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Audit Act - Auditor-General - Reports - No. 22 - National broadcasting transmitting facilities - Report


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The A uditor - G eneral

Audit Report No. 22 1989-90

National broadcasting transmitting facilities

The Auditor-General A u d it R ep ort N o. 2 2 1 9 8 9 - 9 0

N a tio n a l b r o a d c a stin g tr a n s m ittin g fa c ilitie s

A ustralian Government Publishing Service, C anberra

© C om m onw ealth of A u stralia 1989

ISBN 0 644 11063 5

T h is w o rk is co p y rig h t. A p a rt from a n y u s e a s p e rm itte d u n d e r

t h e C o p y rig h t A c t 1 9 6 8 , n o p a r t m a y b e r e p r o d u c e d b y a n y

p ro c e s s w ith o u t w ritte n p e rm issio n fro m th e D irec to r P u b lish in g

a n d M a r k e tin g , A G P S . I n q u i r i e s s h o u l d b e d ir e c te d to th e

M an ag er, GPO B ox 84, A G PS P ress, C a n b e rra , ACT 2601.

S u p p le m e n ta r y V olu m e to t h is R ep ort title d :

T he A uditor-G eneral A udit R eport No.22 1989-90

N ational b roadcasting tra n sm ittin g facilities: supp lem en tary volum e

ISBN 0 644 11062 7 Cat. No.89 2091 5

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA PARLIAMENTARY PAPER

2 95 of: 1989 O rdered to be printed by authority ISSN 0727-4181

Printed in Australia by R. D. Rubie, Commonwealth Government Printer, Canberra

AUSTRALIAN AUDIT OFFICE

A ustralian Audit Office C anberra, ACT 29 November 1989

Dear Mr President Dear Mr Speaker

In accordance with the provisions of sub-section 48F(8) of the Audit Act 1901, I tran sm it to the Parliam ent a copy of my report, which includes a supplem entary volume, signed on 29 November 1989, on an efficiency audit of the National broadcasting transm itting facilities.

Yours sincerely.

. C · '

J . C. Taylor Auditor-General

The H onourable the President of th e Senate, The H onourable the Speaker of the House of Representatives,

Parliam ent House, C anberra, ACT

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Contents

Page

Overview vii

1. National broadcasting transm itting facilities

1.1 Introduction 1

1.2 History 1

1.3 Size and funding of National Network 3

1.4 Administrative arrangem ents 5

1.5 Audit scope and conduct 10

2. Summary o f audit findings

2.1 Review history 12

2.2 Administrative arrangem ents 13

2.3 Capital works program 15

2.4 O perations and m aintenance program 17

2.5 E xternal broadcasting - Radio A ustralia 18

2.6 Financial adm inistration 20

2.7 Conclusion 22

3. D evelopm ent of new contract

3.1 Introduction 23

3.2 AAO review 23

3.3 Impact of new contract 24

3.4 Finalising the contract 26

3.5 Conclusions 26

4. Summary o f recom m endations and respon ses 28

4.1 Review history 29

4.2 Administrative arrangem ents 30

4.3 Capital works program 31

4.4 O perations and m aintenance program 36

4.5 Radio A ustralia external broadcasting 44

4.6 Financial adm inistraion 46

4.7 New contract 64

Appendix 1. Acronyms 66

Appendix 2. Series titles 67

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OVERVIEW

T his report re p re se n ts th e outcom e of a detailed and comprehensive review of the adm inistration of national broadcasting transm ission facilities. The adm inistration is com plex in v o lv in g fo u r s e p a ra te C om m onw ealth

G overnm ent bodies, th e D epartm ent of T ransport and Com m unications (DTC), the A ustralian Telecommunica­ tions Corporation (Telecom) (through one of its business u n its the Telecom B roadcasting Directorate [TBD]), the A ustralian B roadcasting Corporation (ABC) and the Spe­

cial B ro a d ca stin g Service (SBS). In addition, m any commercial broadcasters in non-m etropolitan areas use the facilities to tran sm it their program m es to the viewing and listening audiences.

D u rin g th e c o u rs e of th e a u d it in fo rm a tio n on th e

m anagem ent and operation of the facilities was obtained from all interested parties. Extensive discussions were held with th e four Com m onw ealth bodies and w ritten m aterial on all aspects w as also provided. Discussions w ere held w ith re p re s e n ta tiv e s of th e F ed eratio n of

A u s tra lia n C o m m ercial T elevision S ta tio n s a n d th e Federation of A ustralian Radio B roadcasters. All parties provided full co-operation to the A ustralian Audit Office (AAO) representatives and their assistance with the con­

duct of the review is gratefully acknowledged.

Because of the extensive nature of the audit, the report h a s a su p p lem en ta ry volum e co n tain in g the detailed findings. The report contains brief background on the development and adm inistration of the facilities, a sum ­

m a ry of th e a u d it fin d in g s , c o m m e n ts on th e

development of proposed new contractual arrangem ents betw een DTC and Telecom and a sum m ary of the recom­ m endations flowing from the audit. This sum m ary also includes a response to each recom m endation by the four

Commonwealth bodies associated w ith the adm inistra­ tion and use of the facilities.

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The supplem entary volume contains a sum m ary of pr vious reviews of the adm inistration of the facilities an d isc u sse s in som e detail th e ad m in istrativ e arrangi m e n ts for fu n d in g a n d c o n tro l of th e facilities an

planning and im plem entation of the capital works prc gram. The m anagem ent of the on-going operations an m aintenance functions is also reviewed. A separate sec tio n d e a ls w ith th e a d m in is tr a tio n of fa c ilitie s fo

A u s tra lia ’s e x te r n a l b ro a d c a s tin g p ro g ra m - Radi A u stra lia . The volum e also c o m m e n ts on financia m anagem ent of th e program including the existing am

proposed contractual arrangem ents w ith Telecom.

Major findings of the review The key issues arising from the audit relate to:

• uncertainty concerning present in ten tio n s relating ti th e ow nership of elem ents of n a tio n a l broadcasting f a c ilitie s a n d a r r a n g e m e n ts fo r fu n d in g ongoing operations and m aintenance of the facilities

• d if f ic u ltie s b e in g e n c o u n te r e d in p la n n in g anc

im p le m e n tin g G o v e rn m e n t p ro g r a m s fo r the

development and expansion of the netw ork within the time frames and expenditure levels originally envisaged by Government

• th e a d eq u acy a n d a p p ro p ria te n e s s of perform ance standards and monitoring of the inform ation systems to ensure cost-effective operations and m aintenance

• determ ination of optim um levels of staffing designed to e n s u re s a tis fa c to ry an d econom ic o p e ra tio n s an d m aintenance

• th e p a rlo u s s ta te of facilities p rovided for ex tern al broadcasting and the need for co-ordinating machinery to assess need and priorities, and

• deficiencies in the present cost plus arrangem ents for financial m anagem ent of the program.

Recent developments D uring the course of th e audit in itiativ es were tak en aim ed at overcoming a num ber of the problem s outlined in the report. In particular the D epartm ent and Telecom commenced negotiations for the developm ent of a new

viii

c o m m e rcially o rie n te d c o n tr a c tu a l a rra n g e m e n t to replace the existing cost plus agreem ent implemented in 1981. At th e tim e of w riting th is rep o rt negotiations were nearing completion and various aspects of the new a rra n g e m e n ts w ere a lre a d y b ein g in tro d u c e d . The D epartm ent believes th a t these new arrangem ents will rem ed y m an y of th e d iffic u ltie s u n d e rly in g th e a d ­ m inistration of the facilities.

The AAO fully supports the development of a new con­ t r a c t u a l a r r a n g e m e n t w h ic h s h o u ld le a d to

im provem ents in perform ance sta n d a rd s and m onitor­ ing, project m anagem ent, asset m anagem ent, balancing staffing against needs, and financial m anagem ent and reporting. A m ajor concern in the development of the new contract is the limited extent to which the broad­ casters, the end u sers of the services, have been involved

in the contract negotiations.

A nother area of concern which is now being addressed is the state of the external broadcasting facilities. It is u n ­ derstood th a t a review is proceeding w ith a view to a thorough evaluation of Radio A u stra lia ’s transm ission needs. Funds were provided in the 1989-90 Budget to remedy immediate problem s at the Shepparton Station.

Possibly the m ost significant issue requiring resolution is the question of the m ost appropriate arrangem ent for m anagem ent of the facilities. This issue is of particular concern to the broadcasters, especially the ABC and the

SBS. Although they are the end u sers of the facilities, which affect the quality of reception by their audiences, they are not directly responsible for the provision of the

service. In th eir com m ents to the AAO they have fre­ quently expressed concern about the adequacy of their involvem ent in th e p lanning and m anagem ent of the facilities.

The issue h a s been exam ined by previous reviews in ­ cluding the 1981 Committee of Reviews of the A ustralian B roadcasting C om m ission (Dix Committee). The Dix Committee report commented in some detail on the ad­ m in istratio n of b ro ad castin g facilities. A lthough the

G overnm ent only p a rtia lly a c c e p te d th e C om m ittee recom m endations on th is m atter, th o se recom m enda-

ix

tions still rem ain to be im plem ented. The AAO recogi nises th a t th is is a complex issue and a wide range o: competing interests needs to be considered. However iii believes it m ay now be an appropriate time to considee again w hether th e present arrangem ents represent the. m ost effective m ethod of providing and maintaining the national broadcasting networks.

Responses

In th eir resp o n ses to the proposed report the Depart·, m ent and the ABC provided some general comments oar the outcome of the efficiency audit. The m ain elements! of these com m ents are set out below.

Departmental comment: The D e p a rtm e n t a p p re c ia te s th e e ffo rts of Auditor- G e n e ra l’s s ta f f in p ro d u c in g t h i s re p o rt on thee

ad m in istratio n of n atio n al tra n sm ittin g facilities and, while it feels the AAO could have ta k en some issues fur­ th e r and h as m inor disagreem ents w ith the construction: p la ce d on som e sp ecific in c id e n ts , th e Department! agrees with m ost of the report’s recom m endations.

The D epartm ent h a s been aw are of deficiencies in the a d m in istra tio n of n a tio n a l b ro a d c a stin g tra n sm ittin g facilities for a n u m b er of years and h a s p u t considerable effo rt in to id e n tify in g an d se e k in g to co rrect these:

deficiencies.

The d epartm ental review of w orking arrangem ents fo r the facilities, conducted in 1984, w as initiated because:: of concerns held w ithin the D epartm ent. This review'1

catalogued num erous deficiencies and was followed upr with concerted action for their rectification. However, as; th e D e p artm en t w orked on th e p ro b le m s, it became aw are of the lim itations placed on its ability to imple­ m e n t c o m p re h e n s iv e s o lu tio n s b y th e te rm s and

conditions of the 1981 agreem ent with Telecom.

Following this, a specific review of arrangem ents for the operation and m aintenance of national transm itting sta­ tions was initiated in 1987 in a n attem pt to influence the working arrangem ents directly, in a way not open to the D epartm ent under the 1981 agreem ent.

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A fter a c o n sid e ra b le in v e stm en t of re s o u rc e s by th e D epartm ent it was decided that the working group estab ­ lis h e d to c o n d u c t th is review w as n o t p ro g re s sin g

quickly enough tow ards its objectives. The D epartm ent redeployed th e reso u rces to p u rsu e direct negotiations w ith Telecom on a new, more commercially oriented con­ tr a c tu a l a rra n g e m e n t a s a m e a n s of ach iev in g th e

objectives of th e review and of resolving m any of the deficiencies identified in the existing arrangem ents.

The proposed new c o n tra c tu a l a rran g em en t h a s been developed to the point where the D epartm ent is now con­ fident th at it will contribute to a significant improvement in the relationship betw een the D epartm ent and Telecom

an d m eet m ost of th e recom m endations m ade in th is report.

The other m ajor issu e s arising out of the findings con­ cern the relationship betw een the D epartm ent and the national broadcasters, th e ABC and the SBS.

The adm inistration of th e Com m onwealth transm itting facilities is a complex m atter.

As AAO has recognised, these facilities not only include th e a c tu a l t r a n s m i t t e r s w hich b ro a d c a s t p ro g ra m s

generated by th e tw o n a tio n a l b ro a d c a ste rs, b u t the

transm itting sta tio n s provide th e infrastructure for the tr a n s m is s io n of a n e s tim a te d 80% of c o m m e rc ia l

television services in non-m etropolitan areas, for major segments of Telecom’s tru n k telephone network, and for a ra n g e of s m a lle r , b u t n e v e r th e le s s im p o r ta n t,

radiocom m unications services.

G overnm ent control of these significant m ulti-purpose transm ission facilities m aterially assists accommodating the often competing dem ands of the various users.

The ongoing o p eratio n and expansion of the facilities w hich deliver ABC an d SBS p ro g ram s to the general public is an im portant policy consideration for Govern­ m ent. The D epartm ent agrees th a t the issues identified

by the AAO relating to the effectiveness of the National B roadcasting S ervices D evelopm ent Council (NBSDC) an d the T ra n sm issio n Planning Com m ittees (TPC) in providing scope for th e b ro a d c a ste rs to m ake an ap-

xi

propriate input to th e planning of new services, should be addressed as recom m ended by AAO.

ABC Comment: The ABC does not consider the cu rren t ownership arran­ gem ents to be satisfactory from either the ABC’s point of view or from a n atio n al perspective. In th e main dis­

s a tis f a c tio n s te m s fro m th e la c k of c o n tro l and

independence accorded to the ABC by th e se arrange­ m e n ts a s well a s c o n c e rn s over th e ir efficiency and

effectiveness.

