Chapter 3

Examination of selected annual reports

3.1
The Senate Economics Legislation Committee has selected the annual reports of the committee’s two portfolio departments, a non-corporate Commonwealth entity and a corporate Commonwealth entity for closer examination:
Department of the Treasury;
Australian Taxation Office;
Department of Industry, Science, Energy and Resources; and
Commonwealth Scientific and Industrial Research Organisation.
3.2
These Commonwealth entities were also selected to highlight their contributions to two events during the reporting period: bushfires and COVID-19.

Department of the Treasury

3.3
The 2019–20 annual report of the Department of the Treasury (Treasury) was tabled in Parliament on 30 November 2020.1 As noted above, Treasury’s annual report was tabled one month late.
3.4
The incoming Secretary, Dr Steven Kennedy PSM, highlighted the following activities that took place in 2019–20 including:
introducing a large portion of bills into Parliament, 52 bills containing 113 measures;
providing policy advice on the digital economy;
preparing the government’s bushfire response plan, with the $2 billion Bushfire Recovery Fund and other bushfire assistance policies; and
assessing the impact and providing advice to the government on its economic response to COVID-19, plus development and delivery of $198 billion COVID-19 Response Package.2

Performance reporting

3.5
A Commonwealth entities performance criteria and reporting consists of three documents:
Portfolio Budget Statements (PBS) state the Outcome/s, Purpose and Programs for Commonwealth entities which inform its performance criteria;
Corporate Plan 2019–20 sets out the Commonwealth entities purpose/s and individual performance criterion noting the activities it will undertake and intended results; and
Annual Performance Statement which contains reporting and analysis on the Commonwealth entities actual performance results, in light of its forecasts.3
3.6
Treasury’s purpose statement in the PBS 2019–20, was mostly consistent with its outcome statement—‘[t]o support and implement informed decisions on policies for the good of the Australian people, consistent with achieving strong, sustainable economic growth and fiscal settings’—aside from the addition of ‘…and fiscal settings’ in the purpose statement.4
3.7
Treasury set out in its Corporate Plan 2019–20, four strategic areas through which it pursues its purpose:
Macroeconomic—promoting a sound economic environment.
Fiscal—promoting effective government spending arrangements and regulations.
Markets—developing well-functioning markets that encourage consumer and investor confidence.
Revenue—developing effective arrangements for revenue and taxation matters that support a sustainable tax system.5
3.8
Each focus area contained between three and four performance criterion with targets and noted the relevant Program between 1.1 to 1.9. An additional target—'The Treasury complies with the requirements of the Charter’—was included in the Annual Performance Statement which did not appear in the Corporate Plan 2019–20, for the first criterion in the Fiscal area.6
3.9
Treasury reported that it met all of its performance criteria for the 2019–20 year.7 On reviewing if Treasury addressed all of its targets in the results, the committee identified that the results for the first criterion—International engagement—in the Macroeconomic area did not address four of its five targets.8 The targets that were not commented on—dot points 1, 3, 4 and 5—appear to be activities that would happen behind the scenes. To ensure that each target was met, a statement outlining why they were not commented on would assist.
3.10
Due to COVID-19, the implementation of the commitments associated with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry were deferred six months by the government, thereby setting back the second Markets performance criterion.9
3.11
Treasury’s part in the bushfires and COVID-19 can be traced to its second fiscal performance criterion—Fiscal policy contributions.10 Treasury supported the development of the government’s response packages including ‘the $134 billion of direct fiscal support in response to the COVID-19 pandemic…[and] the $2 billion Bushfire Recovery Fund, and other bushfire assistance polices’.11 In meeting its targets for this performance criterion, Treasury reported:
considering the views of ‘business and industry groups, other government departments and agencies, taskforces, and state-based stakeholders’ when providing policy advice on the impacts of COVID-19 across different sectors of the economy;
supporting the implementation of the government’s COVID-19 response—‘approximately 1.62 million recipients of unemployment benefits (JobSeeker and Youth Allowance—Other), COVID-19 supplement payments to around 2.2 million Australians fortnightly, totalling approximately $5.7 billion, and Economic Support Payments to around seven million people, totalling approximately $5.3 billion’; and
‘receiv[ing] positive feedback from Treasury ministers, their offices and other stakeholders’.12

