Chapter 2Overview of annual reports examined
2.1This chapter examines selected annual reports in greater details 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 Australian Strategic Policy Institute (ASPI) and the RAAF Welfare Recreational Company for examination. The following summaries 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 assess 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 report, corporate plan and portfolio budget statements (PBS) for the relevant bodies it has oversight of.
2.4Most of the presented 2022–23 annual reports for Commonwealth entities and companies were available in HTML format on the Transparency Portal and in PDF format on most bodies’ websites.
2.5All 2022–23 corporate plans for the bodies whose annual reports were examined were located and available for reference.
2.6All 2022–23 Portfolio Budget Statements for the Department of Defence (Defence) 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 also 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 reports now incorporate this feature.
Defence portfolio
Australian Strategic Policy Institute
2.9ASPI tabled its 2022–23 annual report in the Senate on 25 January 2024 and the House of Representatives on 7 February 2024. The report was submitted to the Minister on 1 November 2023.
Chair and Executive Director’s review
2.10In their review, Council Chair Gai Brodtmann and Executive Director Justin Bassi highlighted how global instability is on the rise noting the war in Ukraine and rising tensions in the Indo-Pacific. They discussed how these and other developments recognise three realities:
economic interdependence no longer prevents state-on-state conflict;
investment in defence and security is necessary to prepare and deter conflict; and
security in the Atlantic is connected to security in the Indo-Pacific.
2.11They also discussed additional threats faced in the 12-month reporting period, including: increases in cyber attacks and intrusions, technological developments used by authoritarian regimes and criminal groups to achieve objectives through the global spread of foreign interference and disinformation.
2.12The Council Chair and Executive Director discussed ASPI’s achievements including:
hosting the first in-person Sydney Dialogue, the region’s leading policy summit for critical, cyber and space technologies;
the first and second AUKUS trilateral think-tank dialogues;
the eighth annual Be’er Sheva Dialogue;
the Space and National Security Masterclass and Strategic Dialogue;
the inaugural Quad Technology Business and Investment Forum; and
the Darwin Dialogue.
2.13ASPI also strengthened its professional-development and capacity-building focus which involved mentorship of Australian national-security policy officers and officers from across the Pacific and Southeast Asia.
2.14In 2022–23, ASPI opened a Washington DC office. The Council Chair and Executive Director highlighted the key role this office plays in the strategic debate, security dilemmas in Europe and the Indo-Pacific and noted that they were looking ahead to the 2024 US Presidential election.
Performance reporting
2.15ASPI’s performance framework is set out in its Corporate Plan 2022–26. ASPI has five purposes which are:
Conduct and publish research;
Provide an alternative source of strategic policy ideas and advice;
Stimulate public discussion;
Promote international understanding; and
Develop expertise.
2.16When measuring performance, ASPI details how it measures achievements, records who benefits and outlines what was achieved against its five purposes.
2.17In reporting on its first purpose, conduct and publish research, ASPI delivered five series totalling 37 publications, 894 pieces on The Strategist (ASPI’s official blog) and ASPI highlighted that five publications contributed to the national debate.
2.18ASPI’s second purpose, provide an alternate source of strategic policy ideas and advice, is measured by participation in government advisory committees and expert panels and submissions to parliamentary inquiries. ASPI reported staff were invited to participate in four government advisory committees and expert panels and provided eight submissions to parliamentary inquiries.
2.19The third purpose – to stimulate public discussion – is measured by the number and range of ASPI’s public events and published opinion pieces, and the usage of its website, The Strategist and social media. ASPI reported that it conducted 109 events and published 31 opinion pieces during the reporting period. It also saw increased traffic on its social media platforms, website and The Strategist webpage.
2.20ASPI’s fourth purpose is to promote international understanding which is measured by five key indicators:
ranking in the University of Pennsylvania’s Global Go To Think Tank Index;
invitations to speak at international conferences;
links with overseas think tanks;
international visiting fellowships; and
participation in and hosting of international dialogues.
2.21ASPI ranked eleventh in the University of Pennsylvania’s Global Go To Think Tank Index and staff attended 27 international conferences as speakers. Additionally, ASPI hosted five visiting fellows and participated in 14 dialogues. ASPI engaged with 43 think tanks across the world.
2.22APSI’s final purpose is to develop expertise which is measured by the number of interns whom ASPI supports, published pieces by interns and the number of participants in ASPI professional development courses. ASPI reported hosting ten interns in the reporting period with 13 published pieces. ASPI conducted 39 professional development courses and workshops during the reporting period.
2.23The Committee notes that the absence of a quantifiable measure of performance in ASPI’s corporate plan makes it difficult to assess its level of achievement. It is difficult to determine if performance has been met when it is gauged by broad and generalised targets.
Financial reporting
2.24ASPI reported a $2 325 220 deficit result for 2022—23 following a $562 341 surplus in the 2021—22 reporting period. ASPI also noted an increase in revenue of $1 797 130. This was mainly provided by the Department of Home Affairs for the 2023 Sydney Dialogue and additional professional development courses.
2.25ASPI noted overall expenses increased due to the first full year of operations at the Washington DC office and increased event-related expenses for major events held during the financial year. Travel expenses also increased by $1 043 125 due to increased frequency of travel, increased airfares, and increased staff movements between Canberra and Washington DC whilst establishing the US office.
Other matters
2.26ASPI did not fully comply with section 28E(ga) of the PGPA Rule. The section requires statistics to be provided about both ongoing and non-ongoing employees within the entity including the number of full-time employees, part- time employees, their gender and staff location. The Committee notes ASPI provided statistics on its non-ongoing employees, including a breakdown of the number of non-ongoing employees that are full-time, part-time and their gender. However, ASPI did not provide any statistics for its ongoing employees. Furthermore, ASPI did not provide any details of the location of their employees, both on-going and non-ongoing.
