financial year

6 DoH, Annual report 2017-18, p. 46.

7 DoH, Annual report 2017-18, p. 46.

8 DoH, Annual report 2017-18, p. 14.

9 DoH, Annual report 2017-18, p. 166.

10 DoH, Annual report 2017-18, p. 166.

11 Commonwealth of Australia, Consolidated Financial Statements for the year ended 30 June 2018, December 2018, p. 12.

12 Commonwealth of Australia, Consolidated Financial Statements for the year ended 30 June 2017, December 2017, p. 12.

13 DoH, Annual report 2017-18, p. 167.

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(prior to depreciation costs).14 DoH explained the circumstances contributing to the 2017-18 surplus as follows:

Additional revenues in the form of inspections, applications, conformity assessment and evaluations in the Therapeutic Goods Administration (TGA) and higher revenue from new chemicals assessments in the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) made a significant contribution to this surplus. Revenues from Government remained reasonably consistent with the prior year.

Significant expense controls were further enhanced in 2017-18. More stringent application of controls around engagement of contractors, services under contract or others and other expenses have all led to a reduction in supplier expenses. In addition, maintaining workforce levels to reflect available funding has been a key priority for the Department.15

Consultants and exempt contracts

2.14 In 2017-18, DoH awarded 548 new consultancy contracts with a value of $44.0 million.16 This was a significant decrease (55.6 per cent) of DoH's 2016-17 consultancy expenditure which totalled $99.3 million.17 However, DoH's expenditure on new consultancy contracts was still 48.6 per cent higher than the 2015-16 expenditure of $22.6 million.18

2.15 Whilst not a mandatory requirement of the Public Governance, Performance and Accountability Rule 2014, the committee encourages DoH to provide further information regarding its consultancy contracts, particularly given its highly variable year on year new consultancy expenditure.

2.16 In 2017-18, 136 DoH contracts over $10 000 were exempt from publication on AusTender as publication would disclose exempt matters under the Freedom of Information Act 1982 (FOI Act).19 This was 20 more exempt contracts than the 116 exempt contracts DoH entered into in 2016-17.20 The committee has previously suggested that DoH could consider including further information in its annual reports regarding exempt contracts, to the extent this would not adversely impact on DoH's obligations under the FOI Act. The committee notes that DoH has not provided further detail in its 2017-18 annual report.21

14 DoH, Annual report 2016-17, p. 14.

15 DoH, Annual report 2017-18, p. 167.

16 DoH, Annual report 2017-18, p. 162.

17 DoH, Annual report 2016-17, p. 224.

18 See, DoH, Annual report 2015-16, p. 243.

19 DoH, Annual report 2017-18, p. 152.

20 DoH, Annual report 2016-17, p. 225.

21 DoH, Annual report 2016-17, p. 152.

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2.17 The committee commends DoH on its annual report which provides a significant overview of its activities and performance in 2017-18.

Department of Social Services 2.18 The 2017-18 annual report for DSS was tabled on 15 October 2018.22

Secretary's review

2.19 The Secretary, Ms Kathryn Campbell AO, CSC, provided an overview of DSS' focus in 2017-18, and said:

In 2017-18 our main focus has been to ensure the welfare system is well targeted and designed to help people find employment, progressing the implementation of a quality National Disability Insurance Scheme (NDIS) and standing up a National Redress Scheme for the survivors of institutional child sexual abuse.23

2.20 Ms Campbell also provided examples of DSS' key work activities, including:

• finalising full National Disability Insurance Scheme (NDIS) arrangements with New South Wales and South Australia, and working with all states and territories to establish the NDIS Quality and Safeguards Commission;

• negotiating with the states and territories and major institutions to opt-in to the

National Redress Scheme, which was implemented on 1 July 2018;

• development of a new Humanitarian Settlement Program in conjunction with

Australian Government departments and establishing a new regional settlement location in Armidale, New South Wales;

• reforming the 1800RESPECT service resulting in 98 500 people receiving

support for family and domestic violence and sexual assault through that service in 2017-18; and

