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Finance and Public Administration Legislation Committee—Senate Standing—Report on annual reports referred to legislation committees—No. 1 of 2016, dated March 2016


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The Senate

Finance and Public Administration

Legislation Committee

Annual reports (No. 1 of 2016)

March 2016

ii

© Commonwealth of Australia 2016

ISBN 978-1-76010-352-1

Senate Finance and Public Administration Committee Secretariat:

Ms Lyn Beverley (Secretary)

Ms Margaret Cahill (Research Officer)

Ms Sarah Brasser (Administrative Officer)

The Senate PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3530 Fax: 02 6277 5809 E-mail: fpa.sen@aph.gov.au Internet: www.aph.gov.au/senate_fpa

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iii

Membership of the Committee

Members

Senator Cory Bernardi (Chair) LP, SA

Senator Jenny McAllister (Deputy Chair) ALP, NSW Senator Joanna Lindgren (from 23 February 2016) LP, QLD Senator Bridget McKenzie NAT, VIC

Senator Nova Peris ALP, NT

Senator Janet Rice AG, VIC

Senator Dean Smith (until 23 February 2016) LP, WA

Table of Contents

Membership of the Committee ........................................................................ iii

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

Introduction ............................................................................................................ 1

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

Allocated portfolios ................................................................................................ 2

Role of annual reports ............................................................................................ 2

Reports examined ................................................................................................... 2

Reports not examined ............................................................................................. 3

Method of assessment and current annual reporting requirements ........................ 4

Timeliness ............................................................................................................... 7

Senate debate .......................................................................................................... 9

Non-reporting bodies ........................................................................................... 10

Assessment of reports ........................................................................................... 10

Chapter 2............................................................................................................ 11

Review of selected reports ...................................................................................... 11

Department of Parliamentary Services ................................................................. 11

Department of Finance ......................................................................................... 17

Department of the Prime Minister and Cabinet .................................................... 19

Australian National Audit Office ......................................................................... 23

Australian Public Service Commissioner ............................................................. 25

Office of the Official Secretary to the Governor-General .................................... 27

Appendix 1 ......................................................................................................... 31

Dates relating to the presentation of reports between

1 May to 31 October 2015 ................................ ...................................................... 31

Chapter 1

Introduction 1.1 The Senate Finance and Public Administration Legislation Committee (the committee) is responsible for examining the annual reports of the parliamentary departments,1 and the departments and agencies of the Prime Minister and Cabinet Portfolio and the Finance Portfolio.

1.2 This is the first report on annual reports for 2016 and provides an overview of selected annual reports presented to the Parliament between 1 May and 31 October 2015. Copies of this and other committee reports can be obtained from the Senate Table Office, the committee secretariat or online at the committee's web page.

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

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

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

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

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

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

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

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

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

1 As a matter of comity between the Houses of Parliament, neither House inquires into the operations of the other House. For this reason, neither the annual report of, nor the proposed expenditure for, the Department of the House of Representatives is referred to a Senate committee for review.

2

Allocated portfolios 1.4 The Senate allocated departments and agencies to committees on 13 November 2013.2 In accordance with that resolution, the committee has responsibility for the oversight of the following:

 Parliament;

 Prime Minister and Cabinet Portfolio (PM&C Portfolio); and

 Finance Portfolio.

Role of annual reports 1.5 Annual reports place a great deal of information about government departments and agencies on the public record in relation to the performance, activities, management and financial position of the reporting body. The Requirements for Annual Reports for Departments, Executive Agencies and Other Non-corporate Commonwealth Entities (Requirements for Annual Reports), prepared by the Department of the Prime Minister and Cabinet (PM&C), note that '[t]he primary purpose of annual reports of departments is accountability, particularly to the Parliament.'3 Annual reports assist the Parliament in the examination of the performance of departments and agencies, and the administration of government programs.

Reports examined 1.6 During the period of 1 May to 3l October 2015, 17 annual reports of bodies or statutory office holders were presented to the Parliament and referred to the committee. The reports examined are categorised as follows:

Non-corporate Commonwealth entities

Parliamentary departments

 Department of the Senate - Report for 2014-15

 Parliamentary Budget Office - Report for 2014-15

 Department of Parliamentary Services - Report for 2014-15

Departments of State

 Department of the Prime Minister and Cabinet - Report for 2014-15

 Department of Finance - Report for 2014-15

Agencies

 Australian National Audit Office - Report for 2014-15

2 Journals of the Senate, No. 1, 13 November 2013, pp 88-89.

3 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. 3.

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 Office of the Official Secretary to the Governor-General - Report for 2014-15

 Australian Public Service Commission - Report for 2014-15, including report

of the Merit Protection Commissioner

 Inspector-General of Intelligence and Security - Report for 2014-15

 Commonwealth Ombudsman - Report for 2014-15

 Private Health Insurance Ombudsman - Report for 2014-15

 Future Fund Management Agency- Report for 2014-15 4

Corporate Commonwealth entities

 Albury-Wodonga Development Corporation - Report for the period 1 July to

31 December 2014 [Final report]

Commonwealth companies

 National Australia Day Council Limited - Report for 2014-15

 Australian River Co. Limited - Report for the period 1 December 2013 to

30 November 2014

Statutory office holders

 Parliamentary Service Commissioner - Report for 2014-15, including report

of the Parliamentary Service Merit Commissioner

 Remuneration Tribunal - Report for 2014-15

Reports not examined 1.7 The committee is not obliged to examine reports on the operation of Acts, reports of Royal Commissions, statements of corporate intent, surveys, policy papers, budget documents, corporate plans or errata. Where a report is referred to two standing committees, the committee has deferred examination of those reports to the committee which has primary oversight of the portfolio where that agency sits. Accordingly, the following documents were also referred to the committee but not examined in this report:

 Institutional Responses to Child Sexual Abuse - Royal Commission - Report of case study no. 17 - The response of the Australian Indigenous Ministries, the Australian and Northern Territory governments and the Northern Territory police force and prosecuting authorities to allegations of child sexual abuse which occurred at the Retta Dixon Home, dated July 2015

 Classification (Publications, Films and Computer Games) Act 1995 - Independent review of Part 10 (Material prohibited in certain areas in the Northern Territory) by MinterEllison, dated 6 August 2015

4 It is noted that section 10(2) of the Public Governance, Performance and Accountability Act 2013, states that the High Court and the Future Fund Board of Guardians are not Commonwealth entities.

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 Stronger Futures in the Northern Territory Act 2012 - Independent review of

the effectiveness of Northern Territory and Commonwealth laws in reducing alcohol-related harm by MinterEllison, dated 6 August 2015

 Australian Electoral Commission - Western Australian Senate Election 2014

- Funding and disclosure report, dated January 2015

 Final Budget Outcome 2014-15

 Clean Energy Finance Corporation - Report for 2014-15

Method of assessment and current annual reporting requirements 1.8 Senate Standing Order 25(20) requires that the committee examine reports referred to it to determine whether they are timely and 'apparently satisfactory'. The committee must consider whether the reports comply with the relevant legislation and guidelines for the preparation of annual reports in forming its assessment.

Public Governance, Performance and Accountability Act 2013

1.9 The Public Governance, Performance and Accountability Act 2013 (PGPA Act) came into effect on 1 July 2014, replacing the repealed Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act). As set out in previous reports of the committee, different reporting requirements had applied to the former FMA Act bodies and CAC Act bodies.

1.10 Major changes to the Requirements for Annual Reports, which apply to non-corporate Commonwealth entities, were anticipated for the 2014-15 annual reports following the commencement of the PGPA Act. However, these revisions are now anticipated to come into effect in 2015-16.5 Notwithstanding this delay, changes were made to the updated Requirements for Annual Reports in the interim to reflect the passage of the PGPA Act, including the amendment of references to the CAC Act and FMA Act.

