6A FINANCE
6A.4 Retirement Benefits
6A.6 Asset Sales
6A.8 Australian National Audit Office
The Retirement Benefits program provides appropriate superannuation arrangements for Members of Parliament, Commonwealth employees and employees of authorities (where arrangements are not in place). The superannuation arrangements cover retirement, disability, and death and have regard to relevant community standards.
Retirement Benefits involves the following 3 sub-programs:
From an administration view, there is little change in the 1996-97 financial year. Staffing years will marginally increase despite the policy of reduction in running costs. This is because there is an increased funding of $2.73 million to handle costs involved with transferring staff from the old Commonweatlh Superannuation Scheme (CSS) to the newer Public Service Superannuation Scheme (PSS).
The very large discrepancy between actual and budget outlays is explained mainly by the anticipated funding requirements to pay superannuation benefits. Such benefits will be paid to large numbers of public servants who are expected to accept voluntary redundancies.
The Office of Asset Sales
This Program is responsible for the prosecution of all major asset sales being undertaken by the Australian Government. It was established by the former Labor Government as the Task Force on Asset Sales, a Division within the Department of Finance. In a pre-election commitment, the Government required the downsizing of the Department of Finance, including the asset sales function. In response, the Department is reducing staff employed on asset sales and is replacing the current Task Force arrangements with an Office of Asset sales (OAS) within the Finance portfolio as from 1 October 1996.
The OAS will be staffed under the Public Service Act but will draw more extensively on the private sector to provide specialist consulting skills in those areas where private industry has a comparative advantage. This will allow a reduced establishment of officials to focus on the strategic issues which are of most significance to Government including strategic oversight and control of sale processes. As a result, 1996-97 running costs are projected to decline by 51.5% over actual running costs in 1995-96; salary running costs are projected to decline by 5.1% while other running costs are forecast to fall by 76.5%. Total running costs for 1996-97 are $6.7 million while other program costs amount to $147.8 million. Offsetting these costs are substantial 'negative outlays' derived from projected takings from the Government's asset sales program.
New Major Asset Sales Initiatives
New major asset sales processes provided for in the 1996-97 Budget are as follows:
Telstra. The Government has decided that a scoping study should be conducted to assist it in determining the best method of selling one third of the Commonwealth's equity in Telstra. The Telstra (Dilution of Public Ownership) Bill 1996 is before the Parliament and is the subject of a Senate inquiry. Proceeds from the sale of one third of Telstra have been included in the estimates for 1997-98 and 1998-99, contingent on the passage of legislation.
Commonwealth Funds Management Limited (CFM). On 7 May 1996, the Government announced its intention to offer CFM for sale, subject to the results of a scoping study to determine the extent of commercial interest. Proceeds from any sale are expected in the current financial year.
Businesses of the Department of Administrative Services (DAS). Following a comprehensive review, the Government has decided to sell or otherwise realise its interests in a number of common service businesses in DAS. The Government has decided to withdraw from DAS Distribution, DAS Interiors, Works Australia, Asset Services, DASCEM and Australian Operational Support Services; these businesses will either be disposed of by trade sale or by management buyout. Other DAS businesses (AGPS, DAS Removals, AUSLIG, AVO and AGAL) will be retained but subject to revised operating arrangements, including market testing of services. From July 1997 they will be subject to the competitive neutrality principles of the national competition policy; this will ensure that they enjoy no comparative advantage over private sector competitors by virtue of their status as Government owned businesses. A review of these businesses in the light of the revised operating arrangements is to be undertaken in 1997-98.
The On-going Privatisation Program
Estimated 1996-97 proceeds from major asset sales are $5151 million. Individual assessments of the expected proceeds from each sale are not provided by the Government for commercial reasons. However, in addition to the initiatives referred to above, the following major assets are expected to contribute to sales proceeds over the Budget year:
Leases on Federal Airports. These long term leases are to be sold in two stages. The sale of the first group of leases covering Brisbane, Melbourne, Perth and possibly Adelaide is expected to be completed in 1996-97.
Commonwealth Bank of Australia. Proceeds totalling $3.39 billion from the sale of share instalments from the CBA were received in July 1996 with final instalments being due for payment in November 1997.
