Linda Burney (Barton, Australian Labor Party) Share this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit I present the following reports: Report 505: Inquiry into Policy and Program Design and Implementation; and Report 506: Inquiry into Commonwealth Financial Statements 2022-23. Policy and program design and implementation is an area that requires continuous improvement. The delivery great policy model introduced in 2019 by government states that policy advice should be clear on intent, well-informed, practical to implement and influential. There is an expectation that government entities will adopt these practices but the inquiry found this is not always the case. The reports of the Auditor-General that were examined in this inquiry highlighted inadequate stakeholder engagement, a lack of effective performance measures and deficiencies in the advice to government among their findings. Ineffective decision-making and departure from best practice resulted in common issues being identified by the ANAO even though the audited programs were very different and included the export control legislative framework, telehealth expansion, family migration and the black economy task force.

The Delivering Great Policy model outlines the need for policymakers to be well informed and for active stakeholder consultation. Some of the audited agencies only did this at an executive level and thus excluded the views of some of the most impacted parties for consideration. On several occasions throughout this inquiry examples were provided to the committee of poor information management and lack of coordination between agencies and inadequate communication to stakeholders. Further issues included inadequate support resulting in ineffective implementation and the need for additional resources to correct this.

The committee also learned of instances where critical deficiencies in the advice to government created additional strain in the delivery of the relevant programs and policies. The telehealth services expansion by Department of Health and Aged Care during COVID-19 yielded some valuable lessons for providing such advice if a global pandemic were to rise again in the future. The committee found that deficient advice by the Department of Home Affairs regarding the Family Migration program and by the Treasury when implementing the Black Economy Taskforce negatively impacted public trust in the effectiveness and transparency of government.

Performance reporting and impact measurement are also fundamental components of effective policy and program design and implementation. They provide evidence based data that enable adjustments and improvements by policymakers that can ultimately determine whether the intended outcome has been achieved. A lack of importance placed on these activities was found, in three audit reports, to cause avoidable delays and inefficiencies. Crucial information to assist with decision-making and future planning was also, therefore, lacking.

I am pleased to note that the Commonwealth entities involved in this inquiry provided substantial responses to their audit findings and that they assisted the committee's investigation on the core practices that required future improvement. The committee has noted that there was still work to be done in relation to several of the programs resulting from the findings of the Auditor-General's report. We have made 11 recommendations to this report, which include requests for progress updates from Home Affairs on its stakeholder engagement and planning, from agriculture on it's transformation and action plan, from health on legislative changes to allow digital assignment of benefits for the MBS, from Treasury on strengthening its information management processes and from the Department of Education on its performance and stakeholder engagement plans.

The committee has also recommended that the Australian government prioritise legislation to align the Health Insurance Act with the modern technological requirements of telehealth and makes further reforms to make the partner and child family visa program truly demand driven. This inquiry has highlighted that Commonwealth entities must remain vigilant in ensuring that they continue to meet best practice requirements when designing and implementing policies and programs for the benefit of the Australian public.

I now move to Report 506. The second of the reports I am presenting today concerns JCPAA's inquiry into the Commonwealth financial statements audit 2022-23. The annual auditing of the financial accounting and reporting by Commonwealth entities by the ANAO provides assurance to the parliament on the financial position of the Australian government and the expenditure of taxpayers' money. The financial statements audit of 243 separate entities in 2022-23 also provided a crucial assessment of the risk, governance arrangements and internal control frameworks that exist across the Commonwealth.

Most of the significant and moderate findings in these audits were in the categories of governance of legal and other matters impacting entity financial statements; IT governance including security, change management and user access; and accounting and control of non-financial assets. The ANAO report also noted that there were increased weaknesses compared to last year in change management policies and control of IT systems and in the process used by entities for accounting for computer software.

There were a number of areas of concern for the committee that arose during the inquiry. One was the 14 legislative breaches identified by the audits, three of which were significant and involved two instances of payments and one where no legally required system of risk oversight was in place. Seven of the non-significant legislative breaches involved incorrect executive remuneration and noncompliance with the Remuneration Tribunal. The committee agrees with the acting Auditor-General, in relation to this issue, that executive remuneration issues have important implications both for the prevailing culture of an agency and for public expectations regarding pay and entitlements of public servants.

The first two recommendations of this report require the three entities with the significant legislative breaches to update the committee on their progress in addressing them. The committee has also recommended that the Department of Finance amend its guidelines to require immediate notification of any remuneration breaches and subsequent engagements with the entity in question to discuss remediation steps.

Problems with the timeliness of financial statements preparation by some entities were also of concern to the committee during the inquiry. While there was an increase over the previous year in these statements being finalised and the Auditor's report being issued within three months of the financial year end, the number of entities tabling their annual report in time to be scrutinised at subsequent Senate estimates hearings declined over the previous year. The committee's view is that the parliament must have this information in time to readily and properly scrutinise the expenditure of taxpayers' funds. A third recommendation from this inquiry was that entities that have failed to table their annual reports on time for three consecutive years must provide an explanation to the committee.

The committee was also interested in the role that internal auditors play in assisting Commonwealth entities with the timeliness and robustness of their financial reporting. An internal audit function is currently not mandatory, and the committee concurs with the view of the ANAO that this is puzzling, given the well-established benefits for risk management, fraud control and legislative compliance. It was concerning to us, therefore, that approximately 20 per cent of entities have reduced their internal audit budgets over the past years. The committee notes and appreciates that the Department of Finance has commenced a consultation process to update and enhance its guidance of internal auditing. The fourth recommendation of the committee in this report is that a mandatory framework with detailed guidelines for internal auditing be developed as part of this process.

As in previous years, problems with the IT governance were prominent among the significant and moderate findings by the ANAO in the 2022-23 financial audits. Unauthorised user access to IT systems across the Commonwealth has continued to be an issue over many years, and the fifth recommendation of the committee in this inquiry— (Time expired)

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