1.11 The Requirements for Annual Reports do not apply to corporate Commonwealth entities and Commonwealth companies (formerly CAC Act authorities and companies). The current Requirements for Annual Reports note that sections 7AB and 7AC of the Public Governance Performance and Accountability (Consequential and Transitional Provisions) Rule 2015 continue the application of the Commonwealth Authorities (Annual Reporting) Orders 2011 and the Commonwealth Companies (Annual Reporting) Orders 2011 to annual reports for those entities and therefore will apply for the 2014-15 reporting period.6

5 See Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies, 29 May 2014, p. i; and Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive

Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. i. 6 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for

Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. 1.

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1.12 Therefore, noting the above changes and transitional arrangements, below is a summary of the instruments under which the 2014-15 annual reports were prepared:

 for non-corporate Commonwealth entities: the PGPA Act, section 46; for portfolio departments and executive agencies, the Public Service Act 1999, sections 63(2) and 70(2); for parliamentary departments, the Parliamentary Service Act 1999, section 65; for statutory bodies, relevant enabling legislation; and the Requirements for Annual Reports;

 for corporate Commonwealth entities: the PGPA Act, section 46; for statutory

bodies, relevant enabling legislation; the Commonwealth Authorities (Annual Reporting) Orders 2011;

 for Commonwealth companies: the PGPA Act, section 97, which also refers

to requirements under the Corporations Act 2001; Commonwealth Companies (Annual Reporting) Orders 2011; and

 for non-statutory bodies: the guidelines are contained in the government response to the Senate Standing Committee on Finance and Public Administration Report on Non-Statutory bodies, Senate Hansard, 8 December 1987, pp 2632-45.

Development of new reporting rules under the PGPA Act

1.13 The committee notes that the responsibility for issuing the Requirements for Annual Reports transferred from the Department of PM&C to the Department of Finance on 1 July 2015.7 Under the Joint Committee of Public Accounts and Audit's (JCPAA) inquiry into the Department of Finance's development of the Commonwealth Performance Framework, Finance advised that 'these requirements will be replaced through the consolidation of all mandatory requirements into a rule made for the purposes of section 46 of the PGPA Act.'8 Section 46(4) of the PGPA Act states that before rules are made they must be approved on behalf of the Parliament by the JCPAA.

1.14 The Department of Finance will undertake a consultation process in the development of the guidelines which will include input from the JCPAA.9 The committee understands that the JCPAA will seek feedback from Senate Standing Committees on the development of the new guidelines and looks forward to the opportunity of participating in this process.

7 See footnote 28, Joint Committee of Public Accounts and Audit, Report 453 Development of the Commonwealth Performance Framework, December 2015, p. 12.

8 Joint Committee of Public Accounts and Audit, Report 453 Development of the Commonwealth Performance Framework, December 2015, p. 12.

9 Joint Committee of Public Accounts and Audit, Report 453 Development of the Commonwealth Performance Framework, December 2015, Submission 17 - Supplementary Submission, pp 2-3.

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PM&C Requirements for Annual Reports for 2014-15 reports

1.15 The Requirements for Annual Reports are reviewed annually and, if required, are updated to take into account any changes to reporting requirements in legislation, arising from new policy, or recommendations in parliamentary, Australian National Audit Office (ANAO), or other reports. The Requirements for Annual Reports published on 25 June 2015, noted that the significant amendments, apart from those noted above concerning enactment of the PGPA Act, to the current version relate to small business procurement and Indigenous employment. 10

Small Business Procurement

1.16 This new mandatory reporting obligation is comprised of three elements which have been added to reflect the Government’s commitment to improve small business access to Commonwealth contracts and requires:

 the inclusion of a statement that refers readers to the statistics on Small and

Medium Enterprises (SMEs) participation on the Department of Finance's website;

 for bodies that are 'material' in nature, the inclusion of a statement which

refers readers to the on-time payments performance results on Treasury's website; and

 the inclusion of a brief statement on the ways in which the agency's

procurement practices support SMEs which is consistent with paragraph 5.4 of the Commonwealth Procurement Rules.11

Indigenous employment

1.17 This new mandatory reporting requirement specifies that the annual report must include information on the number of ongoing and non-ongoing employees as at 30 June, for the current and preceding year who identify as Indigenous. The Requirements for Annual Reports note that this requirement follows the Australian Government's announcement of a new Indigenous employment target across the Commonwealth public sector as part of its response to the Forrest Review, Creating Parity.12

10 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. i.

11 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, pp 14-15.

12 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. 10.

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Timeliness

Commonwealth entities

1.18 Section 46 of the PGPA Act requires Commonwealth entities to prepare an annual report and provide it to the responsible Minister by the 15th day of the fourth month after the end of the reporting period for the entity.13 This section of the Act does not, however, provide for a timeframe for the Minister to present the report to the Parliament. For non-corporate Commonwealth entities, the Requirements for Annual Reports state that:

The responsible Minister must, in turn, present the report to each House of the Parliament on or before 31 October in the year in which the report is given. If the Senate Supplementary Budget Estimates hearings are scheduled to occur prior to 31 October, it is best practice for annual reports to be tabled prior to those hearings.14

1.19 As the Requirements for Annual Reports only apply to non-corporate Commonwealth entities, there is a lack of clarity regarding the timeframe for the presentation to the Parliament of annual report of corporate Commonwealth entities. It would appear that Section 34C of the Acts Interpretation Act 1901 regarding periodic reports would apply to corporate Commonwealth entities, as it did for Commonwealth authorities under the former CAC Act. Section 34C(3) of the Acts Interpretation Act states that:

(3) Where an Act requires a person to furnish a periodic report to a Minister for presentation to the Parliament but does not specify a period within which the report is to be so presented, that Minister shall cause a copy of the periodic report to be laid before each House of the Parliament within 15 sitting days of that House after the day on which he or she receives the report.

1.20 The committee hopes that the development of the new reporting requirements, as noted earlier, will provide clarity on this issue.

Commonwealth companies

1.21 Under section 97 of the PGPA Act, Commonwealth companies are required to prepare an annual report and provide it to the responsible Minister:

(a) if the company is required by the Corporations Act 2001 to hold an annual general meeting—the earlier of the following:

(i) 21 days before the next annual general meeting after the end of the reporting period for the company;

13 Following concerns raised by the committee on the operation of Section 46 of the PGPA Act, this section was amended to provide for the provision of the annual report to the Minister by 15 October rather than by 31 October, as originally drafted.

14 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and Other Non-Corporate Commonwealth Entities, 25 June 2015, p. 3.

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(ii) 4 months after the end of the reporting period for the company; and

(b) in any other case—4 months after the end of the reporting period for the company; or the end of such further period granted under subsection 34C(5) of the Acts Interpretation Act 1901.

1.22 Section 97(5) of the PGPA Act states that:

(5) If the Commonwealth company is a wholly-owned Commonwealth company, or is not required to hold an annual general meeting, the responsible Minister must table the documents in each House of the Parliament as soon as practicable after receiving them. In all other cases, the responsible Minister must table the documents in each House of the Parliament as soon as practicable after the annual general meeting of the company.

Timeliness of the 2014-15 reports examined

1.23 The committee considers the timely presentation of annual reports to be an important element in accountability to the Parliament and continues to encourage bodies and statutory officers to endeavour to meet relevant timeframes.

1.24 Appendix 1 lists the annual reports tabled (or presented) in Parliament between 1 May and 31 October 2015, and referred to the committee, with relevant tabling dates.

1.25 As noted above, the presentation of annual reports to the Parliament has two elements with regard to timeliness: the furnishing of the report to the Minister and the presentation of the report to the Parliament.

