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Chapter 1

Introduction

1.1        This is the Senate Finance and Public Administration Legislation Committee's (the committee's) first report on annual reports for 2012. It provides an overview of the committee's examination of annual reports for the 2010–11 financial year presented to the Parliament between 1 May and 31 October 2011. Copies of this and other committee reports can be obtained from the Senate Table Office, the committee secretariat or online at: www.aph.gov.au/senate_fpa.

Terms of reference

1.2        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]

Allocated portfolios

1.3        The Senate last amended the continuing order relating to the allocation of departments and agencies to committees on 8 February 2012 resulting in the transfer of the newly established Regional Australia, Local Government, Arts and Sport portfolio to the Senate Rural and Regional Affairs and Transport Committee for oversight.[2] In accordance with that resolution, the committee has responsibility for the oversight of the following:

  • Parliament;[3]
  • Prime Minister and Cabinet portfolio; and
  • Finance and Deregulation portfolio.

1.4        As the Department of Regional Australia, Regional Development and Local Government and the various arts and sports agencies were within the committee's oversight during the 2010–11 financial period, the committee was referred these annual reports for examination and report. The changes to the committee oversight resulting from the February 2012 amendment will be reflected in the committee's second report on annual reports for 2012.

1.5        The following changes were made to the Administrative Arrangements Orders:

  • 19 October 2011: transfer of administration of the Australian Information Commissioner Act 2010, Freedom of Information Act 1982 and Privacy Act 1988 from the Department of the Prime Minister and Cabinet to the Attorney-General's Department.[4] This resulted in the transfer of the Office of the Australian Information Commissioner from the Prime Minister and Cabinet portfolio to the Attorney-General's portfolio.
  • 7 December 2011: removal of the Family Law Act 1975, Part XIVA from the oversight of the Prime Minister and Cabinet Portfolio.[5]
  • 14 December 2011:  responsibility for the Arts and Sport was transferred to the new Regional Australia, Local Government, Arts and Sport portfolio.

1.6        The above changes arising from the various Administrative Arrangements Orders will be reflected in the committee's examination of 2011–12 annual reports.

1.7        As noted in the committee's second report of 2011 (August 2011), the Australian Reward Investment Alliance (ARIA) and the Military Trustee Boards were amalgamated to form the Commonwealth Superannuation Corporation from 1 July 2011. In addition, ComSuper was established as a statutory agency, replacing the role of the Commissioner for Superannuation with the Chief Executive Officer. The final reports for ARIA and the Commissioner for Superannuation were received and examined by the committee.

Method of assessment

1.8        Annual reports provide one of the key mechanisms, together with the Senate Estimates process, for scrutiny of the operations of Government. The Requirements for Annual Reports: for Departments, Executive Agencies and FMA Act Bodies state that 'the primary purpose of annual reports of departments is accountability, in particular to the Parliament'.[6]

1.9        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 forms an opinion by considering whether the reports comply with the relevant legislation and guidelines for the preparation of annual reports. The principal legislation which apply to departments, statutory agencies and authorities, and Commonwealth companies are:

  • Public Service Act 1999;
  • Parliamentary Service Act 1999;
  • Financial Management and Accountability Act 1997 (FMA Act); and
  • Commonwealth Authorities and Companies Act 1997 (CAC Act).

1.10      Statutory authorities report under their respective enabling legislation. For example, the Australian Sports Anti-Doping Authority reports under section 74(1) of the Australian Sports Anti-Doping Authority Act 2006.

1.11      The committee also assesses whether reports comply with the Requirements for Annual Reports: for Departments, Executive Agencies and FMA Act Bodies (the PM&C requirements), issued by the Department of the Prime Minister and Cabinet (PM&C) with the approval of the Joint Committee of Public Accounts and Audit under subsections 63(2) and 70(2) of the Public Service Act 1999. This is the authoritative source outlining the requirements for preparing and presenting annual reports for bodies prescribed under the FMA Act.[7]

1.12      Commonwealth authorities and companies reporting under the Commonwealth Authorities and Companies Act 1997 (CAC Act) are required to comply with the Commonwealth Authorities and Companies (Report of Operations) Orders 2008 which set out the requirements for the preparation of annual reports.[8]

1.13      The Finance Minister has a role in the oversight of Commonwealth authorities that are also classified as a Government Business Enterprise (GBE) as set out in the CAC Act. The annual reports of GBEs must provide an assessment of the entity's financial condition, dividends and community service obligations over the financial year.