2.27The Committee also notes section 28E(b) of the PGPA Rule requires ‘the names of the persons holding the position of responsible Minister or responsible Ministers during the reporting period, and the titles of those responsible Ministers’ to be included in annual reports. ASPI listed in its appendix this information was included in chapter 1, however, the information was unable to be located in the prescribed chapter.
2.28The Committee has previously reported page number references in the list of requirements greatly increase transparency and oversight. Page numbers also aid in locating information required by the PGPA Rule. The Committee notes ASPI neglected to provide page number references in its appendix ‘Index of annual report requirements’.
Conclusion
2.29The Committee considers this report to be ‘apparently satisfactory’. However, the Committee again reiterates the importance of including page number references in its index of annual report requirements, as well as including all necessary statistics about its staff.
2.30The Committee looks forward to seeing these matters corrected in ASPI’s future annual reports.
RAAF Welfare Recreational Company
2.31The RAAF (Royal Australian Air Force) Welfare Recreational Company’s Annual Report 2020—21 was tabled in the Senate on 22 November 2021 and the House of Representatives on 28 October 2021. The report was submitted to the Minister on 20 October 2021.
2.32The RAAF Welfare Recreational Company tabled a revised annual report – Annual Report 2020–21 (revised)– in the Senate on 4 December 2023 and the House of Representatives on 30 November 2023. As noted in Chapter 1, the report was submitted to the Minister on 22 June 2023.
2.33The purpose of the RAAF Welfare Recreational Company is:
to provide access to discounted accommodation and to manage and promote owned recreational facilities for RAAF members, their families and other eligible persons, and provide financial support to, and assist in the provision of, recreational facilities and services to RAAF members.
2.34The Accountable Authority (Board) of the RAAF Welfare Recreational Company is appointed by the Chief of Air Force and comprises serving and ex-serving members of the RAAF. During the 2020–21 reporting period, the Board consisted of seven members.
Performance reporting
2.35The RAAF Welfare Recreational Company records performance under three topics: recreational facilities, finances and trust administration. The RAAF Welfare Recreational Company met both the finance and trust administration categories for the reporting period however, the entity failed to meet all three of the performance measures for the recreational facilities category.
2.36Recreational facilities has three performance measures:
performance measure 1: achieve target occupancy levels of 65 per cent for their property on the Gold Coast (Ambassador);
performance measure 2: achieve a cash neutral operational outcome for recreational facilities; and
performance measure 3: demonstrate majority occupancy of Air Force personnel.
2.37The RAAF Welfare Recreational Company did not achieve its target occupancy levels of 65 per cent for performance measure 1. Instead, it achieved a 35 per cent occupancy rate for their property on the Gold Coast and cited closure of the property due to Covid-19 restrictions as well as state border closures as the main reasons for failing to meet the target occupancy rate.
2.38Performance measure 2 required the entity to achieve a cash neutral operational outcome for recreational facilities. The RAAF Welfare Recreational Company noted the Ambassador property on the Gold Coast achieved an operating loss of $0.062 million. The entity highlighted ‘cash generated through occupancies dropped for two reasons; closure associated with the pandemic and lower occupancy rates following the re-opening of the apartments.’ It also cited a slight increase in operating expenses from previous years.
2.39Performance measure 3 requires the majority of occupants in properties to be Air Force personnel. The reporting period saw a decrease in Air Force personnel using the facilities from the previous year to 43 per cent. The RAAF Welfare Recreational Company noted that Air Force personnel ‘continued to be the highest user group [for occupancy].’
2.40The Finance category has three performance measures: financial statements indicate operating surplus, property valuations are accurate, and returns on investments reflect growth against the consumer price index (CPI). The RAAF Welfare Recreational Company reported meeting all three performance measures in the Financials category.
2.41Trust Administration has two performance measures: Annual Information Statement is lodged with the Australian Charities and Not for profits Commission (ACNC) by 31 January of the following calendar year, and Board changes are processed in accordance with mandated timeframes. The RAAF Welfare Recreational Company reported that it will comply with these two measures.
Financial reporting
2.42The RAAF Welfare Recreational Company is a charitable trust registered with the ACNC and is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards.
2.43For the reporting period, RAAF Welfare Recreational Company noted it:
[…] acted solely as trustee of the Trust and did not carry on any business activity on its own behalf […] therefore there were no revenues, expenses or cash flows in relation to the Company.
Other matters
2.44In the section titled, ‘Events after the Reporting Period’, the RAAF Welfare Recreational Company noted they had been subject to an audit by the Australian National Audit Office (ANAO).
2.45In October 2022, in considering the RAAF Welfare Recreational Company’s annual report for 2021–22, the ANAO discovered the published version of financial statements contained in the 2021 annual report differed from the audited financial statements. The RAAF Welfare Recreational Company determined it had not obtained an auditor’s report for the published financial statements which resulted in a breach of Section 301 of the Corporations Act 2001.
2.46Additionally, the RAAF Welfare Recreational Company was assessed by the ANAO’s Interim Report on Key Financial Controls of Major Entities for Financial Year 2019/2020 and deemed to have not met five disclosure requirements. The five disclosure requirements not met were on the basis the Audit Committee membership was reported as two members instead of the required three members.
2.47The Committee notes in the revised annual report for 2020/21, the RAAF Welfare Recreational Company did not include statistics on ongoing and non-ongoing employees as prescribed by section 28E(ga) of the PGPA Rule.
Conclusion
2.48The Committee considers this report to be ‘apparently satisfactory’.
Senator Raff Ciccone
Chair