• supporting the commencement of the National Housing and Homelessness Agreement on 1 July 2018 to provide $1.5 billion in ongoing assistance to state and territory government for housing and homelessness outcomes.24

Ministerial responsibilities

2.21 As at 30 June 2018, ministerial responsibilities for the Social Services Portfolio were:

• the Hon. Dan Tehan MP—Minister for Social Services;

• the Hon. Jane Prentice MP—Assistant Minister for Social Services and Disability Services; and

22 Journals of the Senate, No. 122, 15 October 2018, p. 3871; House of Representatives, Votes and Proceedings, No. 141, 15 October 2018, p. 1869.

23 Department of Social Services (DSS), Annual report 2017-18, p. 1.

24 DSS, Annual report 2017-18, pp. 1-2.

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• the Hon. Dr David Gillespie MP—Assistant Minister for Children and

Families.25

2.22 The committee notes as at the time of this report, ministerial responsibilities for the Social Services Portfolio have changed to:

• the Hon. Paul Fletcher MP—Minister for Families and Social Services;

• the Hon. Sarah Henderson MP—Assistant Minister for Social Services,

Housing and Disability Services; and

• the Hon. Michelle Landry MP—Assistant Minister for Children and

Families.26

Performance reporting

2.23 DSS reported on its performance across the following four portfolio outcomes: social security; families and communities; disability and carers; and housing.27 DSS highlighted several key results from 2017-18, including:

• Outcome 1: Social Security—estimating the future lifetime costs of Australia's social security system and developing insights on cohorts at risk of long-term welfare dependency;

• Outcome 2: Families and Communities—delivering family and community services to approximately 2.7 million people and delivering key activities under the National Plan to Reduce Violence against Women and their Children 2010-2022 and the Third Action Plan 2015-2018 of the National Framework for Protecting Australia's Children 2009-2020;

• Outcome 3: Disability and Carers—development of the Australian

Government Plan to Improve Outcomes for Aboriginal and Torres Strait Islander People with Disability and the National Disability Strategy 2010-2020 Australian Government Action Plan;28 and

• Outcome 4: Housing—establishment of a review of the National Regulatory System for Community Housing.29

Financial performance

2.24 During the 2017-18 reporting year, DSS was responsible for $117.7 billion in government expenditure.30 This included $109.3 billion for outlays to individuals and

25 DSS, Annual report 2017-18, p. 12.

26 Department of Prime Minister and Cabinet, Ministry List, 2 March 2019, https://www.pmc.gov.au/resource-centre/government/ministry-list (accessed 27 March 2019).

27 DSS, Annual report 2017-18, pp. 16-85.

28 DSS, Annual report 2017-18, p. 64.

29 DSS, Annual report 2017-18, p. 78.

30 DSS, Annual report 2017-18, p. 104.

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$6.8 billion for 'programs, subsidies and grants to support the community'.31 This represents an increase in administered expenses of $2354.2 million, but a decrease in personal benefits of $157.1 million from the 2016-17 reporting year.32

2.25 During the reporting year, DSS received $406.8 million in departmental appropriations and generated $68.8 million in own source revenue from recoveries and other revenue, which included services rendered and rental income.33 This represents an increase in Australian Government revenue of $3.7 million and a decrease in other revenue of $19.3 million.34

2.26 The committee notes that DSS amended some of the comparative figures for departmental finances from the 2016-17 reporting year.35 DSS explained in the notes to the financial statements that '…during the 2016 and 2017 financial years, the department transferred Appropriation Act 1 funding between operating and capital as the funds were to be used for capital acquisitions.'36 However, the department has now recognised that 'accounting standards prevent this reclassification of funds between operating and capital' and therefore DSS included a detailed table in the financial statements that clearly set out the adjusted and restated figures for this year.37

2.27 DSS also noted in the financial statements that departmental own source revenue and expenses had been overstated in the 2017 financial statements because reimbursements of expenses were recognised as revenue.38 DSS advised that the restatement from revenue to expenses did not affect the department's operating result or its statement of financial position.39

2.28 The committee considers that DSS provided a clear explanation in its financial statements about which figures from the 2016-17 reporting year had been restated and why this was considered to be necessary. However, the committee considers that, in future, the department may wish to consider providing a note in the body of the report to draw to the reader's attention that the figures have been restated and are available for consideration in the financial statements.

