Review of selected reports
The Committee has selected the annual reports of the following bodies
and statutory office holder for closer examination:
Department of Defence;
Department of Veterans' Affairs, Repatriation Commission, and
Military Rehabilitation and Compensation Commission;
Department of Foreign Affairs and Trade;
Defence Housing Australia;
Export Finance and Insurance Corporation; and
Judge Advocate General.
In accordance with Standing Order 25(20)(g) the following summaries of
reports examined draw attention to significant matters relating to the operations
and performance of bodies during the year under review as set out in the annual
Department of Defence
Reviews by the Secretary and Chief
of the Defence Force
In his review for 2017-18, the Secretary of the Department of Defence
(Defence), Mr Greg Moriarty, advised that it had been a successful year
for the department with progress made in a number of areas including:
transformational reform; workforce diversity; strengthening military and
intelligence capabilities; and international collaboration through acquisition
and sustainment of major assets.
In the relation to reform, Mr Moriarty noted that there had been strong
progress in implementing the majority of the recommendations of the First Principles
with a future focus on managing holistic reform and continual improvement
through a 'One Defence' approach. He also noted the importance of continuing
cultural reform in Defence where leaders are accountable for a positive culture
of collegiality and mutual respect.
Another area of achievement highlighted by the Secretary was the
increase in diversity of the Defence workforce. Some specific examples of attainment
within the Australian Public Service cohort which were noted included:
an increase in the number of women from 41.8 to 42.4 per cent;
an increase in the number of women in executive level positions from
7698 to 7964;
an increase in the number of women in senior executive service
(or equivalent) from 44 to 48; and
an increase in the number of Indigenous staff from 2 per cent to
2.2 per cent.
While some of the increases were more significant than others, the Committee
was pleased to note that there was positive change across a number of
categories. Mr Moriarty also commented that results were similarly
encouraging for the Australian Defence Force (ADF). It was also noted that
women on Defence boards increased by 5.6 per cent to 45.8 per cent
during the year and was supported by the implementation of the Defence Women
on Boards Action Plan 2017-19.
The Secretary also reported on significant progress in development of a
number of key military and intelligence capabilities during 2017-18, including
the Hunter class Future Frigates, the Land Combat Vehicle System, and the
Offshore Patrol Vessels. He also noted progress in relation to critical
infrastructure and other enabling capabilities needed to operate and sustain
Defence's evolving capabilities.
The establishment of the Australian Signals Directorate as a separate
statutory agency within the Defence Portfolio on 1 July 2018 was also
highlighted in the Secretary's review. He noted the work undertaken by the department
to support this process and confirmed its continued assistance and
collaboration on cyber security and intelligence matters.
Mr Moriarty also confirmed Defence's continued commitment to
international collaboration during the year, including through the
participation of the then Minister for Defence, Senator the Hon Marise Payne,
at ministerial consultations with the United Kingdom and United States.
General Angus Campbell AO DSC assumed leadership of the ADF as the Chief
of the Defence Force (CDF) on 6 July 2018. His first annual review highlighted
the diverse, challenging and often dangerous work of the ADF both at home and
General Campbell's review provided a snapshot of Australian forces' important
ongoing contributions in overseas operations during 2017-18, including in Iraq,
Syria and Afghanistan. Of particular note by the CDF were the achievements of
the crew of the HMAS Warramunga during its deployment in the Middle East
(under operation MANITOU)
during 2017-18 which he described as 'one of the most successful Middle East deployments
on record.' He noted that:
...Warramunga's crew intercepted, seized and destroyed
approximately 31.8 tonnes of hashish and approximately two tonnes of heroin,
valued at around $2.17 billion Australian.
General Campbell also remarked on Australia's contributions to
operations supporting regional security, including assistance to the Armed
Forces of the Philippines in the global fight against terrorism under operation
AUGURY; and Australia's contribution to the international contingent enforcing
the United Nations Security Council resolutions on North Korea under operation
Also highlighted was the ADF's contribution to humanitarian aid in the region
following the Papua New Guinea earthquake and Tropical Cyclone Gita in Tonga,
in addition to assistance in the clean-up following Tropical Cyclone Marcus in
Darwin in March 2018.
Additionally, General Campbell highlighted the progress with ongoing
reform processes and noted the release of both the Defence Mental Health and
Wellbeing Strategy 2018-2023, and the second iteration of the Pathway to
Change cultural reform program.
While noting that 2018 marked milestone anniversaries for a number of
historic military and peace keeping events, General Campbell remarked on the
continuing service commitment of the current serving ADF personnel:
...our people remain committed to the tenets of courage,
sacrifice, endurance and mateship.
First Principles Review
The Committee has had an ongoing interest in the progress of Defence's
implementation of the recommendations of the FPR. At the Supplementary Budget
Estimates 2016-17 hearing on 19 October 2016 Defence agreed to provide the
Committee with a written summary of progress prior to each estimates round of
hearings. As noted above, the departmental Secretary indicated in his review that
good progress had been made in implementing the majority of the recommendations
of the FPR. The report later noted that:
Continued focus on improvement and implementation of the four
remaining recommendations of the First Principles Review will continue into
Defence's 2016-17 annual report reported against the performance measure
'Defence develops organisational capability that ensures it can achieve
Government-directed outcomes' with a target of implementation of the FPR
recommendations achieved by 30 June 2017. It was noted that this was partially
achieved and that it was expected that 'the remaining six recommendations will
be completed in 2017-18'.
The current annual report notes that Defence had completed 71 of the 75
recommendations of the FPR and that the implementation of the four remaining
recommendations will continue in 2018-19.
The annual report later includes a brief description of the outstanding
recommendations of the FPR:
The remaining recommendations relate to Systems Program
Office (SPO) reform. This work is complex, with the Capability Acquisition and
Sustainment Group reviewing each SPO to ensure it is operating as efficiently
as possible. Defence expects to continue implementing Systems Program Office
reform until 2023.
Work also continues on increasing thresholds for referral to the
Parliamentary Standing Committee on Public Works. While the FPR recommended
increasing the financial thresholds for referrals, Defence is developing a
risk-based framework that would enable the Public Works Committee to focus its
scrutiny on higher risk Defence infrastructure proposals.
The annual report also noted that the Australian National Audit Office
(ANAO) released a performance audit of Defence's Implementation of the FPR in
April 2018. Advice from the Secretary of Defence to the ANAO in response to the
Audit indicated that as at March 2018 Defence 'expects implementation of the FPR
to be completed in 2020.'
The most recent update on Defence's progress was provided to Committee prior
to the Budget Estimates 2019-20 hearings on 26 March 2019 and advised that 73
of the 75 agreed recommendations had been implemented. The outstanding
recommendations were 2 and 2.4 and related to System Program Office reform,
where each would be examined to determine where each fits within the smart
buyer function, the most appropriate procurement model and achieving value for
money. Defence advised that it expected to be able to close these outstanding recommendations
after June 2020, with all reforms completed by June 2023.
Annual Performance Statement
The Annual Performance Statement reports on the extent to which Defence
has fulfilled its purposes as set out in its corporate plan for 2017-18. The statement
reports on all of the non-financial performance criteria and measures set out
in the Defence 2017-18 Corporate Plan and the Portfolio Budget Statements (PBS)
and Portfolio Additional Estimates Statements 2017-18 for the Defence Portfolio.
Defence's two 'purposes' as listed in the 2017-18 Corporate Plan, align directly
with the two 'Outcomes' as set out in the 2017-18 PBS. The Committee
appreciates the work done on the performance framework to bring these elements into
alignment to enhance readability between the documents.
The report states that Defence incorporates feedback from various bodies
and that the 2018-19 planning and reporting cycle will have greater alignment
of performance criteria and targets in the key performance documents, the
Corporate Plan and the PBS, which the report notes:
...will allow Defence to provide a clearer assessment of how we
have succeeded in achieving our purposes, representing a significant step
forward in maturing Defence's planning and processes.