Reports examined

1.14      During the period between 1 May 2011 and 31 October 2011, 42 annual reports tabled in the Senate, or presented 'out of session' to the President of the Senate were referred to the committee for examination.

1.15      The reports examined are categorised as follows:

Departments of State

  • Department of Finance and Deregulation—Report for 2010–11—pursuant to section 63 of the Public Services Act 1999;
  • Department of the Prime Minister and Cabinet—Report for 2010–11— pursuant to subsection 63 of the Public Service Act 1999; and
  • Department of Regional Australia, Regional Development and Local Government—Report for period 12 September 2010 to 30 June 2011—pursuant to section 63 of the Public Services Act 1999.

Departments of Parliament

  • Department of Parliamentary Services—Report for 2010–11—pursuant to paragraph 65(1)(c) of the Parliamentary Service Act 1999 including the Annual Report of the Parliamentary Library pursuant to subsection 65(3) of the Parliamentary Services Act 1999; and
  • Department of the Senate—Report for 2010–11—pursuant to section 65 of the Parliamentary Service Act 1999.

Statutory agencies/authorities

  • Australian Electoral Commission—Report for 2010–11—pursuant to section 17 of the Commonwealth Electoral Act 1918;
  • Australian Institute of Family Studies—Report for 2010–11—pursuant to section 114L of the Family Law Act 1975;
  • Australian National Audit Office—Report for 2010–11—pursuant to section 28 of the Auditor-General Act 1997;
  • Australian Parliamentary Service Commissioner—Report for 2010–11—pursuant to section 42(1) of the Parliamentary Service Act 1999;
  • Australian Public Service Commission—Report of the Australian Public Service Commissioner for 2010–11, including report of the Merit Protection Commissioner—pursuant to section 44 of the Public Service Act 1999;
  • Australian Reward Investment Alliance (ARIA)— Report for 2010–11 [final report], including financial statements for Commonwealth Superannuation Scheme, Public Sector Superannuation Scheme and Public Sector Superannuation Accumulation Plan—pursuant to section 162 of the Superannuation Act 1976, section 28 of the Superannuation Act 1990 and section 26 of the Superannuation Act 2005;[9]
  • Australian Sports Anti-Doping Authority—Report for 2010–11—pursuant to section 74(1) of the Australian Sports Anti-Doping Authority Act 2006;
  • Commissioner for Superannuation (ComSuper)— Report 2010–11—pursuant to section 162 of the Superannuation Act 1976 and section 21 of the Papua New Guinea (Staffing Assistance) Act 1973;
  • Future Fund Board of Guardians and Future Fund Management Agency—Report for 2010–11—pursuant to section 81 of the Future Fund Act 2006;
  • Inspector General of Intelligence and Security—Report for 2010–11—pursuant to subsection 35 of the Inspector-General of Intelligence and Security Act 1986;
  • National Archives Of Australia and National Archives of Australia Advisory Council—Report for 2010–11—pursuant to subsection 70(1) of the Public Service Act 1999 and subsections 68(1) and 68(2) of the Archives Act 1983;
  • Office of the Australian Information Commissioner—Report for 2010–11—pursuant to section 30 of the Australian Information Commissioner Act 2010;
  • Office of the Official Secretary to the Governor-General—Report for 2010–11—pursuant to section 19(1) of the Governor-General Act 1974; and
  • Old Parliament House (Museum of Australian Democracy)—Report for 2010–11—pursuant to section 70 of the Public Service Act 1999.

Commonwealth authorities/companies

  • Albury-Wodonga Development Corporation—Report for 2010–11—pursuant to subsection 34C(3) of the Acts Interpretation Act 1901;
  • ASC Pty Ltd—Report for 2010–11— pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian Council for the Arts—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian Film, Television and Radio School—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian National Maritime Museum—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • Australian Sports Commission—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997 including the Australian Sports Foundation Ltd;
  • Bundanon Trust—Report for 2010–11—pursuant to section 36 of the Commonwealth Authorities and Companies Act 1997;
  • Medibank Private—Report for 2010–11—pursuant to sections 9 and 36 of the Commonwealth Authorities and Companies Act 1997;
  • National Australia Day Council Limited—Report for 2010–11—pursuant to subsection 36(4) of the Commonwealth Authorities and Companies Act 1997;
  • National Film and Sound Archive—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • National Gallery of Australia—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • National Library of Australia—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • National Museum of Australia—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997;
  • NBN Co Limited—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997; and
  • Screen Australia—Report for 2010–11—pursuant to section 9 of the Commonwealth Authorities and Companies Act 1997.