2.29 The committee thanks DSS for another helpful, informative and compliant annual report which highlights the work and performance of the department.

31 DSS, Annual report 2017-18, p. 104.

32 DSS, Annual report 2017-18, p. 105.

33 DSS, Annual report 2017-18, pp. 105, 129.

34 DSS, Annual report 2017-18, p. 104

35 See, DSS, Annual report 2017-18, p. 104, Table 3.4.1.

36 DSS, Annual report 2017-18, p. 123.

37 DSS, Annual report 2017-18, p. 123.

38 DSS, Annual report 2017-18, p. 124.

39 DSS, Annual report 2017-18, p. 124.

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Department of Human Services 2.30 The 2017-18 annual report for DHS was tabled in the House of

Representatives and in the Senate on 15 October 2018.40

2.31 The purpose of DHS is as follows:

The department delivers payments and associated services on behalf of partner agencies; and provides related advice to government on social welfare, health and child support service delivery policy.41

Secretary's review

2.32 The Secretary, Ms Renée Leon PSM, provided a substantive overview of the work undertaken by DHS during 2017-18. Ms Leon noted the department:

• provided $173.4 billion in payments;

• paid more than 3.3 million social security claims, 62 000 aged care claims and 419 million Medicare services;

• worked with students to make more than 45 online and behind-the-scenes improvements to make it easier for students to claim and manage payments;

• continued to focus on digital transformation, including increasing the percentage of Medicare services claimed online to 97.9 per cent, adding Department of Veterans' Affairs staff to the payroll system and delivering the second tranche of welfare improvements;

• used multidisciplinary teams to plan and deliver projects in a more cohesive

way;

• improved communication with staff to promote engagement; and

• achieved its target of five per cent Aboriginal and Torres Strait Islander employees.42

Ministerial responsibilities

2.33 For the first part of the reporting year, the Hon. Alan Tudge MP was the Minister for Human Services.43 On 20 December 2017, the Hon. Michael Keenan MP was sworn in as Minister for Human Services.44

Performance reporting

2.34 DHS reported on its performance across three program areas:

• Program 1.1: Services to the Community—Social Security and Welfare;

40 House of Representatives, Votes and Proceedings, No. 141, 15 October 2018, p. 1185; Journals of the Senate, No. 122, 15 October 2018, p. 3871.

41 Department of Human Services (DHS), Annual report 2016-17, p. 2, 240.

42 DHS, Annual report 2017-18, pp. 3-5.

43 DHS, Annual report, 2016-17, p. 4.

44 DHS, Annual report, 2017-18, p. 12.

15

• Program 1.2: Services to the Community—Health; and

• Program 1.3: Child Support. 45

2.35 For Program 1.1, DHS met 13 of its 15 performance measures.46 DHS reported that the performance measures it met included the achievement of digital service standards and delivery of the following key Budget measures:

• Welfare Payments Infrastructure Transformation Budget measures;

• Strengthening the Integrity of Welfare Payments Budget measures;

• Jobs Budget measures;

• Families Budget measures; and

• Income Management Budget measures. 47

2.36 DHS also met its performance targets for both telephony and face-to-face customer service, although wait times increased slightly.48 DHS did not meet its performance targets for achieving customer service satisfaction standards (75.2% achieved against a target of 85%), or its targets for the achievement of payment integrity standards: Centrelink: Debt under recovery Budget measure (59% achieved against a target of 60%).49

2.37 For Program 1.2, DHS met 13 of its 14 performance measures.50 Some of DHS' positive results included telephony service standards for calls made to the Pharmaceutical Benefits Scheme Authority line and the My Health Record Providers line, and levels of general practitioner satisfaction with Medicare provider service delivery.51 DHS did not meet its targeted results relating to achieving customer satisfaction standards, again falling just short of the 85 per cent target.52

