Review of selected reports
The committee has selected the annual reports of the following bodies
for closer examination:
Department of Industry, Innovation and Science, including the
reports of Geoscience Australia and IP Australia;
Northern Australia Infrastructure Facility;
Department of the Treasury;
Australian Bureau of Statistics; and
Australian Competition and Consumer Commission.
Department of Industry, Innovation and Science
The 2016–17 annual report of the Department of Industry, Innovation and
Science (the department) was prepared under the leadership of the Secretary,
Ms Glenys Beauchamp PSM. As in previous years, this document includes the
annual reports of Geoscience Australia and IP Australia, non-corporate
Commonwealth entities within the Industry portfolio.
In her review, the Secretary highlighted a number of the department's
achievements in 2016–17, including significant progress in implementing the
National Innovation and Science Agenda (NISA). This was a key initiative of the
Australian Government to help 'deliver new sources of growth, create high-wage
jobs and improve Australia's competitiveness'. In particular, the NISA
The $500 million Biomedical Translation Fund and $200 million
CSIRO Innovation Fund which are now up and running, supporting the
commercialisation of innovative ideas.
The new Australian Cyber Security Growth Centre which is helping
the nation to capitalise on the growing global cyber security market and
complementing the work of the existing Industry Growth Centres.
The Business Research and Innovation Initiative which is linking
entrepreneurs to government procurement processes and giving them funding to
create new products.
Then Minister the Hon. Arthur Sinodinos AO delivered a National Science
Statement which provided a long-term vision for the future of science in
Australia. Other significant projects highlighted included the Advanced
Manufacturing Fund, and finalisation of the design of the Australian Domestic
Gas Security Mechanism.
The Secretary also noted the establishment of the Northern Australia
Infrastructure Facility, whose report will be examined later in this chapter.
Annual performance statements
The department had two significant changes to its program structure in
2016–17. Firstly, as a result of amendments to the Administrative Arrangements
Orders on 19 July 2016 and 1 September 2016, the department's responsibility
for program 2.5 Energy was transferred to the Department of the Environment and
Energy. The second change was the addition of the Northern Australia
Infrastructure Facility (NAIF) to program 2.6 Northern Australia
The committee notes that the department has now delivered seven out of
the 24 measures set out in the NISA. The initiatives implemented included
support for: commercialisation and entrepreneurship; international science and
innovation engagement; Science, Technology, Engineering and Mathematics (STEM)
capability and access; critical research infrastructure; and the establishment
of Innovation and Science Australia to guide long-term strategy and investment.
Program 2 is the department's most extensive program covering performance
across 5 sub-programs. The analysis provided in the annual report is
comprehensive without being excessive. The department summarised its
performance with the following statement:
Measured by the performance criteria set out against the
intended results, steady progress has been recorded in recent years towards the
achievement of Purpose 2, particularly with regard to growing foreign direct
investment and increasing early-stage entrepreneurship activity. However,
annual business investment has been falling since 2013–14, driven by the
winding back of mining investment.
The delivery of Program 3: Simplifying doing business involves
facilitating competition and innovation by making it easier for businesses to
interact with government as well as reducing the cost of doing business.
Since the introduction of the government's Regulatory Reform Agenda in October
2013, the department has contributed an estimated $496.74 million in net
The annual report clearly sets out the department's expenditure and
revenue. The department recorded a loss of $4.8 million for the 2016–17
reporting period. Including depreciation and amortisation, the department recorded
a total loss of
$45.1 million. The committee notes that this is a less significant loss than in
the previous financial year, and that despite this loss, the department is
still able to meet its financial obligations as and when they fall due.
The department did not offer any explanation or discussion of the $4.8 million
The department's revenue is largely generated through three sources: royalty
revenue ($950.1 million); levy receipts generated by NOPSEMA ($34.6 million);
and registration fees generated by NOPTA ($15.2 million)––totalling nearly $1
billion in revenue for the reporting period 2016–17.
This will be Ms Beauchamp's final report for the Department of Industry,
Innovation and Science, as she became the Secretary of the Department of Health
on 18 September 2017. The new Secretary of the department is Dr Heather Smith
PSM. Dr Smith was previously Secretary of the Department of Communications and
The committee considers that the department's annual report for the
2016–17 reporting period is apparently satisfactory.
Northern Australia Infrastructure Facility
Establishment of the NAIF
The NAIF was established under the Northern Australia Infrastructure
Facility Act 2016 (NAIF Act) in July 2016. The NAIF is a corporate
Commonwealth entity under the PGPA Act and is an agency within the Industry,
Innovation and Science portfolio.
The responsible minister for the NAIF is the Minister for Resources and
Northern Australia. The NAIF legislative framework and governance model aims to
balance the need to operate within commercial financial markets with public
interest and accountability.
