Anthony Byrne (Holt, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

The Auditor-General Amendment Bill 2008 [2009] proposes minor amendments to the Auditor-General Act 1997.

The bill amends the Auditor-General Act to implement certain recommendations of the 2001 inquiry into the Auditor-General Act by the Joint Committee of Public Accounts and Audit. The JCPAA inquiry was intended to assess the act and determine if it was achieving its stated intentions. Overall, the committee found that the act provided an effective framework for the Australian National Audit Office to carry out its functions.

While these are the first substantive legislative amendments to the Auditor-General Act since the JCPAA issued its report in 2001, some of its recommendations have been implemented administratively by the Auditor-General. Amending the act will provide legislative certainty for these administrative actions. A number of the amendments also build on, or are additional to, the JCPAA’s recommendations as other areas of the Auditor-General Act which could be strengthened or require amendment have been identified in the time since the report.

The proposed amendments are minor. For example, they clarify and extend the distribution of performance audit reports, make provision for the inclusion of comments on proposed reports in final reports, and clarify the circumstances in which audit information made available to entities and other parties in the course of a performance audit may be disclosed. The bill will also update the penalty provisions in the Auditor-General Act to bring them in line with current criminal law policy.

When the Auditor-General conducts a performance audit of a Commonwealth agency, a copy of the final report is provided to interested persons prior to the tabling of the report in the parliament. This gives the recipients an opportunity to consider the report in advance of tabling so that they are able to respond to any questions that may arise. Although it is the Auditor-General’s practice to give the chief executive of an audited entity a copy of the final report prior to tabling, this is not an explicit requirement of the legislation. To address this deficiency in the act, the bill would provide that the Auditor-General must give a copy of the report to the chief executive of an agency or, if the audited entity is a Commonwealth authority or company, to an officer of the authority or to a director or senior manager of the company, as soon as practicable after the report is completed. The bill also provides that the Auditor-General may provide a copy of a report, or extracts from a report, to any person, including a minister, or any body who, in the Auditor-General’s opinion, has a special interest in the report.

With the increased outsourcing of government services in recent years, there are potentially many groups, such as contractors engaged to deliver government services, which may be involved in a performance audit. There is no provision in the act at present to require the Auditor-General to give draft reports to these people for comment. To address this, the bill would allow the Auditor-General to give a copy of a proposed report, or an extract from a proposed report, to any person who, in the Auditor-General’s opinion, has a special interest in the report. The recipient of the draft report would then have 28 days to provide written comments, which the Auditor-General is obliged to take into account in finalising the report. This process will help ensure that information in the report is correct. It also provides for natural justice by giving persons who may be criticised in a report an opportunity to comment on the findings set out in the proposed report. To preserve the integrity of the audit process, the recipients of such information would, of course, be subject to the confidentiality provisions in the act that apply generally to persons who are in possession of audit information.

In the interest of fairness and completeness, the bill also requires that the Auditor-General must include, in full, all written comments received on a proposed report under subsection 19(4) in the final audit report. This amendment provides a legislative basis for the Auditor-General’s current practice.

The bill also corrects a number of errors in the act that were identified by the JCPAA in its 2001 report, particularly in those provisions relating to the omission of information from reports on public interest grounds. These are explained in detail in the explanatory memorandum that accompanies the bill.

The amendments will have no financial impact. The changes to the Auditor-General Act proposed by this bill, while relatively minor, are an important step towards encouraging open communication and improving the fairness, effectiveness and integrity of the audit process.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

It is a pleasure to speak on the Auditor-General Amendment Bill 2008 [2009], particularly as I represent, in the House of Representatives, the shadow special minister of state, who resides in the Senate. The bill gives practical effect to recommendations by the 2001 Joint Committee of Public Accounts and Audit in its review of the Auditor-General Act. These recommendations were largely accepted by the coalition, and the extremely minor caveats of the government of the day are reflected in the current text of the bill. The proposed amendments are technical and in the view of the opposition are non-controversial. They will serve to clarify performance audit reports and broaden their distribution to interested parties.

The amendments will provide for the inclusion of comments on proposed reports in final reports and clarify the circumstances in which audit information made available to entities and other parties in the course of a performance audit may be disclosed. The bill will also update the penalty provisions in the Auditor-General Act to bring them in line with current criminal law policy. Subsection 15(2) of the Auditor-General’s Act currently requires the Auditor-General to table a copy of a performance audit report in each house of the parliament and give a copy to the responsible minister. While it is the Auditor-General’s practice to provide the chief executive of the audited agency with a copy of the report, this is not explicitly authorised by the act. The amendment to subsection 15(2) would provide explicit authority for the Auditor-General to give a copy of the report to the chief executive of the agency that is the subject of the report.

This amendment will ensure that the chief executive receives a copy of the report at the same time as the responsible minister, which is appropriate as the chief executive has direct responsibility for the operations of the audited agency. This will provide the opportunity for the chief executive to consider the content of the report and for briefing to be prepared for the responsible minister prior to tabling. The new subsection 36(2B) would make it an offence for persons who receive information under new section 23A to use or disclose that information except where those persons are also themselves performing an Auditor-General function—for example, staff of the Australian National Audit Office. The maximum penalty for this offence would be two years imprisonment.

