Chapter 2Overview of annual reports examined
2.1This chapter examines selected annual reports in greater detail in accordance with Standing Order 25(20)(b). The Foreign Affairs, Defence and Trade Legislation Committee (the Committee) has selected the annual reports of the Department of Defence, the Department of Veterans’ Affairs, the Department of Foreign Affairs and Trade, the Australian Submarine Agency and the Australian Signals Directorate for examination. This chapter will highlight the findings in relation to the annual reports examined.
Performance reporting
Availability of performance framework documents
2.2The availability of relevant performance framework documents is essential to assessing a body’s level of achievement of planned performance. Commonwealth entities and companies are required to set out in their corporate plan each year how they will achieve their purpose and how their performance will be measured and assessed.
2.3Since the launch of the Transparency Portal in 2019, the Committee has monitored the availability of the annual reports, corporate plans and portfolio budget statements (PBS) for the relevant bodies it has oversight of.
2.4Most of the presented 2023–24 annual reports for Commonwealth entities and companies were available in HTML format on the Transparency Portal and in PDF format on most bodies’ websites. The 2023–24 annual report for the Australian Centre for International Agricultural Research (ACIAR) was not available on the Transparency Portal; however, was available on ACIAR’s website.
2.5All 2023–24 corporate plans for the bodies whose annual reports were examined were located and available for reference.
2.6All 2023–24 Portfolio Budget Statements for the Department of Defence (Defence), including the Department of Veterans’ Affairs and the Department of Foreign Affairs and Trade (DFAT), were available on the Transparency Portal and on their respective websites.
‘Clear read’ principle
2.7Department of Finance (Finance) guidance on annual performance statements notes the importance of the alignment of the annual performance statement with the corporate plan and PBS:
Annual performance statements should include information that demonstrates the connection between the corporate plan, PBS and annual performance statements to enable a ‘clear read’ across the three documents.
To achieve this, entities may wish to include a diagram demonstrating how the performance information fits together across the documents, or page number references to the corresponding information in corporate plans and the PBS.
It is good practice for entities to set out the discussion of the achievement of performance in their annual performance statements in the same order as the corporate plan, reinforcing the connection between the documents. Each performance measure should be expressed in a consistent way to aid the clear read between its planned performance information and performance results.
2.8Overall, most annual reports examined demonstrated a ‘clear read’ between the review of performance presented in the annual reports and the source documents. As the Committee has noted previously, the inclusion of references in the performance information to the relevant part of the corporate plan or PBS for each measure assisted in the examination of these reports and many now incorporate this feature.
Defence portfolio
Department of Defence
2.9The Department of Defence annual report 2023–24 was submitted to the Minister on 9 October 2024. It was tabled in in the Senate out of session on 30 October 2024 and the House of Representatives on 4 November 2024.
Secretary and Chief of Defence’s reviews
2.10In his review for 2023–24, Mr Greg Moriarty AO, Secretary of the Department of Defence, highlighted the release of the inaugural National Defence Strategy which reaffirms the findings of the Defence Strategic Review to ‘respond to our complex strategic environment’.
2.11He noted this new approach calls for coordinated whole-of-government and whole-of-nation efforts to achieve an integrated approach to Australia’s defence and advancing its interests.
2.12Mr Moriarty also highlighted:
investment in people: rebalancing Australian Public Service (APS) workforce and reducing reliance on external contractors;
partnerships with Defence industry: the Defence Industry Development Strategy, released in February 2024, sets out the ‘strategic rationale for a sovereign defence industrial base’;
implementing AUKUS: collaboration with the United States (US) and the United Kingdom (UK) has ensured progress on the optimal pathway for Australia’s acquisition of nuclear-powered submarines. Over the next 12 months, Defence expects to see continued progress in delivering phase one of the optimal pathway;
long-range strike: Defence’s purchase of long-range strike capabilities, including 200 Tomahawk cruise missiles, 60 advanced anti-radiation guided missiles and two anti-tank guided missiles;
the Australia-US alliance: the 10th iteration of Exercise TALISMAN SABRE, which was one of the largest bilateral military exercises ever conducted the US;
Indo-Pacific: the Indo-Pacific Endeavor 2023 engaged 14 nations and involved more than 2000 personnel form the Australian Defence Force (ADF) and APS; and
global partners: including updating the defence and security agreement with the UK and continuing to provide support to Ukraine.
2.13In his review for 2023–24, Admiral David Johnston AC RAN, Chief of the Australian Defence Force, highlighted the National Defence Strategy, which found the strategic environment has continued to deteriorate since the release of the Defence Strategic Review.