The objective of the NAIF is to provide grants of financial assistance
to the states and territories for the construction of Northern Australia
economic infrastructure. The NAIF will act in partnership with relevant state
and territory governments, as well as private financers who will provide the
majority of financial support, to increase investment in infrastructure in
Annual report 2016–17
This is the first annual report from the NAIF. Annual reports must
provide certain details, in accordance with the PGPA Act, about the operations
and governance of a body for scrutiny by the Parliament.
In their review of the NAIF's first 12 months in operation, the Chair,
Ms Sharon Warburton, and CEO, Ms Laurie Walker, provided a generalised account
of the NAIF's activities for 2016–17:
As at 30 June 2017, NAIF had received 124 enquiries (50 of
which were active) relating to its potential participation in infrastructure
projects. At the time of writing, nine project (15 per cent of active
enquiries) are in due diligence. The active projects span across port, airport,
road, rail, energy, pipeline, telecommunication and water related
infrastructure. They also include infrastructure components of broader
projects. Projects are diversified across all northern Australia jurisdictions
of the Northern Territory, Queensland and Western Australia. NAIF has worked
constructively with those key stakeholders in pursuit of shared objectives.
The NAIF's Investment Mandate stipulates at subsection 17(1) that the
NAIF must have regard to 'Australian best practice corporate governance for
Commercial Financiers, when performing its functions'.
This requirement has led the NAIF to develop a confidentiality policy which
states that NAIF's activities are subject to commercial-in confidence, and
therefore, cannot be fully disclosed to the public. This has caused some
misconceptions about the NAIF and its decision making processes.
In particular, the NAIF came under a significant amount of public
scrutiny during the 2016–17 period over whether or not it intended to approve a
loan for the Adani Group to finance the construction of a railway line from the
Carmichael mine to the Abbot Point port in Queensland.
The governance and operation of the NAIF is currently the subject of an
inquiry by the Economics References Committee.
Annual performance statement
The NAIF's Annual Performance Statement includes two criteria: establishment
of sound governance framework; and development of potential investment proposal
pipeline having regard to a preference for diversification including by
industry and geographic spread.
In meeting the first performance criterion, NAIF has worked with the Export
Finance Insurance Corporation (Efic) to establish an appropriate governance
framework and has published a suite of corporate governance policies on its
The second performance criterion is less tangible and relies on the
stability of the governance framework established to ensure that the NAIF and
its Board are meeting this performance criterion.
The nature of the NAIF's work and its requirement for commercial
confidentiality to be maintained at all stages of a project make it difficult
to determine precisely how the NAIF is meeting its performance targets.
The NAIF 2016–17 annual report fulfils its requirements under the PGPA
Act. However, the report also appears to adhere to the NAIF's
commercial-in-confidence policy and therefore does not disclose any detail
beyond what is currently available on the NAIF's website.
The committee looks forward to the release of the NAIF's 2017–18 annual
report after September 2018, which may provide more detail given the
establishment of a comprehensive 2017–18 corporate plan and the financial close
of it first project, the Onslow Marine Support Base, in September 2017. The
finalisation of this first project should begin to enable the Parliament to
better examine how the NAIF is undertaking its role and whether its governance
structures are adequate.
Department of the Treasury
The Department of the Treasury's (Treasury) annual report for 2016–17
begins with a review of the reporting period by the Treasury Secretary, Mr John
Fraser. Mr Fraser commented that Treasury is moving towards becoming a more
'outward-looking organisation', and that the way Treasury operates is evolving.
An embodiment of this evolution is the creation of a new Group within Treasury:
the Structural Reform Group.
The Structural Reform Group was created in March 2017 and is designed to
'undertake deeper analysis on the challenges and opportunities facing our industries,
cities and regions.
The Group is led by Ms Meghan Quinn, previously the head of the Financial System
Division in Treasury's Markets Group.
The Structural Reform Group is responsible for policy relating to
competition, industry, infrastructure, regional development, energy,
environment, communications, transport, workplace relations and regulatory reform.
Mr Fraser also noted Treasury's work in implementing recommendations
from the 2014 Financial System Inquiry (FSI). The committee notes that it has
conducted a number of bill inquiries into the legislation developed in response
to these recommendations during the 2016–17 financial year.
Mr Fraser also highlighted a new Treasury branch in Perth. Noting the
significance of this step:
Having a presence in Western Australia means we can foster
closer ties with local stakeholders and attract talent from the private sector.
