Chapter 2 - Annual reports of statutory and non?statutory authorities and government companies


Chapter 2 - Annual reports of statutory and non?statutory authorities and government companies

Defence portfolio

The Army and Air Force Canteen Service
[trading as Frontline Defence Services]

2.1       The Army and Air Force Canteen Service Annual Report 2003–2004 was presented to the President of the Senate on 13 September 2005. A letter from Frontline Defence Services, advising of a delay in presenting the report, was tabled in the Senate on 8 September 2005. The letter, dated 17 May 2005, to the Minister, the Hon De–Anne Kelly MP, from Mr Robin Hart, Chairman, Frontline Defence Services, stated:

Frontline prepared its annual financial statements for the year ended 30 June 2004 I accordance with the reporting timetable. The audit was performed by Australian National Audit Office and an Unqualified audit report was issued on 21 October 2004. At this time, the Federal election and Ministerial changes prevented the report being submitted, however the audited financial statements were forwarded to your office and distributed with Defence with the quarterly report.

Notwithstanding this situation, I regret that the annual report had not been completed. Administrative issues in 2005 have unfortunately overtaken the completion of the report. Please be assured that the matter is now receiving the highest priority and will be finalised during this week.

2.2        The report is tabled in accordance with section 9 of the Commonwealth Authorities and Companies Act 1997.

2.3        The Army and Air Force Canteen Service (AAFCANS) was established under the Army and Air Force Canteen Service Regulations 1959. The Board adopted the trade name ‘Frontline Defence Services’ (‘Frontline’) in 1997 as part of a major business realignment.[1] It is a statutory authority 'formed to provide goods, facilities and services to, or entertainment and recreation of, designated members of the Defence family'. Under the regulations, Frontline returns its profits or surplus to bases for the provision or improvement of welfare and amenities for Defence personnel.[2]

2.4        The financial year 2003–2004 was a challenging one for Frontline. The Chairman reported that:

Frontline recorded revenues of $33,228k and a net operating deficit of $1,207k. Cash generated by the business over the period was $571k.
....

The business faced many planned and unexpected hurdles during the year, including:

  • The winding up of overseas operations (East Timor and Solomon Islands)
  • Deployment of troops to areas not serviced
  • Low levels of personnel on base during most of 2003–2004
  • The identification and write off of $316k in bad debts relating to previous years.

...Despite recording a net deficit, disbursements of $150,000 were paid out of surplus funds.[3]

2.5        The Chairman goes on to report that the Board responded to the 'hurdles' by introducing new revenue–generating initiatives and cost–cutting programs. These included:

  • the launch of Frontline Online, the new internet sales site,
  • the rationalisation of several outlets, in consultation with base commanders,
  • the formation of strategic alliances to expand the range of products and services offered; and
  • conduct and analysis of customer surveys.[4]

2.6        The Chairman concluded his remarks by emphasising that Frontline continues to operate under unique conditions... 'regulations and stakeholders expectations require it to operate on a competitive, commercial basis. Nevertheless, Frontline also has a responsibility to provide services in locations and circumstances that are not commercially viable'.[5]

2.7        The 2003–2004 report is an informative account of the operations and performance of Frontline Defence Services. The Committee finds that this report fulfils all requirements outlined in the guidelines for statutory bodies.

Annual report 2004–05

2.8        The Committee notes that the annual report for the current period under review has not been received within the required tabling time line. The Committee is unaware of any explanation as to why this report is late and finds this to be unsatisfactory.