1.26 In regard to the first element, the committee notes that for relevant reports, most were provided to the Minister within the required timeframes as set out above. Two non-corporate Commonwealth entities failed to provide their reports to the Minister by 15 October: the Australian Public Service Commissioner and the Future Fund Management Agency both submitted their annual reports on 23 October.

1.27 Reports covering the 2014-15 financial year examined in this report were presented in the Parliament in a timely manner, that is, by 31 October 2015.

1.28 The committee commends those agencies whose annual reports were presented in the Parliament before the Supplementary Budget Estimates hearings which commenced in the week beginning 19 October 2015, making them available for examination at this time.

Reports covering other timeframes

1.29 The final report of the Albury-Wodonga Development Corporation covered the period 1 July to 31 December 2014 and the final report of the Australian River Co. Limited covered the period 1 December 2013 to 30 November 2014. Both reports appear to have met the relevant tabling requirements.

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Minister's response to recommendation from Report 1 of 2015

1.30 On 23 June 2015 the committee received advice from the Minister for Indigenous Affairs, Senator the Hon Nigel Scullion, in response to its recommendation from its report Annual reports (No. 1 of 2015) concerning the absence of annual performance information for the Office of the Registrar of Indigenous Corporations (ORIC) being tabled in the Parliament. The committee recommended:

…that the Minister for Indigenous Affairs and the Registrar of Indigenous Corporations review the previous process of incorporating information about the Registrar in the annual report of the portfolio department which supported accountability to the Parliament, and advise the committee on future arrangements.15

1.31 The Minister advised the committee that he and the Registrar reviewed the previous practice of incorporating ORIC's performance information in the portfolio department's annual report (then the Department of Families, Housing, Community Services and Indigenous Affairs). He informed the committee that the Registrar had advised of his support for the resumption of the previous practice of incorporating performance information in the portfolio department's report and that the Department of the PM&C, as the new portfolio department, had advised of no impediments to this practice. The Minister further noted that arrangements had been made to include performance information from ORIC in the 2014-15 annual report of the Department of the PM&C. Further comment on the Department of the PM&C's report appears in Chapter 2 of this report.

1.32 The formal Government response to the recommendation was tabled in the Senate on 4 February 2016 and confirmed that information on ORIC had been included in the annual report of the Department of the PM&C.

Senate debate 1.33 In accordance with Standing Order 25(20)(d) the committee is required to take into account any relevant remarks about the reports made in debate in the Senate. The committee notes that none of the annual reports examined in this report have been the subject of comments or debate in the Senate.

1.34 However, it is noted that the 2014-15 annual reports were the subject of questioning by senators during the Supplementary Budget Estimates 2015-16 hearings on 19 and 20 October 2015. Senators referred to the annual reports on several occasions and one theme of questioning concerned the timeliness of tabling of the reports. In particular, explanations were sought from some bodies that failed to meet best practice by not having the annual report available to the committee in time for the estimates hearings.16

15 Senate Finance and Public Administration Legislation Committee, Annual reports (No. 1 of 2015), March 2015, p. 11.

16 See for example, Official Committee Hansard, 19 October 2015, pp 77-78; Official Committee Hansard, 20 October 2015, pp 67-68.

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Non-reporting bodies 1.35 Standing Order 25(20)(h) requires that the committee inquire into, and report on, any bodies which do not present annual reports to the Senate but should present such reports.

1.36 The committee makes no recommendation for any bodies not presenting an annual report to do so.

Assessment of reports 1.37 Under Standing Order 25(20)(a), the committee is required to examine the annual reports of departments and agencies and report to the Senate on whether they are 'apparently satisfactory'. In its examination of the annual reports referred, the committee found them to be of a satisfactory standard and largely adhere to relevant requirements. The committee considers the reports examined to be 'apparently satisfactory'.

Chapter 2

Review of selected reports

2.1 The committee has selected the annual reports of the following bodies for closer examination:

 Department of Parliamentary Services

 Department of Finance

 Department of the Prime Minister and Cabinet

 Australian National Audit Office

 Australian Public Service Commission

 Office of the Official Secretary to the Governor-General

Department of Parliamentary Services Secretary's review

2.2 This year's annual report of the Department of Parliamentary Services (DPS) was prepared under the leadership of the Acting Secretary, Dr Dianne Heriot. The report generally adheres to the Requirements for Annual Reports and includes suggested as well as mandatory items. The committee appreciated Dr Heriot's forthright and open account of the year in review which highlighted not only the achievements of the department, but also the challenges, including the scrutiny of departmental processes and systems through reviews and audits by parliamentary committees and the Australian National Audit Office (ANAO).

2.3 Dr Heriot did not gloss over the findings of these processes and was frank in her description:

There were highly critical findings by the Australian National Audit Office (ANAO), further review of the performance of the department by the Senate Finance and Public Administration Legislation Committee, and an inquiry by the Senate Standing Committee of Privileges into the use of CCTV material in Parliament House.

Many aspects of our work were scrutinised, including record-keeping, asset management, procurement, contract management, leadership and the use of CCTV footage in an internal disciplinary matter. One outcome of the Privileges Committee inquiry into CCTV use was the development by the Presiding Officers of a new code of practice for CCTV. In accordance with the Committee’s recommendations, privileges training for DPS staff has been strengthened.

The wide ranging inquiry by the Senate Finance and Public Administration Legislation Committee had not yielded a final report by the end of the financial year, but the two interim reports the committee issued in April and June 2015 signalled serious concerns with key aspects of DPS’

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performance. The report on DPS’ performance by the ANAO, Performance Audit 2014-15 #24 Managing Assets and Contracts at Parliament House, which was released in February 2015, similarly pointed to significant shortcomings.1

2.4 Dr Heriot also helpfully outlined how the department was responding to the findings of these reviews:

The department worked hard to respond to the findings of each of the reviews and inquiries. More robust systems were put in place, to improve accountability and transparency, and to ensure that DPS employees better understand their obligations. While there is still some way to go, considerable progress has been made.

In particular, our 2014-15 work involved systematically and progressively responding to the recommendations of the ANAO report.

New procurement and contract management policies, and training modules for staff involved in procurement and contract management, have been developed and introduced. The suite of training now ranges from foundation training to quarterly procurement practitioners’ forums which share learnings and reinforce best practice. Further advanced training will be introduced in 2015-16. By early 2015-16 a new Procure to Pay (P2P) system will complete the comprehensive reforms of DPS’ procurement processes.

The majority of the ANAO’s recommended reforms will have been implemented by December 2015.

A new DPS Risk Management Policy and Framework was also implemented in 2014-15, and work on a new fraud control plan was well advanced by the end of the financial year.

While there have been some sound achievements, there remains a significant program of work ahead to address findings in relation to records and asset management and to build on improvements in procurement and contract management.2

2.5 Notwithstanding the issues noted above, Dr Heriot also outlined the broad range of work carried out by the department in support of the functions of the Parliament and the needs of parliamentarians and their offices throughout 2014-15. Some highlights included:

 support for the 12 new senators who took their seats in July 2014, in addition to four senators who filled casual vacancies;

 installation of assisted listening devices in all but one of the committee rooms making the Parliament more accessible to occupants with a hearing impairment;

1 Department of Parliamentary Services Annual Report 2014-15, pp 2 and 4.

2 Department of Parliamentary Services Annual Report 2014-15, p. 4.

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 availability of on-demand streaming of parliamentary proceedings and

historical footage via smartphone, tablet or computer;

 new behind-the-scenes tours and special events to coincide with major local events;

 completion of a Building Condition Assessment Report and a Strategic Asset Management Plan; and

 commencement of a major program of work to improve physical security at Parliament House.3

2.6 The Secretary's review also remarked that the Senior Executive Service turnover rate within the department continued to be high, noting that four senior staff departed during the year and that the former Secretary, Ms Carol Mills, ceased in that role in April 2015. Dr Heriot further noted that '[s]tability of the leadership team remains a challenge…'.4

2.7 The committee notes that the report does not specifically note that Ms Mills' term as Secretary of DPS was terminated. The report's discussion of SES employment only notes the recruitment and departures, including transfers and a resignation.5 The committee acknowledges the sensitivities around this action; however, as annual reports are the key reference document relating to the operations and performance of departments each year and also form part of the historical record, it would be expected that it include this detail. The termination of a departmental secretary due to the loss of confidence of a Minister, or in this case, the Presiding Officers, is a relatively rare and significant event, and it would be expected to be recorded in the annual report for that year.