2.38 For Program 1.3, DHS met three out of its seven performance measures.53 Performance measures achieved included meeting its targets for the child support collection rate and its target for the percentage of active paying parents with less than one month liability outstanding.54 DHS did not meet its targets for the achievement of customer satisfaction standards, the average speed of answer for telephony services or

45 DHS, Annual report 2017-18, p. 16.

46 DHS, Annual report 2017-18, p. 167.

47 DHS, Annual report 2017-18, p. 167.

48 DHS, Annual report 2017-18, pp. 167, 174-175.

49 DHS, Annual report 2017-18, pp. 167-168, 177.

50 DHS, Annual report 2017-18, p. 178.

51 DHS, Annual report 2017-18, pp. 178-179, 183.

52 DHS, Annual report 2017-18, pp. 178, 180.

53 DHS, Annual report 2017-18, p. 186.

54 DHS, Annual report 2017-18, pp. 186.

16

for claims processed within the standard processing time.55 DHS noted that the transition to a new information technology system and the need for staff to work across two systems contributed to longer wait times for customers in the transition phase.56

2.39 The committee again recognises that DHS' approach to reporting its performance, with respect to its annual statements and stated purpose, is transparent, helpful and informative. Where targets were not met, DHS provided clear information about the outcome, the context surrounding the result and the work being undertaken to improve on its performance.57

2.40 The committee considers that including the performance measures from previous reporting years in the performance statement greatly enhances the transparency and utility of the annual report in describing the performance of the entity.

Financial reporting

2.41 In 2017-18, DHS administered $173.4 billion in payments, which is approximately 38 per cent of government outlays.58 DHS received $4297.1 million in government appropriations and generated $315.4 million in own source revenue.59 This represents an increase in governmental appropriations of $95.5 million (from $4201.6 million) and an increase in own source revenue of $70.6 million.60

2.42 DHS reported an operating surplus of $174.9 million (after adjustment for depreciation, amortisation and revaluation of the assets). This is an increase on DHS' $80.7 million operating surplus in the previous reporting period.61

2.43 As at 30 June 2018, DHS held assets totalling $2808.1 million, mostly comprised from retained appropriations and non-financial assets. Asset values increased 24.5 per cent from the same time during the previous year.62

2.44 Overall, the committee commends DHS for producing an informative, clearly presented and compliant annual report.

55 DHS, Annual report 2017-18, pp. 186, 189.

56 DHS, Annual report 2017-18, p. 189.

57 DHS, Annual report 2017-18, pp. 166-192.

58 DHS, Annual report 2017-18, p. 194.

59 DHS, Annual report 2017-18, p. 195.

60 DHS, Annual report 2017-18, p. 195, DHS, Annual report 2016-17, p. 199.

61 DHS, Annual report 2017-18, p. 194.

62 DHS, Annual report 2017-18, p. 198.

Chapter 3

Annual reports of Commonwealth entities and companies Health Portfolio 3.1 The committee received the 2017-18 annual reports of Commonwealth entities and companies within the Health Portfolio as listed at Appendix 1. The committee examined the reports of the following entities in further detail:

• Australian Aged Care Quality Agency (Quality Agency);

• National Health Funding Body (NHFB); and

• Australian Digital Health Agency.

Australian Aged Care Quality Agency

3.2 The Quality Agency was a non-corporate Commonwealth entity established under the Australian Aged Care Quality Agency Act 2013 to hold aged care providers accountable:

…for their performance against the accreditation Standards for residential aged care, the Home Care Standards for home care services, Quality Review of National Aboriginal and Torres Strait Islander Flexible Care Services.1

3.3 As noted in Chapter 1, this is the last full annual report of the Quality Agency, which ceased operation on 31 December 2018 and was superseded by the Aged Care Quality and Safety Commission on 1 January 2019.