The performance statement presents results for each of Defence's two purposes
against the performance criteria from the PBS, PAES and Corporate Plan. The
inclusion of page references to the source documents assists in navigating
between the documents.
Defence's overall performance against its purposes for 2017-18 was achievement
of 46 criteria out of a total of 50, or 92 per cent; with four criteria partially
achieved. This result compares with the 2016-17 result of 50 fully achieved
criteria out of a total of 61, or 82 per cent.
The four performance criteria not fully achieved in 2017-18 related to
the Program 2.12 - Defence People. One of those criterion was the 'achievement
of ADF recruitment targets', which was also only partially achieved in 2016-17.
While recruitment for reserves in 2017-18 was 84 per cent of the full-year
target, up from 80.4 per cent achievement in 2016-17; the result for ADF
permanent force recruitment from all sources was 94 per cent of the full year
target, and down from 97.4 per cent in 2016-17.
During the Budget Estimates 2019-20 hearing on 10 April 2019, the
Committee sought an explanation from Defence on the reported result of
'partially achieved' for this criterion and queried why failure to meet the
recruitment targets for both ADF permanent force enlistments and the Reserve
force is not reported as failing to meet the target and therefore 'not
achieved'. Defence explained the approach to reporting on this criterion:
I would consider that hasn't achieved 100 per cent. It's not
one recruiting round each year – an annual recruiting basis. So, if a person
elects to join the ADF but doesn't actually get on transport to arrive at their
initial training, we actually can't then recruit that person to join the ADF-
if it's in April, May et cetera. So, whilst we have these targets, we recruit
annually against training outcomes and where we can't achieve a recruitment
outcome by a person who enlists as a direct entry, we secure other people to
join the ADF who might have already had service in the ADF, and have re-joined.
They are not a direct-entry enlistment.
The main feature there is in terms of our categories that are
most difficult to recruit to. We have what we call, as you know, critical
categories, where we are fighting for talent and a workforce that other
organisations are as well. This is particularly in the technical fields, and
also in the health areas. This has been over a number of years. We have
remediated quite effectively for some of those categories, but not entirely. To
have fully achieved our recruiting targets and to have stated that we had
achieved 100 per cent would not be a fair description, given our problems recruiting
to those more difficult areas.
In regard to the failure to achieve the target for Reserve Force
recruitment, Defence explained:
We have a longer period there where we have found it more
difficult to recruit to the reserve. We have been doing a lot of work on our
employment framework and model to make it a more appealing option for
Australians. The total workforce model that looks at more flexible categories
of service is the work that we are doing and it is explained in part in the
annual report. That is the way we are approaching that issue so that we are a
more contemporary employer.
The department's performance in relation to the criterion 'Australian
Defence Force members and families are supported through the delivery of the
family support program, transition services and bereavement support' was down in
2017-18, with only partial achievement, compared to full achievement in 2016-17.
While the 2017-18 performance result for this criterion indicated that ADF
members and families had been supported through successful delivery of family
support programs, ADF transition services and bereavement support, the report
explained that the 'partially achieved' result:
...reflects the continued focus on improving the transition
process and outcomes for Defence. In 2018-19, Defence will further embed the
transition coaching model, review the Career Transition Assistance Scheme and
ADF transition seminars, promote greater engagement with families, and
introduce Military Transition Support Officer roles.
The other two partially achieved criteria under Program 2.1 – Defence People
were new criteria for 2017-18 and related to the implementation of the 2016-26
Defence Strategic Workforce Plan,
and enhanced linkages between Defence and the Department of Veterans' Affairs,
particularly in the area of improved electronic information exchange. The Committee
will continue to monitor progress in relation to the above criteria concerning
The report noted that Defence was in a 'sound financial position'.
It was reported that the department's net cash spend was $34.9 billion in 2017-18,
an underspend of $26.2 million when compared to the revised estimates in the
Defence 2018-19 PBS (excluding expenditure on operations funded on a No Win, No
It was noted that:
This represents a variance of .08 per cent and demonstrates
the close scrutiny the Department has placed on its financial management during
On an accrual basis, Defence reported that it incurred an operating
surplus of $853.1 million; and on a cash basis, it was reported that the
operating surplus was offset by a commensurate increase in capital expenditure
associated with specialist military equipment.
Department of Veterans' Affairs, Repatriation Commission, and Military
Rehabilitation and Compensation Commission
Ms Liz Cosson AM CSC, Secretary of the Department of Veterans' Affairs,
by virtue of that role, also performs the roles of President of the
Repatriation Commission (RC),
and Chair of the Military Rehabilitation and Compensation Commission (MRCC).
Accordingly, the reports of the three bodies are combined into a single
publication. The reports of the RC and MRCC are prepared in accordance with the
respective legislative requirements as set out in Chapter 1.
RC and MRCC annual reports
Both the RC and MRCC annual reports for 2017-18 provide detail on the
bodies' functions and powers, structure, membership, administration, and a
brief summary of activity for the year under review. Both bodies noted lower
levels of activity in 2017-18 compared to recent years. The RC annual report
advised that in 2017-18 there were 12 formal meetings which considered 55
submissions, compared to 16 formal meetings and 84 submissions in 2016-17.
The MRCC annual report advised that there were 10 formal meetings which
considered 50 submissions in 2017-18; and two subcommittee meetings which
considered four submissions.
While this is only marginally down on activity in 2016-17,
the report notes that:
Over the past six years, the number of matters considered by
the MRCC has declined substantially, from 211 submissions in 2012-13 to 54 in 2017-18.
Much of the decline has been a consequence of delegated decision-making by the
MRCC and the development of full MRCC policies and guidelines to support
decision-making by the MRCC delegates.
In Ms Cosson's first report as Secretary of the department, she
highlighted the centenary of the establishment the Repatriation Commission in
2018 noting that '[a] century on, we are as committed to that mission as ever.
We are putting veterans and their families first.'
She provided an update on the progress of DVA's transformation, advising
that the department has moved to the implementation phase in 2017-18. Some
initiatives that were highlighted by Ms Cosson included:
the launch of MyService, the web-based claims system, and the
digitisation of paper files, resulting in faster claims processing;
faster response for claims relating to one of 40 conditions that
are known to be related to service, which will receive a response in an average
of 20 days or less (rather than the previous average time of 100 days); and
earlier connection with veterans' through information sharing
with Defence, with connection with ADF members from the day they join up,
bringing about a range of benefits.
Ms Cosson also noted that 2017-18 had been an intense period of
commemoration as part of the Anzac Centenary.
The Secretary's report included a comprehensive summary of the department's
focus in the year ahead. One area of high priority for the coming year is programs
to provide mental health support and suicide prevention.
While noting the achievements of the department in 2017-18, the
Committee appreciated Ms Cosson's candour in acknowledging past failings and
committing to better serving veterans and their families in the future:
I know that DVA has not always met your expectations. I acknowledge
that sometimes we have not made the right decisions or been the best we can be.
Our greatest challenge is to rebuild the trust between us.
You are the reason we are here, and the reason we will continue to strive to do
Thank you for your service.
The Committee was pleased to be able to locate the DVA Corporate Plan
2017-21 on the department's website as it was not able to locate the 2016-17 corporate
plan when it examined last year's annual report.
Part 1 of the annual report presents information on performance. This
section included a discussion of achievements in relation to transformation and
was followed by the priorities for the year ahead in relation to the department's
three purposes: compensation and support, health and wellbeing, and
commemorations. This discussion is followed by the Annual Performance
The DVA Corporate Plan 2017-21 advises that the 2017-18 performance
criteria are aligned to the performance criteria in the DVA 2017-18 PBS:
The Department's PBS for 2017-18 set out three outcomes,
their programs and the performance indicators used to monitor achievements
against the deliverables. The performance indicators from the PBS have been
included in the Plan and have been aligned to our purposes, strategies and
activities to demonstrate how success will be measured.