The ABC c an n o t be a tru ly in d e p e n d e n t b roadcaster until such time as it controls all aspects of both program production and program transm ission. As indicated in

the M inister’s Second Reading Speech w hen the ABC Act w as introduced into the Parliam ent in 1983, the inten­ tion of the Government at th at time w as to reinforce the independence of the ABC by enabling the ABC to control its transm itters and to provide the ABC w ith the same control over its transm issions as commercial and public broadcasters sharing national transm itting stations. Ac­ cordingly the Act m akes it m andatory for the Minister to transfer ownership of ABC transm itters to th e ABC and m akes it optional to tra n sfe r complete transm itting s ta ­ tions to the ABC. As th e report points out, no action has yet been taken to tra n sfe r either tra n sm itte rs or sites to the ABC. However, even if action were to be taken in th is regard, to be properly independent an d to have the

same control as commercial and public broadcasters the ABC would need to have the transm ission budget allo­ cated to it together w ith budget responsibility and would also need to be m ore responsible for its own planning

and for providing new and replacem ent facilities.

Despite the fact th a t the ABC is the m ajor end user it

has little influence in m aking the final decision when it comes to planning the location of new services, replacing existing services or upgrading existing services. Even the standards governing th e quality of program signals are decided between the D epartm ent and Telecom with little consultation w ith th e ABC. N evertheless, as the end u se r the ABC is generally held responsible by the public for breakdow ns, loss of signals, poor reception, lack of services and all other problem s associated with

xii

transm ission of ABC services. Yet the ABC has very little authority to address these complaints.

Until such time as the ABC h a s control over the same a sp e c ts of th e tra n sm issio n ch ain as th e com m ercial broadcasters, it will continue to be a t a competitive dis­ advantage. The ABC is not seeking any advantage over th e c o m m ercials b u t b elieves t h a t all b ro a d c a s te rs

should operate on a ‘level playing field’.

Certainly the new contract will not reduce the potential conflict of interest identified by the Dix Committee be­ tween the D epartm ent being responsible for advising the

M in iste r on th e re g u la tio n of th e ra d io fre q u e n c y

spectrum , including th e allocation of frequencies, while at the same time owning and operating the largest tra n s­ m ission network in the country.

The new c o n tra ct will also do n o th in g to red ress the

anom aly of c o n tin u in g d e p a rtm e n ta l involvem ent in m ajor operational m atters. The th ru s t of recent Govern­ m ent micro-economic reform s h a s been for less direct involvement in operational m atters. This has been par­ ticu larly tru e in th e T ra n sp o rt an d C om m unications portfolio, which h as seen regulatory control over Telecom rem oved a n d tra n s fe rre d to th e A u stra lia n Telecom ­ m unications A uthority (AUSTEL) and th e handing over of

operational responsibilities from the D epartm ent of Avia­ tio n to the Federal A irports C orporation and the Civil Aviation Authority.

In view of th e im p o rtan ce of th e tra n s m itte rs to the

delivery of ABC services w hether the existing ownership a rran g em en ts rem ain or not, it is im p o rtan t th a t the

ABC be involved to a m uch greater extent in discussions involving the new contract.

In our view these problem s are partly the result of a fun­ dam ental flaw in the existing ow nership and operating structure, involving as it does a tripartite arrangem ent betw een th e D e p artm en t, Telecom an d th e ABC and w h ere the tr a n s m is s io n n e tw o rk is c o n tro lle d by a

Government D epartm ent and not a broadcaster who is accountable to its audiences.

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Chapter 1.

N ation al b r o a d c a s tin g tr a n s m ittin g f a c i li t i e s

L.l Introduction 1.1.1 The natio n al b ro ad castin g service in A ustralia comprises three m ain elements:

(a) program p ro d u ctio n and p re se n ta tio n by th e ABC and SBS

(b) the relay of television and radio program s between studios and to transm itting stations by Telecom and AUSSAT, and

(c) th e tra n sm issio n of program s to th e public. The

planning an d financing of tra n sm ittin g facilities is undertaken by the DTC w ith Telecom acting as the D e p a rtm e n t’s a g e n t in p ro v id in g , o p eratin g and m aintaining these facilities.

1.1.2 This audit focused on the adequacy and effective­ n ess of the present arrangem ents for th e third of these elements, i.e., provision, operation and m aintenance of the national broadcasting transm itting facilities.

L.2 History 1.2.1 The Postm aster-G eneral’s D epartm ent (PMG) was responsible for th e physical provision, operation and m aintenance of th e national broadcasting transm itting facilities when the national broadcasting commenced in

1928. PMG undertook the planning role for the national service tran sm itters u n til 1949 w hen the function was tra n s fe rre d to th e A u s tra lia n B ro a d ca stin g C ontrol Board (ABCB). In 1976 the ABCB was abolished and the technical planning and specifications functions for the

National Broadcasting Service were subsequently tra n s ­ ferred to the M inister in 1977 with the detailed work

1

National high power main transmitting station

ABN2 Gore Hill, Sydney, New South Wales.

photo courtesy Department of Transport and Communications

2

b ein g perform ed by e n g in ee rin g a n d te c h n ic a l s ta ff redeployed to h is D epartm ent. Additional staff required for other activities associated w ith the adm inistration of broadcasting facilities were diverted from other functions

over time. Since the changes to adm inistrative arrange­ m e n ts in 1 9 8 7 th e M in is te r fo r T r a n s p o r t a n d

Com m unications h a s been the M inister responsible for planning.

1.2.2 While th e n a tio n a l b ro a d c astin g tra n sm ittin g facilities were originally intended for u se by the ABC, their use has since been extended to th e SBS and a su b ­ stantial proportion of commercial television broadcasters

outside the capital cities. Commercial broadcasters who share the national facilities are required to pay a fee for their use. In some instances national services are tra n s ­ m itted from sites developed by commercial organisations

(often b ro a d c aste rs) a n d a fee is p aid to the private

owners.

1.3 Size and funding of national network 1.3.1 At D ecem ber 1987 th e tra n sm issio n netw ork comprised 581 tra n sm itte rs and translators. There is no

consolidated record of th e total value of the transm ission facilities but it is estim ated to be some $400-500 million. Through this netw ork the vast majority of the population have access to at least one Government funded television

a n d radio service. T he d evelopm ent of the S econd

Regional Radio N etw ork (SRRN) will re su lt in a large proportion of the population having access to two ABC radio services by 1995. In addition to th e domestic ser­ v ices, p ro g ram s a re a lso tra n s m itte d th ro u g h th re e

R adio A u stra lia sh o rt-w av e tra n s m ittin g sta tio n s at Shepparton in Victoria, Carnarvon in W estern A ustralia and Darwin in the N orthern Territory.

1.3.2 Expenditure on national transm itting facilities, including Radio A ustralia, is funded through Budget ap­ p ro p ria tio n s to DTC an d SBS. The following table

shows estim ated expenditure for 1987-88 and 1988-89.

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1987-88 1988-89 $000 $000

O perations and M aintenance 58845 64830

Capital Works and Services 12278 24216

Total 71123 89046

1.3.3 These figures exclude costs associated with ad­ m in is tr a tio n p ro v id e d by th e D e p a r tm e n t (ab o u t

$2.5 million per annum), the ABC and the SBS, and in­ clude expenditure in cu rred on funding electricity costs an d som e m a in te n a n c e c o sts for b ro a d c a s te rs (other th a n th e ABC an d th e SBS) u tilisin g Com m onwealth facilities.

National transmitter station

ABN4 Mt. Oxley, Bourke, New South Wales. <

photo courtesy Department of Transport and Communications

A Administrative arrangements 1.4.1 Under the A ustralian Broadcasting Corporation A c t 1983 th e C om m onw ealth is re sp o n sib le for th e

p ro v isio n of fa c ilitie s for th e tra n s m is s io n of ABC

programs. Similarly u n d er the Broadcasting Act 1942, the provision of SBS transm itting facilities rests with the Minister.

1.4.2. The roles an d responsibilities of the principal parties involved in the development and use of national transm itting facilities are:

)epartment of Transport and Communications. 1.4.3 Prime responsibility for th e national transm ission facilities rests with the National Broadcasting Branch of the C om m unications O perations Division which is lo­ cated in Canberra. This B ranch h as three sections, viz

E ngineering an d P lan n in g , O p eratio n s, and Develop­ m ent, and contains about 40 staff. Approximately half of the staff are engineers and technical officers involved in planning and overseeing the development of national

ra d io a n d te le v is io n tr a n s m is s io n fa c ilitie s . The

re m a in d er are clerical s ta ff re sp o n sib le for financial m anagem ent of the facilities program including the ad­ m inistration of sh arin g arrangem ents w ith commercial broadcasting and of a n agency agreem ent with Telecom

for the provision and m aintenance of the facilities.

1.4.4. In addition to planning new services for the ABC and SBS, the D epartm ent is also responsible for plan­ ning other developm ents for n atio n al facilities arising from G overnm ent d e cisio n s. G overnm ent decisions

relating to the clearance of television from Band II and th e provision of facilities for E q u alisatio n in regional areas are m ajor program s th at have to be incorporated in the planning process. Also provision m ust be made for the upgrading or replacem ent of existing facilities.

\ustralian Telecommunications Corporation 1.4.5 Telecom acts as the agent of the Department in th e design, p ro c u re m e n t, in sta lla tio n , operation and m aintenance of the facilities.

1.4.6 In late 1983 Telecom established a Broadcasting Directorate as a largely autonom ous u n it to undertake

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all work associated with the tra n sm issio n facilities. At J u n e 1988 the D irectorate employed 925 staff on a full time basis. The D irectorate’s staff w as augm ented in the more remote locations by local Telecom staff for ‘first-in' m aintenance su p p o rt (am ounting to 20 staff years) and by other Telecom su p p o rt services for m aterial supply, in d u s tria l re la tio n s a n d personnel services. Telecom ch arg es the D ep artm en t and SBS th e full costs of all la b o u r, m a te ria l, in c id e n ta l a n d o v e rh e a d expenses together with a 10% ‘profit’ margin.

Australian Broadcasting Corporation and the Special Broadcasting Service. 1.4.7 The principal involvement of the ABC and SBS in the development and operation of the transm ission net­

work is through th e ir participation in th e NBSDC and TPC. The NBSDC includes the Chief Executives of the D epartm ent, th e ABC an d the SBS an d is intended to

oversee the overall p lan n in g , d evelopm ent and m ain­ tenance. The TPC contain representatives from the two b r o a d c a s tin g o r g a n is a tio n s , th e D e p a r tm e n t and

Telecom and w ere e sta b lish e d to review policies and practices regarding national tra n sm itte rs an d to advise th e M inister on th e exercise of h is s ta tu to r y respon­

sibility for the planning of ABC and SBS services.

Commercial broadcasting 1.4.8 M achinery h a s been established for the Depart­ m e n t to c o n s u lt w ith c o m m e rc ia l b r o a d c a s te r s in

relation to the developm ent of the n ational transm ission network. Because of economic and technical advantages agreem ents have been m ade with com m ercial television operators to share sites. However th ere h a s been only limited sharing of radio transm itting facilities, but this m ay increase w ith th e advent of FM radio in regional

areas.

Ownership and sharing of facilities 1.4.9 G enerally, n a tio n a l b ro a d c astin g tran sm ittin g stations in the State C apitals are used solely for ABC or SBS services an d in rem ote ru ra l lo c atio n s solely for ABC services. The D epartm ent h a s estim ated th at 80%

of com m ercial television services in regional areas are broadcast from Commonwealth sites. In th e se locations

6

the station m ay be shared with other broadcasters, with Telecom for te le c o m m u n ic a tio n s p u rp o s e s a n d w ith o th e r G overnm ent a n d p riv ate u s e r s , p rin cip ally for radiocom m unications purposes. On a shared site each

u s e r norm ally provides a tra n s m itte r, program in p u t equipm ent and relay links for its own use. The item s provided by the site owner and shared by other u sers in ­ c lu d e a c c e s s r o a d s , b u ild in g s (in c lu d in g a ir

conditioning), power supplies, m ast or tower, aerial sys­ te m s , m u ltip le x e q u ip m e n t a n d o th e r a s s o c ia te d

equipment.

Commercial translator station

WIN3 Brokers Nose, Wollongong, New South Wales.

photo courtesy Department of Transport and Communications

7

1.4.10. The majority of national transm itting facilities are located on land owned or leased by the Department. In som e cases n a tio n a l facilities are located on land

owned by Telecom. In a comparatively sm all num ber of cases national tra n s m itte rs are located on other sites and th e D epartm ent h a s entered into agreem ents with the owners for the use of their facilities.

National and commercial translator station (shared)

ABN3 and GTS5 Borthwicks Hill, Port Lincoln, South Australia.

photo courtesy Department of Transport and Commications

8

Black Mountain Tower, Australian Capital Territory.

photo courtesy Department of Transport and Communications

9

Agreement between Department and Telecom 1.4.11 An ag reem en t betw een th e D ep artm en t and Telecom was signed by the Secretary of the Department

In S e p te m b e r 1981 a n d th e A c tin g C h ie f G e n era l

M anager of Telecom in October 1981. The introduction to the agreement includes the following principles:

• the relationship betw een the D epartm ent and Telecom is one of principal and agent

• the national transm itting stations and th eir equipment rem ain the property of the Commonwealth at all times

• th e p a r tie s re c o g n is e th e im p o r ta n c e of m ak in g

optim um use of Commonwealth Governm ent resources and facilities and of achieving economic and effective operation of national and Radio A ustralia facilities, and

• there is a willingness on the part of Telecom to make its broadcasting expertise available to the D epartm ent, as required.

1.4.12 There are detailed clau ses in th e agreem ent

relating to the form ulation and m anagem ent of the capi­ tal works program. It also sets out procedures relating to th e th re e y e a r a n d a n n u a l o p e ra tio n s a n d m a in ­

tenance program s and procedures for recovering costs and m aintaining accounting records.

