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Thursday, 8 November 1973
Page: 1651

The PRESIDENT -Is leave granted? There being no objection, leave is granted.

Senator McAULIFFE - The 145th report of the Public Accounts Committee comprises 2 Treasury minutes relating to previous reports of the Committee. Those reports were the 123rd report and the 133rd report, which dealt with expenditure from the Advance to the Treasurer for 1969-70 and 1970-71 respectively. In this report the Committee has found it necessary to make observations on 2 matters relating to the Treasury minute on the 123rd report and 2 matters in connection with the Treasury minute on the 133rd report. Briefly, the observations were concerned with the Adequacy of training provided by the Treasury in the interpretation of output data from the Treasury computer system; incomplete evidence submitted by the Department of Works and the Department of Air; and delays in the payment of accounts by client departments of the Department of Supply. Further details are set out in chapter 4 of the report.

The 146th report concerns the Committee's inquiry into aspects arising from the report of the Auditor-General for the financial year 1971-72. The Committee would again commend the Auditor-General and his staff for the sustained effort they have made over the years to present the report to Parliament during August. As we have indicated on previous occasions, the tabling of the report in that month each year has assisted the Committee considerably in this important area of its work.

In its inquiry the Committee took evidence from the Department of Air, the Department of Civil Aviation, the Department of the Navy, the Department of the Army, the Public Service Board, the Department of Supply, the Department of the Treasury and the Department of Works. In all, our inquiries related to 8 matters.

In relation to the Department of Civil Aviation, the Committee inquired into fraudulent salary payments that occurred in the Department's Victoria-Tasmania region. The frauds were perpetrated by a number of officers within the salaries section in collusion with other participants. The evidence shows that a significant factor in the frauds was the failure of departmental officers to observe internal controls and checks specified in Treasury regulations, Treasury directions and Departmental instructions. Other factors that facilitated the frauds were a lack of sufficient staff to handle the volume of work and the general inexperience of the staff in the salaries section. It appears that appropriate action has been taken by the Department to prevent a recurrence of similar frauds.

The evidence taken from the 3 Service departments related mainly to inadequate checking of billings received from the United States services for equipment and stores supplied which resulted in substantial over-charges of approximately $900,000 not being detected. The Committee considers it most unsatisfactory that inadequate checking of billings has persisted for so many years. The Committee hopes that the measures proposed to overcome the checking deficiencies will be successful and has called for a report on the current position from the departments concerned.

In connection with the Department of Supply, the Committee inquired into the necessity to subsidise production in 1971-72 for the first time at the Central Drawing Office and the Commonwealth Government Clothing Factory by charging amounts to the appropriation 'reserve capacity maintenance'. The evidence shows that the Central Drawing Office did not have a viable work load after the transfer of much of its work and staff to the Defence Printing Establishment and productivity at the Clothing Factory had been adversely affected by a change in location and the Victorian electricity strike. On examination of the Auditor-General's report for 1972-73, we note that the Clothing Factory seems to have regained its viability as there was no charge to the appropriation in 1972-73 and the Central Drawing Office ceased operations as a separate undertaking as from 1 July 1973.

Also in connection with the Department of Supply the Committee inquired into overexpenditure on orders at the Government Aircraft Factories. A number of remedial steps were taken by the Department following Audit representations and the Committee is satisfied that each of them will contribute to the eradication of the problem.

In the case of the Department of Works the Committee's inquiry related to a claim by the Department against a private consultant in respect of the cost of rectification of deficiencies in the design for the structural frame for the terminal building at Tullamarine Airport. The Committee was neither fully satisfied with the method used to select the particular consultant nor with the methods of selection generally prevailing and has recommended that the Department should examine the alternative methods of selection suggested during the inquiry. The Committee was also not satisfied that sufficient control had been exercised in the administration of the contract and considered that every effort should be made to prevent a recurrence of similiar circumstances. In addition to these matters, evidence was taken from the Department of Air in relation to accounting for supplies purchased overseas, the Public Service Board concerning incorrect payments to officers leaving the Public Service and the Department of the Treasury in relation to the Works Services Trust Account. I commend the reports to honourable senators.

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