3.4 In his report, the Chief Executive Officer, Mr Nick Ryan, focused on the Quality Agency's role in improving quality outcomes for consumers by:

• strengthening risk-based regulation to identify and respond to risk in a targeted way;

• piloting the new Aged Care Quality Standards, including new guidance material and delivering education to support providers to implement the standards;

• implementing unannounced re-accreditation audits;

• delivering a series of provider roundtables in partnership with Aged and

Community Services Australia, the Aged Care Guild and Leading Aged Care Services Australia; and

• publishing Consumer Experience Reports for residential services and commencing work on Consumer Experience Reports for home and community services.2

1 Australian Aged Care Quality Agency (Quality Agency), Annual report 2017-18, p. 4.

2 Quality Agency, Annual report 2017-18, p. 1.

18

3.5 During the 2017-18 reporting period, the Quality Agency reported against its performance criterion to ensure:

…high quality care for persons receiving Australian Government subsidised aged care through the efficient and effective delivery of services under the Australian Aged Care Quality Agency Act 2013 and in accordance with the Quality Agency Principles 2013.3

3.6 The Quality Agency exceeded all four targets set in the portfolio budget statements and it achieved 23 of the 35 performance measures set in its corporate plan.4 The Quality Agency noted that the 12 performance measures not achieved were either ongoing, including measures relating to the transition to the new regulatory regime, or that the agency was working towards meeting the measures.5

3.7 During the reporting period, the aged care sector and the operations of the Quality Agency were considered at Senate estimates and in parliamentary inquiries, including the Senate Community Affairs References Committee's inquiry into Effectiveness of the Aged Care Quality Assessment and Accreditation Framework for protecting residents from abuse and poor practices, and ensuring proper clinical and medical care standards are maintained and practised and the House of Representatives Standing Committee on Health, Aged Care and Sport inquiry into Quality of Care in Residential Aged Care Facilities in Australia.6

3.8 Aged care quality and safety continues to be an area of interest and concern to the committee. The committee notes that since the end of the reporting period the new Aged Care Quality Standards have been introduced and the Royal Commission into Aged Care Quality and Safety has commenced.

3.9 The Quality Agency's appropriation for the 2017-18 financial year totalled $27.285 million and this was supplemented by the sale $15.436 million in goods and services and $164 390 of other revenue.7 The Quality Agency recorded a break even position for the financial year, with a surplus of $9507 before depreciation and a net deficit of $1.03 million, less than the $1.37 million deficit forecast in the portfolio budget statements.8

3.10 Overall, the annual report provides a useful insight into the work of the Quality Agency and highlights some of its key achievements over the reporting year.

3 Quality Agency, Annual report 2017-18, p. 47.

4 Quality Agency, Annual report 2017-18, pp. 47-53.

5 Quality Agency, Annual report 2017-18, pp. 47-53.

6 Senate Community Affairs References Committee, Effectiveness of the Aged Care Quality Assessment and Accreditation Framework for protecting residents for abuse and poor practices, and ensuring proper clinical care standards are maintained and practised, April 2019, pp. 109-110; House of Representatives Standing Committee on Health, Report on the Inquiry into the Quality of Care in Residential Aged Care Facilities in Australia, Parliamentary Paper 109/2018.

7 Quality Agency, Annual report 2017-18, p. 44.

8 Quality Agency, Annual report 2017-18, p. 44.

19

3.11 The committee thanks Mr Nick Ryan and the staff of the Quality Agency for their hard work and looks forward to working with the Aged Care Quality and Safety Commission.