This is part of our focus on broadening our horizons. We need to engage widely
with different industries and regions to gauge better how the economy is
Finally, Mr Fraser noted another development: the establishment of a Critical
Infrastructure Centre within the Attorney-General's Department. This new body
would complement the work of the Foreign Investment Review Board which sits
within Treasury. Its purpose is:
...to advise on the national security risks to Australia's
critical infrastructure with an initial focus on water, ports, electricity and
telecommunications sectors. The Centre's advice will complement existing FIRB
processes in scrutinising foreign involvement in these important assets.
Annual performance statements
With the creation of the Structural Reform Group, Treasury now has six
Groups which contribute to the delivery of its main outcome:
Informed decisions on the development and implementation of
policies to improve the wellbeing of the Australian people, including by
achieving strong, sustainable economic growth, through the provision of advice
to government and the efficient administration of federal financial relations.
The Treasury continues to assess its performance through three
'purposes' as set out in its Corporate Plan for 2016–17: promoting fiscal
sustainability; increasing productivity and workforce participation; and securing
the benefits of global economic integration.
Treasury's annual report provided the following summary of its financial
performance for 2016–17:
The Treasury has a sound financial position, with sufficient
cash reserves to fund its debts as and when they fall due. After adjusting for
depreciation and amortisation and changes in asset revaluation reserves, the
Treasury reported an operating surplus of $3.3 million in 2016–17, which was
driven by underspends by boards/panels and one-off activities. This compares
with an operating deficit of $2.9 million in 2015–16 after adjusting for
depreciation and amortisation and changes in asset revaluation reserves. The
Treasury's administered expenses in 2016–17 were $94.5 billion, compared with
$88.0 billion in 2015–16.
The committee considers that Treasury's annual report for the 2016–17
reporting period is apparently satisfactory.
Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) is led by Mr David Kalisch,
the Australian Statistician. In his review of 2016–17, Mr Kalisch provided a
comprehensive summary of the agency's activities during the reporting period.
In particular, Mr Kalisch commented on the 2016 Census, which took place
on 19 August 2016. He acknowledged the Census outage and the difficulties that it
presented to the ABS. However, Mr Kalisch also noted that, despite the
technical issues, the 2016 Census was successful in collecting all of the data
Mr Kalisch highlighted the following participation rates:
The headline indicators for the success of the 2016 Census
were an overall response rate of 95.1%; an online response rate of 63.3% (up
from 37.9% in 2011) and a net undercount of 1.0% (down from 1.7% in the 2011
The 2016 Census was the subject of three separate reviews:
Review of the Events Surrounding the 2016 eCensus, by
Alastair MacGibbon, Special Adviser to the Prime Minister on Cyber Security, 13
Senate Economics References Committee inquiry into the 2016
Census, report––2016 Census: issues of trust, tabled 24 November 2016;
Report on the Quality of 2016 Census Data, by an
Independent Assurance Panel, released in June 2017.
Mr Kalisch noted that in assessing the quality of 2016 Census data, the
Independent Assurance Panel said that:
While challenges were experienced and should be addressed for
the 2021 Census, the changed approach led to a more efficient, effective and
modern Census operation. The Panel strongly supports the changed approach to
the Census and its further refinement in order to secure a high quality and
financially sustainable Census into the future.
He also commented that the ABS has almost completed implementing the
recommendations of Alastair MacGibbon's review, noting that the review helped
to provide 'impetus to accelerate reform and help us address key issues of
importance to both the Government and the broader community'.
The Government Response to the Senate inquiry was received in
February 2017. Of the 16 recommendations made by the committee, the government
indicated that it agreed or noted all except three recommendations.
Mr Kalisch concluded his comments on the 2016 Census, stating that:
Many of the things we have learned from the 2016 Census,
alongside international developments, are contributing to reformed governance
arrangements, strategy and practices as we start to prepare for the
2021 Census. We have also used the opportunity to take stock and embed new
dimensions into our communication, cultural change program, training, policies
ABS transformation agenda
Mr Kalisch's review also detailed the progress the ABS has made as part
of its transformation agenda. The transformation, which began in 2014–15, is
modernising the infrastructure through its Statistical Business Transformation
Program (SBTP) with a $257 million investment. In the past 12 months, the ABS
reported it has:
developed a new stakeholder and relationship management plan to
enable better and more consistent collaboration and support to our key
stakeholders and government;
delivered key foundational infrastructure that will underpin
improvements to our statistical systems as part of SBTP; and
developed and begun to implement a cultural enhancement strategy
that will lead to better engagement with our staff and improve our ability to
harness their abilities, capacity and diversity.
The ABS' annual report indicates that a 'discussion and analysis of the
entity's financial performance' as required by PGPA rule 17AF(1)(a) is located
in three different sections of the report: pp. 2–11; pp. 84–85 and pp. 86–113.
The committee notes that the information on pages 84–85 and 86–113
fulfils PGPA rules 17AF(1)(b)––a table summarising the total resources and
total payments of the entity, and 17AD(e)–– the entity's financial statements.