Financial reporting

3.12
In 2019–20 Treasury’s financial result was an operating surplus of $3.6 million, excluding depreciation, amortisation, changes in asset revaluation reserves and leasing adjustments. Treasury explained its surplus by noting ‘underspends throughout the department due to COVID-19 restrictions and a diversion of resources for the government’s COVID-19 response’. This compares with an operating deficit of $2.1 million in 2018–19.13

Australian Taxation Office

3.13
The 2019–20 annual report of the Commissioner of Taxation for the Australian Taxation Office (ATO) was tabled in the House of Representatives on 19 October 2020 and in the Senate on 9 November 2020.14

Performance reporting

3.14
The ATO’s purpose statement and outcome statement informed one another in the PBS.15 The ATO’s purpose is:
…contributes to the economic and social wellbeing of Australians by fostering willing participation in the tax and superannuation systems. We achieve this by: building trust and confidence [and] being streamlined, integrated and data driven.16
3.15
The ATO set out in its Corporate Plan 2019–20, nine strategic objectives which are grouped into five perspectives:
(1)
Government (G1 and G2);
(2)
Client (C1 and C2);
(3)
Workforce (W1 and W2);
(4)
Operational (O1 and O2); and
(5)
Financial (F1).17
3.16
The ATO had 20 measures for Program 1.1, with between one and eight measures under each strategic objective. The ATO reported achieving 14; substantially achieving one; and not achieving three measures.18 The ATO noted that ‘the target result is not available for two measures as they rely on results of the Australian Public Service census, which was not conducted this year’.19
3.17
The ATO attributed not meeting three measures—proportion of activity statements lodged on time, ratio of collectable debt to net tax collections, total revenue effects—to natural disasters and COVID-19.20 The proportion of activity statements lodged on time was impacted by the ATO assisting individuals and businesses in bushfire identified areas by ‘deferring due dates for lodgement and payment of activity statements and some income tax returns’.21 In terms of total revenue effects, the first six months to December 2019 indicated that the ATO would exceed its target however the ATO changed its approach to assist tax payers that were impacted, thereby lowering the result.22
3.18
In regards to the bushfires and COVID-19, the ATO ‘provided a range of measures [to individuals and businesses] to help alleviate cash flow pressures and assist with their recovery efforts’ and ‘advis[ed] Treasury on policy and law design, revenue implications and implementation matters, such as the impacts on systems, administration and compliance’, respectively.23 All nine of the strategic objectives reported initiatives from the five perspectives that related to COVID-19 and, less often, the bushfires. These initiatives included:
Playing a key role in designing and implementing law for the government’s response to the bushfires—tax exemption for natural disaster relief and compensation payments and other tax-related measures—and COVID-19—JobKeeper, Cash Flow Boost, Backing Business Investment, pay as you go/goods and services tax instalment indexation suspension measures, Early Release of Superannuation and the JobKeeper Review.24
Assisting employers with pre-populated Single Touch Payroll data crossing over to JobKeeper and tax practitioners accessing government online services securely and remotely with the new myGovID digital identity credential.25
Shifting large parts of the workforce to deliver on economic stimulus packages and the ATO’s response to COVID-19.26
Increasing the capacity of online services to cope with the demand for the COVID-19 stimulus measures.27
‘Re-prioritised work and resources to manage the costs of the COVID19 response within our 2019–20 appropriation’.28

Financial reporting

3.19
In 2019–20 the ATO’s financial result was an operating surplus of $8.2 million.29 The ATO explained its surplus with reference to ‘environmental factors outside of the ATO’s control which caused the ATO to re-prioritise planned work and response to COVID-19 stimulus packages’.30 This compares with an operating deficit of $3.3 billion in 2018–19.31