1.4.13 A separate arrangem ent, between the Minister an d Telecom , covering th e provision of b ro a d c astin g facilities a t B lack M o u n tain Tower in th e A u stralian Capital Territory w as signed in 1980.

1.5 Audit scope and conduct 1.5.1 The audit exam ined the adequacy and effective­ n e ss of th e provision, o p eratio n an d m a in ten an ce of transm itting facilities. Existing adm inistrative arrange­ m e n ts betw een th e DTC, Telecom, th e ABC an d SBS were also reviewed.

1.5.2 The co-operation and assistance provided during the course of the audit by staff of DTC, Telecom, ABC, SBS, the Federation of A ustralian Commercial Television Stations and the Federation of A ustralian Radio Broad­ casters are gratefully acknowledged.

10

1.5.3 After a prelim inary examination, th e decision to conduct the audit w as advised to the four agencies in­ volved in February 1988 and fieldwork began in April 1988. The report was not transm itted to the Parliament w ithin the intended twelve m onths of initiation of the

audit for the following reasons:

• th e c o m p le x ity of e x p lo rin g th e a d m in is tr a tiv e

r e la tio n s h ip s b e tw e e n th e v a r io u s a g e n c ie s w as

under-estim ated

• as a result of staff movement during the period, for a substantial portion of the latter p art of the audit it was m ore cost-effective to have only one officer dedicated full-time, and

• th e p re p a ra tio n of new c o n tra c tu a l a rra n g e m e n ts

betw een th e D e p a rtm e n t an d Telecom tow ard s the planned end of th e a u d it was considered sufficiently im portant to w arran t extended exam ination.

1.5.4 Originally budgetted for 2595 ho u rs of audit

effort, the audit used 3961 hours. The cost of the audit was $262204. The relevant bodies were kept informed of audit findings and views as they progressed throughout the period of the audit and have been extensively con­

sulted on recom m endations.

11

Chapter 2.

S u m m a r y o f a u d it f in d in g s

2.1 Review history 2.1.1 The arra n g em en ts for the provision, operation and m aintenance of th e n ational tra n sm itte rs have in the p a st been subject to a series of reviews. A num ber of these reviews w as initiated by the D epartm ent because

of concerns about the operation of the program . Similar problem s have been identified by all of th e se reviews especially in relation to the operation and m aintenance of th e transm ission facilities. It w as noted th a t while som e deficiencies h a d b e en rem ed ied a s a re su lt of

review recom m endations, a num ber of the problems pre­ viously identified still existed and needed to be resolved.

2.1.2 The AAO found th a t many of the provisions of the c o n tra c tu a l agreem ent signed by th e D epartm ent and Telecom in 1981 are not being observed. Further, the agreem ent does not cover some im portant aspects such

as monitoring of cost effectiveness and negotiation with th ir d p a rtie s. In com m on w ith som e of th e earlier j

reviews the AAO concluded th at the cost-plus nature of the agreem ent m ade it cum bersom e to adm inister and its effective m anagem ent imposed resource intensive re­ quirem ents on the D epartm ent.

2 .1 .3 A c o n s u lta n c y review c o m m issio n e d by th e ■

D epartm ent early in 1988, provided the foundation for a new com m ercially o rie n te d c o n tra c t p re s e n tly being negotiated between the D epartm ent and Telecom. This

audit h a s recommended th a t these negotiations take into a c c o u n t the c o n c lu sio n s an d re c o m m en d a tio n s con­ tained in the earlier reviews and in the AAO review. The D e p a rtm e n t h a s a d v ise d th e AAO th a t m a n y of th e

problems identified in previous reviews will be overcome under the new contract. The AAO believes th a t the ef­ ficiency and effectiveness of the program could have

12

been improved if the provisions of the 1981 agreement h ad been more closely observed by both parties in the period.

2 .1 .4 Effective m onitoring of th e p re sen t agreem ent would require more resources th a n are presently avail­ able and th e developm ent of m ore re so u rce efficient control m echanism s is highly desirable. The D epartm ent

h a s advised th a t a m ajor criterion in the development of the new contract with Telecom h a s been to seek the in­ tr o d u c tio n of p r o c e s s e s t h a t c a n be a d m in is te re d

effectively w ithin the resources available.

2.1.5 The success or otherwise of the new contract in im proving a d m in istra tio n of th e facilities will depend u p o n a c le a r u n d e rs ta n d in g a n d o b serv an ce of th e

re sp ec tiv e ro le s a n d re s p o n s ib ilitie s by each p a rty

coupled with a recognition of th e objectives, capabilities an d co n strain ts associated w ith the operations of the other parties. This will entail a free and frank exchange of inform ation and the establishm ent of m achinery for

the prompt identification and resolution of adm inistra­ tive issues as they arise.

1.2 Administrative arrangements 2.2.1 The AAO examined the existing adm inistrative a r­ ra n g e m en ts for m an ag em en t a n d c o n tro l of n a tio n a l broadcasting facilities. This exam ination indicated th a t funding arrangem ents were not consistent with legisla­ tion.

2.2.2 The existing arrangem ents are th a t moneys for the operation and m aintenance of national transm itting facilities are appropriated to the D epartm ent and SBS who, in accordance with a contractual agreement, reim ­

burse Telecom for expenses incurred, plus a margin for profit. Legislative changes in 1983 indicate that the ABC w as to be responsible for the operation and m aintenance of transm itters and for the associated costs. However, at

th e time of th e a u d it, costs asso ciated with ABC te r­ re s tria l tra n s m ittin g facilities w ere being paid from Budget appropriations to the D epartm ent.

13

2.2.3 Similarly, the arran g em en ts in relatio n to the

SBS appear to be inconsistent with c u rren t legislation. The legislation indicates th a t the SBS should be receiv­ ing broadcasting services w ithout charge, however funds for operations and m aintenance and electricity are in­ cluded in moneys appropriated to the SBS.

2.2.4 This report recom m ends th a t arrangem ents for the ow nership of, and th e funding of costs associated w ith ABC and SBS tra n sm issio n facilities be clarified

and th a t future arrangem ents be consistent with all the relevant legislative provisions.

2.2.5 The ABC in its responses to th is report has put

the view th at a fundam ental flaw in the adm inistration of the facilities is the tripartite nature of the arrangem ent involving the national broadcasters, the D epartm ent and Telecom. Also as there is no direct relationship between

th e b ro a d c a s te r an d service c o n tra cto r, th e arran g e­ m ents are inherently inefficient and unstable. The ABC proposes a review of alternative options in collaboration with the Department, Telecom and the SBS.

2.2.6 The D epartm ent agrees th a t the tripartite arran­ gem ent creates some difficulties and requires the parties to p u t more effort into m aking the relationships work. It also points out th a t various organisational models have been proposed in the p a st b u t none have been found

more acceptable. The D epartm ent will, nevertheless, co­ operate in a further review of the arrangem ents.

2.2.7 This Office su p p o rts the proposed review on the general principle th a t any public organisation should be responsible for its in p u ts and outp u ts - w here possible th e o rg an isatio n sh o u ld specify th e services required from others, be placed in a position to adequately fund those services, be responsible for m onitoring the services provided and be acountable to the G overnment. Any such arrangem ent should properly assess fu tu re capital requirem ents and funding sources.

2.2.8 At the time of writing this report the Department and Telecom were in the process of negotiating new con­ t r a c t u a l a r r a n g e m e n ts r e la tin g to th e p ro v is io n ,

o p eratio n and m a in te n an c e of tra n s m ittin g facilities.

14

The participation of th e b ro ad castin g bodies in these n e g o tia tio n s h a d b e e n lim ite d to re s p o n s e s to th e

D e p artm en t’s re q u e s ts for provision of com m ents on transm ission stan d ard s. While it is acknowledged th at th e D ep artm en t is th e d o m in a n t agency th ro u g h its

responsibility for appropriated funds, the AAO considers th a t, in view of legislative provisions, the SBS’s funding arrangem ents and th e role of th e two national broad­ casters as m ajor u sers of the transm ission facilities, it w ould be ap p ro p riate for the n ational broadcasters to

have a greater involvement in the development of con­ tractual arrangem ents.

2.3 Capital works program 2.3.1 The audit exam ined the arrangem ents for the ad­ m in is tra tio n of th e c a p ita l w orks program to a sse ss w h e th er th e p la n n in g , c o n stru c tio n an d financing of

f a c ilitie s w ere b e in g m a n a g e d in a n e ffic ie n t an d

economic m anner.

2.3.2 The following deficiencies were identified in the capital works planning processes:

• th e r e is d o u b t t h a t th e NBSDC a n d th e TPC a re

achieving th eir purpose of providing the ABC and the SBS with a g re a te r role in th e p la n n in g of n atio n al

facilities. D issatisfaction h a s been expressed by these broadcasters in th e achievem ents of the Council, and th e C om m ittees have not p u rs u e d a n active role in longer term planning and overseeing the m anagement of

the transm ission system , as is envisaged by th eir term s of reference

• the D epartm ent h a s generally underestim ated the costs an d time req u ired to im plem ent m ajor capital works proposals. Significant slippage h a s been noted in a num ber of G overnm ent-approved program s and it is unlikely th a t the proposed tim etables and expenditures approved by the Government can be achieved

• c o n c e rn h a s b e e n e x p re s s e d over th e ageing an d

deterioration of n ational broadcasting facilities b u t a system atic program for replacem ent was not initiated until 1988. Delays in planning a replacem ent program have led to th e p o ssib ility of a d e g ra d a tio n in th e

transm ission of broadcasting services

15

• th e re have been d e lay s in fin alisin g a n n u a l capital

works program s and arrangem ents for the co-ordination of p la n n in g a c tiv itie s do n o t a p p e a r to be working satisfactorily. There were delays in determ ining project requirem ents and issuing statem ents of specifications, sufficient lead time w as not given for the purchase of e q u ip m e n t, a n d a d d itio n a l d e lay s w ere c a u s e d by e n g in e e rin g d iffic u ltie s a n d th e d eliv ery of faulty equipm ent. To avoid th e se problem s, a co-ordinated strategy should be developed

• c u rre n t procedures for th e reporting of progress and expenditure on capital w orks projects do not comply w ith th e a g re e m e n t b e tw e e n th e D e p a rtm e n t and

T elecom and have n o t e n a b le d th e D e p a rtm e n t to

m onitor or to exercise full control over the capital works program. There are indications of significant variations betw een initial e stim a te s and re q u isitio n s an d final costs b u t little evidence th a t these variations have been s u b je c t to o n g o in g rev iew . T h e p ro p o s e d new

contractual arrangem ents include provision for linking progress paym ents to construction m ilestones, and

• the D epartm ent h a s not issued or endorsed standards or guidelines for the national broadcasting facilities to be constructed by Telecom. D epartm ental staff have little control over p u rch ase or installation procedures, and are not in a position to assess the cost effectiveness of facilities co n stru cted . The lack of s ta n d a rd s may h a v e c o n tr ib u te d to th e e x is tin g p ro life r a tio n of

e q u ip m e n t ty p e s w h ic h h a s im p lic a tio n s for

m a in te n a n c e c o s ts . S ta n d a r d s h a v e n o t been

formalised for standby facilities and th is can impact on in v e stm e n t d e cisio n s a n d m a in te n a n c e c o sts. The D e p a r tm e n t h a s a d v is e d t h a t it d o e s n o t have

a p p r o p r ia te r e s o u r c e s o r e x p e r tis e to e s ta b lis h

c o m p re h e n s iv e s t a n d a r d s a n d g u id e lin e s

independently.

2 .3 .3 T h is re p o rt re c o m m e n d s t h a t th e ro le s and

responsibilities of the NBSDC and the TPC be reviewed to assess w hether alternative arrangem ents would pro­ v id e im p ro v e d c o - o r d in a tio n a n d p la n n in g . The

tim etable associated with m ajor capital works programs sh o u ld be exam ined a n d revised. F u rth e r, a co-or­

d in a te d s tra te g y s h o u ld be jo in tly d e v e lo p e d to

16

determ ine p rio rities an d tim etables for fu tu re capital works programs.

2.4 Operations and maintenance program 2.4.1 The operations and m aintenance of the national broadcasting facilities were reviewed in order to assess

the efficiency and effectiveness of the adm inistrative pro­ cedures developed by th e D epartm ent and Telecom.

2 .4 .2 U n d er th e 1981 c o n tra c tu a l a g re em e n t th e

D epartm ent is required to determ ine perform ance stan d ­ ards and Telecom determ ines the level at which facilities will be m aintained. The development of operational and perform ance sta n d a rd s h as been a slow process and ac­

tion is currently in h a n d to produce agreed standards. Liaison between th e D epartm ent and the prime u sers of the national facilities is limited, with the result th a t the ABC and the SBS have not h ad a close involvement in

se ttin g th e s ta n d a rd s . O p eratio n s a n d perform ance s ta n d a rd s have b e e n issu e d w ith in Telecom b u t th e standards are not complete and have not received endor­ sem en t by th e D e p artm en t or n a tio n a l b ro ad casters. This report recom m ends th a t the D epartm ent finalise the

development of s ta n d a rd s in conjunction with Telecom and with representatives of the ABC and SBS. Recent contractual negotiations have resulted in the inclusion of standards relating to m ost transm itting facilities in the proposed new contract.

2.4.3 Telecom operates a com puter system to record the reliability of transm itting facilities, however the data collected have not been effectively analysed and utilised. T h is re p o rt re c o m m e n d s t h a t T elecom provide th e

D epartm ent, the ABC and th e SBS w ith regular su m ­ m ary reports of perform ance nationally and by service and th a t regular m eetings be held by the Departm ent, Telecom, the ABC and the SBS to examine performance

data and consider th e need for indepth analysis. Addi­ tio n a l re p o rtin g is e n v isa g e d u n d e r p ro p o se d new

contractual arrangem ents.