Avalon Airport Geelong Limited. The sale of this facility is expected in September 1996.
MacLeod Repatriation Hospital Site. Sale options for the disposal of the site are under review with the aim of progressing the sale in 1996-97.
The object of this review is to examine aspects of outlays that might enhance or constrain the ability of the Auditor-General to carry out his duties and responsibilities under the Audit Act 1901 and other relevant legislation.
The significant variations between 1995-96 actual outlays and the 1996-97 budget outlays(1) indicate that there is an additional outlay for salaries and other cost increases of $755,000. This will enhance the ability of the Australian National Audit Office (ANAO) to increase staffing levels in audit teams. This would appear to be necessary as there was an underexpenditure in 1995-96 due to 'lower than expected staffing levels in audit teams'.(2) The budgeted running costs on salaries was underspent by $1.7 million and the figure for actual staff years was 348.0 as against the 1995-96 budgeted figure of 377.1. As the budgeted staff years figure for 1996-97 is 377.0, it would appear that the ANAO is attempting to restore 'expected staffing levels' in audit teams. The Summary of Outlays shows an increase of $3.3 million in Running Costs-Salaries, budgeted for 1996-97 over the actual outlays for 1995-96. The total underexpenditure including Other Program Costs in 1995-96 amounted to $4 544 000 and carry over from 1995-96 to 1996-97 is $3 719 000. If the budgeted sum is expended before the year end, there should be an improvement in staffing levels for audit operations in 1996-97.
In the year 1994-95 the ANAO had engaged 48 consultants (51 in 1993-94) at a total cost of $2 653 949 ($9 344 257 in 1993-94) as temporary staff to assist in management tasks or to assist the Auditor-General in the conduct of financial statement audits and performance audits of government departments, agencies or business enterprises.(3) Consultancies are included in Other Running Costs and it was underspent by $2 035 000 in 1995-96. It is therefore possible that that there was a curtailment in the use and payment made to consultants in 1995-96. The budget for 1996-97 shows an increase of $922 000 in Other Running Costs over the actual outlays for 1995-96. Again if the budgeted expenditure is spent there could be a greater use of consultants for audit operations in 1996-97.
Other Running Costs also include property operating expenses and it is relevant to note that the Royal Commission of Inquiry into the Leasing by the Commonwealth of Accommodation in Centenary House,(4) which examined the long term funding implications for the ANAO of the Centenary House lease,(5) reported that it had been agreed by the Department of Finance and the ANAO, that ANAO's funding shortfall in consequence of the Centenary House lease will be $560 150 in 1995-96 rising over the term of the lease to $3.6 million in 2008-09; the funding shortfall for 1996-97 was estimated at $739 170.(6)
The 2% reduction in Running Costs expected in 1996-97, as a savings measure, will result in a reduction in outlays by $890 000. The 'lower than expected staffing levels' in 1995-96 may have resulted from budgetary considerations and the need to effect reductions in running costs as a similar 2% reduction to the base applied in 1995-96. This may be repeated in 1996-97 if the budgeted outlays are not spent on enhancing audit staffing levels. What was observed by Justice Morling of the impact on ANAO audit operations of the shortfall in funding arising from the lease of Centenary House, which in 1996-97 was expected to be $739 170, may be noted of the impact of the 2% reduction in running costs imposed on the ANAO for 1996-97, estimated at $890 000.
The financial obligations of the lease will be significant for the ANAO. Unless it can greatly reduce its operating costs or obtain additional funding it seems certain that it will have to curtail its audit activities. If that occurs, it must be a serious question whether the Auditor-General will be able to comply with his obligation under the Audit Act 1901 to report, annually, on the financial statements of Departments and Authorities (ss. 51(1), 63H(2) and 63M(2)) and other obligations placed upon him by the Corporations Law, s.331A(1). In the absence of additional funding, the ANAO's ability to maintain the existing standard of its audit services must be prejudiced.(7)
It could be argued that it is counter productive not to quarantine the Australian National Audit Office from the 2% reduction in Running Costs, as it may in the end not amount to a saving if the ANAO, the watchdog of the Commonwealth's purse strings, is restrained from discharging its legal and professional obligations in the manner it considers appropriate.
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