Budget Estimates 2008–09
On 13 May 2008, the Senate referred to the Finance and Public
Administration Committee (the committee) for examination and report the
- Particulars of proposed expenditure in respect of the
year ending on 30 June 2009;
- Particulars of certain proposed expenditure in respect of the
year ending on 30 June 2009;
- Particulars of proposed expenditure in relation to parliamentary
departments in respect of the year ending on 30 June 2009;
- Particulars of proposed supplementary expenditure in respect of
the year ending on 30 June 2008; and
- Particulars of certain proposed supplementary expenditure in
respect of the year ending on 30 June 2008.
The committee has responsibility for examining the expenditure and
outcomes of the:
- Parliamentary departments;
- Prime Minister and Cabinet portfolio;
- Finance and Deregulation portfolio; and
- Human Services portfolio.
Appendix 1 lists the departments and agencies under the
portfolios mentioned above.
Restructure of portfolios
The committee notes that two portfolios under its purview have undergone
structural reorganisation since the committee last reported on estimates.
Prime Minister and Cabinet
Following an amendment made to the 25 January 2008 Administrative Arrangements Order (AAO) on 1 May 2008, the Government announced two major
additions to the responsibilities of the PM&C portfolio. These are:
- transfer of the National Archives of Australia from the Finance
and Deregulation portfolio (Finance);
- the announcement of plans to establish Old Parliament House (OPH)
as an executive agency under the Public Service Act 1999. This is
planned to come into effect from 1 July 2008, whereby the OPH will be
transferred to the PM&C portfolio from the Environment, Water, Heritage and
the Arts portfolio.
There have been four additions to PM&C department output group
structure since the Additional Estimates 2007–08. These are reflected in Table
Table 1.1: Changes to the PM&C
Revised Wording /
Output Group 4
Support Services for Government Operations
In his opening statement, Senator Faulkner elaborated on the changes to
the ministerial reporting arrangements within the PM&C portfolio,
...the Prime Minister has asked that the Auditor-General and the
Inspector-General of Intelligence and Security work directly to me... The changed
arrangements will bring together, under the same reporting arrangements, a
range of statutory officeholders whose responsibilities encompass advice and
reporting on ethical administration, including the Commonwealth Ombudsman, the
Australian Public Service Commissioner, the Merit Protection Commissioner and
the Privacy Commissioner. Just for the information of the committee, I retain
responsibility for cabinet business and processes, the Cabinet Implementation
Unit, community cabinet, honours and awards, the National Australia Day Council
as well as matters relating to integrity and government...
Finance and Deregulation
As mentioned above, the amendments to the 25 January 2008 Administrative Arrangements Order made on 1 May 2008 resulted in National Archives of Australia
being transferred to the PM&C portfolio. However, the outcome structure of
the department remains unchanged.
During the hearings, the commitments made by the Labor Party under Operation
Sunlight were discussed, particularly the vetting of outcomes and outputs.
It was explained that Finance will re-evaluate all Commonwealth agency outcomes
against set criteria, which will then be approved by the minister.
It is thought that this review will be conducted by the end of 2008, in time
for the new outcomes to be used in the 2009–10 Budget.
Since the Additional Estimates 2007–08, the Future Fund Management
Agency's (Future Fund) outcome structure has broadened in scope to now include
managing investments of other Australian Government Asset Funds.
The Agency now manages the investments of the Higher Education Endowment Fund
(HEEF) and as such, the outcome structure has been revised to reflect this. The
management and investment strategy of HEEF will continue until its closure,
whereby its funds will be subsumed into the Education Investment Fund (EIF).
The FFMA has also been given the responsibility of managing two additional
funds as announced in the 2008–09 Budget. The management of both the
Building Australia Fund and the Health and Hospital Funds are to be undertaken
by the Future Fund.
As a reflection of the changes to the outcome statement, the Future Fund
has now published two outputs to accompany their outcome statement. The issue
of a lack of outputs was initially highlighted in the committee's report on Annual
reports (No. 2 of 2007).
Due to the addition of new investment funds for the Future Fund to manage, the
committee expects the output structure to be modified further, once the
managerial arrangements for the new funds are finalised. The changes to the Future
Fund's outcome and outputs structure are displayed in Table 1.2 below.
Table 1.2: Changes to the Future Fund's outcome/output structure
Revised Wording /
Enhanced capacity for
the Australian Government to offset unfunded superannuation liabilities
Managing and growing
publicly funded investments to meet future financial needs and contribute to
the prosperity of future generations of Australians.
