Introduction
On 14 May 1998 the Senate referred to the committee for examination and
report the following documents in relation to the parliamentary departments,
the Prime Minister's portfolio and the Finance and Administration portfolio:
- Particulars of proposed expenditure in relation to the parliamentary
departments in respect of the year ending on 30 June 1999;
- Particulars of proposed expenditure for the service of the year ending
on 30 June 1999; and,
- Particulars of certain proposed expenditure in respect of the year
ending on 30 June 1999.
The committee received evidence from the President of the Senate, Senator
Margaret Reid; Senator Robert Hill, representing the Prime Minister; Senator
John Herron, the Minister for Aboriginal and Torres Strait Islander Affairs;
and Senators Rod Kemp and Nick Minchin, representing the Minister for
Finance and Administration, together with officers of the departments
and agencies concerned.
The committee held public hearings on 2, 3 and 4 June 1998. A copy of
the Hansard transcripts of evidence are tabled, for the information
of the Senate. Further written explanations furnished by departments and
agencies will be tabled, when received, in volumes entitled Additional
Information.
Matters concerning the parliamentary departments
Department of the Senate
Amongst other issues, the committee notes with concern the current impasse
over the funding for, and continuation of, the Parliamentary Paper series
and hopes that the matter will be speedily resolved in an equitable manner.
Matters concerning the Prime Minister and Cabinet portfolio
The Olympic Commemorative Medal
The committee was surprised to discover mention in the PBS of the transfer
of $403,000 to the Office of the Governor-General from the Prime Minister's
Department `for the manufacture of national awards to commemorate sport
in the context of the Sydney 2000 Olympics'. The number and costings of
the proposed medals, their purpose and means of assessment of recipients
was explored.
The Federation Fund
The committee continued its examination of the selection of projects
to receive support from the Federation Fund. It learnt that the department
provides `summary advice' to Cabinet on projects seeking funds and hence
is confidential. The committee was advised that the Federation Fund Task
Force was involved in the discussions which led to the policy decision
to fund the federation grants program and the federation cultural and
heritage program, which are now administered by the Department of Communications
and the Arts and the Department of the Environment. The committee questioned
the apparently tight time frames within which applications are to be made
for projects; it also clarified questions relating to the reimbursement
for local members of parliament from the $200,000 allocation to each electorate
for the costs associated with the management of the community projects
program.
The position of the Strategic Investment Co-ordinator
The committee was advised via correspondence dated 1 June 1998 from Mr
Joe d'Angelo, Senior Finance Adviser of the Prime Minister's Department,
of the existence within the Prime Minister's portfolio of the Office of
the Stategic Investment Co-ordinator. Mr d'Angelo explained that that
office was not included within the portfolio's PBS on the grounds that
it received its funding not from the department but from the Department
of Industry, Science and Tourism and that Mr Bob Mansfield, the Strategic
Investment Co-ordinator, had been appointed by the Governor-General under
section 67 of the Constitution and hence reported directly to the Prime
Minister. The committee explored the reasons for the appointment, and
its cost. It was informed that Mr Mansfield had previously been a consultant
dealing with investment facilitation but his present, enlarged and changed
role was to examine, on a case-by-case basis, the possible need for investment
incentives. Dr Watt, Executive Co-ordinator for the department, explained
that the funding arrangements were not unusual:
there is much more tendency within the Department of the Prime Minister
and Cabinet, and indeed from the bureaucracy generally, to draw more
flexibly on resources and use them differently. For example, I am sure
you are aware that the Forest Task Force, which resides within the Department
of the Prime Minister and Cabinet, receives contributions for its funding
not just from the Department of the Prime Minister and Cabinet but also
from the environment and primary industries portfolios. [1]
Establishment of the Office of Indigenous Policy
The committee examined the $2 million transfer from the ATSIC budget
and the creation of approximately 20 positions in an Office of Indigenous
Policy (OIP), to become operational from 1 July 1998. Minister Herron
explained that, following a review by Mr Ray Taylor of the provision of
policy advice to the Minister for Aboriginal and Torres Strait IslanderAffairs,
he had elected to follow Mr Taylor's fifth alternative to the perceived
problems of ATSIC serving two masters (the indigenous community and government),
namely the establishment of a support agency, the OIP. The OIP will subsume
the Office of Indigenous Affairs which currently comprises the Wik Taskforce,
the Aboriginal Reconciliation Branch and a policy unit. Its head will
be another section 67 appointment, funded at a level determined by the
Remuneration Tribunal.