Non-statutory Authority

  • Australian Political Exchange Council—Reports for 2007–08, 2008–09 and 2009–10—pursuant to its terms of reference; and
  • Public Lending Right Committee—Report for 2010–11—pursuant to section 19 of the Public Lending Right Act 1985.

Reports not examined

1.16      The committee is not obliged to report on Acts, statements of corporate intent, surveys, corporate plans or errata. The committee did not examine the following reports:

  • ASC Pty Ltd—Statement of corporate intent 2011 to 2014;
  • Australian National Audit Office—Report for 2010–11 corrections [2];
  • Department of Finance and Deregulation—Campaign advertising by Australian government departments and agencies—Report for 2010–11;
  • Final budget outcome 2010–11—Report by the Treasurer and the Minister for Finance and Deregulation;
  • NBN Co Limited—Statement of corporate intent 2011 to 2013; and
  • Privacy Act 1988—Report for 2009–10 on the operation of the Act, including financial statements for the Office of the Privacy Commissioner—Correction.

Reports held over

1.17      The following reports were tabled in Parliament after 31 October 2011. These reports will be examined in the committee's second report on annual reports due to be presented to the Senate in September 2012:

  • Australian Electoral Commission—Election 2010—Funding and disclosure report (presented 14 November 2011);
  • Australian Public Service Commission—State of the Service Report for 2010–11 (tabled in House of Representatives on 24 November 2011);
  • Commonwealth Ombudsman—Report for 2010–11 (tabled 7 February 2012);
  • Department of Finance and Deregulation—Certificate of compliance—Report for 2010–11 (presented 25 January 2012);
  • Department of Finance and Deregulation—Consolidated financial statements for the year ended 30 June 2011 (presented 13 December 2011);
  • Department of Finance and Deregulation—Issues from the advances under the annual Appropriation Acts—Report for 2010–11 (tabled in the House of Representatives on 24 November 2011);
  • Members of Parliament (Staff) Act 1984—Report for 2010–11 (tabled 22 November 2011); and
  • Mid-year economic and fiscal outlook—2011–12—Statement by the Treasurer and the Minister for Finance and Deregulation (presented 30 November 2011).

Non-reporting bodies

1.18      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.

1.19      The committee continues to approach this in two ways. First, the committee examines the Administrative Arrangements Order for the list of legislation administered by portfolio ministers and consequently, departments and agencies. Second, the committee consults the Department of Finance and Deregulation's listing of Australian Government Bodies. The list identifies the agencies that are required to report and the Acts under which they report.[10]

1.20      Based on the above checks, the committee considers it has received all reports that it is required to receive.

Timeliness

1.21      Most agencies and departments are required to table an annual report in Parliament by 31 October each year unless another date is specified, for example, in an agency's legislation, charter and/or terms of reference. Commonwealth companies reporting under the CAC Act are required to provide an annual report to the responsible minister four months after the end of the company's financial year.[11] Ministers are required to table annual reports of companies as soon as practicable.

1.22      The committee notes that a number of annual reports were held in the Minister's office for a period greater than four weeks:

  • Australian Institute of Family Studies – received by minister on 2 September 2011 and tabled on 13 October 2011;
  • National Library of Australia – received by minister 23 September 2011 and tabled on 26 October 2011;
  • Old Parliament House – received by minister 23 September 2011 and tabled on 28 October 2011; and
  • Australian Reward Investment Alliance – received by minister 30 September and tabled 31 October 2011.

1.23      While these reports were presented to the relevant minister within the required timeframe, the committee believes greater effort should be made to ensure that annual reports received by ministers are provided to the Parliament promptly.

1.24      For each report referred to it, the committee recorded the following dates:

  • submitted to minister;
  • received by the minister;
  • tabled in the Senate or presented to the President or a temporary chair of Committees; and
  • tabling date in the House of Representatives, where applicable.