2.4.4 There is a lack of clarity regarding the respon­ sibilities of the D epartm ent and Telecom for monitoring

17

the cost effectiveness of national services an d neither party h a s been actively involved with th is monitoring ac­ tion. Cost recording p ractices (such a s recording the costs of shared facilities at a site against a single service at th a t site) have impeded the assessm ent of tru e costs, the com parison of cost effectiveness of services, deter­ m ination of staff resources required at each location and th e com parison of th e a c tu a l cost of s h a re d facilities with fees recovered for sharing. This report recommends th a t responsibility for m onitoring cost effectiveness be clearly defined by the D epartm ent and th a t comparative costs of various categories of service be m onitored and reported by Telecom. C osts of operating and m aintain­ ing s h a re d b ro ad castin g facilities sh o u ld be recorded separately from th e cost of m aintaining individual ser­ vices. Some progress in th is respect h as been made in the context of the proposed new contract, however, final

details of information to be provided were still subject to negotiation at the time of writing th is report.

2.4.5 Since 1987, equipm ent at attended stations has b e e n pro g ressiv ely a u to m a te d a n d th is h a s led to a

reduction in staffing levels and costs. Earlier action to autom ate stations could have saved m illions of dollars in s ta ff c o sts . AAO b eliev es th a t th e D e p a rtm e n t and

Telecom should w ork closely to g eth er to e n su re th a t staffing levels, and hence costs, are kept to a minimum consistent with satisfactoiy levels of perform ance. They sh o u ld jo in tly determ in e a notional staff distrib u tio n n ecessary for the satisfacto ry and economic operation and m a in ten an ce of th e facilities. M ethodologies for designing m aintenance d istricts and determ ining staff

required in each district should be stan d ard ised between all S tates to promote consistency and cost effectiveness. If the proposed new contract is im plem ented it is likely th a t the determ ination of staffing will be reviewed in a s­ sociation with annual renewal of the contract.

External broadcasting - Radio Australia 2.5.1 The audit review w as aim ed at evaluating the

practices and procedures involved with the transm ission of Radio A ustralia's program s. Prime focus w as on the capability of the tran sm issio n facilities to broadcast to

18

the preferred targets of Radio A ustralia in a cost effective m anner.

2.5.2 There is considerable evidence indicating the need for substantial capital works expenditure if Radio A ustralia is to m aintain or increase its current level of coverage. The need for attention to the capital require­

m e n ts h a s b e e n k n o w n for so m e y e a r s , how ev er

p ro p o s a ls h av e n o t b e e n in c lu d e d in c a p ita l w orks

program s. In a paper prepared by the Director of Radio A ustralia in Ju ly 1988, it was estim ated th a t the cost of rectifying the problem s at Shepparton, Darwin and Car­

narvon would be approxim ately $36 million. The paper estim ated th a t the cost of upgrading the facilities to pro­ vide better coverage of th e prime target areas would be a further $52 million.

2.5.3 A threshold issu e th a t needs to be resolved before e n te rin g in to a n y m a te ria l c a p ita l co m m itm e n ts is

Government consideration of the rationale and objective for Radio A ustralia an d how priorities, both long and short term, are to be determ ined. This would include an assessm ent of the need to m aintain facilities capable of p ro v id in g t r a n s m is s io n s a t th e c u r r e n t level or to

upgrade the facilities to enhance reception in priority target areas.

2.5.4 A fu rth e r im p o rtan t issu e is th e lead time re­

quired to enable facilities to be designed, purchased and constructed. In view of the deteriorating condition of m any of the existing facilities it a p p e a rs th a t u n le ss

early action is tak en there will be a degradation of exist­ ing services.

2.5.5 At present a n u m b er of G overnment agencies ex­ ercise some in flu en ce an d control, b oth directly and in d irectly , over th e o p eratio n of Radio A ustralia b u t th e r e is no sin g le a g e n c y p ro v id in g overall policy

guidance and developing long term strategies. As a con­ sequence, there does not appear to be a coherent plan to identify and address the short and long term needs of Radio Australia. In the absence of a single body respon­

sible for managing the external broadcasting activity the AAO believes there is a need for a formal co-ordinating

19

committee to a ssess priorities and to provide advice to the M inister/G overnm ent on overall needs and funding.

2.5.6 The target audience has a significant impact on both production an d tran sm issio n costs. Overall, the cost of broadcasts for the Asian region is at least three tim es th a t of b ro ad casts to the Pacific. As production costs and transm ission facilities are heavily influenced by decisions relating to target audiences it is essential th a t these three elem ents be considered as p a rt of an in­ tegrated development strategy.

2.6 Financial administration 2.6.1 AAO reviewed the arrangem ents relating to the fin an cial a d m in istra tio n of the n a tio n a l broadcasting transm itting facilities w ith the object of identifying op­ p o r tu n i tie s fo r g r e a t e r eco n o m y , e ffic ie n c y and

effectiveness.

2.6.2 The full costs of providing the ABC and the SBS tra n sm ittin g services are not clearly identified in Ap­ propriation Acts, and a s a result m isleading conclusions can be drawn about the total costs of providing each ser­ vice. C u rren t d e p a rtm e n ta l and Telecom accounting

system s do not distin g u ish in detail betw een costs for tran sm ittin g ABC program s and costs for other users. T h is re p o rt re c o m m e n d s th a t th e D e p a rtm e n t and

Telecom record and report separately the costs of provid­ ing services for each u s e r of national facilities and for providing common usage facilities. It is not clear that

th is recom m endation will be covered by the reporting ar­ rangem ents contained in the proposed new contract.

2.6.3 The agency agreem ent between the Department and Telecom was reviewed by AAO and it w as concluded th a t num ero u s m a tte rs were either not covered or re­

quired clarification. The D epartm ent and Telecom had not prepared a n agreed docum ent or m an u al defining re sp o n sib ilitie s a n d s e ttin g out fin a n c ial provisions, s ta n d a rd s , directions an d processes. A review of the agreem ent is currently underway, however the Depart­ m ent h a s involved the ABC and SBS in th e review only by seeking comment on transm ission stan d ard s. This report recom m ends th a t th e D epartm ent an d Telecom finalise the development of the new agreem ent, ensuring

20

th a t a tte n tio n is given to m a tte rs w h ich req u ire in ­

clusion, clarification or form alisation and as m entioned earlier th at the ABC and SBS are actively involved in the agreement.

2.6.4 AAO considered examples of th e exchange of in­ form ation betw een th e D ep artm en t, Telecom and the SBS and noted lack of detail in estim ates and claims and the absence of logical b ases in planning reductions in

program costs. It w as found th a t the D epartm ent had n o t esta b lish e d its info rm atio n req u irem en ts, and in some cases m ade little use of inform ation obtained. The

D epartm ent w as slow to forward inform ation to Telecom on capital works requirem ents, and Telecom was slow to provide inform ation on actual costs. W hen forwarded, th e costing d a ta lacked sufficient detail for monitoring

and analysis by the D epartm ent or the SBS. This report recom m ends th a t th e D e p artm en t, SBS and Telecom define and agree th eir inform ation needs and give formal com m itm ents to provide th a t inform ation in full and in accordance w ith specific tim etables. These m atters as re lated to th e D epartm ent and Telecom are being ad­ dressed as p art of th e negotiations associated with the new contractual agreem ent.

2.6.5 The D epartm ent is responsible for ensuring the proper m anagem ent of Commonwealth assets under its control, however there is a lack of consolidated records

of assets. This report recom m ends th a t the Department, in conjunction with Telecom, develop a common system to record a ss e ts an d rep o rt on a sse t holdings. Once

again, the proposed new contractual arrangem ents seek to p u t in place an appropriate register of assets and pro­ cedures for its m aintenance.

2 .6 .6 The AAO n o te d som e o th e r financial m a tte rs

relating to practices w ithin the D epartm ent. Purchase ord ers were n o t issu e d to Telecom for operations and m aintenance expenditures, and one Telecom invoice for $1 740 000 w as paid twice. This report recom m ends th a t the D epartm ent issue pu rch ase orders for opera­ tions and m aintenance expenditure and th a t the Supply

and Accounts Section in the D epartm ent improve its ac­ counting procedures.

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2.7 Conclusion 2.7.1 Many of the problem s and deficiencies noted by AAO in th is report have been know n for a num ber of years, and yet little improvement had resulted. The cost

plus arrangem ent betw een the D epartm ent and Telecom is cum bersom e, a n d re q u ire s s ta n d a rd s a n d costing processes to be form alised in detail. Additionally, there are no incentives inherent in a cost plus arrangem ent for the agent to improve efficiency. These factors lend sup­ p o rt to th e m o re c o m m e rc ia lly o r ie n te d c o n tra c t

presently being negotiated and add weight for its early finalisation.

2.7.2 A num ber of recom m endations concerning these p ro b lem s have b een m ade w hich AAO co n sid ers will result in improvements in adm inistrative processes. It is recommended th a t the D epartm ent, in conjunction with Telecom, the ABC and the SBS, take action to improve

the m anagem ent and control of its transm itting facilities, having regard to the detailed findings and recommenda­ tio n s o u tlin e d in t h i s re p o rt. R e c o m m e n d a tio n s

considered to have th e h ighest prio rity are those as­ sociated with finalising a n arrangem ent acceptable to all p a r tie s a n d th o s e a s s o c ia te d w ith th e P la n n in g

Committees’ operations.

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Chapter 3.

D e v e lo p m e n t o f n e w c o n t r a c t

3.1 Introduction 3.1.1 As m entioned above, at the time of writing this report the D epartm ent and Telecom were negotiating a new co n tract for c a p ita l w orks, operations and m ain­ te n a n c e , m o n ito rin g of n e tw o rk p e rfo rm an c e, a sse t m anagem ent and reporting and financial adm inistration.

3.2 AAO review 3.2.1 Between S ep tem b er 1988 an d J u n e 1989 the

D epartm ent provided th e AAO w ith various drafts of the proposed contract an d accom panying docum entation in­ cluding a M aintenance Support Specification (MSS). The

docum entation w as examined to a ssess w hether th is in­ itia tiv e , if im p le m e n te d , w o u ld p ro v id e b e tte r

m anagem ent and control over expenditure on broadcast­ in g f a c ilitie s a n d o v e rc o m e th e a d m in is tra tiv e

deficiencies identified during th e course of the audit.

3.2.2 Some im provem ents which could result from im­ plem entation of the drafts seen by the AAO in Ju n e 1989 include:

• introduction of firm prices for p articu lar services to be provided by Telecom

• setting up of operational perform ance standards

• more regular and detailed perform ance reporting

• a n n u al certification of station perform ance and asset m aintenance conditions

• ongoing review of staffing allocations for m aintenance

• clear identification of additional costs associated with the introduction of new services and facilities

• improved control over assets, and

23

• improved content and tim eliness of financial reporting to th e Department.

3.3 Impact of new contract 3.3.1 The D epartm ent h as advised the AAO th a t the proposed contract will overcome m any of the problems stem m ing from the contractual relationship between the D epartm ent and Telecom identified in th is report and in previous reviews. Brief comment by th e AAO on issues raised in this report and the possible im pact of the draft contract provided to the AAO on these issu e s is outlined below.

Issues raised Possible im pact

F u n d in g and ow nership of facilities

No effect

R esponsibilities of the D e p artm en t a n d Telecom re q u ire some clarification

Largely clarified

Lack of sta n d a rd s S ta n d a rd s developed (but

n o t com plete) for tra n s ­ m ission perform ance - capital w orks to be

developed a s contract is im plem ented

In a d eq u ate perform ance a n d financial re p o rtin g S ignificant im provem ent

A ppropriate Telecom staffing levels High level m onitoring by th e D e p artm en t

in tro d u ce d

Lack of control over a s s e ts C ontrol greatly im proved

P rocedures for com m issioning of facilities Not in clu d ed in contract

C onsultation a n d co­ o rd in atio n w ith reg ard to p lan n in g of capital w orks

Not affected by contract

C o n tractu al provisions n o t being observed P aym ents m ay be related to activities perform ed

C apital works tim etables n o t realistic Not affected by c o n tra ct

Little sta n d a rd isa tio n of equipm ent Not affected by co n tract

Inadequate an a ly sis of tran sm issio n p erform ance M ajor in crease in provision of raw d a ta needing

an aly sis

D a ta integrity for reco rd in g tran sm issio n faults Not affected by co n tract

M easures of cost- effectiveness

More d a ta on costs of individual services will be rep o rted , b u t com parative an a ly sis is required

C osts for sh a re d facilities no t recorded sep a rately C osts to b e recorded sep a rately

Radio A ustralia facilities deteriorating Not affected by co n tract

No docum ent fully defining responsibilities a n d procedures

U seful im provem ent

No au d it of Telecom ac co u n ts by th e D e p artm en t

Not re q u ired u n d e r a firm price contract

Little reference to c o n s u lta ­ tion w ith n a tio n al b ro a d ­ c a ste rs

Little change

Provision for b re a c h of agreem ent a n d a rb itra tio n Reference to breaches only apply to Telecom a n d no

provision for arb itratio n

Tim ing of claim s Tim ing defined

R esponsibility for negotiating w ith third p artie s

Not in clu d ed in co n tract

Use of Telecom site s/C o m m ­ onw ealth site s by T elecom / C om m onw ealth/others

Not in clu d ed in co n tract

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S ta n d a rd s for accom m odation a n d vehicles

V arious costs no t included

R eporting of new costs

A pportioning of o verheads

T a rd in e ss of the D ep artm en t a n d Telecom in exchanging inform ation

In a d e q u a te analysis of fin an cial inform ation

C alculation of fees ra te s for sh a rin g

Incom plete billing of s h a re rs

3.4 Finalising the contract 3.4.1 During the course of the audit, the AAO was in ­ form ed by the D epartm ent th a t the proposed contract would be finalised and in force by 1 Ju ly 1989. How­

ever, significant negotiations were taking place at the tim e of writing th is report, which m ay resu lt in major changes to the proposed contract.