Parliamentary Librarian's review

2.8 The Parliamentary Librarian, Dr Dianne Heriot, highlighted the client evaluation survey of library services for the 44th Parliament, noting a high overall satisfaction rate of 93% among Senators, Members and their staff. Dr Heriot advised that this was a pleasing result in light of the previously reported budgetary constraints under which the Library has been operating. However, it was further noted that the evaluation found:

…that behind positive satisfaction ratings there were indications that the impacts of past budget cuts have been felt by all client groups. Ratings for proactivity, for quality and consistency of services had declined since the last evaluation (in 2012); and satisfaction rates among parliamentary staff were less positive than those of senators and members (78 per cent for committee staff and 86 per cent for other parliamentary staff). While the very welcome additional funding provided in the 2014-15 Resource Agreement has enabled the Library to begin to address capacity gaps, this

3 Department of Parliamentary Services Annual Report 2014-15, pp 2-6.

4 Department of Parliamentary Services Annual Report 2014-15, p. 6.

5 Department of Parliamentary Services Annual Report 2014-15, p. 157.

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remained a work in progress throughout the reporting period. The benefits of this investment will be realised in 2015-16 and beyond.6

2.9 Other areas which were a focus for the Library during 2014-15 were the development of the new strategic plan; progress in digitisation of two million pages of archived information and 1200 hours of electronic media archives; improvements to the delivery of news and media monitoring services by providing access to a much wider range of regional press, online news and regional radio; and assistance to new Senators who commenced in 2014.7

Performance information

2.10 The report on performance is arranged by departmental divisions and includes divisional highlights and discussion on activities. At the end of these sections a table of results against key performance indicators (KPIs) is included. The KPIs are similar to the previous year with some minor amendments. They generally reflect the KPIs presented in the Portfolio Budget Statements (PBS) for 2014-15 but have been allocated numbering and had some additional areas included for the building occupant satisfaction measure, including new measures for cleaning, gardens and landscaping, art services and heritage management. Like the 2013-14 PBS, the 2014-15 PBS does not include deliverables8 for the department.

2.11 The committee commented in some detail on the department's performance measures in its report Annual Reports (Report 1 of 2015). As the department's performance information is essentially the same as the previous year, the committee reiterates its earlier comments, particularly in relation to the absence of program deliverables and the limitations of relying on the building occupant satisfaction survey as the measure for performance for core services delivered by DPS.9

2.12 The report advised that the building occupant/client satisfaction survey was conducted jointly with the ANAO in September 2014.10 It was noted that this survey invited the 226 parliamentarians, with 33 responding, and did not involve other building occupants. Noting the above comments on the disadvantages of relying of client surveys to measure performance for core services, it was nevertheless pleasing to note that new feedback mechanisms may be incorporated into the performance information in 2015-16; where, in addition to parliamentarians, the survey would include their staff and other building occupants:

6 Department of Parliamentary Services Annual Report 2014-15, pp 81-82.

7 Department of Parliamentary Services Annual Report 2014-15, pp 82-84.

8 'Deliverables' are produced by the programme in meeting its objective; and tangible, quantifiable products of a programme, see Department of Finance, Guide to preparing the 2014-15 Portfolio Budget Statements, p. 24.

9 Senate Finance and Public Administration Legislation Committee, Annual Reports (No. 1 of 2015), pp 16-21.

10 The ANAO was part of the survey to enable it to inform its performance audit. See Department of Parliamentary Services Annual Report 2014-15, p. 74.

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…in 2015-16 the department will develop a Client Feedback Policy and Service Charter that outlines what our clients, stakeholders and customers can expect from our service delivery and it will also outline how they interact with the department. In addition, the department is considering a new quarterly survey aimed at obtaining regular feedback from building occupants. The surveys could seek feedback about a number of services or activities including:

 cleaning

 building maintenance

 parliamentary broadcasting and recording

 management of the Parliament House Art Collection

 garden and landscaping

 parking

 heritage

 gym and sporting fields

 security 11

2.13 Following the committee's recent inquiries into the performance of DPS, the committee continues to take an active interest in a number of areas and projects within the department. One area of particular interest is heritage management and the development of the department's new heritage framework comprising a conservation management plan and design principles document. The performance report on heritage and design integrity provided background on the development of these documents but does not indicate when they will be completed.12 Last year's annual report noted that both documents were expected to be completed in 2014-15.13 The Secretary's review in this year's report notes that '[b]oth documents are expected to be competed in 2015-16' but does not offer an explanation as to why they were not delivered in 2014-15 as anticipated.14

2.14 It is noted that the Parliamentary Library continues to report against its KPIs and deliverables relating to research services and information access services over a three year period even though these are not included in the PBS. It is commended for maintaining this performance information and making it available in the department's annual report.15

11 Department of Parliamentary Services Annual Report 2014-15, p. 75

12 Department of Parliamentary Services Annual Report 2014-15, p. 45.

13 Department of Parliamentary Services Annual Report 2013-14, p. 47.

14 Department of Parliamentary Services Annual Report 2014-15, pp 7-8.

15 Department of Parliamentary Services Annual Report 2014-15, pp 127-136.

16

Financial Performance

2.15 The report included a good summary of the department's financial performance which satisfactorily met the requirements under the Requirements for Annual Reports.

2.16 DPS recorded an operating surplus of $10.9 million (excluding unfunded depreciation) in 2014-15 and follows two years of financial deficits.16 The surplus was attributed to the following causes:

 flow-on effects of the savings measures implemented in 2013-14 to minimise the operating deficit…;

 fewer voluntary redundancies than planned with 11 of the planned 24 completed during 2014-15; and

 delays in the implementation the Australian Parliament House Security Upgrade Budget Measure.17

2.17 It was noted that DPS received 'significant investment' in the 2014-15 budget to improve services. The report discussed how the additional resources were being utilised:

…DPS has improved its financial and procurement policies and processes. This included the development, in the latter part of the financial year, of a new procurement framework, new Accountable Authority Instructions, an updated financial delegation manual, a new Capital Management Governance Framework, new financial reports to all executives and upgrades to the Enterprise Resource Management System.

These improvements address weaknesses identified in reviews of the department and will better position DPS to deliver sustainable services and a significant capital program over the next four years.18

2.18 The Parliamentary Librarian also provided a discussion on the budget and financial performance of the Parliamentary Library in 2014-15. Dr Heriot noted that funding for the Parliamentary Library is set out in the Resource Agreement between herself and the Secretary of DPS which is provided for under section 38G of the Parliamentary Service Act 1999 to help ensure the independence of the Library. There was under-expenditure of budgeted funds in 2014-15. The Library's Resource Agreement provided for an operating budget $16.348 million and a capital budget of $1.240 million; and actual expenditure was $15.729 million in operation funding and $1.532 in capital funding. This was attributed primarily to employee costs where recruitment was slower than anticipated.19

2.19 The department received an unqualified audit report from the ANAO on its financial statements.

16 Department of Parliamentary Services Annual Report 2014-15, pp 4-5.

17 Department of Parliamentary Services Annual Report 2014-15, p. 20.

18 Department of Parliamentary Services Annual Report 2014-15, p. 18.

19 Department of Parliamentary Services Annual Report 2014-15, pp 92-93.

17

External Scrutiny

2.20 The report's section on significant development in external scrutiny was comprehensive. This section included details of the improvements which had been implemented as a result of the six recommendations from the ANAO performance audit concerning DPS's management of assets and contracts. The full terms of reference for both the Committee's inquiry into DPS and the Senate Privileges Committee inquiry into the use of CCTV material in Parliament House were also included in this section.20

New reporting requirements for 2014-15

2.21 The annual report goes some way to address the new requirement on the number of Indigenous employees, but does not fully cover the information required. It provides a percentage of the representation of Indigenous employees across the department as at 30 June 2015 only; however, it does not include the number of ongoing and non-ongoing employees as at 30 June, for the current and preceding year who identify as Indigenous.21

2.22 The other new requirement for the 2014-15 annual report concerning procurement initiatives to support small business was adequately covered in the annual report.22

Department of Finance 2.23 Finance has again produced an informative and high quality annual report which closely aligns with the reporting requirements, including 'suggested' as well as 'mandatory' information. Information is clearly presented and the report is easy to navigate. The comprehensive glossary is a helpful inclusion.

