This Program provides appropriate superannuation arrangements for Members of Parliament and Commonwealth employees (not covered in Program 5). The superannuation arrangements cover retirement, disability and death, and have regard to relevant community standards.
There are no Budget measures affecting this program. The reduction in the running costs can be explained largely by the Parliamentary superannuation payments, due to allowances for lump sum payments in 1996-97 resulting from the 1996 election.
The Commonwealth Superannuation Administration (ComSuper) provides appropriate superannuation arrangements for the Commonwealth Government's civilian employees and members of the defence force. Comsuper administers four schemes:
There are no budget measures affecting the portfolio outlays. However, as in last year, Comsuper will expect heavy workloads associated with large retrenchment programs being undertaken across the Australian Public Service, representing a significant increase over normal workload levels. Costs associated with the increased level of activity will be funded by user charges to employer agencies.
Comsuper will introduce arrangements for the implementation of the Government's Superannuation Surcharge for high income earners during 1997-98.
The very substantial growth in negative outlays reflects the significant asset sales initiatives which the Office of Asset Sales (OAS) aims to complete during 1997-98. The aims of the OAS for 1997-98 include:
In addition, the trade sale of leases on the Phase One FAC Airports (encompassing interlinked trade sale processes for Brisbane, Melbourne and Perth airports) will yield substantial proceeds to the Commonwealth.
1997-98 Budget measures affecting program outlays relate to (1) the divestment of Auscript, (2) the sale of the commercial arm of the DAS Domestic Property Group and (3) additional running costs in relation to sales and review processes arising from the 1997-98 Budget In relation to the first two measures, for commercial reasons the estimated proceeds from the sale of these activities have not been identified.
Total 1997-98 Budget appropriations for the Program amount to $269.4 million compared with the estimated actual 1996-97 figure of $116.9 million reflecting the general expansion in the Commonwealth's asset sales activities projected for the coming financial year. The Office of Asset Sales itself has been undergoing a resourcing contraction over 1996-97 in accordance with the Government's policy of drawing more extensively on private sector expertise through the engagement of specialist consultants. As the successor to the former Asset Sales Task Force, the OAS accounted for an estimated 41 staff years in 1996-97; this is projected to decline to 33 staff years in 1997-98 reflecting the significant reduction in the number of officers required to manage sale processes.
It is necessary to reconcile the Appropriations and Program Outlays for the Australian National Audit Office (ANAO) to appreciate how the net outlays are to be utilised by the Auditor-General in discharging his responsibilities for the audit of Commonwealth departments, departmental commercial undertakings, statutory authorities and most Commonwealth-owned and controlled companies. The Portfolio Budget Statements 1997-98 (PBS 1997-98) provide the following reconciliation between appropriations and outlays for the Program as well as the three Sub-programs: Financial Statement Audit Sub-Program (7.1), Performance Audits Sub-program (7.2) and Audit Support Sub-program (7.3).(1)
|
Program 7 |
Sub-Program 7.1 |
Sub-Program 7.2 |
Sub-Program 7.3 |
|
|
($'000) |
($'000) |
($'000) |
($'000) |
|
|
Total Appropriations |
52 165 |
23 015 |
11 530 |
17 620 |
|
S 35 Receipts |
-237 |
-100 |
0 |
-137 |
|
Other Receipts |
-13 032 |
-13 000 |
0 |
0 |
|
Program Outlays: 1997-98 |
38 896 |
9 915 |
11 530 |
17 451 |
|
Program Outlays: 1996-97 |
33 803 |
7 649 |
10 051 |
16 103 |
The ANAO is expecting to deploy additional resources at a cost $5 million to the 1997-98 Budget and the salient outlays and performance forecasts of each Sub-program are indicated below.
Financial Statement Audit Sub-program (7.1)
The ANAO will not audit the Commonwealth Bank following the sale of the Commonwealth's holding and this accounts for reduced revenue of $2 million and the reduction in outlays in comparison with 1996-97.