3.4.2 Given th a t m ajor variations from th e contract d ra fts m ay s till o c c u r th e view s of th e AAO on the

docum entation m ay have to be revised in the light of developments.

3.5. Conclusions 3.5.1 Implementation of the draft contract reviewed by th e AAO co u ld le a d to im p ro v ed s t a n d a r d s , a s s e t

m a n a g e m e n t, p r o je c t m a n a g e m e n t, p e rfo rm a n c e

m onitoring, b alan c in g of staffing a g a in st needs, and

Not re q u ired u n d e r a firm price co n tra ct

Telecom responsibility to detei m ine co sts included in price

Provision for price variations in co n tra ct

Telecom to apportion overheacc a s p a rt of ten d ered price

C o n tract im poses time limits < « Telecom to provide informatioi b u t does n o t require the D e p artm en t to provide inform ation to o ptim ise forward p lan n in g by Telecom

D e p artm en t to receive d ata

requiring an a ly sis

A dditional costing inform ation to be m ade available to the D e p artm en t

Not affected by contract

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financial reporting and monitoring. However, num erous problem s associated with the adm inistration of national broadcasting facilities will not be affected by the new ar­ rangem ents.

3.5.2 The actual im pact of a new arrangem ent is totally dependent on the agreem ent finally reached and docu­ m ented, and w hether the parties fully implement these arrangem ents. In the p a st both parties did not fully ob­

s e rv e th e c o n d itio n s of t h e i r 1981 c o n tr a c tu a l

arrangem ents.

3.5.3 The AAO believes th a t the development of the new contract would have benefitted from increased consult­ atio n with the ABC an d the SBS. If the SBS rem ains re sp o n sib le for a d m in is tra tio n of ex p en d itu re on its transm itters the new contract will establish a precedent for any subsequent contract negotiated by SBS. Also th e r e would be m e rit in o b taining th e views of bo th

broadcasters as the principal end-users of the services being provided.

3 .5 .4 The AAO h a s recom m ended th a t the new contract be seen as a first step in the development of improved procedures for the adm inistration of the national broad­

casting transm itting facilities. F urther development and refinem ent of th e c o n tra ct should commence im m edi­ a te ly an d s h o u ld involve fu ll c o n s u lta tio n w ith

appropriate elem ents of the D epartm ent, Telecom, the ABC and the SBS.

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Chapter 4.

S u m m a r y o f r e c o m m e n d a t io n s a n d r e s p o n s e s 38888

This section contains a listing of the recommendations arising from the audit exam ination of the adm inistration of n a tio n a l b ro a d c a stin g tra n s m ittin g facilities. The responses to these recom m endations by the parties in­ volved in the adm inistration and use of the facilities is

shown immediately after each separate recommendation.

1. AAO recom m ends that the Departm ent, in con­ ju n ctio n with T elecom , the ABC and th e SBS, take action to improve th e m anagem ent and control of its transm itting facilities, having regard to th e detailed

fin d in g s and r e c o m m e n d a tio n s o u t lin e d in th is

report.

DTC Agrees; the D epartm ent w as conscious of the need for improved arrangem ents for the m anagem ent of Common­ w ealth tra n sm issio n facilities w hen it encouraged the

estab lish m en t of th is audit. The D epartm ent has in­ v e s te d s u b s t a n t i a l r e s o u r c e s in d e v elo p in g an

arrangem ent with Telecom, in the form of a more com­ m ercially oriented c o n tra c t, w hich b e tte r defines the roles of the parties and clearly specifies all the tasks to be perform ed and the inform ation requirem ents of the D epartm ent and the broadcasters (ABC and SBS).

T e le c o m Supports the response from the ABC.

ABC Existing arrangem ents are inefficient prim arily because of th e c o n fu s e d t r i p a r t i t e a r r a n g e m e n ts involving

ABC/DTC/Telecom and merely tightening up the current arrangem ents will not resolve the underlying fundam en­ tal flaw in the existing arrangem ents. The Department,

ABC and SBS should review all of the alternative options

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for ownership and m anagem ent of ABC/SBS tra n sm it­ tin g f a c ilitie s a n d m ak e r e c o m m e n d a tio n s to th e

Government.

SBS Strongly agrees th a t action be tak en to improve m anage­ m ent and control of transm itting facilities.

1. Review history 2 . AAO recom m en ds (Section 1.7.10) that negotia­ tio n s for th e in tro d u c tio n o f th e new co n tra ctu a l arrangem ents w ith Telecom take in to account con­ clusions and recom m endations contained in previous reviews and in th is report.

DTC Agrees; a num ber of the AAO’s recom m endations h as al­ ready been ta k e n into a cco u n t in negotiation of new contractual arrangem ents. Many recom m endations of

earlier reviews have, of course, been implemented and o th e r s h a v e b e e n c o n s id e re d by G o v e rn m e n t a n d

rejected o r o v e rta k e n by o th e r dev elo p m en ts. AAO recom m endations and, w here c o n sisten t, other review recom m endations will be tak en into account in ongoing negotiations on th e arrangem ents.

T e leco m Agrees th a t new co n tractu al arrangem ent should take account o f conclusions and recom m endations contained in previous reviews a s well as in the AAO report, noting

th a t the key w ords are ‘take account o f. Telecom does not support all of the recom m endations made.

ABC The ABC h a s conducted an internal review of future op­ tio n s for th e ow nership an d m anagem ent of National B roadcasting Service transm ission facilities. The ABC

Board is expected to consider its position in October.

SB S Supports recommendation.

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2. Administrative arrangements

3. AAO reco m m en d s (Section 2.4.27) th at the Depart­ ment:

(a) clarify the arrangem ents for the ownership of, and the funding o f co sts associated with, ABC and SBS transm ission facilities

DTC Agrees.

T e le c o m Agrees.

ABC S u p p o rts th e re c o m m e n d a tio n s a n d co m m e n ts th a t tran sfer of the ownership of the tran sm itters as defined in the ABC Act does not provide the ABC with any useful degree of independence nor place it in the sam e position as commercial and public broadcasters sharing NBS sta­ tions. If ABC is to be p u t in the sam e position as other broadcasters, then the following conditions m u st be ful­ filled first:

• control of planning priorities (subject to final Ministerial approval)

• control of adequate budgets

• control of capital replacem ent policy

• control of operational and m aintenance stan d ard s

• ow nership and control of transm itters and all associated facilities where sole or principal broadcaster, and

• ability to give directions to contractor or carry out work itself.

(b) develop a strategy, in conjunction with other in­ t e r e s t e d p a r tie s , to im p le m e n t G o v e rn m e n t d ecisions relating to the ownership and funding of ABC and SBS transm ission facilities.

DTC Agrees.

T e le c o m Agrees.

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ABC All parties should be involved in developing changes to cu rren t adm inistrative and funding arrangem ents. Im­ plem en tin g G o v ern m en t d e cisio n s w hich red u ce th e

degree of departm ental involvement in operational m a t­ ters is consistent w ith other Government microeconomic reforms.

SB S The SBS should be involved in the process and should be treated sim ilarly to the ABC.

3. Capital works program 4. AAO re c o m m e n d s (Section 3.9.10) that:

(a) the D epartm ent, in conjunction with the Broad­ c a s t in g D ir e c t o r a t e , e x a m in e th e p r o p o se d

expenditure and tim etables associated w ith major capital works programs and, if necessary, submit r e v is e d e s t i m a t e s for c o n s id e r a t io n b y th e

Government

DTC Agrees; the capital w orks program is a dynamic program and is, in effect, u n d e r continuous review between the the D epartm ent an d Telecom. The proposed new con­

tractual arrangem ents with Telecom specifically provided for an annual program review. The Departm ent will con­ tinue to review the program , taking advice from TBD as to its capacity to complete program m ed work, and will

keep Government informed.

T e le co m As the responsibility for planning, funding and arranging provision of facilities re sts with the Departm ent, this is a

m atter for the D epartm ent. Telecom is prepared to offer advice and assistance as necessary.

ABC Such re-exam ination should be conducted in conjunc­ tion with th e ABC. The preferred position of the ABC is to determ in e its own c ap ital w orks prio rities and to

directly control the im plem entation of such priorities.

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SB S Supports recom m endation.

(b) the Department, th e Broadcasting D irectorate and th e T ran sm ission P lannin g C o m m itte es join tly d e v e lo p a c o -o r d in a te d s tr a te g y to d eterm in e priorities and tim etab les for th e im plem entation o f a viable capital works program taking account o f th e availability o f resources w ithin th e Depart­ m ent and Telecom

DTC Agrees; th e D e p artm en t an d the B ro a d ca stin g Direc­ to ra te a re , of c o u rse , re p re se n te d on th e TPC. The

T ra n s m is s io n P la n n in g C o m m ittees a re involved in reviewing ABC an d SBS projects an d c an provide ap­ propriate advice to the M inister ab o u t any changes in priorities.

T e le c o m The th r u s t of th is is noted. However, th e TPC in its

p re s e n t form is n o t com petent to deal w ith th e mag­

nitude of this ta sk and could contribute little to the task. It is believed th at the bodies represented on th e TPC viz. the Departm ent, Telecom, ABC and SBS all need to p ar­ ticipate in the determ ination of priorities and tim etables for implementing viable w orks program s. However, it is also noted th at the legislation p uts th e m atter of deter­ m ining priorities in the h a n d s of 'the M inister’.

ABC If the Committees are to be effective then, unlike current practice, the D epartm ent m u st accept th a t it m u st co-or­ dinate the planning through, and be responsible to, the TPC.

SBS Supports recom m endation b u t for the Com m ittees to be effective th en the D epartm ent m ust accept th a t it m ust co-ordinate the planning through, and be responsible to, the relevant TPC.

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(c) a reassessm ent be made of the planned expendi­ ture and savings associated w ith the equipm ent replacem ent program

DTC Agrees; th e eq u ip m en t rep lacem en t program and a s ­ s o c ia te d s a v in g s a re s u b je c t to c o n tin u o u s

reassessm ent.

T eleco m Agrees. However, it is not clear who is to participate.

ABC Agrees, in conjunction with ABC.

SB S Supports recom m endation.

(d) p rocesses for lia iso n and co n su lta tio n betw een the Department and the Broadcasting Directorate be refined to provide closer co-ordination in the developm ent o f planning proposals and the capital works programs

DTC Agrees; the proposed new contractual arrangem ents be­ tw een the D e p artm en t and Telecom provide for quite

clearly defined liaison and co n su ltatio n arrangem ents, w ith a view to m uch improved co-ordination between the D epartm ent and Telecom.

T e le co m Agrees. This will probably require additional resource in both the D epartm ent and Telecom Broadcasting.

ABC Agrees while c u rre n t organisational arrangem ents con­ tinue.

SB S Supports recommendation.

(e) the roles and resp on sib ilities o f th e NBSDC and TPC be reviewed to assess w hether alternative ar­ rangements would provide improved co-ordination and planning

33

DTC Agrees.

T e le c o m Agrees.

ABC U nder th e p resen t arra n g em en ts the C ouncil and the Committee are of limited value only.

SBS S upports recom m endation, b u t considers th a t the Coun­ cil to date has been of very limited value w hereas the TPCs have the potential to be of great value.

(f) d elays in th e preparation of project docum enta­ tio n be addressed and, if n ecessa ry , additional resources, including con su ltan ts, be provided to enable tim etables to be achieved

DTC Supports the recom m endation, subject to budgetary con­ siderations.

T e le c o m Notes b u t points out the absence of com petent consult­ an ts in the area as evidenced by previous unsatisfactory experience by the D epartm ent in regard to th e use of c o n su ltan ts for the design and project docum entation.

ABC Delays could possibly be avoided by a rationalisation of responsibilities, th u s avoiding the necessity for addition­ al resources.

SB S Supports recom m endation.

(g) the Department and th e Broadcasting Directorate introduce a progress reporting sy stem based on key m ilestones to enable effective m onitoring of project progress and expenditure

DTC Agrees; the proposed new contractual arrangem ents be­ tw een th e D e p a rtm e n t a n d Telecom provide for the establishm ent of m ilestones for capital w orks projects

34

and ties progress paym ents to these m ilestones, thereby establishing an effective progress reporting system.

T e leco m Agrees.

ABC Agrees while c u rre n t organisational arrangem ents con­ tinue.

SB S Supports recom m endation.

(h) standards for th e construction o f television and radio transm ission facilities be developed

DTC A grees; th is re q u ire m e n t w ill be a d d re s s e d a s th e

proposed new c o n tra c tu a l a rra n g e m e n ts are p u t in

place.

T e leco m Agrees.

ABC Agreed provided developed in conjunction with ABC.

SB S Supports recom m endation.

(i) stan d ard s and g u id e lin e s for th e p ro v isio n of

stand-by fa cilities be developed and maintained

DTC D isa g re e s; s ta n d a r d is a tio n in th is a re a w ould be

counterproductive to cost effectiveness. The D epartm ent considers th a t th e m ost cost effective equipm ent con­ figuration should be determ ined for each station, based on m aintenance costs and reliability data.

T e le co m Agrees.

ABC Agreed provided developed in conjunction with ABC.

SB S Strongly supports recommendation.