Secretary's overview

2.24 The Secretary of the Department of Finance, Ms Jane Halton AO PSM, noted that the 2014-15 year was her first in that role. Her overview provides a useful summary of the key achievements throughout the year, which included the provision of support to government to formulate and deliver the 2015-16 budget. Other highlighted achievements of the department by the Secretary included:

 working with Commonwealth entities and companies to assist them in understanding new duties and responsibilities under the Public Governance, Performance and Accountability Act 2013;

 design, development and implementation of the enhanced Commonwealth

performance framework;

 development and implementation of the Australian Government charging

framework to improve consistency of charging activities;

20 Department of Parliamentary Services Annual Report 2014-15, pp 148-151.

21 Department of Parliamentary Services Annual Report 2014-15, p. 161.

22 Department of Parliamentary Services Annual Report 2014-15, p. 166.

18

 the conduct of the pilot phase of the Efficiency Through Contestability

Program;

 the launch of the Australian Government Organisations Register;

 the launch of govCMS to provide a new whole-of-government website

delivery service to Commonwealth, state and local Australian government entities; and

 support to the 2014 G20 Leaders' Summit and associated meetings, including through COMCAR services.23

2.25 The review also noted significant changes to the Finance Portfolio through privatisation, mergers and closures facilitated by the department throughout the year. These involved the sale of Medibank Private in November 2014, the merger of ComSuper with the Commonwealth Superannuation Corporation on 1 July 2015, and closure of Albury-Wodonga Development Corporation and the Australian River Co. Limited during the year.24

2.26 The Secretary's review also outlined the department's financial performance and priorities for the coming year.25

Performance reporting

2.27 The department's report on performance presents a concise and thorough review of how the department has performed during the year in relation to its deliverables and KPIs. The department has developed a detailed and comprehensive set of deliverables and KPIs. The KPIs are a mix of qualitative and quantitative measures and the inclusion of some targets aids in the assessment of achievement.

2.28 A summary overview of performance for each outcome is presented followed by highlights of significant activities and achievements in 2014-15. The introductory discussion for each outcome notes that all deliverables were achieved and provides an overview of the results for the KPIs. Out of the total number of 46 KPIs across the three outcomes, 39 were fully met. The summary overview of performance for each outcome includes a comparison of aggregate results of KPIs from the previous year.

2.29 Following this are the performance information tables presenting a list of deliverables and the results for each of the KPIs. The tables provide information on whether the KPI was achieved and in many cases includes supporting commentary which is particularly helpful as an explanation for those KPIs which were not achieved or only partially achieved.

2.30 Where performance information had changed, this was noted and an explanation provided. For example, the amendment to the deliverable and KPI for

23 Department of Finance Annual Report 2014-15, pp 3-5.

24 Department of Finance Annual Report 2014-15, p. 4.

25 Department of Finance Annual Report 2014-15 pp 6-7.

19

'International governance and cooperation' under Program 1.1 had been amended and was noted in the report as required under the Requirements for Annual Reports.26

Financial performance

2.31 The Secretary noted in her review that the department's financial position is sound, and is operating within its appropriations.27 The report indicated that the department recorded an operating surplus of $56.4 million for the 2014-15 financial year compared to an operating deficit of $97.1 million last year.28 The surplus was attributed to:

The effective management of both its departmental specific budget funded operations and special accounts covering whole-of-government activities such as the Commonwealth's procurement arrangements and property portfolio.29

2.32 The department's audited financial statements received an unqualified audit opinion from the ANAO.30

External scrutiny

2.33 The report's section dealing with significant developments in external scrutiny was comprehensive and included details of all ANAO reports involving the department, a full list of the details of engagement with parliamentary committees, and details of substantial legal actions. This section also helpfully notes that the department was not impacted by reports or decisions of other the external oversight bodies, such as the Commonwealth Ombudsman and the Australian Information Commissioner.31

New reporting requirements for 2014-15

2.34 Finance has included the necessary information for the new mandatory requirements concerning the Indigenous employment and small business procurement in this year's report.32

Department of the Prime Minister and Cabinet 2.35 This is the first annual report of the new Secretary of the Department of the Prime Minister and Cabinet (PM&C), Mr Michael Thawley AO.33 Some of the areas highlighted by the Secretary in his overview included the department's role in

26 Department of Finance Annual Report 2014-15, pp 32-33.

27 Department of Finance Annual Report 2014-15, p. 7.

28 Department of Finance Annual Report 2014-15, p. 82.

29 Department of Finance Annual Report 2014-15, p. 7.

30 Department of Finance Annual Report 2014-15, pp 92-93.

31 Department of Finance Annual Report 2014-15, pp 66-70.

32 Department of Finance Annual Report 2014-15, pp 90 & 238.

33 Mr Thawley announced his resignation in November 2015 and was replaced as Secretary by Dr Martin Parkinson PSM on 23 January 2016.

20

supporting Australia's G20 Presidency, the relocation of the Government to north-east Arnhem Land for almost a week in September 2014 and coordination of major economic reform projects. Under the department's responsibility for Indigenous Affairs, the Secretary noted the conduct of the first open grant round under the Indigenous Advancement Strategy (IAS), and results from the Remote School Attendance Strategy. He further noted that the policy priorities over the coming year will focus on economic reform and national security.34

2.36 The committee notes the comprehensive overview of the Prime Minister and Cabinet Portfolio structure in this year's report, which includes a list of all non-corporate Commonwealth entities, corporate Commonwealth entities, Commonwealth companies, and other statutory office holders and bodies within the portfolio as at the time of reporting.35

Performance

2.37 This year's report on performance sets out the departmental objectives as listed in the PBS, followed by the results for the KPIs. The discussion of performance is presented against each of the nine deliverables as set out in the PBS, rather than by the departmental group, as has been the case in recent reports. This is a welcome approach to the structure of the performance section of the report which now aligns more closely with the performance information set out in the PBS, providing a clearer read between the documents.

2.38 The KPIs for Program 1 - Prime Minister and Cabinet, are qualitative and are set out in a tabular format indicating that each KPI was met. The KPIs for Program 1 are essentially the same as the previous year; however, three additional KPIs for Program 1 have been included this year to reflect the additional departmental responsibilities as a result of the amendments to the Administrative Arrangements Order after the federal election in 2013 which added the responsibilities of deregulation and women's policy. The department met all the KPIs for Outcome 1.

2.39 Outcome 2, Indigenous, is delivered through five streams (six programs) under the new Indigenous Advancement Strategy. The KPIs and deliverables for programs under Outcome 2, have been updated and are set out in tables by program, providing a clear read between the information presented in the PBS and the report. While most of the KPIs are quantitative, they do not include targets, which would enhance this information to provide a measurable basis to assess performance of the department in meeting a program's objective.