All the PBS measures have been listed in the plan and
additional qualitative measures have been added to provide a holistic view of
how success will be measured to achieve DVA's purposes. The measures will
evolve over time to reflect any significant change in strategy, operating
environment, activities or Government priorities in order to better represent
Where changes to performance criteria have been made since publication
of the Corporate Plan or PBS, these have been appropriately noted and
referenced in the Annual Performance Statement with an explanation provided.
The Annual Performance Statement sets out results for each of the
department's three purposes from the Corporate Plan, which align to the
department's three Outcomes as set out in the PBS. Also included were results
for the performance criteria for 'Enabling Services' as set out in the
Corporate Plan, which facilitate the delivery of services to business lines
through the use of resources to support organisational capability.
The Annual Performance Statement presents a complete, accurate and easy
to navigate summary of results against the performance criteria contained from
the source documents. Results were presented in a tabular form which included
the target, and the results for 2017-18 and 2016-17 for comparative purposes.
The inclusion of a column indicating success or failure with a tick or a cross,
provided a quick reference to indicate achievement. The results tables also
helpfully included a page reference to the source documents. These were
followed by an analysis of performance results against each purpose.
Overall, DVA achieved high levels of attainment against performance
criteria across the department's three purposes and its enabling services in
2017-18. In regard to Purpose 1 - Compensation and Support, out of a total of
30 performance measures, nine qualitative criteria relating to the correctness
rate of claims were not achieved in 2017-18. The timeliness targets for all
compensation and income support claims were achieved across Purpose 1 program
areas. In addressing the failure to achieve some qualitative criteria for
Purpose 1, DVA advised:
DVA continues to improve the quality of work in Purpose 1
program areas by using information provided by the quality assurance program to
manage resource allocation, improve training and development packages, target
policy and procedural support, and engage in performance management. Improving
information technology support through the implementation of new processing
systems is also expected to improve the quality of decision-making under
programs 1.2, 1.3 and 1.6.
Improving the claims process continues to be a key strategy
in the Department's ongoing commitment to providing a more efficient service.
Further improvements to business practices will enable efficiencies, and the
continued focus on quality performance will ensure that clients are receiving
the benefits and entitlements to which they are entitled.
The 2017-18 results for performance criteria for Purpose 2 - Health and
Wellbeing were 11 achieved out of a total of 15. For the four criteria not
achieved, the result for performance criterion 2.5.3 which related to the
percentage of claims for reimbursement in relation to travel that were processed
within the Service Charter timeframe of 28 days was very close to meeting the
target of 100 per cent. The 2017-18 result was only 0.5 per cent off the target,
and was a slight improvement of last year's result of 99 per cent.
The other three performance criteria under Purpose 2 which were not
achieved in 2017-18 all fell under Program 2.6 – which related to providing access
to health and other care services under the Military Rehabilitation and
Compensation Act 2004 (MCRA) and the Safety, Rehabilitation and
Compensation (Defence-related Claims) Act 1988 (DRCA). These criteria were
introduced in 2016-17 and relate to the department's rehabilitation program with
a target of 90 per cent for each. The report did not record a result for
2017-18 but indicated that each of the criterion were 'not met', with the
Data quality issues, due in part to migrating data from DVA's
ageing ICT systems, have made accurate reporting on the rehabilitation program
performance indicators (PPIs) difficult during 2017–18. The rehabilitation PPIs
have been reviewed and revised for 2018–19, and DVA will be able to report on
the rehabilitation PPI outcomes for 2018–19.
Two of the three performance criteria for Purpose 3 Commemorations, were
achieved in 2017-18. Performance criterion 3.2.1 regarding the delivery of
events safely, on time and within budget, was recorded as being partially
achieved. The discussion which accompanied the results explained that:
...four international and two domestic services were delivered
with a variation in actual expenditure, compared to budget, of more than 5 per
cent. Of those six services, three were delivered under budget and three were
delivered over budget. The variations in expenditure were due to changes in the
planning and delivery of the commemorative services, including changes to the
infrastructure and the support required to deliver the events.
The discussion also noted positive media coverage and feedback from
veterans and ex-service organisations about commemorative services conducted.
In recognition of the importance of the supporting elements that facilitate
the delivery of DVA's programs, the final performance table presents results for
the department's enabling services. These elements include its workforce,
financial management function, ICT services, partnerships with Commonwealth
agencies; engagement with stakeholders, and management of a program of research.
The department is commended for developing and reporting on criteria for these
functions which support and contribute to achievement of purposes and outcomes.
Overall, 12 of the 13 enabling services criteria were achieved. Overall, the
accompanying analysis on the department's performance for enabling services was
informative. For example, the result for the performance criterion 4.1.3
'workforce is engaged and actively participates with attendance rates
consistent with like APS' was again 'partially achieved' in 2017-18 as it was
in 2016-17. The accompanying discussion explains the department's inability to
fully achieve this criterion in 2017-18:
The 2017 Australian Public Service (APS) State of the Service
employee census recorded a very high employee engagement index of 80 per cent
for DVA, compared to the average for large operational agencies of 70 per cent.
In the 2018 APS employee census results, the DVA employee engagement index fell
to 74 per cent, due to the addition of new questions. However, DVA retained an
employee engagement advantage when compared to the APS average (70 per cent)
and the average for large operational agencies (69 per cent). The DVA
unscheduled absence rate improved in 2017–18 to an average of 14 days, compared
with an average of 14.6 days in the previous year. While DVA scored very well
in relation to employee engagement, its unscheduled absence results only
surpassed two of the three similar agencies (Department of Human Services,
Department of Health and Department of Defence), so an overall performance
rating of partially achieved for criteria 4.1.3 is appropriate.
The report's section on financial performance includes a table of DVA's
financial performance and financial position broken down by the department and
the Defence Service Homes Insurance Scheme (DSHIS) 
for the last three years.
The inclusion of comparative results was a helpful addition.
The department achieved a consolidated operating surplus (excluding
depreciation) of $3.46 million in 2017-18, against the budgeted $2.55 million reported
in the 2017-18 PBS. It was also reported that the DSHIS reported an operating
surplus of $5.68 million (excluding depreciation).
The Committee noted that while the annual report included references to
the Senate Foreign Affairs, Defence and Trade References Committee's inquiry into
suicide by veterans which reported in August 2017, the report's section on
external scrutiny did not include the inquiry details.
The Government response to the References Committee's report was tabled on 24
October 2017. Section 17AG(3) of the PGPA Rule requires entities to include the
most significant developments in external scrutiny during the year, including
by parliamentary committees, and the entity's response. As this was a
significant and important inquiry concerning the welfare of veterans' which looked
closely at the operations of DVA, reference to the inquiry in this section of
the report would be expected.
Department of Foreign Affairs and Trade
In her annual review, the Secretary of the Department of Foreign Affairs
and Trade (DFAT), Ms Frances Adamson, described the release of the 2017
Foreign Policy White Paper as 'a signature achievement' for the department
in 2017-18. Noting that it had been 14 years since the last foreign policy
white paper, Ms Adamson explained the importance of the release of the White
Paper in the current international climate:
Powerful drivers of change in the international system are
converging in ways that are challenging Australia's interests.
The White Paper makes clear that Australia will need to
pursue its national interests in a more competitive and contested world. Now,
more than ever, our global environment does not draw distinctions between our
foreign policy, trade, economic, security and development interests. We will
have to work harder to maximise our international influence and secure our
national interests, the prosperity of Australia, the independence of our
decision-making, and the security, safety and freedom of our people.
She also reported that DFAT had made significant progress in supporting
Ministers in implementing the White Paper across government during the year.
Some of the other achievements for 2017-18 highlighted by the Secretary include:
strengthening regional groupings, including the
Australia-India-Japan-United States quadrilateral dialogue and the ASEAN South
East Asia's strategic convenor;
'stepped-up' engagement in the pacific, including the high-speed
undersea cables initiative linking Papua New Guinea, Solomon Islands and
Australia, security agreements with Solomon Islands, Tuvalu and Nauru, and
support for labour mobility; and
support for free trade agreement negotiations, including the signing
the Trans-Pacific Partnership (TPP-11) and bilateral free trade agreement with
On the corporate front, Ms Adamson noted progress on a number of internal
reform processes designed to focus resources, prioritise capabilities, build a
more diverse and higher-performing workforce, and more efficient and
cost-effective use of technologies, including:
revision of the organisational structure with a view to align it
with the strategic direction and priorities of the White Paper;
commencement of the roll out of a new workforce strategy;
implementation of the Women in Leadership strategy; and
delivery of the International Communications Network initiative
to replace networks at over 174 sites globally.