2.14Admiral Johnston also noted:
the final report for the Royal Commission into Defence and Veterans’ Suicide and Defence’s commitment to improve the welfare of serving and former-serving members of the ADF;
targeted continuation bonuses, increased investment in the Defence Study Assistance Scheme and an expansion of the ADF Family Health Program to increase recruitment and retention;
continuation of the AUKUS partnership including Royal Australian Navy (RAN) officers and sailors undertaking training in the US and UK and RAN personnel being assigned to US Virginia Class submarines after graduating from training;
International Defence engagement including prioritising working with partners to build resilience, deter aggression and coercion and contribute to stability in the region;
support for our neighbours and partners through regional exercises; and
Operation KUDU which involved up to 90 ADF personnel providing training to the Armed Forces of Ukraine in the UK.
2.15Admiral Johnston also highlighted the change in command of the ADF from General Angus Campbell AO DSC to himself. He extended his gratitude to General Campbell for his leadership of the ADF.
Performance reporting
2.16Defence’s reporting framework is set out in the Defence 2023–24 Portfolio Budget Statements (Defence PBS) and the Department of Defence Corporate Plan 2023–27 (Defence Corporate Plan). The Defence PBS sets out the Department of Defence’s outcomes and programs administered under them.
2.17Defence has two outcomes:
Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government directions; and
Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.
2.18Defence measures performance through a four-tier rating system:
achieved;
substantially achieved;
partially achieved; and
not achieved.
2.19Defence has 10 performance measures. Of these, six were achieved, three were substantially achieved and one was partially achieved.
Substantially achieved
2.20As noted above, Defence substantially achieved three of its performance measures. The following section provides further details of these performance measures.
2.21Performance measure 4.2 relates to Defence supporting Australian Defence Force members and their families by providing access to support services and programs. This performance measure contains two targets.
2.22In measuring the first target, Defence assesses five wellbeing factors: health, social support and connection, respect and recognition, safety and employment. For the reporting period two of these categories (health and safety) increased, two remained steady (social support and connection and employment) and one (respect and recognition) experienced a decrease which contributed to this target being substantially achieved.
2.23The second target measure assesses four factors: health, social support and connection, employment and education and skills. Defence reported an increase in satisfaction across three of these targets, with employment receiving a decrease in satisfaction in one area.
2.24The employment target measures ADF members job satisfaction, satisfaction with employment opportunities and satisfaction with the employee’s financial situation. Both job satisfaction and employment opportunities experienced an increase. However, the satisfaction with employee’s financial situation experienced a marginal decrease in satisfaction – falling to 66.8 per cent in 2023–24 compared to 67.4 per cent in 2022–23. This contributed to the performance measure being assessed as substantially achieved.
2.25Performance measure 5.1 concerns Defence building and maintaining relationships with international partners that promote regional and global security and stability. This performance measure has two target measures.
2.26The first target measure requires a review of four regional and bilateral international engagement policies. Despite having four reviews scheduled, only three reviews were completed during the reporting period, contributing to a substantially achieved result.
2.27The second target measure requires at least 80 per cent of outcomes from ministerial meetings being on track to be delivered. Defence reported 83 per cent of outcomes were assessed as being on track to be completed at the end of the reporting period.
2.28Performance measure 7.1 relates to Defence contributing to Australia’s prosperity through the inclusion of Australian businesses and enterprises in supply chains for capability and services. This performance measurecontains five target measures of which Defence achieved four targets. The ‘Defence invests in innovation, science and technology as approved by Government’ target measure achieved a substantially achieved. This was due to a slight increase from 2.6 per cent to 2.7 per cent of Defence’s total budget being invested in innovation, science and technology.
Partially achieved
2.29The performance measure which achieved a partially achieved rating was:
Defence is able to attract and retain an Australian Defence Force and Australian Public Service workforce with necessary culture, skills and capabilities to contribute to Australia’s national interests.
2.30Defence partially achieved this performance measure due to not meeting the workforce guidance milestones outlined in the PBS. At the end of the reporting period, Defence reported the average funded strength of the ADF was 7.1 per cent below the workforce growth requirements outlined in the Portfolio Additional Estimates Statements 2023–24. These statements set workforce requirements at 62,735 while Defence reported its total workforce as 58,310.
Financial performance
2.31Defence reported a net capital deficit of $834.7 million for the reporting period with a net operating surplus of $391.1 million. This resulted in a net cash deficit of $443.6 million or 0.9 per cent of total funding for the reporting period.