Department of Industry, Science, Energy and Resources

3.20
The 2019–20 annual report of the Department of Industry, Science, Energy and Resources (Industry) was presented out of sitting in the Senate on 15 October 2020 and tabled in the House of Representatives on 19 October 2020.32 Industry’s annual report also incorporates the annual reports of Geoscience Australia and IP Australia however those reports are not included in the following discussion.33
3.21
The incoming Secretary, Mr David Fredericks PSM, highlighted the following activities that took place in 2019–20 including:
delivered the $50 million Manufacturing Modernisation Fund;
Australian Space Industry entered a number of statements of strategic intent focused on lifting investment in the industry;
released the National Hydrogen Strategy;
Critical Mineral Facilitation Office established within the department;
improved user experience for companies accessing the Research and Development Tax Incentive;
delivered concrete action with the Advancing Women in Science, Technology, Engineering and Mathematics (STEM) 2020 Action Plan and STEM Equity Monitor;
26 Cooperative Research Centres and 113 Cooperative Research Centres Projects operated across Australia in a wide variety of sectors; and
delivered Round 2 of the SME Exports Hub Initiative.34

Performance reporting

3.22
Industry’s Outcome statement 1 is consistent with the purpose statements of Programs 1 and 2.35 Industry set out six purposes in its Corporate Plan 2019–20, of which two are examined by this committee:
(1)
Supporting science and commercialisation—facilitate the development and uptake of new ideas and technology, and translate them into commercial activity.
(2)
Growing business investment and improving business capability—build a diversified, flexible, resilient and dynamic economic base that can identify and adapt to new markets and emerging opportunities.36
3.23
Industry had 63 performance criterion, of which 41 came under the Programs this committee oversees. On reviewing the performance results of the 41 performance criterion relevant to this committee, it appears Industry met 22 criterion, partially met four, did not meet 12 and could not report against three.37 The reason commonly provided by Industry as to why a target was not met was COVID-19. In terms of implementing the Australian Civil Space Strategy, the committee notes that there was no reporting on the jobs and growth part of that performance criterion.38 Further, Industry reported that ‘[w]hile the target number of participating small to medium enterprises has been exceeded, there has not been a confirmed increase in revenue/export sales’ which is also worth noting.39
3.24
Industry described itself as being at the ‘forefront’ of the COVID-19 response, assisting in the following ways:
supported access to PPE and medical equipment;
worked with states, territories and industry to ensure a stable energy supply;
addressed impediments in critical supply chains; and
helped business and industry adjust and adapt to the new circumstances.40
3.25
In addition, the National Measurement Institute carried out crucial work during the pandemic:
Australia’s first accredited hand sanitiser testing service;
one of the first mask testing services to meet Australian standards; and
new genetic reference standards to improve the reliability and accuracy of coronavirus testing.41
3.26
In terms of the bushfires, Industry reported that:
‘Australian Space Agency established the Bushfire Earth Observation Taskforce in partnership with the CSIRO, Geoscience Australia and the Bureau of Meteorology to support planning, response and recovery efforts related to bushfires using space-based Earth observation capabilities’;42
two bushfire roundtables were held; 43 and
Industry Growth Centres provided key insights to assist stakeholder engagement and policy development.44

Financial performance

3.27
In 2019–20 Industry’s financial result was an operating deficit of $7 million.45 Industry explained its deficit as ‘largely due to unexpected reductions in revenue from the bushfires and COVID-19 restrictions, as well as increased expenditure on general resourcing to support the government’s COVID19 response’.46 This compares with an operating surplus of $6.4 million in 2018–19.47

Commonwealth Scientific and Industrial Research Organisation

3.28
The 2019–20 annual report of the Commonwealth Scientific and Industrial Research Organisation (CSIRO) was presented out of sitting in the Senate on 14 October 2020 and tabled in the House of Representatives on 19 October 2020.48