In her outlook for 2018-19, Ms Adamson discussed the foreign policy
challenges in a 'more contested and competitive international environment' and
listed the security challenges that Australia will face in the future as a
result of 'nuclear proliferation, terrorism, technological advances,
demographic shifts, climate change and new global power balances.'
She referred to the importance of the White Paper to provide the department
with guidance to:
...help us retain clarity about our long-term objectives and a
steadiness of purpose in ensuring Australia's prosperity and security
strengthen in this complex and fast-changing world.
Annual Performance Statement
DFAT's 2017-18 Corporate Plan was located via an Internet search but did
not appear to be able to be accessed via a link or from a search of the DFAT
home page. Only the most current corporate plan for the 2018-19 financial year
was able to be found via the website's search feature. This accessibility issue
also occurred with last year's corporate plan. The Committee reminds agencies
of the importance of archiving and providing links on their websites to corporate
plans from previous years, as it is an important reference to the annual report
for the corresponding year.
The 2017-18 Corporate Plan states that the department's purpose is 'to
make Australia stronger, safer and more prosperous by promoting and protecting
our interests internationally and contributing to economic growth and global
stability, particularly in the Indo-Pacific region'. This purpose is supported
by the three outcomes outlined in DFAT's 2017-18 PBS which are to be achieved
through eight priority functions, outlined in the 2017-18 Corporate Plan. For
each priority function, the 2017-18 Corporate Plan provides a brief
description, lists the major operational activities and sets out the
performance measures, which includes the method of measurement and the
The Annual Performance Statement is structured around these eight
priority functions. The performance results are presented in results tables
indicating whether the measure is met or partially met. The table also included
a page reference to the source document for each measure.
There were 55 performance measures reported against in DFAT's 2017-18
Annual Performance Statement, with an overall result of 41 met and 14 partially
met. On a percentage basis, this year's achievement of approximately 74.5 per
cent of criteria fully met, is a slight improvement on last year's result of
72.2 per cent of measures fully achieved (that is, 26 out of 36 measures met).
The Annual Performance Statement reports against most of the 2017-18 performance
criteria; however, not all criteria from the PBS were included with the same
wording as set out in the PBS. Despite the inclusion of page references to the
source documents in the Annual Performance Statement, the results presented
could not be clearly linked to some performance criteria from the PBS. For
example, it was noted by the ANAO in its review of DFAT's 2017-18 Annual
Performance Statement that some performance measures for Program 1.1 as set out
in the 2017-18 PBS were not clearly reported against in the Performance
Statement and noted the importance of establishing a clear read between the
While some of the results presented could be linked back to the PBS performance
criteria under Program 1.1; it was not clear how all elements were covered by
the results presented in the performance statement. There was an overlap
between some of the criteria in the PBS and the Corporate Plan and results can
be attributed to similar PBS criteria, but there was not a clear read between
the documents for some of the criteria.
The ANAO in its performance audit of selected 2017-18 annual performance
statements commented on the importance of annual performance statements making
a clear connection between results presented to all performance criteria:
The consistency and completeness of the presentation of
performance criteria and targets across the PBS, corporate plan and performance
statements is important to establish a clear read. Finance guidance notes that
the Finance Secretary's Direction 'does not necessarily require entities to
publish a line-by-line acquittal, however, the reader should be able to clearly
discern the entity's performance against all of the proposed measures.' It is
important for entities to ensure that performance statements make clear how the
results presented relate to measures originally presented in the corporate plan
The Committee notes that the Corporate Plan indicates that DFAT will
continue to undertake work to align the performance criteria between the
Performance measures are being reviewed and refined
iteratively, including aligning this Corporate Plan with the performance
targets in the Portfolio Budget Statements.
The Committee noted in its last review of the DFAT annual report the
department's use of case studies and reviews as a tool to measure performance,
and further noted that the use of case studies did not always provide a clear
case as to why a performance criterion was met or not.
Case studies and reviews continued to be used extensively to measure DFAT's performance
in 2017-18. The Committee notes that the ANAO in its review of the DFAT Annual
Performance Statement for 2017-18, also noted the limitations of using case
studies to adequately measure performance for some criteria:
Case studies can be narrowly focussed examples of particular
circumstances and without significant investment in appropriate upfront design,
cannot typically be used to demonstrate a result that can be reliably
extrapolated across a broader population.
In ANAO's assessment of DFAT's use of case studies and reviews as a
reliable measure of performance, it concluded that in the measures assessed did
not possess better practice characteristics, which include: upfront planning,
articulated objective, defined scope, and clear target and methodology for
The ANAO advised that:
In all instances, DFAT's documentation could have been
improved to identify at the corporate planning stage the parameters used in the
identification and development of case studies presented in the performance
The Committee notes the challenge for DFAT to develop performance
measures for policy activity and recognises the place for case studies and
reviews to demonstrate achievement for some measures and hopes to see the
incorporation of the above factors to strengthen these types of measures.
The ANAO's assessment of the reliability of selected DFAT performance
measures, noted the importance of adequate disclosure of the basis for
measurement to ensure performance measures are free from bias. In the 2017-18 DFAT
performance measures assessed, the ANAO found only one measure was determined
to be 'free from bias'. It also noted concerns around the potential for bias in
DFAT's selection of case studies and reviews as performance measures:
DFAT's reliance on case studies and reviews, selected
ex-post, provides further potential for bias. Where used, case studies can
provide context to the department's activities and achievements. However, case
studies should not be relied upon as a stand-alone measurement, unless the
scope is predetermined, activities clearly stated and measurement methods
detailed in advance. The expected impacts can then considered by readers in
advance, and progress towards outcomes assessed on the basis of results,
particularly in relation to the completeness of the reporting against program
The Committee welcomes DFAT's response to the ANAO audit which advised:
DFAT welcomes the majority of ANAO's observations, which
mirror our own self-assessments and represent areas we are working to
DFAT notes the challenges the Australian Public Service – as
well as state and international entities - face in designing measures and
methodologies for policy performance. That said, the department is determined
to make further progress and will work across government to identify improvements.
We would welcome guidance and identification of good practice examples.
Notwithstanding the above, the Committee commends the department for its
efforts to build on its existing performance measures in the 2017-18 Corporate
Plan. Some of the departmental priority functions have additional criteria
including more specific reviews, deliverables and projects. The inclusion of
specific quantitative measures for some priority functions where possible is also
a welcome addition to the performance information.
For example, in the 2016-20 DFAT Corporate Plan Priority Function 5 – 'Strengthening
international frameworks and norms' used two case studies to measure
performance on an annual basis. In the 2017-18 Corporate Plan, an expanded
Priority Function 5 'Strengthening rule of law, international security, open
and transparent global markets, international frameworks and norms' included 10
additional performance measures including reviews, deliverable outcomes with
varying timeframes for delivery.
Similarly, in 2016-20, Priority Function 6 included the following
performance measures in relation to passport services:
department will use case studies to assess our performance in providing:
high-quality delivery of
passport services to clients; and
- high standards and interoperability of Australian
passports and services
department will review our performance in:
providing efficient processing
of regular and urgent passport applications, including the number and
accuracy of passports issued, and the time taken to process applications; and
- preventing, detecting and prosecuting passport fraud.