(j) measures to increase the degree o f standardisation o f equipm ent be im plem ented.

35

DTC Agrees, b u t notes th a t the present mix of equipm ent is a direct consequence of historical public sector tendering re q u ire m e n ts. T he is s u e will be a d d re s s e d , having

regard to the requirem ents of Finance Regulations, as the new contractual arrangem ents are p u t in place.

T e le c o m Generally agrees b u t does not accept the AAO claim of a high degree of n on-standardisation of equipm ent in the

n a tio n a l tra n s m ittin g netw o rk n o tin g th e absence of A ustralian m an u factu rers, the n o n -sta n d ard television channels in use in A ustralia and the fallacy of counting identical transm itters operating on different TV channels

as differing equipment.

ABC S tan d ard isatio n of equipm ent can also increase costs. The degree of equipm ent standardisation is a m atter for judgem ent.

SB S Strongly supports recom m endation.

4. Operations and maintenance program 5. In relation to th e d evelop m en t o f operational

standards, AAO recom m en ds (Section 4 .2 .1 3 ) that the Department:

(a) e x p e d it e d e v e lo p m e n t o f p e r fo r m a n c e a n d

reliability standards in conjunction with Telecom

DTC Agrees; perform ance and reliability stan d ard s have been developed a s part of the proposed new contractual arran­ gem ents with Telecom.

T e le c o m Agrees.

ABC Agrees.

SBS Supports recommendation.

36

(b) invite the ABC and the SBS to have formal repre­ s e n t a t io n in n e g o t ia t io n s c o n c e r n in g th e

developm ent o f operational standards to be incor­ porated in the new arrangem ents with Telecom.

DTC Agrees; the TPC h a s already established a sub-com m it­ tee to review and report on perform ance and reliability

monitoring system s.

T e le co m Agrees.

ABC Performance stan d a rd s are being decided without suffi­ cient consultation w ith the ABC. ABC should also be involved in the development of procedures at the opera­ tional level which involve interruptions to services. The current approach requiring DTC approval only is totally unacceptable to the ABC.

SBS Strongly su p p o rts recom m endation and seeks ongoing involvement.

6. In relation to m onitoring th e reliability of the

tr a n s m ittin g f a c ilit ie s , AAO recom m ends (Section 4.3.35) that:

(a) the Directorate provide the Department, the ABC and the SBS w ith regular summary reports of per­ formance nationally and by service

DTC Agrees; provision of regular sum m ary reports is a re ­ q u ire m e n t of th e p ro p o s e d new c o n tr a c tu a l

arrangem ents with Telecom.

T e le co m This is already being done.

ABC Concurs, at least while current arrangem ents continue.

SBS Strongly supports recommendation.

37

(b) regular m eetings be held by th e Department, the Directorate, th e ABC and the SBS to exam ine per­ formance data and consider th e need for in-depth analysis

DTC Agrees; see reference to TPC sub-com m ittee above.

T e le c o m Agrees.

ABC Concur, at least while c u rren t arrangem ents continue.

SB S Strongly su p p o rts recom m endation.

(c) th e Department no longer m aintain a card register o f inform ation pertaining to lo sses and degrada­ tion in transm ission (termed outages)

DTC Agrees; the card register w as discontinued in Ju ly 1988.

T e le c o m Not a m atter for Telecom com m ent.

ABC No comment.

SB S Supports recommendation.

(d) th e Directorate take action to correct deficiencies in th e accuracy, com p leten ess and tim elin ess of the Broadcasting Operations Recording and Infor­ m ation System (BORIS) outage data

DTC Agrees; the provision of timely and accurate d ata will be a requirem ent of the proposed new contractual arrange­ m ents w ith Telecom.

T e le c o m Agreed and already in hand.

ABC Agrees.

SBS Strongly supports recom m endation.

(e) BORIS reports w hich provide sum m aries o f perfor­ m a n ce be r ev ise d to in clu d e to t a ls , c o u n ts of

38

n u m b ers o f s e r v ic e s , a v e r a g e s an d o th e r in ­

d ic a to r s o f n o r m a l s y s t e m p e r fo r m a n c e to

p r o m o te a n a ly s is , h ig h lig h t e x c e p t io n s and

anom alies and allow users to compare readily na­ tional performance, State perform ance and trends

DTC Agrees with the general direction of the recommendation. The requirem ents for perform ance data and the m anner in which data is to be sum m arised and reported is laid

dow n in the p roposed new c o n tra c tu a l arrangem ents with Telecom.

T e le c o m Agrees.

ABC Agrees.

SB S Strongly su p p o rts recom m endation.

(f) e x c e p tio n r ep o rts be p ro v id ed to D irectorate m a n a g em en t w h e n o u ta g e d ata in d ic a te th a t reliability standards are not being m et

DTC This is a m atter for Telecom m anagem ent. However, the D e p a rtm e n t w ill be m o n ito rin g n e tw o rk re lia b ility against the stan d a rd s imposed u n d er the proposed new

contractual arrangem ents and will require explanations from Telecom of any instances where the standards are not met.

T e le c o m Agrees, in hand.

ABC No comment.

SB S Supports recommendation.

(g) regular analysis be conducted to identify services with performance well above or below average

DTC Agrees; this is one of th e intended u se s of the perfor­ m ance reports required by the D epartm ent u n d er the

proposed new contractual arrangem ents with Telecom.

T e le co m Agrees. This is already being done.

39

ABC Agrees.

SB S Supports recom m endation.

(h) BORIS codes be developed to distin guish between outages due to installation and /or planned main­ tenance activity.

DTC Agrees; separate reporting of outages due to installation a n d /o r planned m aintenance activity is a requirem ent of th e p ro p o s e d new c o n tr a c tu a l a r r a n g e m e n ts w ith

Telecom.

T e le c o m Agrees.

ABC Agrees.

SB S Support recommendation.

7. In relation to m onitoring of co sts and cost effec­ tiv en ess, AAO rec o m m en d s (Section 4.4.22) that:

(a) respon sib ility for m onitoring co st effectiven ess, and the nature o f reports on co sts and co st effec­ tiven ess, be clearly defined by DTC

DTC Monitoring of costs and cost effectiveness in the opera­ tion an d m aintenance of Com m onw ealth tran sm ittin g s ta tio n s is, by d e fin itio n , th e re s p o n s ib ility of th e

D epartm ent. U nder th e proposed new contractual a r­ rangem ents, the D epartm ent has defined its information requirem ents and Telecom will be required, for the first time, to provide a b reak down of its charges to a level w h ic h w ill e n a b le th e D e p a rtm e n t to d isc h a rg e its

responsibilities. At the sam e time, Telecom will be free to determ ine a p p ro p riate m onitoring p rocedures with respect to the cost effectiveness of its own performance.

T e le c o m Agrees.

ABC If there is to be any change in ownership arrangem ents involving the ABC, th e n the ABC should be consulted

40

over the development and reporting of all m anagem ent information.

SB S Supports recommendation.

(b) th e D irectorate should, at a m inim um , m onitor th e comparative co sts of various categories o f ser­ vices, and generate annual reports on these costs for an alysis by th e D irectorate's Central Office and by DTC

DTC Telecom is required u n d e r the proposed new contractual arrangem ents to provide the D epartm ent with details of

the actual charges to the D epartm ent for m aintaining in­ dividual transm itting facilities. The D epartm ent will be analysing this data along the lines suggested by AAO.

T e le co m Agrees subject to the D epartm ent accepting the addition­ al costs involved.

ABC See comment above at (a).

SB S Supports recom m endation.

(c) th e D ir e c to r a te p u rsu e th e d e v e lo p m e n t o f

m ea su res o f c o s t e ffe c tiv e n e s s to allow m ain ­ tenance co sts for sim ilar services to be compared

DTC U nder the proposed new contractual arrangem ents, the D epartm ent will be in a position to com pare the m ain­

tenance costs of sim ilar facilities at different sites. At th e sam e tim e, Telecom will be free to determ ine ap­ propriate monitoring procedures with respect to the cost effectiveness of its own performance.

T e le c o m Agrees.

ABC See comment above at (a).

SBS Supports recommendation.

41

(d) for each n a tio n a l broadcasting s ite th e cost of operating and m ain tain in g shared broadcasting facilities be recorded separately from th e cost of m aintaining individual services

DTC Agrees; this is a requirem ent of the proposed new con­ tractual arrangem ents w ith Telecom.

T e le c o m Agrees.

ABC See comment above at (a).

SB S supports recommendation.

(e) for each national service, separate co st codes be introd uced for hours used for p reven tive m ain­ tenance, corrective m aintenance and travel.

DTC Disagrees; the D epartm ent sees no contribution to cost effectiveness in collecting th is detailed data.

T e le c o m It is often difficult to sep arate th e costs of preventive m aintenance from corrective m aintenance as repairing a fault is generally associated, in some degree, with the prevention of fu rth e r fa u lts. The sep a ra tio n between hours travelled and h o u rs worked is also ra th e r m ean­ ingless. More im portant are the costs o f travel compared w ith th e costs of perform ing the activity a t th e work

location. Travelling costs encom pass m uch more than the costs of the hours involved (e.g., travelling allowance, vehicle costs, fares, etc.).

ABC See comment above at (a).

SBS Supports recommendation.

8. In relation to staffin g of the D irectorate, AAO recom m ends (Section 4.5.38) that:

(a) th e Department and Telecom join tly determ ine a notional staff distribution reflecting the minimum staff requirements for satisfactory and econom ic

42

operation and m aintenance o f th e facilities, with a view to im plem enting th is distribution as soon as staff redeploym ent is feasible

DTC Disagrees; while intervention by the D epartm ent would have been desirable u n d er the historical cost-plus a rra n ­

gem ents between the D epartm ent and Telecom, it proved quite impractical. U nder the more commercially oriented relationship envisaged in the proposed new contractual a rra n g e m e n ts w ith Telecom , it w ould be quite in a p ­ p ro p ria te for th e D e p a rtm e n t to involve itself in the

m anagem ent of the Directorate in the m an n er suggested by AAO.

T e le co m This is not appropriate to a fixed price contract as cu r­ re n tly being neg o tiated . The c o n tra c to r already h a s stro n g incentive to use the m ost productive staff dis­

tribution and the m inim um staffing levels.

ABC No comment.

SB S Supports recom m endation.

(b) m ethodologies for designing Broadcasting Main­ tenance D istricts (BMDs), including the processes u se d for e s t im a tin g w ork load s and tr a v e llin g t im e s , b e fo r m a lis e d and is s u e d by th e

D ir e c to r a te 's C e n tr a l O ffice to a ll S ta te s to

promote co n sisten cy and c o st effectiveness.

DTC This is a m atter for Telecom management.

T e le c o m The methodology h a s already been standardised. It was not formally prom ulgated because of the industrial sen­ sitivity of the issues associated with staff relocation and

reductions.

ABC No comment.

SBS Supports recommendation.

43

5. Radio Australia external broadcasting

9. AAO reco m m en d s (Section 5.9.18) that:

(a) a high level policy and advisory com m ittee, com­ prising senior rep resen tatives from th e agencies involved with Radio Australia, be established

DTC A ppropriate consultative stru c tu re s for Radio Australia are being developed as p art of the cu rren t Government review of the overseas service.

T e le c o m Agrees.

ABC The ABC is in the process of concluding a m ajor review of Radio Australia including the efficiency and effective­

ness of its transm ission facilities. Radio A ustralia, like th e r e s t of the ABC, w is h e s to s tre n g th e n its inde­

pendence in transm ission m atters while also improving its accountability for th e overall cost-effectiveness of its services. To this end Radio A ustralia intends to m ain­ ta in its c o n s u lta tio n w ith re le v a n t C om m onw ealth

departm ents and will continue to take into account their advice on programming objectives. The establishm ent of a fu rth er high level policy committee is not considered necessary.

Taking into account the budgetary co n strain ts likely to face Radio A ustralia, the Radio A ustralia Review Com­ m ittee h a s recommended the following priorities:

(a) th e im m ediate developm ent of a site in N orthern Q ueensland to cover the Pacific and E ast Asia should have priority over refurbishing Shepparton

(b) the establishm ent of an offshore facility to transm it to Northern China, and

(c) the provision of additional transm itters at Darwin to redress current levels of downtime into S.E. Asia.

SBS No comment.

44

(b) the com m ittee give im m ediate atten tion to the developm ent o f c o st effective proposals aimed at p reven tin g th e d egrad ation o f programs tra n s­ m itted from Shepparton and Darwin

DTC A special allocation of $1.25 m illion w as made in the 1989 Budget process to enable the replacem ent of the antenna switching facilities at Shepparton and to perm it

a thorough evaluation of Radio A ustralia’s transm ission needs.

T e le co m Agrees.

ABC See comment above at (a).

SB S No comment.

(c) a lo n g e r te r m R ad io A u s tr a lia d e v e lo p m e n t strategy be prepared and subm itted for considera­ tion by the M inister/G overnm ent

DTC The Department accepts th a t Radio A ustralia’s tran sm is­ sion requirem ents cannot be assessed in isolation from

key policy decisions about its fu tu re role and respon­ sibilities and fu tu re priority targets. Preparation of a subm ission to Government is underway.

T e le co m Agrees.

ABC See comment above at (a).

SB S No comment.

(d) in evaluating the longer term co sts and benefits th e co m m ittee have regard to th e variations in program and transm ission costs as a result o f the choice o f target audiences

DTC At present, target audiences are determ ined by the ABC in consultation with the D epartm ent of Foreign Affairs

and Trade. As noted above, the question of future con­ su lta tiv e a rra n g e m e n ts for R adio A u stra lia is being

45

addressed as p art of th e current G overnm ent review of th e o v e rs e a s s e rv ic e . S u c h o p e r a tio n a l c o sts and

benefits are, of course, being taken into account in the p re p a ratio n of th e su b m issio n referred to in the com­ m ent against (c) above.

