Chapter 2

Review of selected reports

2.1        The committee has selected the annual reports of the Senate Economics Legalisation Committee's (committee) two portfolio departments for closer examination:

Department of the Treasury

2.2        The 2018–19 annual report of the Department of the Treasury (Treasury) was tabled in Parliament on 16 October 2019.[1]

Secretary's review

2.3        Mr Phil Gaetjens was Secretary to the Treasury from August 2018 to August 2019.[2] From 2 September 2019, Dr Steven Kennedy PSM has served as the Treasury Secretary.[3] The committee thanks Mr Gaetjens for his service and welcomes Dr Kennedy to the Treasury Portfolio.

2.4        The former Secretary, Mr Gaetjens, reported on Treasury's key areas of work for 2018–19, including:

Ministerial responsibilities

2.5        As at 30 June 2019, the ministers in the Treasury Portfolio were as follows:

2.6        The committee notes that the above ministerial representation for the Treasury Portfolio remains current as of the ministry list update of 6 February 2020.[6]

Annual performance statements

2.7        Treasury's purpose is to ' and implement informed decisions on policies for the good of the Australian people, consistent with achieving strong, sustainable economic growth and fiscal settings'.[7] Treasury reported against 13 performance criterions relating to its purpose. The criteria were grouped under the following objectives: promoting fiscal sustainability; increasing productivity; securing the benefits of economic integration; efficient administration of portfolio functions; and policy advice to government. Treasury reported that it met each of its 13 performance criterion.[8]

2.8        In particular, the committee notes the following achievements reported in Treasury's performance statements:

2.9        The committee commends Treasury on meeting its performance targets. The committee recognises that Treasury has reported and analysed its 2018–19 performance in a detailed manner, and that Treasury has clearly stated whether its performance criteria were met.[14] This committee notes this improves on the performance statement in Treasury's Annual Report 2017–18, which also provided detailed information regarding performance but did not include statements on whether its performance criteria were met.[15]

Financial performance

2.10      In 2018–19, Treasury managed administered expenses of $140.3 billion, which is a 4.8 per cent increase from Treasury's administered expenses in 2017–18 ($133.9 billion).[16] Treasury also reported an operating deficit of $2.1 million for 2018–19,[17] which represents a decline on the Treasury's previous operating surplus of $3.2 million in 2017–18.[18] Treasury explained the deficit as being driven by:

...the increase of staff leave provision costs ($5.7 million) due to the decline in the 10-year government bond rate. The deficit was a result of an uncontrollable market factor, rather than a reflection on the state of Treasury’s finances or its functions, as this bond rate movement impacted the leave provision costs on all Commonwealth entities.[19]

Staffing and consultants

2.11      The committee notes the following developments in Treasury's staffing and consultancy arrangements for 2018–19:


2.12      The committee thanks Treasury for providing a cogent and well-presented annual report for 2018–19. The committee considers Treasury's report to be apparently satisfactory.

Department of Industry, Innovation and Science 

2.13      The 2018–19 annual review of the Department of Industry, Innovation and Science (Department) was tabled in the House of Representatives on 17 October 2019 and tabled in the Senate on 11 November 2019.[26] The Department's annual report also incorporates the annual reports of Geoscience Australia and IP Australia.[27]

Ministerial responsibilities

2.14      As at 30 June 2019, the ministers in the Industry, Innovation and Science Portfolio were:

2.15      The committee notes that the above ministerial representation for the Industry, Innovation and Science Portfolio remains current as of the most recent ministry list update of 6 February 2020.[29]

Secretary's review

2.16      The Secretary's review of the key activities of the Department in 2018–19 was presented by Dr Heather Smith PSM.[30] [31]

2.17      The committee notes that Dr Smith has since ceased to be secretary of the Department, and that Mr David Fredericks PSM has been appointed as Secretary effective from 1 February 2020. Mr Fredericks was previously the secretary of the Department of Environment and Energy and, prior to that, held deputy secretary level positions at the Department of Finance and the Attorney-General's Department.[32] The committee thanks Dr Smith for her service and welcomes Mr Fredericks to the Industry, Innovation and Science Portfolio.

2.18      Dr Smith highlighted the Department's key areas of work during 2018–19, including: 

Annual performance statements

2.19      In 2018–19, the Department worked towards meeting its three purposes, as follows:

2.20      In support of its purposes, the Department reported against its performance criteria using a three-tiered hierarchy. The Department's level 1 criterion measures and assesses how well Australia is performing against the Department's outcomes, level 2 criteria measures and assesses the impacts of the Department's programs and level 3 criteria measures and assesses the efficacy of the Departments sub-programs.[38] The Department's report on its performance included 101 individual performance criterions.[39]

2.21      The Department exceeded its targets for some of its performance criteria. For example, the 2018–19 target number of program opportunities to be on-boarded through the Business Grants Hub was 33, and the Department launched 121 grant opportunities.[40] 

2.22      The committee also notes, it appears the Department did not meet some of its 2018–19 performance targets. For example, the Department's 2018­–19 target for the proportion of participating agencies procuring a solution under the Business and Research Innovation Imitative was 50 per cent, and the rate reported was 20 per cent.[41] Similarly, the 2018–19 target for small businesses which received grants through the Cyber Security Small Business program was 1700 and the Department reported that 17 grants were made.[42]

2.23      The committee considers that when the Department has not met a performance criterion, there is an opportunity for the Department to report information relating to how the Department will respond to meet those performance targets in future. The committee also suggests that, where possible, the Department should clearly state whether a performance measure has been met. This would more readily indicate to readers whether or not the Department is meeting its performance criteria. The committee recognises that this approach may not be feasible for all of the Department's performance criteria, particularly for criteria which are correlated with the Department's support of Australia's macro-economic conditions.

Financial performance

2.24      For the 2018–19 financial year, the Department achieved a surplus of $4.6 million, excluding depreciation, amortisation and other adjustments. The Department explained:

This surplus is largely due to funding received late in the financial year for Mid-Year Economic and Fiscal Outlook (MYEFO) measures which could not be spent and staff vacancies across the Department.[43]

2.25      If depreciation and amortisation (totalling $32.0 million) and the change in the asset revaluation reserve (of $0.7 million) are taken into consideration, the Department recorded a loss of $24.9 million for 2018–19.[44] The committee notes this loss is $48.5 million less than the loss the Department incurred in 2017–18.[45] The Department noted:

This reflects the introduction of the net cash appropriation arrangements where appropriation for depreciation and amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations.[46]

2.26      Most of the Department's administered revenue is generated from royalty revenue which totalled $1404.4 million for 2018–19.[47] The committee notes this is a 30.9 per cent increase on the Department's royalty revenue in 2017–18 ($1072.7 million).[48] Income for the Department in 2018–19 also gained from 'levy receipt generated by the National Offshore Petroleum Safety and Environmental Management Authority ($31.5 million) and registration fees generated by the National Offshore Petroleum Titles Administrator.[49]

Staffing and consultants

2.27      The committee notes the following developments in Department's staffing and consultancy arrangements for 2018–19:


2.28      The committee thanks the Department for providing its 2018–19 annual report. The committee considers the report to be apparently satisfactory.

Senator Slade Brockman

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