The 2017-18 Corporate Plan included additional more specific measures
for passport services as set out below:
department will review the high-quality delivery of passport services to
clients, including by providing efficient processing of regular and urgent
percentage of passports
processed within 10 business days
- percentage of priority passports processed within
two business days
- number of reports of faulty passports
- client satisfaction survey
average speed of answering calls
to the Australian Passport Information Service.
department will review the provision of high standards of interoperability of
Australian passports and services
Measured by compliance with the International
Civil Aviation Organization's Doc 9303
||The department will deliver
the new Passport Series R.
||The department will use a
case study to assess our performance in continuing work with the Department
of Immigration and Border Protection to develop the concept of a digital
passport (for both inbound and outbound Australians)
The inclusion of targets where possible for the above quantitative
measures would improve the basis for assessing performance.
The annual report provides a concise summary of the department's
financial performance for 2017-18, including operating result, revenue and
expenses, with useful explanations on the variation from preceding year's
results. The report notes that DFAT recorded an operating deficit of $53.9
million; however, after adjusting depreciation and amortisation expenses, the
year end result was a surplus of $133.3 million. This was attributed to the gain
from sales of the chanceries in Bangkok and Jakarta.
Departmental revenue increased by $107.8 million over 2016-17 to $1,642.7
million in the Statement of Comprehensive Income; with $220.4 million in other
comprehensive income arising from asset revaluation movements in the Statement
of Financial Position. The department reported $1,696.5 million of expenses in
the Statement of Comprehensive Income, an increase of $24.9 million from last
year. This was attributed to increased depreciation and amortisation expenses
of $15.9 million, increased employee expenses of $19.0 million due to delays in
reducing staff numbers; and a reduction in overall supplier expenses of $4.0
The report also advised of the sound financial framework in which the
department operates and manages its resources, noting the importance of strong
financial management of resources in 'an increasingly tighter fiscal
The annual report includes executive reports from the Chairman,
Mr Bob East, and Managing Director, Mr John O'Sullivan, which both highlighted
the importance of the Chinese market for the Australian tourism industry, the United
States Dundee campaign, and the importance of the emerging business
The Chairman advised that 2017-18 had been a 'great year for Australia's
He noted that international arrivals increased by more than 0.5 million to over
9 million, and international expenditure hit almost $43 billion.
While up 5 per cent on the previous year's spend, it is noted that it did not
quite reach the target of $43.4 billion.
In particular, Mr East remarked on the strong performance of the Chinese market
during the year, with arrivals from China overtaking those from New Zealand,
and was the highest value market by spend. Mr O'Sullivan noted that 2017 was
the China-Australia Year of Tourism and described the importance of the Chinese
Although we have to take a balanced portfolio approach, we
have to prioritise our marketing resources and budgets. As our largest and most
valuable inbound market, China is a must-win market for Australian tourism.
Mr East also commented on the organisation's increased focus on business
events, noting that this lucrative sector of the visitor economy had a total
spend of $4.75 billion in 2017.
Mr O'Sullivan noted the launch of the $12 million Business Events Bid Fund in
March 2018 with six events secured.
The Managing Director noted the importance of data and technology in
being able to target the customers and markets delivering the greatest return:
...we can now measure our activities more effectively and
efficiently than ever before. We also have the confidence to take more
calculated risks when creating marketing programs that capture people's
attention and help drive conversation.
He also noted the success of the Dundee marketing campaign which
targeted the United States market, and included a 60-second ad starring
Australian actor Chris Hemsworth which aired during the Super Bowl in 2018. Mr
O'Sullivan attributed the campaign to a 30 per cent increase in sales and about
a 20 per cent lift in yield.
Annual Performance Statement
The Committee was pleased note that this year's performance information
was presented in an Annual Performance Statement in line with the requirements
for a corporate Commonwealth entity under the PGPA framework. TA's single outcome
and purpose are aligned as:
To grow demand and foster a competitive and sustainable
Australian tourism through partnership marketing to targeted global consumers
in key markets
Performance criteria are quantitative and results are presented in
tabular format against the two departmental programs as set out in the 2017-18
PBS: Program 1 - Grow demand and Program 2 - Industry development.
All of the performance criteria from the PBS were presented in the
annual report. It is noted that a number of the target figures for Program 1
were adjusted slightly in the annual report from the target figures from the
2017-18 PBS. The footnote to the results table indicated that the 'percentages
represent targeted goal growth' and were consistent with the target figures from
the 2017-18 Corporate Plan.
The Corporate Plan included three 'corporate' performance criteria:
return on marketing investment;
staff engagement; and
corporate costs as a percentage of overall budget.
The Annual Performance Statement only presented results for the criterion
'return on marketing investment' which was listed under Program 1 – Grow
demand. For the criterion 'staff engagement', the annual report advised
'Achieved a staff engagement score of 92 per cent...' in the section 'Managing Our
Organisation'. A table presenting staff engagement by calendar year from 2014
to 2018 was also provided in this section of the report, but did not include
the target figure from the Corporate Plan.
The inclusion of the result for this performance criterion in the Annual Performance
Statement would have assisted in locating the result. A result for the
remaining corporate performance criterion of 'corporate costs as a percentage
of overall budget' with a target of 9 per cent could not be located in the
A result for performance criterion 'leisure expenditure from TA target
markets' under Program 1 did not have a performance result recorded for
2017-18, advising that it was 'not available.'
The subsequent discussion of performance for Program 1 explained the failure to
have a figure for this criteria in 2017-18:
Please note that the International Visitor Survey results do
not include any data relating to purpose of visit. This is because the quality
of the main purpose of visit component of the passenger data supplied to
Tourism Research Australia (TRA) by the Department of Home Affairs has been
identified as a concern. Work is currently in progress to resolve these issues
and it is likely that a back cast of TRA data will be required. TRA will
release revised estimates once a solution has been implemented.
The Annual Performance Statement includes references to the relevant source
documents; however, some of the page numbers were incorrect. For example, for
the reference to page 152 of the 2017-18 PBS for Program 1, should have been
page 154; and the reference to page 24 of the 2017-18 Corporate Plan, should
have been page 26 for both Programs 1 and 2.
TA achieved seven of the 10
performance criteria reported on for 2017-18. The accompanying analysis
provided useful explanation for the results. For those not achieved, TA was
close to meeting the target of $43.4 billion for international tourism
expenditure, achieving $42.5 billion; and the target of $34.7 billion for 'total
expenditure from TA target markets', achieving $34.04 billion. While both criteria
achieved growth of 5 per cent year on year it was just below the goal. The
report explained that:
Tourism Australia continued to set aspirational visitor spend
goals in 2017/18 to focus our efforts. Performance was on track or close to on
track for all spend metrics. The strength of the Australian dollar, while lower
than the prior year, continued to impact spend, making it comparatively more
expensive for consumers to travel to Australia as well as reducing their
spending while here. Global trends of reduced duration of stay also impacted
There was a greater shortfall for the target goal of $300 million for
the criterion for 'earned advertising value', with a result for $259 million. The
failure to achieve this criterion was explained:
Equivalent Advertising Value is below goal due to fewer
International Media Hosting Program, Public Relations and Broadcast campaigns
than initially planned due to focus on Dundee.
It is noted that there was a particularly strong result for the
performance criterion 'business events expenditure from TA target markets'
which was up 26 per cent with a total of $2.4 billion, exceeding the goal growth
of 10 per cent and total of $2.1 billion.
The report included an overview of financial performance in 2017-18,
including results, revenue, expenditures, and balance sheet position. The net
financial expenditure was $148.2 million which was within 0.1 per cent of the
budget. Gross revenue exceeded the budget by $2.1 million, and it was noted
that a similar increase in expenditure resulted in net expenditure in line with
It was noted that there was a $2.1 million increase in net expenditure
in the statutory accounts. This was attributed to a weaker Australian dollar
resulting in an overall foreign exchange loss for the year of $2.1 million.
As a corporate Commonwealth entity, TA is required to prepare its annual
report in accordance with the legislative requirements under Division 3A,
Subdivision B of the PGPA Rule. Section 17BE(u) of the PGPA Rule requires the
report to include an index identifying where the mandatory requirements are
found in the annual report. The compliance index in TA's annual report
does not have a reference for each item required under the PGPA Rule, and appears
to be an index to the out of date Department of the Prime Minister and Cabinet Requirements
for Annual Reports for Departments, Executive Agencies and other Non-Corporate
Commonwealth Entities, and not the current PGPA requirements for a
corporate Commonwealth entity. However, the report advises that it was prepared
in accordance PGPA Act and other relevant legislation.