2.40 For example, the KPIs for Program 2.5 - Remote Australia Strategies, are set out in the report as follows:

34 Department of the Prime Minister and Cabinet Annual Report 2014-15, pp v-vii.

35 Department of the Prime Minister and Cabinet Annual Report 2014-15, p. 1.

It is noted that following the amendment to the Administrative Arrangements Order 21 September 2015 the Digital Transformation Office moved from the Communication and Arts Portfolio to the Prime Minister and Cabinet Portfolio.

21

KPI 1 Met

Number of standardised tenancy agreements in place in relation to houses located on Indigenous land ✓

Since NPARIH commenced, 9277 standardised tenancy agreements have been put in place in relation to houses located on Indigenous land.

KPI 2 Met

Number of community based Indigenous Advancement Strategies developed ✓

The Department continued to actively engage with communities and stakeholders to guide the practical action taken in communities to address the Government’s priority areas of education, employment and community safety.

KPI 3 Met

Number of new home owners on Indigenous land

✘

The Department’s focus was on addressing the impediments to Indigenous home ownership on Indigenous land. The Department worked with Indigenous Business Australia and relevant jurisdictions to implement policies to help reduce the barriers to home ownership on Indigenous land. Work aimed to reform the delivery of Indigenous home loans in remote areas, develop and implement policies to allow the sale of social housing policies and provide advice to potential home owners to assist individuals to make informed decisions. Despite these efforts, there was only one additional Indigenous home ownership outcome

2.41 The KPIs for Program 2.5 are all quantitative; however, without a target figure to indicate a measure of success of failure, the reader is left to wonder how the result of 'met' or 'not met' was assessed. Notwithstanding this, the department is commended for establishing a comprehensive performance framework for Outcome 2 and for presenting results for the KPIs in the annual report in a clear and accessible manner. The explanatory comments supporting the result for each KPI in the performance tables is a particularly helpful inclusion.

2.42 The performance information is set out in a similar format to that for Outcome 1, that is, a discussion for each deliverable and the results for KPIs in a table format with an indication if the measure had been met. Of the total number of 19 KPIs for Outcome 2, 14 were met, two 'were on track', one was 'not on track', and two were not met.

2.43 Both the performance report and the Secretary's overview noted the conduct of the first IAS grant round in 2014-15 which funded 996 organisations to deliver over 1350 projects at a value of $1 billion.36 The strategy and grant round processes were subsequently the subject of some criticism, including in relation to the consultation processes. On 19 March 2015, the Senate referred the IAS tendering processes to the Senate Finance and Public Administration References Committee for inquiry and report. Acknowledging difficulties with the processes, the department subsequently announced in evidence before the References Committee that post implementation reviews of the grant funding round and the program guidelines would be conducted:

36 Department of the Prime Minister and Cabinet Annual Report 2014-15, pp vi and 22.

22

It is acknowledged that the transition to the new arrangements has been a significant shift and for a number of organisations very difficult. For some organisations the IAS funding round may have been the first time they have had to formally apply for funding in a national funding process. As noted previously, following the announcement of the outcomes on 4 March the government committed to ensuring that there were no unintended gaps resulting from the funding round. On 27 May the minister announced a number of additional grants aimed at providing longer funding agreements and ensuring that the service delivery gaps were filled. Feedback received directly by the department and through submissions to the inquiry process has indicated that there was a mixed level of awareness and understanding of these new arrangements. The department acknowledges this and, as I think has already been mentioned, has started a process to review the funding round process and the guidelines. The reviews are twofold. There is an external review and there is also an internal departmental review. We have started to write to people out in the sector and also key leaders in the area to consider what we will be doing in the post-implementation review of the funding round. The review will consider processes, administration and communication around the funding round. The review of the IAS guidelines will include consideration of matters such as program descriptions, linkages to the outcomes and additional information that could be included in any guidelines in the future.37

2.44 While the References Committee had not yet reported on its inquiry into the IAS, nor had the departmental reviews been reported on at the time of the completion of the annual report, it is still expected that the annual report would note that difficulties were experienced in the first grant round of this strategy and the action taken in response to those criticisms. While an annual report should document achievements and successes, the committee expects it to also be a frank account of challenges experienced by departments and agencies during the year and their response to them. Agencies are reminded that a mandatory requirement of annual reports is the inclusion of significant developments in external scrutiny during the year in review.38 While the PM&C annual report does include a section on external scrutiny, it does not mention the Senate FPA References Committee inquiry into the tendering processes for the IAS, which could be seen as a significant development in external scrutiny of the department.39

Financial performance

2.45 The department's financial statements received an unqualified opinion by the ANAO.40 The report's discussion on financial performance provides an account of the

37 Ms Eliza Carroll, Associate Secretary, Indigenous Affairs, Department of the Prime Minister and Cabinet, Senate Finance and Public Administration References Committee, Committee Hansard, 29 June 2015, p. 45.

38 Requirement for Annual Reports, p. 9.

39 Department of Prime Minister and Cabinet Annual Report 2014-15, p. 42.

40 Department of Prime Minister and Cabinet Annual Report 2014-15, pp 64-65.

23

department's operating result and includes a statement of financial position. The department recorded an operating surplus of $8.1 million, noting that the Statement of Comprehensive Income discloses a technical operating deficit of $17.5 million which includes:

• G20 operating surplus of $5.2 million

• unfunded depreciation and amortisation expense and asset write downs totaling $28.2 million

• a $1.8 million revaluation of employee liabilities due to changes in the long term bond rate and on-costs.41

Appendices

2.46 The report includes four appendices, each of which provides an annual report or background information on entities within the PM&C Portfolio, including those supported by the department:

 Aboriginals Benefit Account Annual Report 2014-15

 Aboriginal and Torres Strait Islander Land Account Annual Report 2014-15

 Office of the Registrar of Indigenous Corporations Annual Report 2014-15

 National Australia Day Council

2.47 In particular, the committee notes the inclusion of the annual report for the Office of the Registrar of Indigenous Corporations in this year's report, in response to the committee's recommendation from its first report of 2015 (as noted in Chapter 1 of this report). This one page summary is a welcome inclusion, and provides statistics on reporting compliance, formal examinations, provision of corporate governance training and products, LawHelp and prosecution. However, information on the office's funding and expenditure details, which the committee had previously noted were not publicly available, were not provided and would be a useful inclusion to aid in the organisation's transparency.42

New reporting requirements for 2014-15

2.48 The report includes the required information for the new mandatory requirements concerning the Indigenous Employment and small business procurement.43

Australian National Audit Office 2.49 This is the first annual report of the new Auditor-General, Mr Grant Hehir, who commenced in the role on 11 June 2015. The 2014-15 annual report is a concise and comprehensive account of the year and largely complies with the Requirements for Annual Reports.

41 Department of Prime Minister and Cabinet Annual Report 2014-15, p. 57.

42 Department of the Prime Minister and Cabinet Annual Report 2014-15, p. 217.

43 Department of the Prime Minister and Cabinet Annual Report 2014-15, pp 44 & 51.

24

2.50 Mr Hehir's overview provides a balanced account of achievements and challenges facing the office during the year. He noted that the ANAO had achieved 'solid ratings' in the survey of members of Parliament. In particular, the office attained 91 per cent satisfaction for both the responsiveness of staff and the integrity of the office; and achieved an overall satisfaction rating of 84 per cent, slightly lower than the previous result of 86 per cent in 2011-12. The areas identified for improvement included, better articulation of the ANAO's contribution to improving public sector administration, the communication of findings, and liaison with members of Parliament through the committee system.44

2.51 He noted the challenges facing the financial statement audit teams as a result of machinery of government changes resulting in some delays in completion of audits; however, added that he was confident that the 2014-15 financial statements would, nonetheless, be prepared, audited and reported on time.45

2.52 The ANAO delivered an operating surplus this year of $0.925 million, an increase from the 2013-14 surplus of $0.444 million. This was attributed to lower than anticipated expenditure due primarily to lower salary expenses resulting from staff vacancies during the year.46

Performance

2.53 The report includes a summary of 'Results at a Glance', a tabular presentation of results against the agency's performance information for deliverables and KPIs clearly setting out the target and result for each. It is noted that out of a total of 13 performance measures, nine were met or were exceeded.47

2.54 The performance measures reported on in the annual report, reflect those presented in the PM&C PBS for 2014-15, providing a clear read between the documents.