Management of the
Management of the Higher Education Endowment Fund
There have been minor changes to the outcome and output structure of the
Australian Electoral Commission, with some slight reshuffling of output groups
occurring since Additional Estimates 2007–08. The addition of output
3.1.3– Communication strategies and services, serves to further
target participation in electoral events.
The committee held public hearings on Monday 26, through to Thursday, 29 May 2008. Copies of the committee's transcripts of evidence are tabled
in four volumes of Hansard. Copies of Hansard are available on
the internet at the following address: www.aph.gov.au/hansard.
In accordance with Standing Order 26, the committee is required to set a
date for the lodgement of written answers and additional information. The
committee resolved that written answers and additional information be submitted
by Friday, 11 July 2008.
Further written explanations furnished by departments and agencies will
be tabled, as received, in the Senate. That information is also available on the
committee's internet page: www.aph.gov.au/Senate/committee/fapa_ctte/estimates/index.htm. As
a matter of Parliamentary Privilege, all information is 'tabled' on receipt.
The committee notes its appreciation that the vast majority of agencies that
submitted their responses to Questions on Notice from Additional Estimates
2007–08 (February 2008), by the specified deadline of 4 April 2008.
Over the course of the four days' hearings—totalling over 41 hours—the committee took evidence from: the President
of the Senate, Senator the Hon Alan Ferguson; Cabinet
Secretary and Special Minister of State, Senator the Hon John Faulkner, representing
the Prime Minister; Minister for
Superannuation and Corporate Law, Senator the Hon Nick Sherry, representing the
Finance Minister; Minister for Human Services, Senator the Hon Joe Ludwig; and Minister
for Climate Change and Water, Senator the Hon Penny Wong, together with
officers of the departments and agencies concerned.
The committee also notes that it has become difficult for Senators to analyse
whole-of-government Budget measures, and cross portfolio matters, within
certain committees. Notably this includes issues surrounding Indigenous policy
which covers agencies which appear before separate committees including
Centrelink and the Department of Families, Housing, Community Services and
The following agencies were released from the hearings without
examination: the Office of National Assessments; the Office of the
Inspector-General of Intelligence and Security; the Australian Institute of
Family Studies, the National Archives of Australia, Health Services Australia
and the Office of the Renewable Energy Regulator.
The committee wishes to acknowledge its appreciation of Senators John
Watson and Andrew Murray for their long standing service and contributions to
the committee. Both Senators will retire from the Senate on 30 June 2008. Senator Murray has served on the committee for the 12 years, since his election to the
Senate in 1996, whilst Senator Watson served the committee for 18 years, and
has served the Senate since 1978. Both Senators have shown a strong commitment
to the value of excellence in public administration matters, and their
knowledge and experience in this and other areas will surely be missed.
The sections of the report that follow list various issues considered by
the committee and discuss some of these in detail. The order is not based on
hierarchy but rather the order in which those issues arose during the hearings.
Three general issues that apply to all agencies under the oversight of
the committee are: the application of an 'efficiency dividend' across the public
sector; changes to the presentation of the 2008–09 Portfolio Budget Statements
(PB Statements) and Budget Papers; and the transparency of funding
allocated by the government in the appropriation bills. These issues are
Following on from the committee's previous examination of the
government's broad application of an additional annual two per cent efficiency
(2007–08 to 2010–11), the committee heard evidence from agencies about its
effect on their operations, and on the recruitment of staff across the public
sector more broadly.
The government has identified a total saving in dollars from the
efficiency dividend of $1.8 billion over five years.
Evidence presented to the committee suggests that some agencies will have to diminish
the range of their activities due to a reduction in the allocation of financial
resources. For example the Australian National Audit Office informed the
We have been able to make some efficiencies, but the reality is
that we will be reducing our performance audit program to some extent to cope
with the reduction in our budget. The consequences are, of course, that we will
produce fewer reports in the years ahead.
Similarly, officials from the Department of Human Services (DHS) informed
the committee that a major effect of the efficiency dividend will be the
reduction in the number of staff.
Senator Coonan questioned DHS officials about how the efficiency dividend will
affect staffing numbers. In response, an official from DHS stated that the
agency has already adapted accordingly:
In moving forward we have developed a new structure for the
department, taking into account the government's priorities...As I said, there
were 15 positions that we cannot afford to fill...I spoke with each of these
people and at that time we also provided them with a letter saying that they
could be potentially excess.