Performance reporting

3.29
CSIRO’s Outcome statement is consistent with its purpose statement which is to ‘…solve Australia’s greatest challenges through innovative science and technology’.49
3.30
The CSIRO set out in its Corporate Plan 2019–20, six strategic pillars/areas:
(1)
Customer first;
(2)
Thriving people and teams;
(3)
Collaborative networks;
(4)
Science excellence;
(5)
Global engagement for national benefit; and
(6)
Breakthrough innovation.50
3.31
CSIRO had 24 performance measures. CSIRO reported achieving 17 measures, not achieving three and not reporting on four due to COVID-19 cancelling a survey.51 Of the measures that were not achieved, it was reported that progress of the Science and Industry Endowment Fund New South Wales Generation STEM program ‘is less than originally intended’ although as the program gains momentum it ‘hope[s] to accelerate STEM literacy and career opportunities for students through higher levels of engagement’.52
3.32
CSIRO has conducted bushfire research collaboratively for almost 70 years,53 and during the reporting period conducted the following research: 54
tasked with providing Report on Climate and Disaster Resilience to the Prime Minister;
studied fire behaviour science;
worked on better detection methods including using Spark;
worked in collaboration to develop a tool—AQFx—to help manage smoke exposure from prescribed burns and bushfires;
worked to apply traditional knowledge to bushfire management;
‘develop[ed] reliable tools to predict bushfire behaviour, and advance fire spread prediction and bushfire suppression systems to support recovery and rehabilitation’55; and
‘bushfire shelter tests and advice; smoke forecasting for bushfires and prescribed burns; testing and the evaluation of fire-safe construction products and materials; and understanding the link between climate, emissions and bushfires’.56
3.33
CSIRO’s researchers have been carrying out the following work to assist in understanding and fighting the COVID-19 virus:
entered into a partnership with the Coalition for Epidemic Preparedness Innovation and in January 2020 along with the University of Queensland started developing and testing potential vaccines at the Australian Centre for Disease Preparedness;
studying the virus;
researching vaccines and potential treatments for COVID19;
working on testing and manufacturing of a vaccine;
‘Testing the performance of advanced materials produced by local manufacturers to boost the supply of medical equipment’; and
partnered with University of Queensland to refine a wastewater surveillance system to detect traces of COVID-19 in sewerage. 57

Financial performance

3.34
According to the Independent Auditor’s Report, the financial statements of CSIRO comply with Australian Accounting Standards and present fairly its financial position.58
Senator Slade Brockman
Chair