2.32Defence noted this result was due to actions taken to accelerate capital expenditure which were undertaken to optimise budget performance. Defence also noted they had lower than budgeted employee benefits:
[…] as a result of lower than budgeted workforce across the ADF (2.3 per cent), partially offset by higher numbers in the APS (1.7 per cent).
Other matters
2.33The Committee notes that Defence missed the inclusion of 17AG(7A)(b) of the PGPA Rule which requires annual reports to include:
a statement that “Annual reports contain information about actual expenditure on reportable non-consultancy contracts. Information on the value of reportable non-consultancy contracts is available on the AusTender website”.
2.34This is not the first instance Defence has failed to meet the standard expected of it in this regard – as noted in the Committee’s Annual reports (No. 1 of 2024) this specific requirement had also not been met in that year. It is disappointing to see the same omission occur for a second time; it is the view of the Committee that as a department of state, Defence should be setting an example for other Commonwealth entities.
2.35The Committee also notes that where the PGPA Rule calls for annual reports to contain a particular statement, the PGPA Rule gives the exact wording of the statement. For example, 17AG(10)(a) of the PGPA Rules requires the inclusion of following statement in annual reports:
[Name of entity] supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website.
2.36Whilst Defence has included all the information required by the statement, the wording was not as it is prescribed by the PGPA Rule. Defence has instead stated:
Defence actively promotes and supports small business participation in Australian Government procurement. Participation statistics for small and medium enterprises are available on the Department of Finance’s website at finance.gov.au.
2.37While minor, the Committee questions why Defence has chosen to change the wording as prescribed by the PGPA Rule and further questions how changing a prescribed statement aids with transparency and accountability.
Conclusion
2.38While the Committee considers this report to be ‘apparently satisfactory’, the Committee again reiterates the importance of including all PGPA Rule requirements and urges Defence to consider that the purpose of providing an annual report to the Parliament is to provide relevant transparency and accountability to the Parliament, stakeholders and the Australian Community.
2.39The Committee looks forward to seeing these matters corrected in Defence’s future annual reports.
Department of Veterans’ Affairs
2.40The Department of Veterans’ Affairs (DVA) submitted its annual report to the Minister on 11 October 2024. It was tabled in the Senate out of session on 28 October 2024 and the House of Representatives on 4 November 2024.
Secretary’s review
2.41In her review for 2023–24, Ms Alison Frame, Secretary of the Department of Veterans’ Affairs, highlighted that DVA had cleared the backlog of unallocated claims and noted the extensive consultation undertaken in developing the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024.
2.42Ms Frame also commented that DVA has continued to support the Royal Commission into Defence and Veterans’ Suicide (the Royal Commission). She noted that DVA has acted quickly to implement recommendations from the interim report and is preparing to implement recommendations when the final report is released.
2.43Ms Frame also discussed:
the difficulty ADF members face when transitioning to civilian life and the work DVA does to support these individuals;
DVA’s shift to a wellbeing approach which aims to place wellbeing at the centre of delivery and design;
additional training for healthcare providers as identified in the interim report into the Royal Commission;
expansion of mental health supports for veterans’ and families in Tasmania;
the establishment of the Aged and Community Care Taskforce;
the opening of Veterans’ and families hubs in Caboolture and Burnie to support existing hubs around the country;
establishment of the Veterans’ Chaplaincy Pilot Program recognising chaplains support spiritual wellbeing during and after ADF service; and
modernising DVA’s information technology systems to improve veterans’ and families experiences when engaging with DVA.
Performance reporting
2.44DVA’s performance reporting framework is set out in the Department of Veterans’ Affairs Corporate Plan 2023–24 and the Department of Veterans’ Affairs Portfolio Budget Statements 2023–24 (DVA PBS). The DVA PBS outlines the departments three outcomes and programs related to each of them.
2.45When measuring performance for Outcome 1 and Outcome 2, DVA assesses against the following criteria:
timeliness;
quality; and
client satisfaction.
2.46Outcome 1 contains 30 performance measures comprising 12 timeliness measures, 12 quality measures and 6 client satisfaction measures. For the reporting period, DVA reported meeting three of the 12 timeliness measures, five of the 12 quality measures and one of the six client satisfaction measures.
2.47DVA noted that timeliness of claims processing remains a high priority and cited an increase in the number of claims received and ongoing training for new staff for not meeting timeliness measures. DVA also highlighted that claims continue to be processed at record levels, ‘with significant resourcing being directed towards processing the existing backlog of compensation claims’.