2.55 The performance report also included the results from surveys of stakeholders, noted above, including client surveys and feedback from Parliament. The report notes that feedback from stakeholders is an important mechanism for providing an understanding of the effectiveness of current practice and informs the development of new audit practices and approaches.48

New reporting requirements for 2014-15

2.56 In relation to the two new requirements included in the latest Requirements for Annual Reports, the report includes the number of staff who identify as Indigenous as at 30 June 2015; however does not include the figure for the preceding year, as

44 Australian National Audit Office Annual Report 2014-15, p. 2.

45 Australian National Audit Office Annual Report 2014-15, p. 2.

46 Australian National Audit Office Annual Report 2014-15, p. 9.

47 Australian National Audit Office Annual Report 2014-15, p. 10.

48 Australian National Audit Office Annual Report 2014-15, p. 29.

25

required under item 12(8) of the Requirements.49 It is also noted that this item is not listed in the compliance index at the back of the report.

2.57 The other new reporting obligation requiring the inclusion of details of procurement initiatives to support small business, could not be located in the report. As noted in Chapter 1 of this report, there are three elements to this requirement: the first requires the inclusion of a statement that refers readers to the statistics on SMEs on the Department of Finance's website. This could not be located in the report. The second part of the requirement requires the inclusion of a statement in the annual report which refers readers to the on-time payments performance results on Treasury's website and only applies to bodies that are considered 'material' in nature. According to the Department of Finance Public Governance, Performance and Accountability Act 2013 agency flip chart the ANAO is not considered a 'material' entity and therefore this element appears not to apply to it.

2.58 The third element, requiring a brief statement on the ways in which the agency's procurement practices support SMEs could not be located. The compliance index lists this requirement 'Procurement initiatives to support small business', but does not include a page reference number.50

Australian Public Service Commissioner 2.59 The annual report of the Australian Public Service Commissioner incorporates the report of the Merit Protection Commissioner. This is the first annual report of the Hon John Lloyd PSM who was appointed as the Public Service Commissioner in December 2014.

2.60 The 2014-15 report is a more streamlined document than the previous year, running to 144 pages, 58 pages fewer than the 2013-14 report. This reflects, in part, a more condensed performance section. It is an informative and concise report which meets the Requirements for Annual Reports and includes the suggested as well as mandatory requirements.

2.61 It was noted that the Internet address for the report inside the title page of the report under contact details,51 which is required under the Requirements for Annual Reports, takes the user to a page which requires a username and password for access.

Public Service Commissioner's review

2.62 The Commissioner's review notes that during 2014-15 the agency has focussed on initiatives to deliver a smaller, more flexible Australian Public Service (APS), including:

 modernising and streamlining the industrial relations framework;

 managing a reduction in APS staffing numbers; and

49 Australian National Audit Office Annual Report 2014-15, p. 46.

50 Australian National Audit Office Annual Report 2014-15, p. 133.

51 See https://www.apsc.gov.au/annualreport (accessed 22 January 2016).

26

 developing the leadership cadre of the APS. 52

2.63 The review also included the priorities in the coming year which the Commissioner noted included a focus on modernising the APS employment framework; improving the capability of human resource managers; performance management, learning, development and talent management; and APS workplace bargaining.53

2.64 The Commissioner included a brief summary of the agency's performance in 2014-15. It noted that the agency met its deliverables and KPIs for 2014-15, and achieved its Outcome within its budgeted resources. A clear statement summarising the agency's performance in relation to its performance framework set out in the 2014-15 PBS at the beginning of the report is a useful inclusion.54

Performance report

2.65 The Commission has developed detailed performance information which is set out in the PBS for the PM&C Portfolio for 2014-15. The performance review section of the report generally includes the performance information as listed in the PBS. As noted above, the Public Service Commissioner in his introductory remarks, advised that the Commission had met all of its deliverables and KPIs in 2014-15. In examination of the performance section of the report, it was noted that one KPI, relating to the number of reviews finalised on behalf of the Merit Protection Commissioner, was not met. Some KPIs are set out in tabular format with a result for the 2014-15 year listed, as well as a result from the preceding year. However, others are listed in a dot point format without a specific result or comment addressing each one.55

Financial performance

2.66 In addition to the Commissioner's note in his introductory review advising that the agency operated within its resources during the year, the report also includes a section on funding and financial performance. This section provides a summary which advises that a small surplus of $0.05 million was achieved by the Commission for 2014-15 and which notes that it includes the effects of the government's net cash funding arrangement where depreciation and amortisation expenses are no longer funded by an appropriation. It was further noted that excluding these factors, the Commission delivered an operating surplus of $1.1 million. The surplus was attributed to prudent management of financial resources.56

52 Australian Public Service Commissioner Annual Report 2014-15, p. 2.

53 Australian Public Service Commissioner Annual Report 2014-15, p. 3.

54 Australian Public Service Commissioner Annual Report 2014-15, p. 3.

55 Australian Public Service Commissioner Annual Report 2014-15, pp 10-11.

56 Australian Public Service Commissioner Annual Report 2014-15, p. 7.

27

New reporting requirements for the 2014-15

2.67 The annual report has satisfactorily addressed the two new requirements for the 2014-15 annual reports concerning Indigenous employment and procurement initiatives supporting small business. The relevant sections in the report included all the necessary information. Of note was the significant change in the number of employees who identified as Indigenous in the last two years: from sixteen in 2013-14 to nine in 2014-15.57

Merit Protection Commissioner Annual Report 2014-15

2.68 The Merit Protection Commissioner is responsible for the delivery of review and fee-for-service functions set out in the Public Service Act 1999 and the Public Service Regulations and comprise the functions of independent reviews of employment decisions and fee-for-service activities, including Independent Selection Advisory Committees.58

2.69 The annual report of the Merit Protection Commissioner for 2014-15 is informative and provides a good account of the year's activities and outcomes, the outlook for 2015-16 and the governance arrangements applying to the role of the Merit Protection Commissioner. The report includes statistics and discussion of the office's performance in regard to review processes during 2014-15, including volume and timeliness measures across different categories.

2.70 The report includes nine text boxes which contain brief case studies or feedback comments, similar to last year's report. While the committee prefers that annual reports not include excessive extraneous information to the core requirements of annual reports, it found that the inclusion of these items enhanced the report on this occasion. The inclusion of some actual examples of reviews that the office had undertaken with identifying information removed, assisted in illuminating the work of the office.

Office of the Official Secretary to the Governor-General 2.71 The annual report of the Office of the Official Secretary of the Governor-General is informative and meets the Requirements for Annual reports including the mandatory, as well as suggested items, where applicable.

