Chapter 3

Annual reports of agencies

3.1        The annual reports of the following agencies were referred to the committee for examination and report during the period 1 May 2019 to 31 October 2019:

Attorney-General's Portfolio
Home Affairs Portfolio

3.2        On this occasion, the committee has examined in more detail the reports of the Australian Security Intelligence Organisation, which was last examined in Report on Annual Reports (No. 2 of 2017), and the Commonwealth Ombudsman (the Ombudsman), which has not been examined by the committee since its incorporation into the Legal and Constitutional Affairs portfolio.

Australian Security Intelligence Organisation

3.3        The Australian Security Intelligence Organisation (ASIO) tabled its report in the Senate and the House of Representatives on 16 October 2019. The report was available to senators for the Supplementary Budget Estimates 2018–19 hearing on 21 October 2019.

3.4        In its Report on Annual Reports (No. 2 of 2019), the committee identified that the ASIO annual report for 2017-18 was not 'apparently satisfactory' because it failed to comply with the following PGPA Act mandatory requirements:

3.5        The committee further identified that the report provided incomplete or unclear information in relation to:

3.6        It is in this context that the committee considers the 2018-19 annual report.

Director-General's review

3.7        In the Director-General's review, Mr Duncan Lewis AO DSC CSC, remarked on the evolution of the organisation in its 70-year history. He noted the one constant over that period was ASIO's 'resolute focus on protecting Australia from those who wish us harm'.[1]

3.8        Mr Lewis highlighted the major contemporary threats, including an enduring threat of terrorism on Australian soil, and espionage and foreign interference, acts which, Mr Lewis stated, 'occur on a daily basis, [and] are of unprecedented scale and sophistication'.[2]

3.9        The Director-General pointed to measures ASIO had taken in the reporting period in order to meet increasingly complex challenges, including building on partnerships and seeking to harness new technological capabilities such as artificial intelligence and machine-learning.[3] A significant development was the commencement of the Enterprise Transformation Program to implement the recommendations from Mr David Thodey AO's 2017 report A digital transformation of the Australian Security Intelligence Organisation. Part of that program involves building partnerships with technology partners on the open market.[4]

Performance reporting

3.10      Mr Lewis, as Director-General, was the accountable authority for ASIO during the relevant period. ASIO is a non-corporate Commonwealth entity under the Home Affairs Portfolio. At the time that the Portfolio Budget Statements (PBS) for 2018-19 were drafted, ASIO fell under the Attorney-General's Portfolio. As such, ASIO's outcome appears in that portfolio's statements.

3.11      ASIO has one outcome:

Informed government decisions about the development, reform and harmonisation of Australian laws and related processes through research, analysis, reports and community consultation and education.[5]

3.12      One performance criterion[6] is applied to evaluate success against a number of targets grouped into four key activities:

These key activities and targets are reflected in the Corporate Plan 2018-19.[8] The targets outlined in the PBS are reflected as performance measures in the Corporate Plan. The performance statement contained in the annual report reflects a combination of the targets in the PBS and the performance measures set by the Corporate Plan.

3.13      The methodology used to develop the annual performance statement was analysis of internal performance reporting and the conduct of an independent survey of 74 stakeholders. Six of the eight performance objectives (or performance measures as referred to in the Corporate Plan) were met during the reporting period. Two performance objectives were 'partially met':

3.14      The committee refers to its previous observation about a lack of clarity in ASIO's previous annual report, and congratulates ASIO for its work in improving clarity in its performance evaluation processes. The committee does note, however, that clarity could be further enhanced by the consistent use of language across the three key documents. In some instances, it appears that multiple labels are applied to the one concept.[12]

Financial performance

3.15      ASIO recorded a deficit of $14.4 million (excluding depreciation) compared to a surplus of $1 million in 2017-18.[13] The annual report attributed this loss to a mandatory accounting adjustment of $8.3 million for employee and make-good provisions due to interest rate movement, and to necessary supplier costs, despite the implementation of measures to reduce expenditure.[14] ASIO noted that the appropriate government process was followed as a result of the outcome.[15]

Management of human resources

3.16      The annual report notes an increase in ongoing staff from 1,900 in 2017-18 to 1,961 in 2018-19, and a decrease in non-ongoing staff from 31 to 25 in the same periods.[16] Just over half of the new ongoing positions were filled by females.[17]

3.17      The committee notes its previous concerns regarding the lack of information on enterprise agreements and other workplace arrangements, as required by PGPA Rule 17AG(4)(c)(iii), in ASIO's previous annual report. The current annual report does not appear to provide this information. The list of requirements indicates that this provision was not applicable in this annual report.[18] It would assist the committee if some guidance was provided as to why this mandatory requirement was not applicable.