2.48Outcome 2 contains ten performance measures consisting of three timeliness measures, five quality measures and two client satisfaction measures. DVA reported meeting all three timeliness and five quality measures. Additionally, they met one of the two client satisfaction measures.
2.49In relation to the one client satisfaction measure that was not met, DVA aims to achieve a result of 75 per cent or better on an annual survey of client satisfaction with the rehabilitation program. DVA reported achieving 68 per cent in the survey for this reporting period, which did not meet the required target.
2.50DVA highlighted clients had timely access to quality healthcare, counselling and rehabilitation services which was reflected through the successful delivery of this outcome.
2.51For Outcome 3, DVA’s performance categories include war graves and commemorations. In order to measure performance against these targets, DVA plans and undertakes a program of regular maintenance and inspections in the relevant countries.These maintenance and inspections are managed by the Office of Australian War Graves
2.52DVA achieved one of the three war graves performance measure targets and the commemorations performance measure. DVA noted this measure was impacted by ‘insufficient evidence due to limitations in the War Graves system and information provided by cemeteries and crematoriums’.
2.53DVA intends to include a customer satisfaction-based measure in future reporting periods to enable a more reliable report on the maintenance of commemorations.
Financial reporting
2.54DVA reported a consolidated net cash deficit of $10 million for the 2023–24 reporting period. This deficit included an operating deficit of $12.5 million and an operating surplus of $2.5 million arising from the Defence Service Homes (DSH) Insurance scheme.
2.55DVA’s financial position at the end of the reporting period was consistent with previous years. It includes total assets of $363.9 million exceeding total liabilities of $308.3 million.
Other matters
2.56Under 17AG(2)(d)-(e) of the PGPA Rule, DVA is required to report any non-compliance with financial law to the Minister and any steps taken to remedy the breach.
2.57For the 2023–24 reporting period, DVA noted it reported significant non-compliance with financial law covering multiple instances, which were reported to the Minister. These included procurements not complying with Commonwealth Procurement Rules (CPR’s) such as:
community nursing;
private hospitals;
day procedures;
alcohol and other drugs;
Defence Service Homes Insurance; and
Open Arms outreach counsellors.
2.58DVA also reported significant non-compliance relating to legislative authority for psychiatric referrals under the Open Arms program had been identified. It was noted that the impacted referrals had ceased and the program was supporting clients to the extent possible under the legislation.
2.59While DVA reported the non-compliance with financial law to the Minister, it is not clear what, if any, corrective action was taken to remedy the non-compliance. When discussing corrective action, DVA stated ‘corrective actions will be or have been undertaken to ensure the department complies with the CPR’s when procuring services for these programs’. This statement does not specify the corrective action DVA has taken or will take to remedy the non-compliance with financial law. The Committee encourages DVA to report the corrective actions it has taken to remedy non-compliance in future annual reports.
2.60Noting this is a recurring matter the Committee comments on regarding DVA’s annual report, the Committee questions whether these ‘corrective actions’ are facilitating change and compliance with financial law. The Committee strongly encourages DVA to review their procurement practices to ensure they are compliant with financial law.
Conclusion
2.61The Committee considers this report to be ‘apparently satisfactory’.
Australian Submarine Agency
2.62The Australian Submarine Agency (ASA) was established on 1 July 2023, transitioning from the Nuclear-Powered Submarine Taskforce, which ceased on 30 June 2023. ASA’s first year of operation was 2023–24.
2.63ASA’s 2023–24 annual report was submitted to the Minister on 3 October 2024. It was tabled out of session in the Senate on 31 October 2024and in the House of Representatives on 4 November 2024.
Director-General’s review
2.64In his review, the Director-General, Vice Admiral Jonathan Mead AO RAN highlighted ASA’s successful first year of operations, having characterised it by the successful achievement of many milestones. The Director-General focused on three main areas of achievement:
working with partners;
investing in industrial capability; and
investing in people.
2.65Working with partners: the Director-General discussed the Optimal Pathway. which was announced in March 2023 and has undergone 18 months of consultation and examination. The Optimal Pathway supports necessary developments to produce, maintain, operate and steward a sovereign fleet of conventionally-armed, nuclear-powered submarines (SSNs). Vice Admiral Mead noted that it enables Australia to be sovereign ready by working closely with, having support provided by and investments from, each AUKUS nation.