National Health Funding Body

3.12 The NHFB is a non-corporate Commonwealth entity established under the National Health Reform Act 2011 to support the obligations and responsibilities of the Administrator of the National Health Funding Pool, who is responsible for providing advice and administering payments relating to public hospital funding.9

3.13 During the reporting year, the NHFB assisted the Administrator to pay over $46 billion dollars to Local Hospital Networks by processing over 4000 banking transactions and preparing over 1800 financial reports. This is an increase on the $43.4 billion paid in 2016-17, when the NHFB made 5239 banking transactions and prepared 1788 financial reports.10

3.14 The NHFB also made progress during the reporting period towards modernising its payment systems, enhancing its integrity capabilities and strengthening the Commonwealth Contribution Model to enhance the ability of the Administrator to provide advice to the Commonwealth Treasurer about public hospital funding requirements.11

3.15 During the reporting period, the NHFB assessed its performance based on 20 performance criteria. Of these criteria, 12 were fully met, six were substantially met and two were partially met.12

3.16 The NHFB explained that some of the performance criteria relating to its reporting obligations and the production of key policy documents were hindered because the role of Administrator was vacant for the last quarter of the reporting year.13 The NHFB notes that following the appointment of the Administrator in July 2018 those criteria have now been met or are in the process of being addressed.14 The NHFB also noted that the measures that had only partially been met were prioritised in 2018-19 and have now been completed.15

3.17 In considering the NHFB report and a number of other reports submitted by non-corporate entities, the committee notes that there appears to be some confusion about the requirements relating to reporting on fraud control measures. In addition to

9 National Health Reform Act 2011, s. 251; National Health Funding Body (NHFB), Annual Report 2017-18, p. 4.

10 NHFB, Annual report 2016-17, p. 2.

11 NHFB, Annual report 2017-18, p. 19.

12 NHFB, Annual report 2017-18, p. 19.

13 NHFB, Annual report 2017-18, p. 19.

14 NHFB, Annual report 2017-18, p. 19.

15 NHFB, Annual report 2017-18, p. 19.

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section 10 of the Public Governance, Performance and Accountability Rule 2014, subsection 17AG(2) relevantly provides:

17AG Information on management and accountability

(2) The annual report must include the following:

(a) information on compliance with section 10 (which deals with preventing, detecting and dealing with fraud) in relation to the entity during the period;

(b) a certification by the accountable authority of the entity that:

(i) fraud risk assessments and fraud control plans have been prepared for the entity; and

(ii) appropriate mechanisms for preventing, detecting incidents of, investigating or otherwise dealing with, and recording or reporting fraud that meet the specific needs of the entity are in place for the entity; and

(iii) all reasonable measures have been taken to deal appropriately with fraud relating to the entity;

(c) an outline of the structures and processes that are in place for the entity during the period to implement the principles and objectives of corporate governance;

3.18 The committee notes that departments and agencies have interpreted the requirement for certification differently. In some cases, entities have included a stand-alone statement signed by the accountable authority that certifies that the appropriate fraud control measures are in place.16 Some other entities have included the statement in the transmittal letter that is signed by the accountable authority to satisfy the requirement.17

3.19 The NHFB, like a number of other agencies during the reporting period, has provided information in its annual report that advises that 'all reasonable measures to appropriately deal with fraud' including investigation and detection measures have been taken and that an appropriate system of risk management exists that complies

with section 10 of the Public Governance, Performance and Accountability Act 2013 and the Commonwealth Fraud Control Policy.18

3.20 The committee considers that these statements satisfy the requirement in rule 17AG(2)(a), but do not satisfy the requirement in paragraph 17AG(2)(b).

16 See, Department of Health, Annual report 2017-18, p. 140.

17 See, National Health and Medical Research Council, Annual report 2017-18, p. iii; Australian Sports Anti-Doping Authority, Annual report 2017-18, p. v.

18 NHFB, Annual report 2017-18, p. 60.

21

3.21 This confusion is understandable as there appears to be little to guide non-corporate entities about this aspect of their reporting requirements.19 The committee considers that certification requires the statement to be made over the signature of the accountable entity. This could be either in the transmittal letter or elsewhere in the annual report.

3.22 While this may seem technical, the Australian Institute of Criminology's report, Statistical Report 07: Commonwealth fraud investigations 2015-16, found that the Commonwealth lost $25.6 million due to fraud in 2015-16.20

3.23 The committee takes this opportunity to remind entities about the importance of fraud measures and proper reporting on them. To instil confidence in the proper use of public money, the committee would like to invite non-corporate entities to provide a greater level of detail about their fraud detection and deterrence measures in future annual reports.