  • 1
    Journals of the Senate, No. 74, 30 November 2020, p. 2618; Votes and Proceedings, No. 86, 30 November 2020, p. 1432.
  • 2
    Department of the Treasury (Treasury), Annual Report 2019–20, pp. 3–4.
  • 3
    See Department of Finance, Commonwealth Performance Framework, 15 November 2019, https://www.finance.gov.au/government/managing-commonwealth-resources/planning-and-reporting/commonwealth-performance-framework (accessed 22 January 2021).
  • 4
    Department of the Treasury (Treasury), Portfolio Budget Statements 2019–20 Budget Related Paper No. 116 Treasury Portfolio, April 2019, p. 37.
  • 5
    Department of the Treasury, Corporate Plan 2019–20.
  • 6
    Compare Department of the Treasury, Corporate Plan 2019–20; Treasury, Annual Report 2019–20, p. 21.
  • 7
    Treasury, Annual Report 2019–20, pp. 13–32.
  • 8
    Treasury, Annual Report 2019–20, p. 14.
  • 9
    Treasury, Annual Report 2019–20, p. 28.
  • 10
    See Treasury, Annual Report 2019–20, pp. 22–23.
  • 11
    Treasury, Annual Report 2019–20, p. 19.
  • 12
    Treasury, Annual Report 2019–20, p. 23.
  • 13
    Treasury, Annual Report 2019–20, p. 33.
  • 14
    Votes and Proceedings, No. 74, 19 October 2020, p. 1273; Journals of the Senate, No. 70, 9 November 2020, p. 2470.
  • 15
    Treasury, Portfolio Budget Statements 2019–20 Budget Related Paper No. 116 Treasury Portfolio, April 2019, p. 188.
  • 16
    Treasury, Portfolio Budget Statements 2019–20 Budget Related Paper No. 116 Treasury Portfolio, April 2019, p. 188.
  • 17
    See Australian Taxation Office, Corporate Plan 2019–20, July 2019, p. 2.
  • 18
    Commissioner of Taxation (ATO), Annual Report 2019–20, pp. 35–38.
  • 19
    ATO, Annual Report 2019–20, p. 35.
  • 20
    ATO, Annual Report 2019–20, pp. 39–40.
  • 21
    ATO, Annual Report 2019–20, pp. 13 and 39.
  • 22
    ATO, Annual Report 2019–20, p. 40.
  • 23
    ATO, Annual Report 2019–20, p. 13.
  • 24
    ATO, Annual Report 2019–20, p. 18.
  • 25
    ATO, Annual Report 2019–20, pp. 21 and 23.
  • 26
    ATO, Annual Report 2019–20, p. 25.
  • 27
    ATO, Annual Report 2019–20, p. 31.
  • 28
    ATO, Annual Report 2019–20, p. 34.
  • 29
    ATO, Annual Report 2019–20, p. 105.
  • 30
    ATO, Annual Report 2019–20, p. 46.
  • 31
    Commissioner of Taxation, Annual Report 2018-19, p. 92. Note 2018-19 financial results included the Australian Charities and Not-for-profits Commission.
  • 32
    Journals of the Senate, No. 70, 9 November 2020, p. 2471; Votes and Proceedings, No. 74, 19 October 2020, p. 1274.
  • 33
    Department of Industry, Science, Energy and Resources (Industry), Annual Report 2019–20, pp. 172–280 and 282–356.
  • 34
    Industry, Annual Report 2019–20, pp. 3–8.
  • 35
    Treasury, Portfolio Budget Statements 2019–20 Budget Related Paper No. 1.11 Industry, Innovation and Science Portfolio, April 2019, pp. 35 and 38.
  • 36
    Department of Industry, Innovation and Science, Corporate Plan 2019–20, August 2019; Treasury, Portfolio Budget Statements 2019–20 Budget Related Paper No. 1.11 Industry, Innovation and Science Portfolio, April 2019, pp. 35 and 38.
  • 37
    Industry, Annual Report 2019–20, pp. 20–58.
  • 38
    See Industry, Annual Report 2019–20, p. 36.
  • 39
    Industry, Annual Report 2019–20, p. 33.
  • 40
    Industry, Annual Report 2019–20, pp. 3–4.
  • 41
    Industry, Annual Report 2019–20, p. 24.
  • 42
    Industry, Annual Report 2019–20, p. 5.
  • 43
    Industry, Annual Report 2019–20, p. 23.
  • 44
    Industry, Annual Report 2019–20, p. 35.
  • 45
    Industry, Annual Report 2019–20, p. 59.
  • 46
    Industry, Annual Report 2019–20, p. 59.
  • 47
    Industry, Annual Report 2018-19, p. 53.
  • 48
    Journals of the Senate, No. 70, 9 November 2020, p. 2470; Votes and Proceedings, No. 74, 19 October 2020, p. 1273.
  • 49
    Treasury, Portfolio Budget Statements 2019–20 Budget Related Paper No. 1.11 Industry, Innovation and Science Portfolio, April 2019, pp. 118–121.
  • 50
    Commonwealth Scientific and Industrial Research Organisation (CSIRO), Corporate Plan 2019–20, p. 8.
  • 51
    CSIRO, Annual Report 2019–20, pp. 36–117.
  • 52
    CSIRO, Annual Report 2019–20, p. 72.
  • 53
    CSIRO, Annual Report 2019–20, p. 18.
  • 54
    CSIRO, Annual Report 2019–20, p. 19.
  • 55
    CSIRO, Annual Report 2019–20, p. 18.
  • 56
    CSIRO, Annual Report 2019–20, p. 19.
  • 57
    CSIRO, Annual Report 2019–20, pp. 22–23.
  • 58
    CSIRO, Annual Report 2019–20, p. 138.

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