Other matters

3.18      In relation to its observations about the lack of a description of the agency's purpose, as required by PGPA Rule 17AE(1)(a)(iv), the committee congratulates ASIO on its efforts to remedy this concern by clearly outlining its purpose as per the Corporate Plan 2018-19.[19]

3.19      A list of requirements has been provided as required by PGPA Rule 17AJ(d), but the committee notes that ASIO has chosen to reference the relevant part (akin to a chapter) of the report, rather than pinpointing any reference with specificity. It would assist the committee if specific references were made within the report, rather than the more general approach listed in the annual report.


3.20      While the committee identified a number of shortcomings with ASIO's report, on balance it considers the report to be 'apparently satisfactory'. The committee commends ASIO for the improvements applied to its annual reporting processes thus far and encourages the agency to continue this trend.

Commonwealth Ombudsman

3.21      The Commonwealth Ombudsman tabled its report in the House of Representatives on 21 October 2019 and in the Senate on 11 November 2019. The report was available to senators for the Supplementary Budget Estimates 2018–19 hearing on 22 October 2019.

Review by the Ombudsman

3.22      In his review, the Commonwealth Ombudsman, Mr Michael Manthorpe PSM noted the continuing trend of high volume of incoming complaints, with a total of 37,388 received over the reporting period. In the Ombudsman's 40 plus year history, that number had only been exceeded once, in the preceding year, with a figure of 38,026.[20] Stakeholder groups which saw growth in the number of complaints over the year included parties interested in the National Disability Insurance Scheme, current and former students who had incurred debts under the VET FEE-HELP Scheme, and overseas students.[21] Mr Manthorpe noted that complaints about the Department of Human Services, while still representing the greatest number of complaints, fell during the reporting period. A similar trend was detected in respect of private health insurers and Australia Post.[22]

3.23      Mr Manthorpe flagged that in the 2019-20 reporting period, the Ombudsman would reform its examination of performance measures to evaluate its ability to build and maintain the confidence of the people who use it, the agencies overseen by it, and the Parliament.[23] The committee looks forward to examining this new approach in the course of its consideration of the 2019-20 annual report.

Performance reporting

3.24      The Commonwealth Ombudsman has one outcome:

Fair and accountable administrative action by Australian Government entities and prescribed private sector organisations, by investigating complaints, reviewing administrative action and statutory compliance inspects and reporting.[24]

3.25      The Ombudsman evaluates its performance by reference to 12 Key Performance Indicators (KPIs) under five objectives.[25] When read alongside the Corporate Plan 2018-19 and the PBS, the annual report appears to provide a 'clear read' in relation to its performance criteria.

3.26      The Ombudsman achieved eight out of 12 KPIs. The KPIs not achieved were as follows:

3.27      The committee acknowledges the Ombudsman's efforts to meet all KPI targets in coming reporting periods. The committee will continue to take an interest in the Ombudsman's efforts to do so, particularly under the new evaluation program foreshadowed by Mr Manthorpe in his review.

Financial performance

3.28      The Ombudsman recorded an operating surplus of $1.4 million, excluding depreciation, amortisation and write down of assets. This was an increase from the previous year's deficit of $0.147 million.[33] Expenses increased by $7 million to $43 million to accommodate for travel, property, contractors and additional staffing costs associated with new functions.[34] Revenue also increased from $23.7 million to $39.1 million. This was largely in the form of additional funding for new and existing programs.[35]


3.29      The committee commends the Ombudsman for a clear and user-friendly annual report, and considers it to be 'apparently satisfactory'.

Senator Amanda Stoker

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