2.66Investing in industrial capability: ASA contributed to the selection process undertaken by the Australian Government which identified collaborative partners in the construction of Australia’s own SSN fleet. ASA announced ASC Pty Ltd and BAE Systems as the collaborative partners for Australia’s SSN fleet and these companies will aid in the construction of the shipyards in Osbourne, South Australia, and HMAS Stirling in Western Australia. The Director-General highlighted these contracts create large employment and training opportunities for Australians, while also supporting and developing industrial capabilities.
2.67Investing in people: the Director-General noted ASA’s delivery of the nuclear-powered submarines is a large and complex endeavour which draws on the expertise of many technical experts, skilled delivery personnel, policy, legal and regulatory expertise. ASA is committed to the investment in its people and supports a culture of respect and collaboration, prioritising safety and security.
2.68Other key achievements discussed by the Director-General included:
establishing arrangements with the US for access to nuclear technical capability including technical support and information exchange, and access to Virginia Class training support systems;
increasing ASA’s workforce;
collaborating with the Department of Education to allocate additional Commonwealth Supported Places in STEM (science, technology, engineering and mathematics) courses to grow a skilled Australian workforce; and
delivering pilot programs and nuclear mindset awareness training to over 100 industry personnel.
Performance Reporting
2.69ASA’s reporting framework is set out in the Defence 2023–24Portfolio Budget Statements (Defence PBS) and the Australian Submarine Agency Corporate Plan 2023-2027 (ASA Corporate Plan). The ASA Corporate Plan sets out the agency’s performance measures and targets to achieve them.
2.70ASA has one outcome ‘to safely and securely acquire, construct, deliver, technically govern, sustain and dispose of Australia’s SSN capability, through the AUKUS partnership’. This is supported by two key activities. ASA uses a three-tiered system to evaluate its performance:
achieved;
partially achieved; and
not achieved
2.71ASA has seven performance measures with 13 targets. Of these, three performance measures were achieved and four were partially achieved.
Partially achieved
2.72Performance measures 1, 3, 6 and 7 were partially achieved, which will be discussed below.
2.73Performance Measure 1, relating to establishing infrastructure and capabilities to support increased visits of SSNs to Australia and a rotational presence of SSNs in Western Australia, was assessed as being partially achieved.
2.74This performance measure has two targets. ASA met one target and partially achieved the other which contributed to the overall assessment of partially achieved for this performance measure. The target that was partially achieved related to the completion of upgrades to the submarine training systems and live-in accommodation at Submarine Rotational Force-West (HMAS Stirling).
2.75ASA reported that funding was approved, contracts amended, and construction had commenced for the training systems centre and the live-in accommodation at HMAS Stirling; however, the target date of completion of 30 June 2024 was not met. ASA now anticipates live-in accommodation to be completed by the fourth quarter of 2025, and the training centre to be completed by the third quarter of 2026.
2.76Performance Measure 3 concerning delivering Australian-built SSN-AUKUS, including infrastructure development at Osborne Shipyard, was also partially achieved. This performance measure has three targets, with two targets being achieved and one target being partially achieved. The partially achieved target relates to the Skills and Training Academy (STA) at Osborne Shipyard achieving interim operating capability.
2.77The contract for the STA initiative delivery was not signed by the deadline of 30 June 2024, resulting in the partial achievement of this target. ASA noted that substantial progress had been made through the delivery of nuclear mindset training and attendance at Accelerated Training Academy for Defence Manufacturing in the US.
2.78Performance Measure 6 relates to setting program and technical requirements and standards for nuclear-powered submarine capability across all capability lifecycle phases. The performance measure contains two targets with one target partially achieved. The target that was partially achieved relates to the Australian Technical Authority Plan (the ATA Plan) that describes how Australia will exercise control over nuclear-powered submarines.
2.79One of the key milestones to meet this target was to have the ASA officially approve the ATA Plan prior to 30 June 2024. The ATA Plan was drafted and distributed to AUKUS partners and major Australian stakeholders; however, it was not approved by the ASA before the prescribed deadline.
2.80Performance Measure 7 is to establish stewardship capabilities to support the introduction of naval nuclear technology to Australia. It contains one target ‘establish a licensing approach to meet legislative and regulatory requirements for Phase 1’.
2.81Achieving this target required the completion of two steps: reviewing and capturing all regulatory obligations applicable to Phase 1; and developing a comprehensive compliance strategy and compliance plan leading towards achieving all necessary regulatory licenses, permits and approvals.
2.82The ASA completed its reviews; however, the comprehensive compliance strategy and plans were not finalised by 30 June 2024, resulting in a partially achieved result.