This is consistent with other penalties for similar offences set out in section 36 of the Auditor-General Act. The extension of the confidentiality provision in this manner preserves the integrity of the audit process, particularly as information obtained by the Auditor-General in exercise of the Auditor-General’s broad information-gathering powers may be confidential and sensitive. This is particularly important where any information and findings are only of a preliminary nature and have not been presented to the parliament.

The opposition regards this bill as noncontroversial. The financial implications of the legislation are nil, and therefore the opposition can happily lend its support this bill, unlike the other bills that have been debated today.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I take the tongue-in-cheek remark from the previous speaker about the other bills presented today, but I am sure my learned colleague did not make that remark terribly seriously. He will have an opportunity to reassess that very shortly, I suspect.

Today I rise to speak on the Auditor-General Amendment Bill 2008 [2009], which will make minor amendments to the Auditor-General Act 1997 to implement and build on recommendations made in the report Inquiry into the Auditor-General Act by the Joint Committee of Public Accounts and Audit back in 2001.

While the amendments in this bill are minor, I think they are, nevertheless, an important step towards encouraging open communication and providing fairness, efficiency and integrity to the audit process. They will also provide legislative certainty for the Auditor-General’s practices in this regard. I understand that these amendments, as has been indicated, are noncontroversial, but there are a few matters in terms of this bill that I would like to highlight and which I think are worthwhile for the House to hear.

This is a response by this government to the report of the inquiry by the Joint Committee of Public Accounts and Audit, as I mentioned, back in 2001. The former government also made a response to that, largely agreeing to the recommendations, but this is the first time that those recommendations have actually been dealt with in the spirit of the Joint Committee of Public Accounts and Audit. The proposed amendments also include a number which are additional to the Joint Committee of Public Accounts and Audit report’s recommendations as, since that time, other areas of the act have been seen to need strengthening—those areas which have now been identified.

As we know, the Auditor-General, Mr Ian McPhee, is an officer independent of the parliament. Under the Auditor-General Act 1997 he is responsible for providing auditing services to the parliament and public sector entities. Mr McPhee, by the way, was appointed as Auditor-General back in March 2005. He is very much a career public servant it would seem. His previous position was as Deputy Secretary/General Manager, Financial Management Group, Department of Finance and Administration, where his responsibilities included managing and providing policy advice to the finance minister on: the budget and financial management framework; budget and financial reporting, and analysis for whole-of-government purposes; public sector superannuation; and the office of evaluation of audit. I put that in to indicate that we have, in Mr McPhee—the person responsible for administration under this act, as the Auditor-General—someone who has absolutely substantial credibility on all sides of this parliament. He is responsible not only for overseeing efficiency but also for ensuring that we strengthen the efficiency processes throughout the public sector and government-related sectors of the Commonwealth. Indeed, from 2003, Mr McPhee was Deputy Auditor-General at the Australian National Audit Office, where he was responsible to the Auditor-General for the delivery of the performance and assurance audit programs of that office.

Although it is the Auditor-General’s practice to give the chief executive of an audited entity a copy of the final report that is going to be tabled, this is not explicitly required under the act. This bill addresses that deficiency. It is done on the basis that this is not simply the Auditor-General being the final arbiter and referee, but that he is going to ensure that all the legal requirements of his position are observed and that, where possible, greater efficiency is extracted by the participation of those other entities which are being audited.

The bill will provide that the Auditor-General must give a copy of the report to the chief executive of an agency or, if the audited entity is a Commonwealth authority or company, to an officer of the authority or to a director or senior manager of the company, as soon as practicable after the report is completed. The bill also provides that the Auditor-General may provide a copy of a report, or extracts from a report, to any person—including the minister—or anybody who, in the Auditor-General’s opinion, has a special interest in the report.

One phenomenon of the recent decade or so has been the level of outsourcing within government services. As a consequence, the groups which may have an interest in the final draft reports are not simply confined to those responsible under the relevant public sector acts. With this increase in outsourcing and government services, there may be many groups—like contractors who are engaged to deliver government services, and consultancies—which may have been involved in performance audits. Yet there is currently no provision under the act for the Auditor-General to be required to give them copies of a report for comment. As I said earlier, this is not simply an exercise in being caught out by a referee but rather in looking to extract greater efficiencies throughout the public sector or those areas where audits are undertaken.

This bill will address this and will provide for the Auditor-General to give a copy of a proposed report, or an extract from a proposed report, to any person who, in the Auditor-General’s opinion, has a special interest in the report. The bill will also provide for the inclusion of written comments received on a proposed report to be included in the final report. Therefore, as these assessments are being made, as the preliminary findings are being canvassed, opinion and response from senior management of the various entities which are being audited can be delivered back to the Auditor-General for inclusion in the final report. Their responses will be evaluated but nevertheless included in the final draft report.