Outsourcing of corporate functions
Following recommendations of the $97,000 Ernst and Young review, a number
of departmental functions were selected for market testing, including
corporate services. The committee learnt that a selective tendering process
was currently underway. Given the References Committee's ongoing interest
in outsourcing, this development will be followed with particular interest.
Matters concerning the Finance and Administration portfolio
Government Members' Secretariat
The committee noted the transfer of responsibility for the Government
Members' Secretariat from the Department of Finance and Administration
(DoFA) to the Chief Whip's Office. This opened the possibility that the
Secretariat would be removed from estimates scrutiny on comity grounds.
The committee was assured, however, that financial accountability for
the Secretariat would remain with the Finance portfolio.
Competitive tendering and contracting
Mr Stephen Bartos of the Resource Management Framework program indicated
that as a result of the implementation of the Commonwealth' purchasing
review, staff numbers in the department's Competitive Tendering and Contracting
(CTC) Group are being reduced from 217 to around 60. He assured the committee
that the CTC group's role was advisory only and that it did not vet contracts
engaged in by other agencies before they were let. Under the Financial
Management and Accountability Act, the efficient, effective and ethical
management of each agency rests with the agency chief executive. While
such devolution has its merits, it raises the question for the committee
as to just what across-the-service monitoring on such vital issues will
be performed, and by whom. If it falls to the Australian National Audit
Office, the resource implications for that agency will need to be considered.
The CTC group has, however, established a purchasing advisory and complaints
service which has received in the order of 200 calls per week from suppliers,
the public and government agencies since its establishment in February.
The information is received in confidence.
DoFA outlined the departmental areas in which competitive tendering and
contracting was underway, including the provision of actuarial services
and facilities management of AusInfo bookshops. Market testing of office
services, facilities and accommodation management and security is taking
place, while the internal audit function and IT have already been outsourced.
Mr Early indicated that the projected savings with the IBM-GSA IT contract
were considerable, a projection the committee will follow with interest.
The savings are expected through volume discounts, though the committee
notes that staffing may be involved, with only 16 of the department's
IT staff having transferred to IBM-GSA.
Asset sales
Committee members and other senators took particular interest in the
administrative costs of the various asset sales underway and in the appointment
of, and fees paid to, consultants and legal advisers. It was established
that there could not be a ballpark figure in percentage terms for the
costs of a sale, because of the wide variance in sales. Those involving
a very large public share offer were relatively inexpensive to sell, whereas
complicated sales or those involving very small assets could be expensive.
In the case of AIDC, almost half of the $6.6 million cost to date on a
sale of $155 million was in legal expenses because of the complexity of
the business transactions AIDC had entered into and hence the need to
undertake vendor due diligence.
Senators questioned the post-sale review of the one-third Telstra sale
and the progress of the ANAO audit currently underway, as well as planning
for `Telstra 2'.
Information technology outsourcing
The Chief Executive of OASITO, Mr Mike Hutchinson, informed the committee
that the current status of the clustering of agencies and the timetable
of the issuing of RFTs was not available for disclosure to the committee,
as `the Commonwealth's commercial advantage in approaching the market
has lain in maintaining a degree of confidentiality for the future program'.
[2] It was speculated that this apparent change
of policy was a result of a reputed lack of competitive interest in the
DEETYA/Employment National IT outsourcing. Mr Hutchinson stated that there
was industry concern generally about the timing and phasing of tenders
and industry capacity to address tenders concurrently and that these matters
were being addressed.
General issues
Responses to questions taken on notice
Once again the committee expresses its concern about the time taken by
departments and agencies to respond to questions taken on notice in the
course of estimates hearings. It is discourteous in the extreme for portfolios
to provide bundles of documents, including careless responses labelled
`draft', from the previous estimates held some three months before, at
5.15pm of the day preceding the next examination of the portfolio's estimates.
Such a course of action makes it impossible for senators to give meaningful
consideration to the responses and to frame further questions. The committee
is not in the habit of setting unreasonably short lead times for responses
to be provided. It accepts that some questions require a considerable
amount of work to respond to. It further accepts that some questions may
not be answered. But it does not believe that an entire portfolio's responses
should be batched and only provided to the committee when complete and
at the penultimate moment. The committee would prefer to receive on a
weekly basis such responses as have been prepared, along with a covering
letter explaining which further responses might take additional time to
prepare or which questions could not or would not be responded to.