Australian War Memorial

2.9        The Australian War Memorial Annual Report 2004–2005 was tabled in the Senate on 11 October 2005. The Australian War Memorial (AWM) is a statutory authority within the Veterans’ Affairs portfolio and functions in accordance with the requirements of the Australian War Memorial Act 1980 and the Commonwealth Authorities and Companies (CAC) Act 1997.[6]

2.10      ‘The purpose of the Australian War Memorial is to commemorate the sacrifice of those Australians who have died in war.’[7]

2.11      In the Chairman’s Report, Mr Adrian Clunies–Ross, reported that the Australian War Memorial's main focus in the first half of 2005, was the construction of a new administration building and preliminary planning for the development of new galleries:

Construction of this building began in March and on completion in early 2006, staff will relocate to it to make way in the main building for expanded gallery space. This stage of gallery redevelopment will result in the redesign of the Korea, Vietnam and Peacekeeping galleries and with related exhibitions will cover Australia's involvement in overseas commitments from 1946 to present.[8]

2.12      The Chairman stated that the Uhrig report, relating to statutory authorities and office holders, was of interest to Council. In light of 'a strong mutually supportive relationship between the Council, the Director, the Minister and Government ... it would be desirable to see these arrangements continue'. He went on to say that the present arrangements ... 'have been proved over time and the Memorial will work closely with the Department of Veterans' Affairs as they conduct the review in 2005–06'.[9]

2.13      The Committee is pleased to note the results of an ANAO follow–up audit to their 1998 Safeguarding the National Collections audit. The Memorial was found to have implemented all the recommendations of the previous audit and to exhibit best practice in a number of areas. The Memorial also introduced a new procurement framework due to the establishment of the Australia–United States free trade agreement.[10]

2.14      The Committee also notes that the Council was satisfied with the results attained by the Finance, Audit, and Compliance Committee. It is convinced that 'the financial matters are tightly controlled, appropriately recorded and satisfy government requirements'. The Chairman stated that that was 'borne out by both internal and external audits which, during the course of the year, have invariably recorded very favourable results'.[11]

2.15      The Committee finds that the War Memorial’s Annual Report provides a comprehensive coverage of the organisation’s activities during 2004–2005. It is an informative and well produced document, which allows the reader to easily access information. The Committee concludes that this report complies with all reporting requirements for statutory authorities.

Defence Housing Authority

2.16      The Defence Housing Authority Annual Report 2004–2005 was presented to the President of the Senate on 28 October 2005 and tabled in the Senate on 7 November 2005. The report is submitted in accordance with section 43 of the Defence Housing Authority Act 1987 and the Commonwealth Authorities and Companies Act 1997.[12]

2.17      The Defence Housing Authority was established in 1988, as a statutory authority, ‘to provide adequate and suitable housing for members of the Australian Defence Force and their families, officers and employees of the Department of Defence and their families; and other persons, in order to meet the operational needs of the Australian Defence Force and the requirements of the Department of Defence’.[13] In 1992 DHA also became a government business enterprise (GBE). DHA also provides housing and relocation services to members of the Australian Customs Service (ACS).[14]

2.18      The Chairman, Mr Jones, and Managing Director, Mr Lyon, reported that the 2004–05 financial year was both challenging and rewarding for DHA, stating that DHA introduced significant business and process improvements designed to strengthen the organisation's financial management as well as increase the quality and value of services provided to clients:

We also endured a downturn part–way through the year in key residential markets, particularly in Sydney and Canberra regions. Despite the downward market change, we achieved good sales for the reporting period. ...

We met all of contractual key performance indicators (KPIs), with one exception being that ADF members would like a great choice of homes, Managing this expectation in future years will require a careful balance of vacancy rates against the provision of greater choice for our customers.[15]

2.19      Mr Jones and Mr Lyons reported that DHA's financial performance for the year was strong, achieving earnings before interest and tax of $82.3 million. This compares favourably with $74.2m for last year. Some of DHA's most notable achievements were:

  • a joint venture partnership at Lyons in Darwin, which will result in over 300 new homes;
  • a new service delivery model was introduced, designed to improve customer service and the number of houses pre–allocated;
  • completion of 451 properties at a cost of $155 million, and acquired 520 properties at a cost of $241 million; and
  • arranged physical uplifts of 30,809 ADF members.[16]

2.20      The Committee notes that the section on DHA's key achievements reflect the four strategies of: delight the customer; value for money for clients; meet commercial responsibilities; and, achieve operational excellence. This section describes in dot point form, objectives and outcomes for the year. A more detailed description of activities is contained in the relevant chapter.[17]

2.21      The Committee finds this report to be well designed and comprehensive in its coverage of the Defence Housing Authority’s activities. In particular, the Committee notes the statutory reporting compliance index[18], which gives the reader a tightly structured and comprehensive overview of the organisation's compliance with legislation. The report complies with all reporting requirements for statutory bodies.