1.25      Commonwealth authorities are required to report by the 15th day of the fourth month after the end of the financial year, which for authorities reporting on a standard financial year basis would be 15 October.[12]

1.26      The committee received the Australian Political Exchange Council annual reports for the 2007–08, 2008–09, 2009–10 financial periods on 14 June 2011. While the Australian Political Exchange Council operates under its own terms of reference and is not required to report by a specific date, the committee believes greater effort should be taken to meet the Council's terms of reference to 'arrange for regular reporting on the Council's activities to Parliament, the Principals and sponsors'.[13]

Assessment of reports

1.27      The committee determines whether the report of an agency satisfactorily meets reporting requirements by assessing against the PM&C requirements, in particular, the checklist at Attachment F; its respective enabling legislation; and where necessary, the Corporations Act 2001.[14]

1.28      The PM&C requirements are reviewed annually to capture changes arising from reporting requirements in legislation and new policy or recommendations contained in various reports. There were three significant changes to reporting requirements for annual reports for the 2010–11 financial year which covered the following:

  • Commonwealth Disability Strategy;
  • Social inclusion reporting; and
  • Freedom of Information.[15]

1.29      These changes are discussed in further detail in chapter two.

Senate debate

1.30      Few annual reports are debated in the Senate, but many remain on the Senate Notice Paper for future consideration. The committee is not aware of any Senate debates relating to the reports examined.

Correction

1.31      The committee would like to acknowledge an error in its previous report on annual reports, Annual reports (No. 2 of 2011). In paragraph 1.21, the committee stated that the Australian Electoral Commission Report for 2009–10 was provided to by the Minister to the Parliament on 9 February 2010, failing to meet the required deadline of 15 sitting days after receipt by the Minister. While the report was tabled in the Senate on 9 February 2011, it was tabled in the House of Representatives on 25 November 2010, meeting the 15 sitting days requirement.

Government responses to committee reports on annual reports

Annual Reports (No. 1 of 2008)

1.32      The Government provided a response to the committee's report Annual Reports (No. 1 of 2008) on 1 March 2012.

1.33      The committee's first recommendation relating to recommendations 10–12 in the committee's 2005 report Government advertising and accountability,[16] were agreed in principle. The response noted that following the introduction of new advertising guidelines in July 2008 and updates in March 2010, the Department of Finance and Deregulation publishes biannual reports on government campaign advertising which include agency specific information.

1.34      The committee made a number of recommendations in regard to the Australian River Co. Limited (ARCo) relating to deliberations to sell the company. The response noted that in 2004-05 two 'roll on/roll off' vessels were sold to Patrick Shipping Pty Ltd. The response states that the wind down of remaining operations must deal with aspects of residual assets and liabilities. Furthermore 'in both cases characteristics which would have influenced the original exclusion from a commercial sale remain relevant'.[17]

1.35      The response supports the committee's recommendation to provide details on ARCo's principle activities, and notes that 'ARCo has taken the committee's recommendation into consideration in preparing subsequent annual reports, including reporting on the progress made regarding divestment of assets and future management of residual liabilities'.[18]

1.36      In addition the response provides an explanation of the perceived conflict of interest in the employment of a former ANL Container Lines Pty Ltd as ARCo Company Secretary and the basis upon which the decision was made to purchase services from a company in which an ARCo Director was a shareholder and director.

1.37      In response to the committee's recommendation that agencies, where appropriate, adopt the practice of reporting on environmental impacts within their annual reports, the response indicated that amendments to the Environment Protection and Biodiversity Conservation Act 1999 will be introduced into Parliament this year. These amendments will seek to allow the minister to specify the requirements for this reporting in regulations under the amended Act to provide greater guidance and quality of reporting on actions to improved sustainability.

Annual Reports (No. 2 of 2009)

1.38      The Government tabled a response to the committee's report Annual Reports (No. 2 of 2002) on 24 January 2012.

1.39      The committee recommended that commonwealth authorities or companies that pay for the services of a related entity company should include an explanation of the decision-making process to engage that company in their annual report.

1.40      The Government agreed to the committee's recommendation and notes that the commonwealth authorities and wholly-owned commonwealth companies are required by the Commonwealth Authorities (Annual Reporting) Orders 2011 and the Commonwealth Companies (Annual Reporting) Orders 2011 to include the 'decision making processes undertaken for approval of individual or aggregate transactions of at least $10,000 (GST inclusive), where a director of the Commonwealth entity is also a director of the other entity that provides the good or service or receives the grant.'[19] This requirement will apply to annual reports from the 2012–13 financial year.

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