The major part of the appropriations will be incurred on Financial Statement Audits (FSAs) at a cost of $18.3 million in 1997-98. The ANAO is expected to issue 348 FSA opinions and 271 reports on the audit of financial statements for the 1996-97 audit cycle .
In addition the ANAO expects to issue five Financial Control and Administration (FCA) Audits in 1997-98, incurring expenditure of $945 000, and one Assurance and Control Assessment (ACA) Audit, incurring $734 000.
Performance Audits Sub-program (7.2)
The ANAO has budgeted to make increasing use of contractors for performance audits, resulting in additional outlay of $1.3 million offset by the effect of the efficiency dividend. The forecast benefits from performance audits in 1997-98 will be at least $32 million. The ANAO expects to table in Parliament a total of 35 audit products comprising mainly performance audit reports and better practice guides. The ANAO's Annual Report 1995-96 records that 30 performance reports were tabled in Parliament (33 in 1994-95) and the estimated potential annual benefit was $98 million ($79.9 million in 1994-95).(2) The corresponding figures for 1996-97 will be known when the Annual Report 1996-97 is tabled in Parliament by 31 October 1997.
Audit Support Sub-Program (7.3)
The increase in outlays in 1997-98 in comparison with 1996-97 is attributed to the provision for equipment upgrades of $1.4 million. As a result of a market testing exercise, Information Technology (IT) support service delivery has been outsourced, with a reduction of 14 staff positions. Core business IT strategy, including systems and application development has been retained by ANAO.
Contract Costs of ANAO Audit Work
The ANAO Annual Report 1995-96 states that the staff costs of Financial Statement Audits (FSAs) were $10.7 million in 1995-96 ($9.6 million in 1994-95). The contract costs of FSAs were $12.9 million in 1995-96 ($11.0 million in 1994-95).(3) Thus in 1995-96, 54.7% of FSAS were contracted out as against 53.7% in 1994-95. The 1995-96 Annual Report does not give statistics of contract costs of performance audits and the 1996-97 figures will only be known when the 1996-97 Annual Report is tabled by 31 October 1997. However, with the additional outlays for contracting out performance audits in 1997-98 referred to above under 'Performance Audits' it may be expected that contract costs of total audit work performed by ANAO in 1997-98 will be a higher percentage of total costs than the figure for 1996-97.
During 1996-97, the Department of Finance and the Office of Government Information Technology (OGIT) completed an evaluation of possible consolidation and outsourcing of Commonwealth information technology (IT) infrastructure. The evaluation found evidence of significant potential benefits from such consolidation and outsourcing within a whole of Government competitive tendering and outsourcing framework. The portfolio efficiency savings shown are those expected to flow from competitive tendering of IT infrastructure. By using outside companies rather than their own IT departments, Australian Public Service agencies anticipate savings totalling 18% of Government IT funding.
OGIT has performed a prime role in managing telecommunications and IT use in the Commonwealth through negotiating and establishing commercial arrangements for agency use. Among other activities, by late August 1997 it will complete the tender process that supports rationalisation of administrative systems across the Government, by signing contracts with approved records management system suppliers. OGIT has a high level of secondment from other agencies to ensure a standard framework for tender specification and contracts. Major outsourcing vendors probably have highly skilled technical, financial and negotiating teams whereas Commonwealth departments and agencies have rather limited experience.
However, IT industry commentators lament the rise of OGIT and the demise of Purchasing Australia, with $4000 million worth of IT purchases at stake over the next five years. With few IT industry initiatives outside outsourcing, the industry remains sceptical of Commonwealth support for an indigenous IT industry. Observers claim that many small to medium size IT suppliers, system integrators and specialist networking companies may cease operations in the face of large international consortiums securing OGIT contracts. Certain Commonwealth departments have also expressed concerns about the OGIT program.
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