Other reports

2.22      Other Defence portfolio authorities, agencies and/or companies which had their annual reports examined by the Committee, but were not otherwise commented upon in this edition, include:

  • Australian Military Forces Relief Trust Fund Annual Report 2004–2005
  • Australian Strategic Policy Institute Annual Report 2004–2005
  • ASC Limited Annual Report 2005
  • Defence Force Remuneration Tribunal Nineteenth Annual Report 2004–2005
  • Defence Force Retirement and Death Benefits Scheme Authority Annual Report 2004–2005
  • Military Superannuation and Benefits Scheme Board Annual Report 2004–2005
  • Repatriation Medical Authority Ninth Annual Report 2004–2005
  • Royal Australian Air Force Veterans’ Residences Trust Fund Annual Report 2004–2005
  • Royal Australian Air Force Welfare Trust Fund Annual Report 2004–2005
  • Royal Australian Navy Relief Trust Fund Annual Report 2004–2005
  • Veterans’ Review Board Annual Report 2004–2005.

2.23      The Committee considers that all the annual reports of the above–mentioned organisations fully met their respective reporting requirements.

Foreign Affairs and Trade portfolio

Australian Agency for International Development (AusAID)

2.24      The Australian Agency for International Development Annual Report 2004–2005 was received by the Deputy President of the Senate on 28 October 2005, and tabled in the Senate on 7 November 2005.

2.25      AusAID administers Australia’s overseas aid program. According to the annual report, the objective of the aid program is to 'advance the national interest by assisting developing countries to reduce poverty and achieve sustainable development'.[19]

2.26      AusAID advises the government on development policy and manages Australian development cooperation programs focused on achieving broad–based growth, stability and effective governance, particularly in our region. In this way, AusAID contributes to the formulation and implementation of Australia's broader foreign policy framework. It is an administratively autonomous agency within the Foreign Affairs and Trade portfolio. The Director General reports directly to the Minister for Foreign Affairs and the Parliamentary Secretary on all aspects of aid policy and operations.[20]

2.27      In the Director General’s review, Mr Bruce Davis, stated that in 2004–2005, events across the world and closer to home significantly shaped the Australian Government's overseas aid program. He noted that while there has been unprecedented progress made in reducing poverty, particularly in Asia, major challenges to global development remain.[21]

2.28      The Director General listed four priorities for the Australian aid program in 2004–2005:

  • responding to the Indian Ocean Tsunami and other humanitarian and emergency situations in Bangladesh, Sudan and Southern Africa,
  • improving security, governance and services in Solomon Islands and Papua New Guinea,
  • Working with partner government and donors to address transnational threats such as HIV/AIDS and other pandemics, organised crime and food security, and
  • Developing long–term innovative approaches to the challenges faced by fragile states in our region and beyond.[22]

2.29      With regard to AusAID as a whole, the Director General stated that:

Corporately, the agency had developed a strong partnership culture, embracing contestability and specialisation and involving other government departments, academic institutions, other donors, the private sector and civil society. AusAID is also embarking upon significant upgrades in its computing and communications systems to meet the challenges of more devolved program management and varied modes of aid delivery. Rigorous accountability processes, while changing, remain a core agency focus.[23]

2.30      Of interest to the Committee was the section 'Effectiveness against outcomes' which explains AusAID's performance information framework. AusAID aggregates information on the quality and quantity of aid program activities to assess performance of the agency's outcomes. In November 2004, the agency adopted a simplified monitoring toolbox (SMT) as the principal monitoring and reporting tool for the annual report. It is now the main component of broader monitoring and evaluation framework for country and regional programs.