In this regard, the committee notes the willing and unequivocal shouldering
of the blame for the response delays of the Finance and Administration
portfolio by that department's deputy secretary, Mr Len Early. It also
notes Senator Hill's clear advocacy of the position that `if you are not
going to get an answer, you ought to be told that you are not going to
get an answer'. [3]
Format of the Portfolio Budget Statements (PBS)
The committee notes that it has seen the last of the PBS in their current
format. In view of the considerable changes to the portfolio budget documentation
which are currently underway and which will be examined by this committee
in the context of its ongoing review of that documentation, the committee
did not examine in particular detail the PBS tabled in this estimates
round. It observes, however, that they continue to have certain deficiencies
in the eyes of some senators. Major disparities in running costs go unexplained.
Errors in the documentation are not unusual. Expenditure which can go
to the heart of the administrative efficiency of an agency, such as spending
on legal costs or consultancies, is normally only clarified through questioning
at estimates hearings.
Corrigenda
On this occasion, the committee notes that two agencies – the Department
of the Senate and ATSIC - provided corrigenda to their PBS. It further
notes that other errors of a minor nature were detected. In view of the
short time frame in which these documents have to be finalised, errors
are probably unavoidable. The committee commends those agencies which
recognise the need to set the record straight.
Role of Finance representatives
A Finance representative observing the estimates of the parliamentary
departments was called on to give evidence on the notional savings on
information technology in the forward estimates of the Department of the
Parliamentary Reporting Staff. In the event, the committee desisted with
the line of questioning. The committee considers that in the context of
its consideration of the format of the PBS under accrual budgeting, the
role of the Finance representatives might well be clarified.
Bouquets
The committee would not want it thought that the estimates process is
a purely censorious one. On this occasion members of the committee were
able to congratulate three agencies for excellence: the Department of
the Parliamentary Reporting Staff's Sound and Vision Office for its expeditious
handling of requests for replays; the Department of the Parliamentary
Library for its turn-around time on company searches; and OGIA for the
precision of its responses to questions on notice.
Audit reports
Again the committee had cause to use make use of reports from the Australian
National Audit Office in its examination of the estimates of various agencies.
Audit Report no.38 of 1998-99 into the sale of three airports was particularly
useful during the consideration of the work of the Office of Asset Sales
and Information Technology Outsourcing.
Questions on notice and supplementary hearings
The committee has set 17 July 1998 as the date by which responses to
questions on notice should be received. If supplementary hearings are
required the dates of 3 and 4 August 1998 have been set.
Senator The Hon Brian Gibson
Chairman
MINORITY REPORT FROM SENATORS RAY AND SHERRY
Evidence given as to government staffing numbers shows that government
staffing numbers have increased by 34.5 since they were originally set
by the Coalition Government.
This exposes the Government's initial claim of frugality in this area
for what it is - a classic double standard.
The Government has made up its staffing shortfall by extensive and record
use of Departmental Liaison Officers and hidden Consultants.
Ministers at the table at Estimates Committees in the last two years
have tended to give dissembling and evasive answers on the question of
Government staffing.
The Government Members Secretariat is rapidly becoming an adjunct to
Robert Menzies House. It is now there for the purpose of assisting in
Liberal and National Party campaigns, at a massive cost to the taxpayer.
The transfer of the Government Members Secretariat from the Department
of Finance and Administration to the Office of the Chief Whip will make
scrutiny much more difficult in future.
Of more concern, however, is the secretive establishment within Government
of a media-monitoring unit.
There is nothing intrinsically wrong with media-monitoring. Given the
hypocritical stance taken by the Coalition prior to the last election,
it is little wonder that they have set up this operation in secret.
It is the Prime Minister's responsibility to allocate staff to specific
Ministers, and he must bear the responsibility for the deception involved.
There are now at least 12 staff members involved in media-monitoring,
with the cost of transcripts being born by the home departments.
Documents made available to Opposition Senators make it clear that these
12 operatives report directly to the Prime Minister's office.
What is required is a separate line item for this operation and a willingness
by Government to acknowledge it, rather than obfuscate.
Senator the Hon. Robert Ray Senator the Hon. Nick Sherry
Senator for Victoria Senator for Tasmania
Footnotes
[1] Evidence, p. 25.
[2] Evidence, p. 285.
[3] Evidence, p. 20.
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