Senator Brandis also questioned officials from Finance about the impact
of the efficiency dividend on their operations. Whilst Finance has undertaken
to provide a compressive answer to the question of which programs have been affected
on notice, an official stated:
In relation to IT services, for instance, we have reduced a
number of positions. We have dropped contractors in our architecture team. This
has had the effect reducing the pace at which we can change our IT environment,
but we are able to maintain it in a position that allows the department to
continue to function.
In line with the continuing pattern and use by governments of efficiency
dividends the committee reiterates its recommendation that: the Department of
Finance and Deregulation report to the government and the Parliament on the
long term effect of efficiency dividends on the outcomes and services provided
by different types of government agencies. This report should be completed by
the last Parliamentary sitting fortnight of 2008.
Changes to the Portfolio Budget Statements
The Minister for Finance and Deregulation, the Hon Lindsay Tanner MP (the
Minister) has sought to change the format and content of the PB Statements in
line with the government's Operation Sunlight policy. These changes were
put into effect for the 2008–09 Budget (May 2008). The following analysis
provides an overview of the main changes. Further discussion on the changes to
the PB Statements is included in Chapter 4 of this report.
During the committee's hearings several Senators questioned officials
about the new format of the PB Statements. In regards to the inclusion of
information in Budget Paper No. 4, Senator Murray stated that he felt there was
more transparency in the information provided.
An official replied that it will be only after the conclusion of the
2008–09 Budget Estimates hearings that a proper analysis of the effect of the
changes will be able to be made.
The committee agrees that this will most likely also be the case for a realistic
assessment of the PB Statements.
According to the 2008–09 Portfolio Budget Statements Constructor's Kit
the 2008–09 PB Statements differ significantly from the 2007–08 PB
Statements in an effort to increase the transparency and accountability of
Some of the changes include:
- An 'Agency Resources Statement' designed to consolidate all of
the resources available to an agency over the Budget year into one table;
Formatting that is intended to closely align PB Statements with
agency Annual Reports. Specifically, the formatting of Section Two: Outcomes
and Planned Performance, to enhance the 'clear read' principle between PB
Statements and Annual Reports; and
- A move away from agencies including information about processes
and activities towards information about results and impacts.
The previous PB Statements contained 5 sections. The 2008–09 PB Statements
now contain 3 sections:
- the Strategic Direction Statement;
- the Agency Resource Statement; and
- Budget Measures.
The Portfolio diagram should now include a link between junior Ministers
and the agencies and bodies over which they have responsibility. Finance states
that this will improve the transparency of Ministerial control and
The Portfolio Resources diagram (showing the total financial resources
available for a portfolio) is now broken down by agency.
Strategic Direction Statement
This statement replaces the 'Agency Overview' section used in the
2007–08 PB Statements. The focus of the previously used 'Agency descriptions'
will move from overview descriptions of processes and activities to a statement
that explains an agency's major ongoing and new functions, and challenges in
the year ahead.
Agency Resource Statement
This is a single resource statement that will consolidate the four
tables previously used to outline available funding to provide a complete
picture of the resources available to the agency over the Budget year (the
previous tables used in the 2007–08 PB Statements were: Appropriations and
Other Resources; Other Resources Available to be Used; Special Appropriations;
and Movements in Special Accounts).
The Agency Resource Statement provides carry-forward amounts and the
balances of Special Accounts to increase the transparency of agency resources
and to fully demonstrate all available resources.
The Budget Measures section is designed to highlight new government
decisions made in the Budget. It includes measure titles, the budget and three
forward year estimates. Agencies are required to indicate by footnote when
measures link to other agencies to allow packages of measures to be easily
identified and located in Budget Paper No. 2 and across different PB
Outcomes and Planned Performance
The Outcomes and Planned Performance section of the PB Statement
provides the link between government resources and government performance.
Agencies are now required to state performance information indicators and set
mandatory measurable targets which are intended to provide the reader with the
information required to judge the agency's performance in contributing towards
Outcomes and Planned Performance
The Outcome Strategy replaces the 'Summary of Contributions to Outcomes'
diagram used in the previous 2007–08 PB Statements, with a shorter statement
focused on the key strategies to be undertaken in contributing towards the
outcomes. It is intended to provide a bridge between the organisational management
structures and strategies with the outcomes set by government. It is intended
that the 'clear read' principle between the PB Statements and the Annual Report
will be more visible with the strategies outlined at Budget and the results
reported in the Annual Report.