Financial reporting
2.83For the 2023–24 reporting period, ASA reported a net capital surplus of $26.6 million which was attributed to lower-than-budgeted expenses across various categories including supplier expenses and employee benefits. ASA noted that the balance sheet reflects a:
‘…shared service arrangements with the Department of Defence, which has built the ASA’s asset base through increased building access to support the ASA’s activities’
2.84While ASA included a summary of its financial performance as required by 17AF(1)(a) of the PGPA Rules requirement, it would have been beneficial to include information on its net cash result, net operating result, and how these figures contributed to the financial result. By including these figures, it would assist readers to create a complete and comprehensive analysis of ASA’s financial reporting, thus enhancing transparency and accountability.
Other matters
2.8517AG(2)(d) of the PGPA Rule requires ‘a statement of any significant issue reported to the responsible Minister under paragraph 19(1)(e) of the Act that relates to non‑compliance with the finance law in relation to the entity.’ 17(AG)(2)(e) further requires ‘if a statement is included under paragraph (d) of this subsection – an outline of the action that has been taken to remedy the non-compliance’ ASA noted in its list of requirements this information could be found on page 65 of its annual report; however, the information was unable to be located and was eventually found on page 73 of the annual report. The Committee encourages the ASA to take care in accurately reporting page number references in its list of requirements to avoid unnecessary confusion.
2.86PGPA Rule, 17AH(1)(c) requires an ‘outline of mechanisms of disability reporting, including reference to website for further information’. While an outline was included, the outline did not include a reference or a link to the website. The Committee encourages ASA to include an electronic address to further information in future annual reports to ensure the ASA is fully compliant with the requirement set out in the PGPA Rule.
2.87The Committee looks forward to seeing these changes implemented in ASA’s future annual reports.
Conclusion
2.88The Committee considers this report to be ‘apparently satisfactory’. The Committee congratulates the ASA on its first annual report and welcomes ASA’s future annual reports.
Australian Signals Directorate
2.89The Australian Signals Directorate’s (ASD) 2023–24 annual report was submitted to the Minister on 1 October 2024. It was tabled in the Senate out of session on 29 October 2024 and in the House of Representatives on 4 November 2024.
Director-General’s review
2.90In her review for 2023–24, Ms Abigail Bradshaw CSC, Director-General of the Australian Signals Directorate, highlighted the work ASD is involved with as outlined in the National Defence Strategy 2024. She noted ASD continued to focus on enhancing foreign signals intelligence as well as conducting both offensive and defensive cyber operations.
2.91Ms Bradshaw also discussed ASD’s contributions to the National Intelligence Community noting ASD’s intelligence on identifying potential adversaries which enabled Government to make informed decisions in Australia’s national interests.
2.92Other topics highlighted in the Director-General’s review include:
dismantling online infrastructure used by foreign cyber criminals who target Australia;
ASD’s work in supporting Australia’s national security and economic prosperity;
ASD’s engagement with international partners to increase and uplift cyber threat awareness and regional security including ASD’s lead role in the Pacific Cyber Security Operations Network;
ASD’s involvement with parliamentary and various other oversight bodies; and
ASD’s continued investment in its workforce through ’activities that support the attraction, retention and upskilling of our people’.
Performance reporting
2.93ASD’s reporting framework is set out in the Australian Signals Directorate Corporate Plan 2023–24 and the Defence 2023–24 Portfolio Budget Statements (Defence PBS). These documents outline ASD’s outcomes and programs.
2.94When measuring performance, ASD uses a combination of qualitative and quantitative metrics based on statistics, stakeholder feedback and case studies that outline the demonstrated impact.
2.95ASD has one outcome and measures its performance in achieving this through five performance measures and ten targets to meet the performance measures. ASD reported meeting all its performance measures for the reporting period.
2.96The Committee notes that while ASD provides a rationale for why a performance measure was assessed as met, an explanation of all possible results that could be achieved for a performance measure would be beneficial to the reader.
Financial reporting
2.97ASD reported a net position of $1.31 million for the 2023–24 period. This position includes $2.05 million in assets and $741 202 in liabilities. ASD provides a detailed financial analysis in their report to the Parliamentary Joint Committee on Intelligence and Security (PJCIS).
Other matters
2.98The Committee notes ASD has chosen to omit page number references in its list of requirements for its 2023–24 annual report. This led to confusion when checking if the annual report complied with requirements prescribed by the PGPA Act and Rule.
