Chapter 1 - Introduction

1.1 Following the restructure of the Senate committee system on 10 October 1994, the examination of annual reports became the responsibility of Senate Legislation Committees. This Committee is responsible for examining annual reports of departments and agencies within two portfolios: Foreign Affairs and Trade, and Defence (including the Department of Veterans' Affairs).

1.2 Under a Senate resolution of 24 August 1994, the Committee is required to report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on reports tabled by 30 April each year by the tenth sitting day after 30 June of that year. Usually, this enables Senators to consider the particulars of proposed expenditure at the Budget Estimate hearings in the light of portfolio performance in the previous year (as set out in annual reports) and to examine aspects of annual reports in more detail with the Minister and officers during the Additional Estimates hearings of Legislation Committees.

1.3 In this reporting period, however, Budget Estimate hearings were held in late September and Supplementary hearings in the third week of October 1996, just prior to the tabling date for annual reports. For this reason, draft annual reports were considered at these hearings.

1.4 So that any matters arising from the discussion of final annual reports at the Additional Estimates hearings might be taken into account in this review, the Committee sought an extension of time from 26 February 1997, the original reporting date for annual reports tabled by 31 October 1996, to 25 March 1997. Subsequently, the Senate granted the Committee a further extension of time to 31 July 1997 to present its report.

1.5 The following annual reports are examined by the Committee in this review:

Annual Reports of Departments

Department of Defence
Department of Foreign Affairs and Trade
Department of Veterans' Affairs

Reports of Statutory Authorities

Defence Portfolio

Australian Military Forces Relief Trust Fund
The Australian War Memorial
Defence Force Remuneration Tribunal
Defence Force Retirement and Death Benefits Authority
Judge Advocate General
Military Superannuation and Benefits Board of Trustees No. 1
National Treatment Monitoring Committee (NATMOC)
Repatriation Commission (with the Department of Veterans' Affairs)
Repatriation Medical Authority
Royal Australian Air Force Welfare Trust Fund
Royal Australian Navy Relief Trust Fund
Veterans' Review Board

Foreign Affairs and Trade Portfolio

Australia-Japan Foundation
Australian Centre for International Agriculture Research
Australian Trade Commission (Austrade)

Reports of Non-Statutory Authorities

Australian Antarctic Foundation
Australia-Korea Foundation

Assessment of Annual Reports

1.6 As noted above, due to the timing of Estimates hearings (just prior to the 31 October 1996 submission date for annual reports), draft annual reports were considered during the Budget Estimate hearings. Consideration of final reports took place at the Additional Estimates hearings on 27 and 28 February 1997. This review takes into account comments on annual reports, and on matters relating to them, made by Committee members during both the initial and Additional Estimates rounds, as required by the Senate resolution of 24 August 1994.[1]

1.7 The annual reports have been examined by the Committee to determine whether they are 'apparently satisfactory', as required by the Senate resolution of 24 August 1994. In the process of assessment, the Committee has considered whether the reports comply with the relevant requirements for the annual reports of departments or authorities.

1.8 Departments are required to adhere to the Requirements for Departmental Annual Reports (revised) issued by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts in March 1994.[2] The aim of the amended Guidelines was to make reports 'the key accountability document for reviewing actual outcomes for the past financial year'. Together with Portfolio Budget Statements and Portfolio Additional Estimates Statements, annual reports are to enhance Government communication with Parliament and so 'to make more meaningful their accountability relationships'.

1.9 The amendments required that annual reports should:

focus on outcomes, including social justice outcomes;
provide clear links between strategies, outcomes and program objectives; and
be concise, readily understandable and balanced.

1.10 On 18 March 1994, the Department of Prime Minister and Cabinet informed departments that:

Commonwealth authorities whose operations are similar to those of departments should consult these revised requirements [for Departmental annual reports] and comply with them¾as well as with the 1982 Guidelines for the Content, Preparation and Presentation of Annual Reports by Statutory Authorities¾as far as is appropriate to do so.

Requirements for non-statutory authorities were outlined in the Senate Standing Committee on Finance and Government Operation's report tabled in August 1986, and modified in 1987. Statutory authorities whose operations are not similar to those of departments are to follow the Guidelines for the Content, Preparation and Presentation of Annual Reports by Statutory Authorities (1982).[3]

General Comments on the Annual Reports

1.11 The Committee was pleased to observe improvements to the already high standard of reporting noted in its 1996 review of annual reports. The majority of reports are well designed and effectively structured to meet reporting requirements. Coverage of activities and outcomes is, in most cases, comprehensive, text succinct and, notably, the standard of performance reporting much advanced on that in reports of the previous reporting period.

1.12 In particular, the Committee notes that the Departments have shown a commitment to performance reporting principles in their refinement of performance measures which now more effectively demonstrate outcomes. Overall, Department annual reports now have a pleasing coherency resulting from greater consistency of presentation, with information organised to cogently address performance reporting requirements. Some weakness was noted in the reporting of internal and external scrutiny mechanisms. The impact of these on program outcomes should be closely assessed in the reports if they are to fully inform Parliament. More candid and comprehensive reporting on problematic elements of project management, as experienced in restructuring or implementing program initiatives, would also improve these documents as vehicles of department accountability.

1.13 In consideration of the reports of statutory and non-statutory bodies, it was observed that there was an overall improvement by reporting bodies in the use of the Guidelines (1982) and Requirements (1994) compared with previous years. The Committee noted that a number of larger statutory authorities continue to adopt an inclusive approach to reporting, responding to both Guidelines and Requirements as appropriate. Despite these improvements, several authorities failed to report on certain aspects of their organisation as required by the Guidelines.

1.14 A number of authorities experienced difficulty in determining which of the reporting requirements were most relevant to, or would most assist explanation of, their particular activities and functions. Some statutory authorities, for example, used the Requirements (1994) without consulting the Guidelines (1982), contrary to the recommendations of the Department of Prime Minister and Cabinet. These authorities failed to clarify a number of aspects of their work which the Guidelines would have called into consideration.

1.15 Subject to the comments made in the individual assessments following in the body of this report, the Committee found all the annual reports considered in this reporting period to be 'apparently satisfactory'.

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