While most of the required information under the PGPA Rule was able to
the located in the report, the omission of a relevant compliance index did not assist
in the examination of this report. For items not located, it is unclear as to
whether that requirement was not applicable or was inadvertently omitted. For
example, sections 17BE(d)-(f) of the PGPA Rule requires corporate Commonwealth
entities to include in their annual reports any directions given to the entity
by a Minister under an Act or instrument, or any government policy orders
during the period; and if not complied with, the reasons for non-compliance.
TA's annual report advised:
As a portfolio agency, Tourism Australia must also consider
and implement ministerial directions and statements of expectations issued from
time to time by the Minister for Trade, Tourism and Investment. The Hon. Steven
Ciobo, MP, was the responsible Minister for the 2017/18 period.
Under the Board Charter, the Board's responsibilities
include...Complying with general government policy as directed by the Minister
for Trade, Tourism and Investment, and according to Tourism Australia's
However, advice on whether TA actually received any ministerial
directions during the reporting period could not be located. The absence of any
further information may be because there were no relevant directions, but a
statement or notation to that effect would provide clarity.
The committee hopes to see the correct compliance index included in
future annual reports.
Defence Housing Australia
The review by the Chairman, the Hon Sandy Macdonald, noted that 2017-18
marked the 30th anniversary of operation of Defence Housing
Australia (DHA) and he commended the agency's work to improve the standard of
housing and related services to ADF members and their families over that time. One
area of note by the Chairman in 2017-18 was the assistance provided by DHA to
the broader Defence community through financial and goods-in-kind support to
various Defence related groups. In particular, he noted that DHA was an
official supporter of the 2018 Invictus Games. The contribution by DHA to local
and regional economies through the employment of local businesses and
tradespeople where possible was also noted by Mr Macdonald.
The Managing Director, Ms Jan Mason,
provided an informative and balanced account of the year, including both
achievements and challenges, and priorities for the year ahead. At the outset
she noted the 'unique and complex' nature of DHA's business where external
factors, which the organisation has little or no control over, affect the operational
and financial performance. Ms Mason listed influencing factors such as service agreements
with the Department of Defence, the accuracy of forecast housing requirements,
the residential property market conditions, and economic factors influencing investment
sentiment. In seeking to achieve DHA's performance targets, Ms Mason described
the balance between the following elements that must be considered:
providing outstanding customer service to ADF members, ADF
families and investors; and
maintaining a robust financial position to deliver commercial
returns to the Australian Government as owner of the business.
In managing the business with regard to the above considerations, Ms
Mason further noted that:
...while DHA must always endeavour to act commercially, profit
considerations are secondary to our primary purpose of providing suitable and
adequate housing for ADF members and their families.
Some of the performance highlights in 2017-18 noted by Ms Mason
the launch of the 'One DHA' initiative to bring all sections
under one unified brand;
the consistent high performance of Property and Tenancy Services
which met or exceeded all customer service measures;
receiving the Customer Service Organisation of the Year – Not for
Profit/Government award at the Customer Service Institute of Australia's 2017
Australian Service Excellence Awards;
increasing the member usage of the Living-in Accommodation
Booking and Allocation Services;
exceeding the leasing requirements for the Capital Plan 2017-18;
launching DHA's first Reconciliation Action Plan.
Ms Mason noted DHA's failure to achieve its profit targets in 2017-18
and cited challenging property market conditions in key provisioning areas
which affected the margin achieved in selling some properties and increased the
property value impairment.
Annual Performance Statement
The annual report sets out DHA's performance framework as a corporate
Commonwealth entity and Government Business Enterprise. It advises that as funds
are not directly appropriated by the Government to DHA, it does not prepare
Portfolio Budget Statements and further notes that information about DHA is
included in the Department of Defence's PBS.
However, it is noted that DHA has a separate entry to the Department of Defence
within the Defence Portfolio 2017-18 PBS. DHA's entry sets out DHA's outcome
and program, and performance information for 2017-18, which includes three
The annual report advised that the DHA Board, in accordance with section
16E(4) of the PGPA Rule, chose not to make the Corporate Plan 2017-18 to 2020-21
publicly available in order to protect its commercial sensitivities. In line
with this provision, DHA has published its Statement of Corporate Intent 2017-18
(SCI), based on the corporate plan which 'provides a high level, plain English
overview of DHA's key objectives and priorities for the financial year.'
DHA's 2017-18 SCI was located on the agency's website by using the
search function, but a link to the document did not appear to be available.
Only the 2018-19 version was able to be navigated to via a link. The SCI sets
out DHA's three purposes with performance measures for each. For Purpose 3 -
Maintain a robust financial position to deliver commercial returns to the
Australian Government, only four KPIs covering staffing are listed. The SCI
notes: 'Due to commercial sensitivities, we do not publish our
financial-related performance targets.'
The Annual Performance Statement states that it presents DHA's
performance against its three purposes and associated KPIs set out in the
2017-18 Corporate Plan, but does not specifically refer to the performance criteria
from the PBS.
Results for all of the KPIs listed in the 2017-18 SCI were presented in
the Annual Performance Statement against the agency's three purposes. For
Purpose 3, in addition to the four performance criteria published in the SCI,
the annual report presents results for the additional 16 criteria covering
revenue, financial performance, business efficiency and leverage/solvency not
published in the SCI.
The report failed to clearly present results for the three performance
criteria for 2017-18 from the PBS:
Performance criteria Target
Houses supplied against provisioning schedule >99%
Members satisfied with their service residence >80%
Return on equity 4.3%
Two of the PBS criteria were reported on in the Annual Performance
Statement (although the 'return on equity' criterion had a target of ≥3.9%), but without
reference or linking the results back to the PBS. While a result for the other criterion
from the PBS - 'Houses supplied against provisioning schedule' with a target of
>99% was not able to be clearly located in the Annual Performance Statement.
The SCI has two criteria regarding properties provisioned for Defence, but these
criteria had a target for a total number and not a percentage against the
schedule. However, the report's overview includes advice that:
Under contractual arrangements with Defence, we must meet 99
per cent of the MWD [member with dependents] provisioning target as set out in
the approved schedule.
The inclusion of page references to the source documents for the
performance criteria would have assisted in providing the 'clear line of sight'
between planned performance as set out in the PBS, in addition to the SCI, and
actual performance over the reporting period.
The 'Results snapshot' table provided a helpful overview of performance
for the year. Each criterion was presented in a tabular format which included
the target and result and a brief explanation. For criteria not met, most
included an explanation for the shortfall. Of the 29 performance criteria
reported on in the Annual Performance Statement, DHA achieved or exceeded 12
KPIs, and failed to meet 17.
This compares to the 2016-17 results where DHA achieved or exceeded 19 KPIs,
substantially met eight KPIs and did not meet one KPI.
The accompanying overarching analysis of DHA's performance noted in
particular the achievement of all KPIs under Purpose 2 relating to the provision
of housing related services and customer service where it indicated that the
results reflected DHA's 'dedication' to improving customer service in support
of its key customer groups: ADF member and investors.
The report's discussion on financial performance noted that DHA does not
receive Government funding and its financial structure is revenue generating.
As a GBE it pays annual dividends to the Australian Government and in 2017-18
it achieved its target of a dividend payout ratio of 60 percent of net profit
after tax, equating to $26.6 million.
It was noted that overall the results for 2017-18 were below targets and
were attributed to:
...property market conditions in areas of key Defence
provisioning, in particular Darwin and Townsville, have significantly impacted
our full year profit outcomes on the Property Investment and Disposal Programs
and on the carrying value of our owned portfolio. A decision to defer the sale
of the Waterloo development site (Sydney, NSW) to outer years also negatively
impacted full year profit outcomes.