The information on pages 2–11 is the Australian Statistician's review,
and contains very little information on the ABS' financial performance in
2016–17. The review indicates that the ABS has been operating with 'declining
operating resources, fragile operating systems [and] expanding information
demands'. It does not give any analysis relating to the ABS' revenue or
expenditure or how this compares with the previous financial year.
The committee encourages the ABS to provide a more detailed discussion
of the its financial performance in future annual reports to fulfil its obligations
under PGPA rule 17AF(1)(a).
The committee considers that the ABS' annual report for the 2016–17
reporting period is apparently satisfactory.
Australian Competition and Consumer Commission
The annual report of the Australian Competition and Consumer Commission
(ACCC) also includes the annual report of the Australian Energy Regulator (AER).
However, this section of the report will focus only on the 2016–17 activities
of the ACCC.
In his review, the ACCC Chair, Mr Rod Sims, stated that 'this has been
an amazing year'.
He pointed to a number of examples; including, the ACCC's first criminal cartel
prosecution, winning two cases in the High Court, and several cases against
large companies for misleading consumers. Mr Sims also noted the high-profile
product safety matters they have dealt with including the mandatory recall of
Infinity cables and the voluntary Thermomix recall.
Mr Sims commented that the ACCC has received more work from the Australian
The Government has directed us to conduct inquiries into the
competitiveness, trading practices, and transparency of the Australian dairy
industry; residential mortgage products; Northern Australia insurance; the
supply of retail electricity and the competitiveness of retail electricity
prices; and the supply of and demand for wholesale gas in Australia, as well as
to publish regular information on the supply and pricing of gas for three years.
Mr Sims indicated that while these inquiries are a great compliment to
the ACCC, 'they will both stretch and test us'.
Annual performance statements
The ACCC's purpose is 'to make markets work for consumers now and in the
The ACCC works to enhance the welfare of the Australian
community by fostering competitive, efficient, fair and informed Australian
markets. Its aim is to bring greater competitiveness and fair trading to the
Australian economy, working on the fundamental principle that this benefits
consumers, business and the wider community.
It achieves this purpose guided by its outcome––'Lawful competition,
consumer protection, and regulated infrastructure markets and services through
regulation, including enforcement, education, price monitoring and determining
the terms of access to infrastructure services'.
In assessing its performance, the ACCC measures its achievements against
Strategy 1: Maintaining and promoting competition;
Strategy 2: Protecting the interests and safety of consumers and
supporting fair trading in markets affecting consumers and small business;
Strategy 3: Promoting the economically efficient operation of,
use of, and investment in infrastructure; and identifying market failure; and
Strategy 4: Promote efficient investment in, and efficient
operation and use of, energy services for the long-term interests of consumers
with respect to price, quality, safety, reliability and security.
A significant level of detail is provided in the ACCC's performance
statements, including a section on 'factors affecting performance' and examples
of how performance criteria have been met. The committee notes that this level
of detail can be difficult for readers to work through. The ACCC could consider
providing a high level summary of the agency's performance and then provide the
more detailed information separately.
The committee considers that the ACCC's annual report for the 2016–17
reporting period is apparently satisfactory.
The committee notes the comments made on compliance indexes in its
Report on Annual Reports No.1 of 2017, and notes that those agencies that had
errors in their compliance indexes have rectified these issues.
The committee also notes, however, that in some reports, the compliance
indexes continued to indicate large page ranges and, in some cases, whole
chapters in which to locate specific information. The committee suggests that
providing a more precise page range for each requirement will improve the
overall accessibility of annual reports.
The committee suggests that all agencies of the Industry, Innovation and
Science and Treasury portfolios ensure that their compliance indexes are in
line with PGPA Act and Rule requirements.
Pro forma phrases
The committee also notes that where the PGPA requirements prescribe a pro
forma phrase to respond to certain compliance requirements, a number of annual
reports failed to use the exact wording provided.
Agencies without reports
The committee notes the establishment of the Financial Adviser Standards
and Ethics Authority on 11 April 2017. As the body was not established until
near the end of the financial year, its first reporting period will be 2017–18.
The committee notes that the Corporations and Markets Advisory Committee
(CAMAC) was abolished on 21 February 2018, when the Statute Update (Smaller
Government) Act 2018 received royal assent. The abolishment of CAMAC was
originally announced in the 2014 Budget. CAMAC's final annual report was tabled
Presentation of consolidated
The committee notes that in 2016–17, the Australian Accounting Standards
Board and the Auditing and Assurance Standards Board have consolidated their
annual reports into one publication.
As noted in Chapter 1, the committee finds that all reports of the
Industry, Innovation and Science and Treasury portfolios for 2016–17 are
Senator Jane Hume
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