Official Secretary's review

2.72 The Official Secretary's review provides an overview of the program of outreach and engagements by the Governor-General and Lady Cosgrove throughout 2014-15 facilitated by the office. The report highlights the significant ceremonial activities and engagements during the year including the services to mark the 100th anniversary of the ANZAC landings at Gallipoli. The review also highlights the number of community engagements undertaken throughout Australia and noted that one-third of the events the Governor-General attended were located in rural, regional

57 Australian Public Service Commissioner Annual Report 2014-15, pp 41-42, 96.

58 Australian Public Service Commissioner Annual Report 2014-15, p. 107.

28

or remote locations.59 It was noted that the office launched an official Facebook page to increase opportunities for the Governor-General to communicate with the Australian public.60

2.73 In the Official Secretary's outlook for 2015-16 it was noted that on-going budgetary pressures remained and expenditure will continue to be closely monitored 'to ensure core vice-regal business remains unaffected.'61 However, also highlighted in this section was the allocation of additional funding in the 2015-16 Budget for a new property program and to meet the increased demand for medals and insignia for the Australian honours and awards program.62

Design

2.74 The annual report's design is similar to the previous year and again features large top and left margins. As the committee has previously commented, this format limits the amount of text per page resulting in a lengthier report.63

Performance information

2.75 The performance report provides a concise review of the office's productivity throughout 2014-15. The report includes the KPIs and objectives as set out in the PM&C Portfolio PBS 2014-15,64 however, does not include a list of the deliverables.

2.76 The committee notes the KPIs in the PBS 2014-15 have been modified from the previous year and the changes include the targets for processing times on nominations for Honours and Awards being replaced by a general satisfaction measure. However, the annual report continues to report against the earlier KPIs and presents results against them for 2014-15 as well as the previous three years.65 The committee hopes to see this information available in the future even though these KPIs are no longer contained in the PBS.

2.77 The office has included a brief statement confirming the office performed well against its performance framework:

In relative performance terms the Office performed well in delivering both components of our outcome—support for the Governor-General’s program and administration of the Australian honours system—exceeding all performance indicators.66

59 Office of the Official Secretary to the Governor-General Annual Report 2014-15, pp 2-8.

60 Office of the Official Secretary to the Governor-General Annual Report 2014-15, pp 3 and 27.

61 Office of the Official Secretary to the Governor-General Annual Report 2014-15, p. 3.

62 Office of the Official Secretary to the Governor-General Annual Report 2014-15, p. 3.

63 Senate Finance and Public Administration Legislation Committee, Annual reports (No. 1 of 2015), p. 3.

64 See Table 1, Office of the Official Secretary to the Governor-General Annual Report 2014-15, p. 12.

65 Office of the Official Secretary to the Governor-General, Annual Report 2014-15, p. 13.

66 Office of the Official Secretary to the Governor-General Annual Report 2014-15, p. 9.

29

2.78 The inclusion of performance results or a summary of results against each of the agency's deliverables and KPIs as listed in Table 1 - Performance Indicators for Program 1 would enhance the presentation of performance information in the report.67

Financial performance

2.79 The report provides an overview of the office's 2014-15 financial performance, which resulted in a small operating surplus after adjustments for depreciation and amortisation.68 The report contains an unqualified audit report on the office's financial statements from the ANAO.69

New reporting requirements for 2014-15

2.80 The office has reported against both new reporting requirements concerning Indigenous employment and small business procurement. However, the committee noted that the office has not included the number of on-going and non-going employees who identify as indigenous from 2013-14 and has only included the figure for 2014-15. Further, the section on small business procurement does not include all required elements, including the reference to the Department of Finance's website.70

Senator Cory Bernardi Chair

67 Office of the Official Secretary to the Governor-Genera, Annual Report 2014-15, p. 12.

68 Office of the Official Secretary to the Governor-General Annual Report 2014-15, p. 9.

69 Office of the Official Secretary to the Governor-General Annual Report 2014-15, pp 9 and 59.

70 Office of the Official Secretary to the Governor-General Annual Report 2014-15, pp 48 and 130.

Appendix 1

Dates relating to the presentation of reports between 1 May to 31 October 2015 Reporting Body Submitted to

Minister

Received by Minister Tabled in the Senate or

presented out of sitting (*)

Tabled in the House of Representatives

PARLIAMENT

Department of the Senate - Report for 2014-15 - - 12/10/15 -

Parliamentary Budget Office - Report for 2014-15 - - 14/10/15 14/10/15

Department of Parliamentary Services - Report for 2014-15 - - 15/10/15 15/10/15

Parliamentary Service Commissioner - Report for 2014-15, including report of the Parliamentary Service Merit Commissioner

- - 29/10/15* 09/11/15

PRIME MINISTER AND CABINET PORTFOLIO

Institutional Responses to Child Sexual Abuse - Royal Commission - Report of case study no. 17 - The response of the Australian Indigenous Ministries, the Australian and Northern Territory governments and the Northern Territory police force and prosecuting authorities to allegations of child sexual abuse which occurred at the Retta Dixon Home, dated July 2015

Also forwarded to the Legal and Constitutional Affairs Legislation Committee

27/07/15 27/07/15 19/08/15 19/08/15

Classification (Publications, Films and Computer Games) Act 1995 - Independent review of Part 10 (Material prohibited in certain areas in the Northern Territory) by MinterEllison, dated 6 August 2015

31/08/15 31/08/15 16/09/15 16/09/15

Stronger Futures in the Northern Territory Act 2012 - Independent review of the effectiveness of Northern Territory and Commonwealth laws in reducing alcohol-related harm by MinterEllison, dated 6 August 2015

31/08/15 31/08/15 16/09/15 16/09/15

Australian National Audit Office - Report for 2014-15 - - 12/10/15 17/09/15

32

Reporting Body Submitted to

Minister

Received by Minister Tabled in the Senate or

presented out of sitting (*)

Tabled in the House of Representatives

Office of the Official Secretary to the Governor-General - Report for 2014-15 13/10/15 15/10/15 26/10/15* 09/11/15

Australian Public Service Commissioner - Report for 2014-15, including report of the Merit Protection Commissioner

23/10/15 23/10/15 30/10/15* 09/11/15

Department of the Prime Minister and Cabinet - Report for 2014-15, including reports of the Aboriginals Benefit Account, Aboriginal and Torres Strait Islander Land Account and the Office of the Registrar of Indigenous Corporations

01/10/15 01/10/15 09/11/15 15/10/15

Inspector-General of Intelligence and Security - Report for 2014-15 02/10/15 02/10/15 09/11/15 15/10/15

Remuneration Tribunal - Report for 2014-15 01/10/15 02/10/15 09/11/15 22/10/15

Commonwealth Ombudsman - Report for 2014-15

(Also referred to the Legal and Constitutional Affairs Legislation Committee)

15/10/15 15/10/15 27/10/15* 09/11/15

Private Health Insurance Ombudsman - Report for 2014-15 15/10/15 15/10/15 27/10/15* 09/11/15

National Australia Day Council Limited - Report for 2014-15 22/10/15 22/10/15 27/10/15* 09/11/15

FINANCE PORTFOLIO

Australian Electoral Commission - Western Australian Senate Election 2014 - Funding and disclosure report, dated January 2015

21/05/15 21/05/15 05/06/15* 15/06/15

Albury-Wodonga Development Corporation - Report for the period 1 July to 31 December 2014 [Final report]

27/03/15 27/03/15 15/06/15 25/05/15

Australian River Co. Limited - Report for the period 1 December 2013 to 30 November 2014

Also forwarded to the Rural and Regional Affairs and Transport Legislation Committee

31/03/15 31/03/15 15/06/15 14/05/15

Final Budget Outcome 2014-15 24/09/15 24/09/15 12/10/15 12/10/15

Department of Finance - Report for 2014-15 14/10/15 14/10/15 16/10/15* 19/10/15

33

Reporting Body Submitted to

Minister

Received by Minister Tabled in the Senate or

presented out of sitting (*)

Tabled in the House of Representatives

Future Fund Board of Guardians and Future Fund Management Agency- Report for 2014-15

23/10/15 23/10/15 29/10/15* 09/11/15

Clean Energy Finance Corporation - Report for 2014-15

Also referred to the Environment and Communications Legislation Committee

15/10/15 15/10/15 30/10/15* 09/11/15