2.99This was evident when assessing whether 17AG(2)(a) of the PGPA Rule, relating to information on compliance with section 10 (fraud systems), had been met. This requirement ensures that there is a minimum standard for accountable authorities of Commonwealth entities to prevent, detect and respond to fraud and corruption. ASD’s list of requirements stated this information was available in the fraud control, detection and prevention section of its annual report. Some information was included in this section; however, information relating to fraud prevention was found in other sections of the report which spanned numerous pages. The Committee urges ASD to include all sections of the annual report where information can be located to aid with transparency.
2.100PGPA Rule, 17AG(4)(c), requires information on enterprise agreements, individual flexibility arrangements and common law contracts and determinations. This information was listed under six different sections of the annual report. While ASD has highlighted where to find the information, the readability aspect has been diminished by requiring the reader to access six different sections of the annual report to find the information required.
2.101The PGPA Rule, 17AG(4)(aa) requires ASD to provide statistics on the entity’s ongoing and non-ongoing employees including full-time employees; part-time employees; gender and staff location. This information was available and located in Appendix C – Workforce statistics in ASD’s annual report. As per 17AG(4)(b) of the PGPA Rule, ASD is also required to report similar statistics on its Australian Public Service (APS) employees, including statistics on classification level; full-time employees; part-time employees; gender and staff location. In its list of requirements, ASD reported that this information is ‘mandatory’ and that it could also be found in Appendix C – Workforce statistics; however, these statistics were not located in the report. The Committee understands that information of this type is provided to the PJCIS in accordance with its accountability function. Nevertheless, the Committee encourages ASD to clearly specify if information is not contained in its annual report due to separate reporting requirements.
2.102The Committee has previously commented on the importance of including page number references in annual reports. The Committee again reiterates that page number references in the list of requirements greatly increases transparency and oversight, as well as aiding in locating information required by the PGPA Rule. The Committee notes that previous ASD annual reports included page number references and questions why, in this instance, ASD has chosen to omit this key aid in transparency and accountability.
2.103The Committee looks forward to seeing the inclusion of page number references in ASD’s future annual reports.
Conclusion
2.104The Committee considers this report to be ‘apparently satisfactory’.
Foreign Affairs and Trade portfolio
Department of Foreign Affairs and Trade
2.105The Department of Foreign Affairs and Trade 2023–24 annual report was submitted to the Minister on 9 October 2024. It was tabled in the Senate out of session on 25 October 2024 and in the House of Representatives on 4 November 2024.
Secretary’s review
2.106In her review for 2023–24, Ms Jan Adams AO PSM, Secretary of the Department of Foreign Affairs and Trade, highlighted the complexity of the international environment as global challenges and geostrategic competition interact and intensify. Ms Adams also noted the following:
engaging with the world as it is: disruptions continued as the world continued to grapple with conflicts around the globe including the war in Ukraine and the Hamas terror attacks on 7 October 2023. Ms Adams highlighted Australia’s continued military, humanitarian and energy assistance to Ukraine and DFAT leading the whole-of-government response to the Hamas attacks.
a peaceful, stable and prosperous Indo-Pacific: Ms Adams noted that DFAT is focused on advancing Australia’s national interests and is achieving that focus by contributing to the stability and security of Australia and its neighbours in the Indo-Pacific region. She highlighted the signing of the Falepili Union, the Pacific Australia Labour Mobility scheme, the United Nations Climate Change Conference (COP 28) and engagement with the Association of Southeast Asian Nations (ASEAN) as achievements in this area.
pursuing economic opportunities and resilience: DFAT is working to expand and diversify trade and investment flows to aid Australia’s prosperity and make Australia more resilient to changing circumstances at home and abroad. Ms Adams noted the signing of free trade agreements, the Indo-Pacific Economic Framework Agreement and strengthening and reforming the World Trade Organisation as achievements.
maintaining a secure Australian Government presence overseas: DFAT’s global network of 116 posts including embassies, high commissions, consulates and representative offices provide a secure, safe and connected presence for the Australian Government overseas.
supporting Australians overseas: Ms Adams noted the number of Australians travelling overseas has exceeded pre-pandemic levels and is projected to continue rising in 2024–25. The demand for passport and consular services therefore remains high and Ms Adams discussed how the department aims to improve its capability for providing consular assistance and travel safety information. Ms Adams also highlighted the safe return of Ms Cheng Lei after more than three years in detention in China.