On a positive note, DHA reported savings on its operating and personnel
costs, and repairs and maintenance spend. It also benefited from revised fee
arrangements on the Member Choice Accommodation MCA contract.
Export Finance and Insurance Corporation
Letter from Chairman and Managing
Director & Chief Executive Officer
The letter from the Chairman, Mr James Millar AM, and Managing Director
and Chief Executive Officer (CEO), Ms Swati Dave, highlights the achievements
and challenges for the Export Finance and Insurance Corporation (Efic) during
2017-18. They described 2017-18 as a positive year with Efic making significant
contributions to Australian exporters and the Australian export economy. Some
of the notable accomplishments during the year were:
the provision of $194 million in funding to 160 Australian
the support of approximately $1.4 billion in export contracts to
businesses across a range of industries; and
meeting the majority of the business objectives for small and
medium-sized (SMEs) enterprises.
The letter also notes that internal analysis revealed that Efic's
contribution to both gross domestic product and jobs supported had increased
significantly compared with the previous year.
The Chairman and CEO explained how the broader economic conditions
impact on Efic's operations, with Efic operating as a 'counter-cyclical'
When credit availability in the private market is strong, the
need for our support may decrease.
They noted that, driven by higher liquidity and low interest rates,
2017-18 saw the Australian banking sector active in sectors that would
traditionally be financed by an export credit agency:
In fact, data from the Berne Union indicates that sales volumes
for new medium and long-term transactions are still at their lowest levels in
the past 10 years, with the exception of 2016. This is despite a return to growth
in most markets.
The global export credit agency landscape is also shifting.
There is an increased focus on implementing more flexible and proactive lending
to more broadly support Government trade policies.
In this context, our aim is to ensure we remain a relevant
and sustainable organisation.
Efic's expanded mandate was also highlighted in the Chairman's and CEO's
letter. Changes to the Export Finance and Insurance Corporation Act 1991
(Efic Act) and the Statement of Expectations during 2017-18 broadened the
types of business and industries which Efic is able to support. The report
The changes...allow us to lend more directly to tourism and
online businesses, provide support for onshore resource projects and assist other
Focussing on some internal developments, Mr Millar and Ms Dave reported
on some positive outcomes within the organisation in regard to diversity. They
advised that in 2017-18:
women held 48 per cent of in leadership positions, up from
32 per cent three years ago;
60 per cent of promotions went to women;
52 per cent of employees are from a non-English speaking
background or with parents from a non-English speaking background; and
Efic's new Reflect Reconciliation Plan was endorsed by
Efic's 2017-18 Corporate Plan was available on the agency's website. The
annual performance statement reports against most of the criteria set out in
the corporate plan in relation to the commercial account. The results tables include
the target figures and page reference to allow for a clear read between the
Efic's performance in 2017-18 against the criteria relating to the
support for SME's showed a significant improvement in comparison to last year's
results, with results within or exceeding the target range. For the performance
criterion for the value of supporting export contracts, which had a target of
$730-$780 million, Efic reported a result of $1.25 billion.
Performance in 2017-18 in relation to corporate, sovereign and project
finance transactions was again at the lower end or below the target range. The
accompanying explanation advised:
These results are driven by a very liquid financial market
and strong private sector appetite, as well as an increasingly competitive
export credit agency landscape. While a disappointing outcome, this is not
unusual in large project financings where project delays are common. It should
be noted that the lack of corporate transactions is not reflective of our
overall credit risk appetite.
We have a strong transaction pipeline for the year ahead and
remain optimistic about the growth in our corporate business.
Efic exceeded both the pre- and post-tax profit targets, as well as the
capital adequacy ratio; but did not meet the target for available capital and
risk weighted assets. The failure to meet these two criteria was briefly
Risk weighted assets rose marginally over the year from
$2,652.4 million to $2,700.4 million; however, they were lower than [the
Corporate] Plan. This was due to lower levels of exposure to large corporate
customers from lower transaction values than [the Corporate] Plan and slower drawdowns
on facilities signed in prior years.
Capital available grew to $674.5 million, which is below [the
Corporate] Plan due to lower credit exposures that contributed less eligible
credit provisions being allocated to capital.
The Committee notes the comments of the ANAO on Efic's annual
performance statement in its report entitled Effectiveness of the Export
Finance and Insurance Corporation which was presented on 6 June 2019.
Efic's purpose as set out in its 2017-18 Corporate Plan is 'Financing
Australian businesses to take on the world'. The ANAO described Efic's
'purpose' as being too broad and not describing the intended impact, nor the
benefit to the Australian economy.
Therefore, in assessing Efic's performance criteria, the ANAO used Efic's
prescribed mandate from the Efic Act and the Statement of Expectations. In line
with what the ANAO described as the necessary characteristics for appropriate
performance criteria, it found that Efic's measures were both relevant and
reliable; however, not fully complete:
...the completeness of the performance criteria was assessed as
partly met, as the performance measures used by Efic are all of a quantitative
nature, and only provide details in relation to financial performance and
completed transactions during the year.
The performance criteria do not clearly explain how Efic has
met its purpose in relation to: building Australia's export trade and working
with banks and other financial institutions to provide financing support to
export businesses; its performance in relation to its underlying functions; and
how it has assisted the growth of the Australian economy.
Efic should consider 'assist-based' performance criteria to
measure its performance against its function and purpose under the Efic Act and
Statement of Expectations. 
The Committee was pleased to note that Efic agreed with the ANAO's
recommendation that Efic include both quantitative and qualitative performance
measures in future performance statements to enable a more comprehensive
assessment of overall progress against its purpose:
Efic notes that the ANAO has made only one recommendation to
include more qualitative measures in the annual performance statement
reporting. We welcome the ANAO's suggestions on the types of qualitative
measures that can be incorporated into our reporting. For example, we know that
Efic's involvement often acts as a catalyst for the private market to step
forward and provide support to businesses. While it is often difficult to
quantify the benefit of Efic's 'crowding in' of the private market, we acknowledge
that such qualitative measures would enhance our current reporting.
The report advised that since 1991, Efic has accumulated profits of
$591.7 million, including $13.9 million profit in 2017-18 (post tax) from
its commercial account transactions. At the time of the preparation of the
annual report, a dividend had not been agreed for 2017-18.
Related entity transactions
To ensure transparency around potential conflicts of interests in the
operations of corporate Commonwealth entities, sections 17BE(n)-(o) of the PGPA
Rule, requires the disclosure of relevant related entity transactions. The report
Directors have made appropriate disclosures in respect of
transactions that Efic has undertaken where they may have, or may be perceived
to have, a material personal interest.
If relevant disclosures were made under these sections, the inclusion of
more detail, including decision making processes and value, would be useful; or
if there were no relevant disclosures, a statement indicating this would
Judge Advocate General
The functions of the Judge Advocate General (JAG) are prescribed by the Defence
Force Discipline Act 1982 (DFDA) and include the following:
making procedural rules for Service tribunals;
providing the final legal review of proceedings within the ADF;
participating in the appointment of Judge Advocates, Defence
Force Magistrates, Presidents and members of courts martial, and legal officers
for various purposes; and
reporting upon the operation of laws relating to the discipline
of the ADF.
Under section 196A(1) of the DFDA the JAG must prepare a report relating
to the operations of the DFDA, the regulations and rules of procedure made
under it and the operation of any law of the Commonwealth or of the Australian
Capital Territory in so far as that law relates to the discipline of the
Defence Force. The JAG's annual report for 2017 provides an informative and
considered account of the matters required under the DFDA.
The report provided a detailed record of significant appointments within
the office of the JAG during the period of review. Other matters discussed in
the 2017 annual report by the JAG included, the number of female legal officers
practising in the superior service tribunal system, overseas developments, discipline
law training, domestic and international visits and engagement.