Outcome Resource Statement
The Outcome Resource Statement is designed to provide further detail to
the Agency Resource Statement. It should provide the connection between
resources available and the agencies planned results and performance. This
information will be grouped according to Output Groups rather than the source
of funding received.
Output Groups and Performance
The major change in this section is the emphasis on performance
reporting that is more 'inclusive and results focussed'.
Finance states that Output groups are to be more inclusive than previously used
or specified in guidance, encompassing departmental outputs (agency goods and
services, including policy advice and the facilitation and delivery of
administered items) and administered items or programs (both through Annual
Appropriation and Special Appropriation).
Explanatory Tables and Budgeted
The Explanatory Tables and the Budget Financial Statements provide
technical financial information of the agency's operations over the Budget and
three forward years.
An agency's Financial Statements provides the technical and more
detailed financial movements for the year ahead. Four tables will now only be
required in certain circumstances, where an agency has a substantial balance
The tables are:
- the Departmental capital budget statement;
- the Departmental property, plant, equipment and
intangibles–summary of movement statement;
- the Schedule of administered capital budget statement; and
the Schedule of administered property, plant, equipment and
tangibles–summary of movement.
Improving the transparency of Portfolio Budget Statements
A key component of the Estimates process is the examination of PB Statements
and Portfolio Additional Estimates Statements (PAES). The relationship between
Appropriation Bills and PB Statements or PAES is an essential aspect of the
committee's examination of the expenditure and performance of departments and
The primary function of the PB Statements is to assist members of
parliament in the scrutiny of changes to proposed expenditure. This is clearly
outlined at the beginning of each PB Statement:
The purpose of the 2008–09 [PB Statements] is to inform Senators
and Members of Parliament of the proposed allocation of resources to Government
outcomes by agencies within the portfolio...A key role of the PB Statements is
to facilitate the understanding of proposed annual appropriations in
Appropriation Bills No. 1 and No. 2 2008–09.
The relationship between the PAES, the PB Statements and relevant Budget
Papers was discussed in detail in a previous report of the committee: Transparency
and accountability of Commonwealth public funding and expenditure.
In relation to the level of information provided in these budget documents,
the committee made the following recommendation:
The committee recommends that expenditure should be reported at
the levels of programs in the budget documents, including in the schedules to
the Appropriation Acts.
The committee notes the recent statement made by the Minister, and
welcomes that he intends to respond to the recommendation outlined above by the
second half of 2008.
As part of the Estimates process, the committee seeks to determine
whether funding for newly established programs has been correctly
allocated in Appropriation Bill No. 2 (bill no. 2), and not in Appropriation
Bill No. 1 (bill no. 1) which is for the ordinary annual services of government
as specified in the Compact of 1965.
Disclosure of appropriations in the PB Statements is an important component of
overall government transparency and disclosure to Parliament. For this reason, understanding
the PB Statements is central to the Estimates process.
Although anecdotal evidence suggests that that the government is, in
some instances, working towards improving the format and content of the PB
Statements, insufficient information still appears to have been provided,
making it unclear as to which appropriation bill funding for new programs is
In scrutinising the most recent PB Statements of the portfolios under
the committee's purview, there was little detail provided of appropriations in
bill no. 2 across all portfolio areas. In many instances, such information was
limited to equity injections. This may indicate that newly established programs
(not considered to be ordinary annual services of government) had been
inappropriately placed in bill no. 1.
Furthermore, the expenditure contained in the appropriation bills was
highly aggregated, posing further difficulties for the committee in
ascertaining whether funding had been correctly appropriated or not.
The committee has identified the following list of programs or projects
that may have been inappropriately placed in bill no. 1. Because of the lack of
information provided in PB Statements, the list below is somewhat uncertain and
Prime Minister and Cabinet
- Australia 2020 Summit ($2.6 million in
- Tackling climate change – emissions trading scheme – design
and implementation ($68.8 million over five years, $11.9 million in
2007–08, $15.5 million in 2008–09)
- Tackling climate change – climate change adaptation strategies
– Western Australia ($0.2 million in 2008–09)
- Tackling climate change – Garnaut climate change review
($2.3 million over two years, $1.6 million in 2007–08, $0.7 million in 2008–09)
Finance and Deregulation
- Deregulation – implementing government’s agenda ($4
million over four years, $1 million in 2008–09)
- Removal of differential treatment of same-sex couples
($34.5 million in 2008–09, divided between several agencies)
- Health and hospital reform – dental health – Teen Dental Plan ($490.7
million over five years, Medicare component $4 million in 2007–08, $8.1 million
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