T e le c o m Agrees.

ABC See comment above at (a).

SB S No comment.

(e) c o sts of operations and m ain tenance (including electricity charges) be considered in plans for the further developm ent of existin g site s.

DTC The com m ents at (d) apply. The D epartm ent recognises t h a t som e tra n s m is s io n s ite s a re m ore c o stly th a n

oth ers. Cost co n sid e ra tio n s are being ta k e n into ac­ c o u n t in d e v elo p in g f u tu r e r e f u r b i s h m e n t p la n s.

However, other criteria will necessarily be relevant.

T e le c o m Agrees.

ABC See comment above at (a).

SB S No comment.

6. Financial administration

10. In relation to ap p rop riation p r o c e sse s, AAO rec o m m en d s (Section 6.4.11) that:

(a) th e D epartm ent and T elecom record and rep o rt separately th e c o sts o f providing services for each user o f national fa cilities and for providing com ­ m on usage facilities

DTC Agrees; u n d e r th e proposed new c o n tra c tu a l arrange­ m e n ts b e tw e e n th e D e p a rtm e n t a n d T eleco m , th e

D epartm ent is to receive details of Telecom’s charges for indiv id u al tra n sm issio n sy stem s a n d com m on equip­ ment.

46

T e le c o m Agrees.

ABC Agrees.

SB S Supports recommendation.

(b) th e Department pursue th e introduction of arran­ gem en ts to ad op t a n et appropriation accou n t structure and to report full details of expenditure and revenue.

DTC Agrees; the D epartm ent will again raise the question of the introduction of a net appropriation arrangem ent for operations and m aintenance.

T e le co m Agrees.

ABC No comment.

SB S No comment.

11. In relation to the agency agreem ent between the Department and Telecom , AAO reco m m en d s (Section 6.5.93) that:

(a) th e Department and Telecom finalise the develop­ m ent of a new agreem ent, ensuring that attention is given to m atters raised by AAO

DTC Agrees; noting th a t a num ber of AAO’s recommendations have already been covered in negotiation of the proposed new contractual arrangem ents; the D epartm ent will take

appropriate action in relation to other recommendations in ongoing negotiations on the arrangem ents.

T e le c o m Agrees.

ABC Agrees.

SBS Supports recommendation.

47

(b) th e ABC and th e SBS be a c t iv e ly in v o lv ed in

developm ent o f th e new agreem ent

DTC Agrees that the ABC and SBS have a vital interest in the perform ance, availability and reliability of the transm is­ sion facilities w hich broadcast th eir program material. The ABC and the SBS have been thoroughly consulted in

r e la tio n to s ta tio n p e rfo rm a n c e s p e c ific a tio n s and

reliability/availability criteria. The TPC h a s established a sub-com m ittee to review and report on perform ance and reliability m onitoring system s with a view to intro­ ducing any necessary variations in periodic revisions of the contractual arrangem ents.

It is n o t a p p ro p ria te to in c lu d e th ird p a rtie s in the

negotiation of commercial elem ents of the agreement.

T e le c o m Agrees.

ABC The ABC is very concerned th at it h as not been involved in negotiations for the new agreement.

SBS S u p p o rts recom m endation; the SBS is extremely con­ cerned th a t it h as not been involved so far.

(c) th e SBS e n te r in t o a form al a g r ee m e n t w ith

Telecom or such other agent as the Minister may approve

DTC The need for the SBS to enter into an agreem ent for the operation and m aintenance of tra n sm itte rs broadcasting SBS program s will depend on the outcome of recommen­ dation 2(a) above.

T e le c o m Agrees. The reason for Telecom not having taken the in­ itia tiv e in p re p a rin g a n a g re e m e n t is th a t the SBS

previously signalled its in ten tio n to have its facilities funded by the D epartm ent (similar to the ABC arrange­ ment). The outcome is still awaited.

ABC No comment.

48

SB S S u p p o rts re co m m en d atio n . However, if for fu n d in g reasons the D epartm ent assum es responsibility for SBS transm itters and en ters into an agreem ent with Telecom th ere should be appropriate c o n su ltatio n betw een the D epartm ent and the SBS.

(d) an agreed m anual o f fin an cial resp o n sib ilities, provisions, standards, directions and processes be p rodu ced to s u p p le m e n t a g r e e m e n ts b e tw e en Telecom, the Department and the SBS

DTC Believes th a t the requirem ents a s betw een the D epart­ m ent and Telecom sh o u ld be em bodied in the formal contractual arrangem ents.

T e le co m Agrees.

ABC No comment.

SB S Supports recom m endation.

(e) depending on th e nature o f a new agreem ent close attention be paid, during its developm ent, to:

- provisions for verification o f costs

DTC Covered u n d er the proposed new co ntractual arrange­ m ents.

T e le co m Agrees.

ABC Agrees; although h a s reservations w h eth er or not the new c o n tr a c t w ill so lv e som e of th e fu n d a m e n ta l

p roblem s u n le ss th e re is a resolve to im plem ent all

provisions of the contract.

SB S Supports recommendation.

- future alterations to the new agreem ent

49

The proposed new contractual arrangem ents provide for an annual renewal negotiation, at which time alterations to th e arrangem ents can be considered.

T e le c o m Agrees.

ABC See com m ent above.

SB S Supports recom m endation.

DTC

- provisions covering breach o f contract by either party

DTC The D epartm ent and Telecom have agreed that, for the initial period of the proposed new contractual arrange­ m ents, It is inappropriate to include breach of contract

conditions in the agreement.

T e le c o m Agrees.

ABC See comment above.

SB S Supports recommendation.

- term ination procedures

DTC The proposed new c o n tra c tu a l a rra n g e m e n ts contain some provisions for term ination b u t, more importantly, th e a rra n g e m e n t p ro p o sed is a fix e d period contract, renewable by agreem ent between the parties.

T e le c o m Agrees.

ABC See comment above.

SBS Supports recommendation.

- arbitration o f dispu tes

DTC At th is stage th e p ro p o sed new c o n tra c tu a l arrange­ m e n ts do n o t in c lu d e p ro v is io n fo r a r b itr a tio n of

50

disputes; the D epartm ent will raise th e need for such a clause in ongoing negotiations with Telecom.

T e le co m Agrees.

ABC See com m ent above.

SB S Supports recom m endation.

- the use, or otherw ise, o f agencies such as the Department o f A dm inistrative Services and other contractors

DTC Under the proposed new contractual arrangem ents, the D epartm ent will give detailed in stru ctio n s to Telecom on how to execute particular proposals. These instructions will include, w hen appropriate, instructions on the use of third parties.

T e le co m Agrees.

ABC See com m ent above.

SB S Supports recom m endation.

- tim ing o f presentation o f bills

DTC Agrees; these requirem ents are covered quite specifically un d er the proposed new contractual arrangem ents.

T e leco m Agrees.

ABC See com m ent above.

SB S Supports recom m endation.

- standards o f accom m odation

DTC Not appropriate u n d e r the proposed new contractual a r­ rangem ents.

T eleco m D isagrees; s ta n d a r d s of a cc o m m o d a tio n a n d m otor

51

vehicles for Telecom staff are not m atters for the Govern­ m ent b u t come u n d er the responsibilities of the Telecom Board. Telecom s ta n d a rd s m u st apply to all Telecom employees.

ABC See comment above.

SB S Supports recom m endation.

- standards for supply and use o f m otor vehicles

DTC Not appropriate u n d er the proposed new contractual ar­ rangem ents.

T e le c o m See com m ent above.

ABC See comment above.

SBS Supports recommendation.

(f) formal procedures for the com m issioning, accep­ tance, handover and the recording o f transm ission a s s e ts be agreed b etw een th e D epartm ent and Telecom

DTC Under the proposed new contractual arrangem ents, the D epartm ent will give detailed instructions to Telecom on how to execute particular proposals. These instructions will include, w hen appropriate, instructions on commis­ sioning, acceptance and handover. The draft contract specification already in cludes com prehensive require­ m ents regarding asset recording and m anagem ent.

T e le c o m Agrees.

ABC Agrees.

SBS Supports recommendation.

(g) th e D epartm ent’s and T elecom ’s responsibilities for negotiation with third parties be defined and included in a formal agreement

52

The incidence of duplicated contact w ith third p arties h a s been extremely m inor and in each instance involved u n u su al circum stances. The responsibilities are clearly understood by both parties b ut, in any event, in the fu­ tu re these re sp o n sib ilitie s will be spelled out in the

instructions to be issued by th e D epartm ent in relation to each project.

T e le co m Agrees.

ABC Agrees.

SBS Supports recom m endation.

DTC

(h) formal arrangem ents be agreed in respect of use b y th e C o m m o n w e a lth a n d T e le c o m o f e a c h

other’s sites and facilities, and associated rights, responsibilities and liab ilities be defined, agreed and docum ented

DTC Agrees; th is is a com plex m a tte r and h a s been u n d er

negotiation for about four years. Recently, both parties re c o m m itte d th e m s e lv e s to f in a lis in g a p ro p o s e d

M emorandum of U nderstanding as soon as possible.

T e le co m This h a s been under way for sometime.

ABC Agrees.

SB S Supports recommendation.

(1) the Departm ent consult w ith th e Department of Finance on charging p olicies and in stitu te char­ g e s , i f a p p r o p r ia te , fo r T e le c o m ’s u s e o f

Commonwealth land and assets

DTC The D epartm ent is conscious of G overnment policy for charging for use of Commonwealth land and assets; the p ro p o se d M em o ran d u m of U n d e rs ta n d in g in c lu d e s

provision for reciprocal charging.

T eleco m Agrees.

53

ABC No comment.

SB S No comment.

(j) w here o r g a n is a tio n s , in a d d itio n to DTC and T elecom , u se C om m onw ealth or T elecom sites, responsibilities and liab ilities o f th e Department and Telecom be defined, agreed and docum ented.

DTC Agrees; the proposed M em orandum of U nderstanding p ro v id e s for a d e ta ile d a g re e m e n t a s to rig h ts and

responsibilities to be concluded for each site shared be­ tween the Commonwealth and Telecom. On the basis of th a t agreement, each party will be able to execute agree­ m ents with third parties. It should be noted that there are several hundred sites in this category and, obviously, it is going to take some time to docum ent them all.

T e le c o m Agrees.

ABC No comment.

SB S No comment.

12. With regard to determ ination and reporting of c o s ts , w hile e x is tin g arrangem ents co n tin u e, AAO reco m m en d s (Section 6.5.94) that:

(a) T e le c o m ’s s u p e r a n n u a tio n l ia b ilit y for th e

D irectorate’s staff be paid directly by the Depart­ m ent, based on inform ation provided by Telecom, t o th e A u s tr a lia n G o v e r n m e n t R e tir e m e n t

B en efits O ffice. The liability should not attract additional co sts relating to financing o f payments by Telecom

DTC Effective from 1 Ju ly 1989, paym ents for operations and m aintenance are no longer to be m ade on a cost-plus basis, hence recom m endations relating to the determ ina­ tion of costs are no longer relevant.

54

T e le co m Agrees. Telecom is reim bursed by the D epartm ent for such costs and no financing charge is made.

ABC No comment.

SB S Supports recom m endation.

(b) Telecom consider including the c o st of worker’s com pensation provisions in its estim ates o f char­ ges

DTC See comment above at (a).

T e le co m The relevant w orkers com pensation c o sts are already being recovered from the D epartm ent.

ABC No comment.

SB S No comment.

(c) major new ex p en ses such as fringe benefits tax and c u s to m s d u ty be r e p o r te d s e p a r a te ly by

Telecom to the Departm ent to enable actual costs o f new expenses to be assessed

DTC See com m ent above at (a).

T e le co m There is no reason to m onitor such expenses. Once es­ tim ates have been provided by Telecom and increases in appropriations obtained, such expenses become simply

costs to be recovered by Telecom from the Department in the u su al way.

ABC No comment.

SB S Supports recommendation.

(d) purchases made and contracts let during 1987-88 be reviewed by Telecom and the Departm ent to identify and subsequently pay any custom s duty outstanding

55

DTC Agrees.

T e le c o m In purchasing equipm ent for national broadcasting ap­ plications Telecom accepts the declarations made in the

p u rc h a s e re q u e s ts by th e D e p artm en t in relation to

lia b ility for b o th s a le s ta x a n d c u s to m s duty. As

Telecom has consisten tly acted u n d e r in struction it is not appropriate for Telecom to be involved in review or fu rth er payments.

ABC No comment.

SB S No comment.

(e) th e D epartm ent enquire in to o p tio n s available whereby cu stom s duty could be reduced or can­ celled.

DTC Disagrees; custom s duty is payable only w hen there is the possibility of the equipm ent concerned being shared with a commercial broadcaster. It is appropriate in such

cases th a t the value of th e asset for cost recovery p u r­ poses include all duties and taxes which th e commercial organisation would otherwise have to pay.

T e le c o m No comment.

ABC No comment.

SB S No comment.

13. In relation to th e d istrib u tion o f co sts, AAO

recom m ends (Section 6.5.95) that:

(a) th e D irectorate's Central Office labour costs as­ sociated w ith ca p ita l works be recorded against th ose works

DTC A grees; ap p ro p ria te provision h a s b e en m ade in the proposed new contractual arrangem ents.

T e le c o m Telecom is already charging all overheads expended on

56

capital works to capital works accounts, not ju st the cost of C entral Office labour involved.

ABC Agrees.

SBS No objection to recom m endation provided th a t if addi­ tio n a l c o sts are p a s s e d on to SBS th e s e c o s ts are

recognised by Budget supplem entation.