The Committee has chosen to consider in more detail the report's
discussion on reform of the DFDA in relation to the operation of superior
service tribunals and publication protocols for superior service tribunal
Reform of the DFDA in relation to
superior service tribunals
While stating at the outset that superior service tribunals (courts martial,
Defence Force Magistrate tribunals and the Defence Force Discipline Appeals
Tribunal) have operated fairly under the DFDA during 2017, the JAG nevertheless
called for reform of the legislation to address what he described as a number
of procedural defects impacting their operation. The JAG noted that the DFDA
has not had significant legislative attention to its superior or summary
service tribunal procedures since 2009 and called for Parliament to consider
necessary reforms to ensure that the investigations and trials conducted under
the DFDA for alleged service offences meet the current community standards.
He advised that:
...many provisions of the DFDA no longer reflect the standards
of procedural efficiency and flexibility in the civilian administration of
justice in Australia. Over the last year, JAs [judge advocates] and DFMs
[Defence Force magistrates] have continued to ensure that accused persons are
afforded a fair trial despite these procedural inadequacies in the DFDA. But
these gaps in the DFDA limit the ADF in promoting the most fair and effective
investigation, prosecution, trial and defence of alleged service offences.
In my view, DFDA reform in these areas...is now required and
justly merits Parliament's early attention in order to maintain confidence in
the ADF's military discipline system. ADF members should enjoy, as nearly as possible,
the benefit of the modern, fair and efficient criminal processes and procedures
available in Australia's civilian courts, adjusted for service conditions.
Regrettably they do not yet do so.
The JAG identified the following priority areas for reform:
better powers to identify and manage mentally impaired ADF
members before service tribunals;
improving superior service tribunal procedures to civilian best
practice in relation to capacity to hear pre-trial applications of the
tribunal's own motion or the prosecutions motion, and the lack of procedural
powers to direct parties to define real issues for trial and manage the course
of expert advice;
strengthening JA/DFM independence through legislation which
provide statutory independence provisions for appointment and term of office;
improving courts martial sentencing transparency and
providing modern law enforcement powers to ADF investigators and the
attendant safeguards, particularly to allow for investigators to have
reasonable access to digitally stored information.
It was suggested by the JAG that the reform of the above issues 'should
command a broad measure of consensus among those directly engaged in the
prosecution and defence of changes before ADF superior tribunals':
Encouragingly, the JAG noted a high level of engagement and support from
the relevant ministers, the CDF, Service Chiefs and the Military Justice
Coordination Committee to effect changes to address the issues raised in the
In the conclusion to the report the JAG makes a direct request for action on
reform of the DFDA:
...this Report respectfully requests that Parliament now
address these required changes through sound legislation that will maintain
confidence in the ADF's superior and summary military discipline system. Such
legislation would justly merit the praise of the many ADF members and other
Australians who are directly or indirectly affected by the daily operations of
The Committee sought advice from Defence at the Supplementary Budget
Estimates 2018-19 hearings on progress and whether it will address the issues
about DFDA reform raised by the JAG's report. The response from Defence,
received on 8 February 2019, focussed on the Summary Discipline System
Review of 2017 but did not specifically address the issues raised by the JAG in
relation to procedural reform to superior service tribunals:
In his 2017 Annual Report (at paragraphs 57 and 58), the
Judge Advocate General reported that acceptance of the Summary Discipline
System Review 2017 (the Review) by the Chiefs of Service Committee has started
the process of addressing concerns held by the command of the Australian
Defence Force that the Summary Discipline System ‘...was no longer meeting
On 1 June 2018, the Chief of the Defence Force appointed a
two-star officer as the Head of the Summary Discipline Implementation Team,
reporting directly to the Vice Chief of the Defence Force who, as the
Accountable Officer for military justice, is responsible for ensuring that the
recommendations of the Review are actioned and implemented.
The Australian Defence Force has initiated a range of
internal reforms with the aim of improving the efficiency and effectiveness of
the Summary Discipline System, and if required would propose legislative
changes. The updated Summary [Discpline] System will provide clearer policy, better
guidance to commanders, closer command oversight and adherence to deadlines,
and improved training delivery.
Defence is working with the Office of the Judge Advocate
General to address the issues raised by the Judge Advocate General in his 2017
Annual Report, before proposals for legislative change are considered.
Implementation of the proposed changes to the Discipline
System will meet the Australian Defence Force’s disciplinary requirements, and
achieve the intent of the Chief of the Defence Force, that the Summary
Discipline System is:
easy to use and understood by command (at all levels),
particularly in deployed environments and at the lowest levels
timely and responsive to command
fair towards all personnel involved in the disciplinary process
trusted by the Australian Defence Force and the wider community.
The Committee notes, however, the passage of the Defence Legislation
Amendment Bill 2018 through the Parliament on 14 February 2019 and assent on
1 March 2019. This Bill included amendments to the DFDA which aimed to
ensure greater transparency in the selection of members of the Judge Advocates'
Panel and to enhance the independence of Judge Advocates.
Publication protocols for superior
service tribunal proceedings
The JAG also proposed the expansion of publication of both the listing
and outcomes of superior service tribunal trials conducted under the DFDA. He
suggests reforming the publication protocols would enhance the fundamental
purpose of the DFDA, which is the maintenance of service discipline; and would reflect
more closely civilian court practice.
The annual report sets out the current approach to the publication of the
upcoming courts martial and DFM trials which the JAG suggests has narrowed
since the DFDA's introduction and is now significantly out of step to that of civilian
Historically, this information was published in routine orders.
Today, upcoming superior service tribunal proceedings are neither announced
externally to the public, nor internally within Defence. The outcomes of
superior service tribunal proceedings are now only published in Service
newspapers with their detail heavily edited.
In contrast, over the same period, public notice of civilian
trials and trial outcomes has significantly expanded. 
No trial listings of ADF superior service tribunal
proceedings are promulgated. Consequently, few members of the public and few
ADF members not involved in proceedings attend superior service tribunal
trials. Insufficient public information is provided to allow anyone who did not
attend to understand the reasons for trial outcomes. The current approach does
not serve to promote either the general deterrence or confidence in the ADF's
superior service tribunal system.
The report noted that Section 140 of the DFDA provides for the
proceedings before a court martial or DFM to be open and proceedings published,
except in certain identified circumstances. The JAG's view is that the intent
of section 140 of the DFDA is that 'superior service proceedings should,
subject to identified service exceptions, be akin to civilian trials in terms
of their openness to the public.'
The JAG further also noted that the wider publication of superior
service trials would bring Australia into line with overseas practice in other
common law military jurisdictions such as UK, Canada and the United States.
This matter has also been an area of concern for the Director of
Military Prosecutions (DPM). In her 2016 annual report she commented specifically
in regard to the reporting of convictions for sexual offences and sexually
related conduct in Service newspapers.
The Committee noted
the DPM's comments on this issue in her 2016 annual report where she described
the limited level of detail in Service newspapers:
...as a wholly unnecessary and overly cautious approach, the
reports are obscured so as to de-identify the convicted member to such a degree
that they seldom convey anything resembling the circumstances behind the
conviction. This is patently at odds with the open nature of Superior Service
tribunals (see DFDA s 140) and the fact that civilian newspapers, in the
absence of a specific non-publication order by the tribunal, openly print names
and the details of the circumstances when they cover military trials.
The then Acting Chief of the Defence Force, Vice Admiral Ray Griggs AO responded
to the DPM's comments at the Committee's Supplementary Budget Estimates hearing
on 25 October 2017:
I think most of the senior leadership of the ADF would have
sympathy with the Director of Military Prosecution's view. There is this thing
called the Privacy Act, though. The Director of Military Prosecutions doesn't
publish the service newspapers; we do—and we are subject to the Privacy Act.
This has been a long and tortuous debate inside the ADF for a number of years.
It has certainly not just been going on in the last 12 months; it's been going
on for years, in terms of: have we got the balance right between publicising
the consequences of unacceptable and disciplinary behaviour through publishing
the outcome of results versus the protection of people's privacy in accordance
with the law.
The Committee will continue to monitor developments in relation to DFDA
Senator the Hon Eric Abetz
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