3.24 The committee thanks the NHFB for an excellent report that provides clear insight into the work of the NHFB in supporting the Administrator and provides a transparent account of the operations of the agency.

Australian Digital Health Agency

3.25 The Australian Digital Health Agency (ADHA) is a corporate entity established under the Public Governance, Performance and Accountability (Establishing the Australian Digital Health Agency) Rule 2017.

3.26 The ADHA exists to 'improve health outcomes for Australians through the delivery of digital innovation, health systems and services'.21 The ADHA's primary products and services include the My Health Record system, the Healthcare Identifiers Service, National Authentication Service for Health, Secure messaging delivery, Australian Medicines Terminology, SNOMED-AU and clinical document specifications.22

3.27 Chapter 2 of ADHA's annual report focussed on performance. In that chapter, the ADHA provided significant detail about the work that it is undertaking to meet the goals of the agency, including detail about the National Digital Health Strategy and its priority activities. However, the committee would have appreciated a clear statement about whether each performance target had been met.

19 The Explanatory Memorandum to the Public Governance, Performance and Accountability Amendment (Non-corporate Commonwealth Entity Annual Report) Rule 2016, Australian Government, Commonwealth Fraud Control Framework 2017, p. C19 and the Attorney-General's Department, Resource Management Guide 201: Protecting, detecting and dealing with fraud, August 2017, p. 22 state the certification requirement but do not provide further guidance about the requirement.

20 Australian Institute of Criminology, Statistical Report 07: Commonwealth fraud investigations 2015-16, June 2018, p. viii.

21 Australian Digital Health Agency (ADHA), Annual report 2017-18, p. 16.

22 ADHA, Annual report 2017-18, p. 17.

22

3.28 While the ADHA provided a table which described its 'outcome' against each target, where a target had not been met, no additional information was provided.23

3.29 The ADHA noted that the targets for the reporting year did not take into account the December 2018 targets, which it considered were 'the focus for much of the Agency's work'.24

3.30 The committee recognises that entities may not always meet their targets, or that their primary work objectives and the reporting year may not necessarily align. However, where work is ongoing or progress is still being made toward the objective, the committee considers a brief statement could be included that explains whether the agency is taking action to ensure that the objective will be met in the next reporting year.

3.31 The committee considers that the absence of those statements made it somewhat difficult to achieve a clear read between the portfolio budget statements, the corporate plan and the annual report to obtain a clear picture of the performance of the ADHA and suggests that the ADHA may wish to revisit its layout for the next reporting year.

3.32 The committee considers the ADHA's report to be satisfactory.

Social Services Portfolio 3.33 The committee was referred the 2017-18 annual reports of Commonwealth entities and companies within the Social Services Portfolio as listed at Appendix 1. The committee selected the National Disability Insurance Agency's (NDIA) annual report to examine in further detail.

National Disability Insurance Agency

3.34 The NDIA is a corporate Commonwealth entity established under the National Disability Insurance Scheme Act 2013 to implement the National Disability Insurance Scheme. The NDIS represents a significant part of the Commonwealth Government's National Disability Strategy 2010-2020.

3.35 The NDIA's annual report for 2017-18 details major achievements and challenges in the agency's operation as it entered the fifth year of the scheme's rollout, including significant growth in participation rates (from 90 638 participants in 2016-17 to 183 965 in 2017-18)25 and the addition of Western Australia to the scheme.26

3.36 As in previous years, the Scheme Actuary, Ms Sarah Johnson, reported on several pressures on the scheme that 'require management responses' as part of the