(b) form al a r r a n g e m e n ts b e a g reed b e tw e en th e Department and th e SBS so that the SBS funds an equitable share o f Telecom overheads.

DTC Agrees; but notes th a t the need for a formal agreement with the SBS will depend on th e outcome of recommen­ dation 2(a) above.

T e leco m No comment.

ABC No comment.

SB S See comment above at (a).

14. In relation to th e availability of accurate infor­ m a tio n and th e rep o rtin g and m o n ito rin g o f th is information, AAO rec o m m en d s (Section 6.6.27) that:

(a) th e D ep artm en t, SBS and T elecom defin e and agree th e ir in form ation n eed s and give form al com m itm ents to provide th at information in full and in accordance with specified tim etables

DTC Information requirem ents are embodied in the proposed new contractual arrangem ents with Telecom. Payments u n d er the arrangem ents are tied to provision of the in­ formation required. The need for the SBS to separately

negotiate sim ilar arrangem ents will depend on the out­ come of recom m endation 2(a) above.

T e le co m Agrees.

ABC Agrees but ABC should also be involved, particularly if

57

o w n e rsh ip a r r a n g e m e n ts in v o lv in g th e ABC are to change.

SB S Supports recom m endation if SBS is to pay for transm it­ ters.

(b) th e Department forward its capital works require­ m ents to Telecom in a tim ely manner

DTC Accepts that in order to meet program tim etables orders for capital works m u st be provided to the contractor in a timely manner.

T e le c o m Agrees. However capital works requirem ents is an in­ adequate description. Telecom would prefer ‘complete project briefs’.

ABC Agrees, at least while cu rren t arrangem ents continue.

SB S Supports recommendation.

(c) Telecom forward co sts data and reconciliations to the Department and SBS in a tim ely manner

DTC Agrees; u n d er th e proposed new co n tra ctu a l arrange­ m e n ts , p ro v isio n of a c c o u n tin g d a ta is tie d to th e

rendering of acco u n ts. The D epartm ent believes th a t th is will provide the necessary incentive for Telecom to provide the inform ation in a timely m anner.

T e le c o m Agrees.

ABC No comment.

SBS Supports recom m endations.

(d) th e Department and Telecom identify all users of C om m on w ealth s it e s , and id e n t ify and verify th ose users’ liab ilities to pay fees and electricity bills

58

DTC Agrees; the objective described in the AAO recom m enda­ tio n h a s b e e n s u b s ta n tia lly a c h ie v e d th ro u g h th e

D epartm ent’s efforts over the p a st several years. Action is being taken to finalise outstanding issues and to u p ­ date the database.

T e leco m It is not appropriate for Telecom to be involved in verify­ ing Commonwealth site sharers liabilities for costs. The D epartm ent is the sole negotiator and arbiter of charges

in th is area and h a s been for m any years.

ABC Agrees.

SB S Supports recom m endation.

(e) Telecom ’s claim s for paym ent o f expenditure for capital works be made against project requisitions issued by the Department

DTC Agrees; this is a requirem ent of the proposed new con­ tractual arrangem ents.

T eleco m Agrees subject to Telecom being in possession of project requisitions.

ABC No comment.

SB S Supports recom m endation.

(f) Telecom ’s claim s for paym ent o f expenditure for op eration s and m a in ten a n ce in clu d e su fficien t detail to allow basic analysis of comparative costs o f categories o f service (State, television , radio, metropolitan, major country, others, etc.)

DTC U nder the p ro p o sed new c o n tra c tu a l a rra n g em en ts, Telecom will no longer be claim ing for ‘exp en d itu re’. Nevertheless, the arrangem ents provide th a t Telecom’s

accounts include inform ation to facilitate the kind of analysis suggested by AAO.

59

T e le c o m U nder the proposed new co n tract the paym ent of ac­ counts and detailing of costs are de-coupled.

ABC No comment.

SB S Supports recom m endations.

(g) Telecom sim plify its m ethod o f calculating claims for expenditure on operations and m aintenance by claiming, in the first instance, on a pro-rata basis

DTC The proposed new contractual arrangem ents provide for Telecom to claim one twelfth of certain agreed annual fees each month.

T e le c o m U nder the proposed new contract m ost of the expendi­ tu re on operations and m aintenance will be recovered on a pro-rata basis.

ABC No comment.

SB S Supports recommendation.

(h) T elecom ’s e stim a te s sen t to the SBS contain at lea st as m uch detail as is contained in estim ates sen t to the Department

DTC U nder th e p ro p o se d new c o n tra c tu a l arra n g em en ts, Telecom will tender prices for particular services, not es­ tim ates of expenditure. W hether the SBS continues to meet the cost of operating and m aintaining transm itters used to broadcast SBS program s will depend on the out­ come of recom m endation 2 (a) above.

T e le co m A ssum ing th a t Telecom is to c o n tin u e to forward es­ tim a te s to th e SBS th e n Telecom re m a in s happy to

provide whatever detail is sought by the client.

ABC No comment.

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SB S Supports recom m endation.

(i) the Department, Telecom and SBS agree on a con­ siste n t basis for th e developm ent o f short term and longer term estim ates

DTC See com m ent against (h) above.

T e le co m Agrees.

ABC No comment.

SB S Supports recommendation.

(j) T elecom in clu d e advice on o p tio n s and related costs in Its estim ates.

DTC Agrees subject to th e comment against (h) above. The proposed new c o n tra c tu a l a rra n g e m e n ts require th a t Telecom advise of options for reducing the cost to the

D epartm ent of m aintaining particular stations, w hen re ­ quested by the D epartm ent.

T e le co m Agrees subject to th e client’s wishes.

ABC No comment.

SB S Supports recom m endation.

15. AAO r e c o m m e n d s (S ec tio n 6 .7 .1 0 ) th a t th e

Department in conjunction w ith Telecom, develop a com m on system to record a ssets and clarify arrange­ m ents for th e stocktaking and disposal o f assets.

DTC It would not be appropriate, either for the Departm ent to be involved in designing Telecom’s a ss e t records sys­ tem s, or for Telecom, a s contractor to the Department, to be involved in designing D epartm ental asset system s. The D epartm ent h a s specified its requirem ents for asset

m anagem ent and recording in th e M aintenance Support Specification which form s part of the proposed new con­ tractu al arrangem ents.

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T e le c o m Agrees.

ABC Agrees.

SB S No comment.

16. In relation to accounting practices, AAO recom­ m e n d s (Section 6.8.7) that:

(a) th e Department issu e purchase orders for operations and m aintenance expenditure

DTC Agrees; the proposed new contractual arrangem ents are equivalent to a Purchase Order.

T e le c o m Agrees.

ABC No comment.

SB S No comment.

(b) Supply and A ccounts Section in the Department review its procedures to ensure th a t records of paym ents are m aintained properly, adjustm ents are n oted to p rovid e referen ce tr a ils , and th e

provisions of the Audit Act are com plied with.

DTC A rrangem ents for th e exam ination and certification of national broadcasting claim s for paym ent were changed in December 1988. All claims are now forwarded direct

from R egistry to th e N atio n al B ro a d c a s tin g B ranch w here they are exam ined and certified for paym ent by delegated officers. Claims are th en forwarded to the Ac­ counts sub-section for authorisation (funds availability), batching and forwarding to the D epartm ent of Finance for issue of cheques.

T e le c o m Not a m atter for Telecom com m ent.

ABC No comment.

SB S No comment.

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17. In relation to th e sharing o f national broadcast­ in g tr a n s m ittin g s i t e s , AAO reco m m en d s (S ection 6.9.27) that th e Department:

(a) give im m ediate priority to th e finalisation of standard agreem ents

DTC The D epartm ent h a s given this issue a high priority over several years. The D epartm ent cannot, of course, act

alone; the negotiations concerned involve the D epart­ m ent and in d u stry representative bodies in seeking to reach agreement.

T e le co m Not a m a tte r for Telecom comment.

ABC Agrees.

SB S No comment.

(b) actively pursue th e form alisation o f arrangements w ith users where agreem ents have not been ex­ ecuted.

DTC Agrees; the D epartm ent has actively pursued, and will continue to p u rsu e, th e form alisation of arrangem ents w ith every party sharing a Commonwealth transm itting

station.

T e le co m Not a m atter for Telecom comment.

ABC Agrees.

SB S No comment.

18. In relation to billing records AAO recom m ends (Section 6.9.33) that th e Department:

(a) develop a database containing inform ation on site s including users, am ounts payable under agreem ents, fee review dates and site values

DTC Agrees; the development of a database as described by AAO h as been a high priority ta sk for the past several

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years. The ta sk h a s consum ed significant resources over th a t period and is now substantially completed.

T e le c o m Not a m a tte r for Telecom comment.

ABC Agrees.

SB S Supports recom m endation.

(b) undertake a reconciliation o f site occupancy data a n d b illin g r e c o r d s , in v e s t ig a t e c a s e s where

sharers are not being billed and take appropriate remedial action.

DTC A grees; th is h a s b e e n th e objective of th e database

p ro je c t re fe rre d to in (a) above. The reconciliation

recommended by AAO h a s also been substantially com­ p le te d and sig n ific a n t a rre a rs of rev en u e have been successfully recovered.

T e le c o m Not a m a tte r for Telecom comment.

ABC No comment.

SB S Supports recom m endation.

7. New Contract 19. AAO recom m ends (Section 7.5.6) th at the new co n tra ct betw een th e D epartm ent and T elecom be developed and refined in full co n su lta tio n with ap­ propriate elem ents o f th e Department, Telecom, the ABC and the SBS.

DTC T he p ro p o s e d new c o n tr a c tu a l a rra n g e m e n ts w ith

Telecom have been negotiated in detail betw een Telecom and the Department, with full consultation with the ABC and SBS in relation to th e reliability, availability and technical perform ance specifications for th e num erous transm itting system s. A sub-com m ittee of the TPC has been estab lish ed to review the reliab ility and perfor­ m ance monitoring system s, with a view to introducing

any necessary variations in periodic revisions of the con­ tractu al arrangem ents.

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T e le co m Agrees.

ABC Strongly agrees.

SBS S u p p o rts recom m endation: see com m ents on Agency Agreement.

29 November 1989 C anberra ACT

J.C . Taylor Auditor-General

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Appendix 1. Acronyms

AAO A ustralian Audit Office

ABC A ustralian B roadcasting C orporation

ABCB A ustralian Broadcasting Control Board

AUSTEL A ustralian Telecom m unications A uthority

BMD Broadcasting M aintenance D istricts

BORIS Broadcasting O perations Recording and

Information System

DTC D epartm ent of T ransport and Communications

MSS M aintenance S upport Specification

NBSDC National B roadcasting Services Development Council

PMG Post M aster General

SBS Special B roadcasting Service

SRRN Second Regional Radio Network

TBD Telecom B roadcasting Directorate

Telecom A ustralian Telecom m unications Corporation

TPC Transm ission Planning Committees

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Appendix 2. The titles listed below are those published in th e financial Year 1989-90

A udit R e p o rt No. 1 D e p a rtm e n t of D efence - overseas p ro c u re m e n t

A udit R e p o rt No. 2 D e p a rtm e n t of V e te ra n s A ffairs

A udit R e p o rt No. 3 In d u stry , T echnology a n d C om m erce Portfolio

A udit R e p o rt No.4 D e p a rtm e n t of E m p lo y m e n t, E d u c a tio n a n d T ra in in g -A boriginal S tu d e n t A s sista n c e S ch em es

A udit R ep o rt N o.5 D e p a rtm e n t o f E m p lo y m e n t, E d u c a tio n a n d T ra in in g - J o b s ta r t

A udit R e p o rt No.6 D e p a rtm e n t o f E m p lo y m en t, E d u c a tio n a n d T ra in in g - p o st g r a d u a te a w a rd s

A udit R e p o rt No.7 D e p a rtm e n t o f E m p lo y m e n t, E d u c a tio n a n d T ra in in g - C om m onw ealth R e b ate for A pprentice F u ll T im e T ra in in g

A udit R e p o rt No.8 D e p a rtm e n t of th e A rts, S p o rt, the E n v iro n m e n t, T o u rism a n d T e rrito rie s - ACT A d m in istra tio n

A udit R ep o rt No.9 D e p a rtm e n t of D efence - p o s t-s e p a ra tio n e m p lo y m e n t

A udit R ep o rt No. 10 Office o f th e S u p e rv isin g S c ie n tist for th e A lligator R iv ers Region - R e search P ro je ct A d m in istra tio n

A udit R e p o rt No. 11 D e p a rtm e n t o f D efence - re c ru itm e n t p ra c tic e s

A udit R e p o rt N o.12 A boriginal A ffairs P ortfolio

A udit R e p o rt No. 13 D e p a rtm e n t o f Im m ig ratio n , Local G o v e rn m e n t a n d E th n ic A ffairs - selected o p e ra tio n s

A udit R e p o rt No. 14 A ttorney- G en eral’s D e p a rtm e n t

A udit R e p o rt No. 15 A d m in istrativ e S erv ices Portfolio

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A u d it R eport N o .16 D e p a rtm e n t of A d m in istra tiv e S ervices - le a s in g e x p e n d itu re

A u d it R eport No. 17 A u s tra lia n C u s to m s S erv ice - p a s s e n g e r a n d crew p ro c e s s in g

A u d it R eport No. 18 D e p a rtm e n t of D efence

A u d it R eport No. 19 P u b lic B ro a d c a s tin g F o u n d a tio n Lim ited

A u d it R eport N o.20 R e p o rt on M in isterial P o rtfo lio s- b u d g e t s ittin g s 1 9 8 9

A u d it R eport No.21 Office of th e P a rlia m e n ta ry R ep o rtin g S ta ff

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