Performance reporting
2.107DFAT’s reporting framework is set out in the Department of Foreign Affairs and Trade’s Corporate Plan 2023–24 and the Foreign Affairs and Trade 2023–24 Portfolio Budget Statements (DFAT PBS). These documents set out DFAT’s outcomes and programs.
2.108When measuring performance, DFAT uses the following ratings:
achieved;
partially achieved; and
not achieved.
2.109DFAT has three outcomes and 13 performance measures. Of these performance measures, DFAT achieved eight performance measures, partially achieved four performance measures and did not achieve one.
Partially achieved
2.110DFAT partially achieved four performance measures (performance measures 1, 3, 7 and 10), which will be discussed below.
2.111Performance measure 1: DFAT’s diplomatic efforts support favourable foreign affairs and trade policy outcomes for Australia, using case studies as a target measure. DFAT aimed to achieve six case studies in the reporting period:
(a)resolve trade impediments with China;
(b)climate change and energy transition;
(c)implementing Australia’s Comprehensive Strategic Partnership with India;
(d)expanding the Pacific Australia Labour Mobility scheme;
(e)implementing Invested: Australia’s Southeast Asia Economic Strategy to 2024; and
(f)providing support to Ukraine.
2.112DFAT achieved three (case studies b, c and f) of their intended six case studies resulting in a partially achieved result. DFAT noted their response to the Hamas—Israel crisis impacted resourcing across all areas of the department, including the six areas chosen as case study areas.
2.113Performance measure 3: Increased number and diversity of Australian university graduates with Indo-Pacific capability, has two target measures:
8,000 Australia university graduates complete a New Colombo Plan program in the Indo-Pacific region in 2023–24; and
diversity measures for First Nations. Disability and regional/remote students are equal to or greater than in the broader Australian university undergraduate cohort.
2.114DFAT noted that the New Colombo Plan target was substantially achieved, while the diversity (First Nations, disability and regional/remote) target was not achieved due to only achieving two of the three sub targets.
2.115Performance measure 7: Australia’s payments to multilateral development organisations generate collective action on issues impacting Australia, contains one target. The target ‘mandatory payments to multilateral development institutions are paid on time,’achieved a partially achieved rating due to eight of nine payments being paid within the agreed encashment date.
2.116Performance measure 10: Australian passports are processed efficiently,contains two target measures:
95 per cent of routine passports processed within 10 business days; and
98 per cent of priority passports processed within 2 business days.
2.117DFAT achieved the priority passport target with 99.9 per cent of priority passports being processed within the two-business day timeframe. It did not achieve the routine passport target measures, recording 77.2 per cent of routine passports being processed within the ten-business day timeframe.
Not achieved
2.118The performance measure that was not achieved was: ‘DFAT’s ministers are satisfied with the advice and support provided by the department’.This performance measure’s target is to maintain satisfaction levels above 85 per cent.
2.119DFAT conducts an annual survey of minister’s chiefs of staff, deputy chiefs, senior advisors and other ministerial officials to gauge satisfaction levels. The survey returned an overall result of 64.5 per cent satisfaction, which resulted in DFAT not achieving the performance measure.
2.120DFAT highlighted the survey identified strengths and areas where the department was performing well, including engaging professionally and providing support in a timely manner for ministerial involvement in overseas visits, speeches and parliamentary processes. DFAT has identified several areas of focus to enhance ministerial satisfaction in future reporting periods, including meeting briefs and ministerial correspondence.
Financial performance
2.121In 2023–24, DFAT reported an income of $2,245.7 million which included:
$2,026.8 million of appropriation revenue from government;
$196.5 million of own-source revenue; and
$22.4 million in gains.
2.122DFAT reported $2,373 million in expenses. This is an increase of $103.7 million from the previous reporting period, which was attributed to increased employee expenses following an increase in staffing numbers and overseas postings following the Covid-19 pandemic.
2.123DFAT reported an overall net deficit of $127.3 million from continuing operations. It noted this deficit is a result of returning to normal operations following the Covid-19 pandemic, increased demand for passports and higher employee expenses due to an increase in staffing numbers domestically and overseas.
Other matters
2.124The Committee notes it was unable to locate the mandatory requirement outlined in 17AJ(f) PGPA Rule, which requires the inclusion of the entity’s website address. DFAT listed in the appendix that the requirement was available on page i; however, the Committee was only able to locate the website address of the online annual report.
2.125The Committee encourages DFAT to ensure all information is included with correct page number references to aid in transparency.
Conclusion
2.126The Committee considers this report to be ‘apparently satisfactory’.
Senator Raff Ciccone
Chair