23 ADHA, Annual report 2017-18, pp. 74-75.

24 ADHA, Annual report 2017-18, p. 74.

25 National Disability Insurance Agency (NDIA), Annual report 2016-17, p. 19; NDIA, Annual report 2017-18, p. 68.

26 NDIA, Annual report 2017-18, pp. 7-8, 70.

23

financial sustainability report, including: higher than expected numbers of children in the scheme with autism, developmental delay and sensory disabilities; lower than expected numbers of people transitioning out of the scheme after early intervention; and higher than expected costs for shared support accommodation.27

3.37 In the committee's assessment of the NDIA's annual report for 2016-17, it commented on these financial pressures:

Whilst not a requirement under the PGPA Rules, the committee encourages the NDIA to consider if noting its response to the pressures on the scheme would enhance the completeness of its reporting.28

3.38 The committee is pleased to see that the NDIA's annual report for 2017-18 includes discussion of management responses to financial pressures.29

3.39 The committee notes that the annual performance statements included in the NDIA's annual report were well presented and clearly linked to the corporate plan and the portfolio budget statements, providing comprehensive footnotes explaining corrections and/or deviations between the three performance framework documents.30

3.40 Commentary provided about performance against each target was of particular assistance in instances where targets were not achieved. For example, despite significant growth in the number of scheme participants, the NDIA did not meet its participation target as set out in the portfolio budget statements (i.e. the number of participants entering the Scheme as per bilateral agreements and actuarial forecasts) - the total number of participants at 30 June 2018 represented only 76 per cent of the scheme-to-date bilateral estimate and 69 per cent of the 2017-18 actuarial estimate. However, the commentary included in the annual performance statements explains that these figures reflect:

…existing challenges within the Scheme, including the difficulty in locating people transferring to the Scheme from state-based programs, the rapid growth of the Scheme, and the geographic diversity of participants.31

3.41 The committee acknowledges these challenges faced by the NDIA and commends the agency on achieving a 90 per cent operational target for participation, where 90 per cent of participants who could be contacted, who met access requirements and whose records were provided received approved participation plans.32

3.42 The committee considers the report of the NDIA to be satisfactory.

27 NDIA, Annual report 2017-18, p. 59.

28 Senate Community Affairs Legislation Committee, Annual reports (No. 1 of 2018), p. 24.

29 NDIA, Annual report 2017-18, p. 60.

30 NDIA, Annual report 2017-18, pp. 65-69.

31 NDIA, Annual report 2017-18, p. 68.

32 NDIA, Annual report 2017-18, p. 68.

24

Senator

Lucy Gichuhi

Chair

Appendix 2

List of additional documents presented to the Senate and referred to the committee that are not required to be examined under Senate Standing Order 25(20)

• Tobacco Advertising Prohibition Act 1992—Report for 2017

• Australian Institute of Health and Welfare—Australia’s health 2018—

Sixteenth biennial report

• NHMRC Embryo Research Licensing Committee—Report on the operation

of the Research Involving Human Embryos Act 2002 for the period 1 September 2017 to 28 February 2018

• National Rural Health Commissioner—Report for the period 11 November to

31 December 2017

• National Health and Medical Research Council—National Statement on

Ethical Conduct in Human Research 2007, updated May 2018

• Medical Indemnity Act 2002—Costs of the Australian Government’s run-off

cover scheme for medical indemnity insurers—Report for 2016-17

• Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act

2010—Costs of the Australian Government’s run-off cover scheme for midwife professional indemnity insurers—Report for 2016-17

• Australian Radiation Protection and Nuclear Safety Act 1998—Direction

under section 41 of the Act

• Australian Sports Commission (Sport Australia)—Corporate plan for 2018-22

• National Health and Medical Research Council (NHMRC)—Corporate plan for 2018-19

• Australian Radiation Protection and Nuclear Safety Agency—Quarterly report

for the period 1 January to 31 March 2018

• Australian Radiation Protection and Nuclear Safety Agency—Quarterly report

for the period 1 January to 31 March 2018

• Final budget outcome 2017-18—Report by the Treasurer (Mr Frydenberg)

and the Minister for Finance (Senator Cormann), dated September 2018

• Australian Radiation Protection and Nuclear Safety Agency—Quarterly report

for the period April to June 2018