2.31      The agency uses other tools, including the non–government brief and the multilateral assessment framework, to measure performance and global programs. The report states that that the quality indicators in the performance information framework specify a target of 75 per cent or more of funded activities or organisations with a rating of satisfactory overall or higher. This approach is consistent with that adopted by the World Bank which has the same target.[24]

2.32      Since the tabling of the portfolio budget statements for 2004–2005, AusAID has created a new outcome and output. It covers the implementation of the Australian government's $1 billion, five year commitment to the Australia–Indonesia Partnership for Reconstruction and Development (AIPRD). By the end of the financial under review, more that $175 million of AIPRD grant funding had been allocated to activities in Indonesia. Total expenditure was $8.7 million.[25]

2.33      The Committee finds that AusAID’s annual report provides a comprehensive coverage of the organisation’s activities during 2004–2005. As usual the Committee considers it to be of high quality: informative and well produced. The Committee concludes that this report complies with all reporting requirements for non–statutory authorities.

Australian Trade Commission (Austrade)

2.34      The Australian Trade Commission Annual Report 2004–2005 was presented to the President of the Senate on 14 October 2005 and tabled in the Senate on 7 November 2005.

2.35      Australian Trade Commission is a statutory authority responsible to the Minister for Trade and the Australian Government under the Australian Trade Commission Act 1985, Commonwealth Authorities and Companies Act 1997, and the Export Market Development Grants Act 1997. It is governed by a Board whose members are drawn from business and government. The annual report states that ‘Austrade contributes to community wealth by helping more Australians succeed in export and international business’.[26]

2.36      In his Managing Director’s report, Mr Peter O’Byrne stated that during 2004–05 two new major free trade agreements came into effect: one with the United States, the other with Thailand...

A core activity throughout the year was helping Australian businesses take advantage of the opportunities arising from free trade agreements. To help Australian companies gain the benefits, the Australian government invested additional resources to appoint 30 new export facilitators dedicated to the US market. Many of these have already been appointed... A specialist selling–to–government team was established in Austrade's Washington office to assist exporters tap into the $200 billion US government procurement market.

In Thailand, Austrade actively targeted specific sectors where opportunities have been opening up as a result of the Thailand–Australia free trade agreement. One major activity was a series of seminars highlighting the agreement held in Australian capital cities and regions. [27]

2.37      Mr O’Byrne also commented that several other government initiatives have been implemented to help businesses understand and benefit from all FTA opportunities.[28]

2.38      Some highlights for the year for Austrade were:

  • assisting to 4358 clients to achieve export deals work $18.364 billion;
  • administering the payment of 3277 grants under the export market development grants scheme (EMDG), which reimburses companies for eligible export promotion expenditure;
  • registering the interest of 900 Australian businesses willing to assist in tsunami reconstruction projects; and
  • Austrade recognised as the 'best trade promotion organisation' from a developed country, at the inaugural World Trade Promotion Organisation awards, held in Malta in October 2004.[29]

2.39      The Committee is satisfied with Austrade's tables which describe its performance and outcomes for the year and its descriptions of accountability and corporate governance requirements.[30]

2.40      The Committee finds that Austrade's annual report provides a comprehensive coverage of the organisation’s activities during 2004–2005. In keeping with previous examinations, the Committee considers this annual report to be informative and produced in a manner that allows the reader easy access to information. The Committee concludes that this report complies with all reporting requirements for non–statutory authorities.

Other reports

2.41      Other Foreign Affairs and Trade portfolio authorities and/or agencies which had their annual reports examined by the Committee but were otherwise not commented upon in this edition, include:

  • Australian Centre for International Agricultural Research Annual Report 2004–2005
  • Australian Safeguards and Non–Proliferation Office Annual Report 2004–2005
  • Export Finance and Insurance Corporation Annual Report 2005.

2.42      The Committee considers that all the annual reports of the abovementioned organisations fully met their respective reporting requirements.

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