The bill will further extend the existing disclosure and confidentiality provisions, including to allow a person to disclose information if it is provided to the recipient to assist a person in conducting a performance audit and if the information was obtained or generated by a person in the course of performing the Auditor-General’s function. It will also prohibit the recipient from using or disclosing that information and, further, provide that an offence is not committed if the Auditor-General has consented to the use or disclosure of that information by the recipient. Further, the bill will clarify that the Auditor-General has no discretion not to omit information from a report where the Attorney-General has issued a certificate to the effect that the disclosure of certain information would be contrary to the public interest.

Finally, the bill will update the offence and penalty provisions in accordance with current criminal law policy. The changes to the Auditor-General Act proposed by this bill, while relatively minor, as I said earlier, are an important step towards encouraging open communication and providing fairness, effectiveness and integrity throughout the audit process, and they will provide the legislative certainty that is required for the Auditor-General’s practice. I commend the bill to the House.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I rise to support the Auditor-General Amendment Bill 2008 [2009]. I will be brief. It is really to get on the record that, from my point of view, to protect and enhance the integrity of the system that we live and work in, you need to have a good, functioning and, dare I say, independent Auditor-General, working in the best interests of public administration. I am therefore an unashamed Auditor-General junkie. I love a good Auditor-General. I do think the role is critical in the delivery of good, open, democratic systems. Therefore, I would certainly hope this is an enhancement of the role and the powers of an Auditor-General in Australia today rather than a butchering or a legislative process that is somehow dampening the important role that the Auditor-General plays.

A good Auditor-General should have the full resourcing of this place. It should have full legal protection. I note that there are some comments in reference to that in, for example, the parliamentary Bills Digest. I would hope that this place recognises the importance of full legal and parliamentary protection for a good, functioning Auditor-General. The point I have previously made—and I would hope this place recognises it—is that, as uncomfortable as it can be at times, particularly for executive governments, the independence of the Auditor-General and his or her role is of utmost importance. I would hope that is the genesis of this bill and, if so, it is warmly welcomed.

The other reason for quickly jumping on this bill is a suggestion that I would like to put forward, in particular, for the Joint Committee on Public Accounts and Audit and its working relationship with the Auditor-General. Coming from the public accounts committee in New South Wales, I think they just started to go into new but welcome territory in representation. Not only was it an exercise of Auditor’s-General reports in New South Wales being dealt with and dealt with by the various agencies at the time in regard to recommendations and responses; what I thought was a clever and welcome step forward was that 12 months later the recommendations relating to the agencies that were audited were revisited and an explanation was sought from those agencies if the recommendations had not been adopted 12 months after the delivery of a report into the public arena. So that was very much an exercise for the auditor to deal with.

The beauty of the public accounts committee and the working relationship with the Auditor in New South Wales was that it allowed that backup, that blunt instrument, to be there. If, in dealing with the Audit Office, various departments or agencies were being belligerent about why various recommendations had not been adopted, the black book of the public accounts committee could be pulled out and various agencies could be hauled in to explain themselves in a full, open forum in front of the committee. It is a worthwhile suggestion for the national parliament to pick up. We can pull so many reports off the shelf where recommendations emerge, but reports come and go and, dare I say, delegations come and go. At times there is a sense in this place that recommendations come and then go nowhere. If we can improve the process of revisiting reports after 12 months, or even longer, I think it would be a welcome addition and hopefully one for consideration by this place.

Anthony Byrne (Holt, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

in reply—I would like to thank the members that have made a contribution to this debate, particularly the members for Sturt, Werriwa and Lyne. I say to the member for Lyne that I have heard the Auditor-General being called many things, but you being an Auditor-General junkie is certainly one for the books. I am sure that will warm the cockles of the heart of the Auditor-General. I am sure he will read that contribution with some measure of approval. On a personal note, I have listened to a number of your contributions and I welcome your presence in this place. I have been very impressed with what I have heard. You are in fact adding value to this place. Thanks very much for your contributions.

Sharman Stone (Murray, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

You like to suck up to the Independents.

Anthony Byrne (Holt, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I am not sucking up to the Independents; I am basically saying what I think. The changes to the act proposed by the Auditor-General Amendment Bill 2008 [2009], whilst relatively minor, are an important step towards encouraging open communication and improving the fairness, the effectiveness and the integrity of the audit process. The bill will provide legislative authority for a number of administrative practices within the Australian National Audit Office which were introduced following the Joint Committee of Public Accounts and Audit report. It also includes amendments which are additional to the JCPAA report recommendations which improve the act and achieve alignment with the other legislation.

I just wanted to reiterate a couple of points. These are—and it is very important to say it—the first substantial amendments to the Auditor-General Act since the JCPAA issued its report in 2001. Some of the recommendations have been implemented administratively by the Auditor-General. Amending the act will provide legislative certainty for these administrative actions. A number of the amendments also build on or are additional to the JCPAA’s recommendations, as other areas of the Auditor-General’s Act which could be strengthened and require amendments have been identified in the time since the report.

As I have said, the proposed amendments appear to be minor. For example, they clarify and extend the distribution of the performance audit reports, they make provision for the inclusion of comments on proposed reports and final reports, and they clarify the circumstances in which audit information made available to entities and to other parties in the course of a performance audit may be disclosed.

The bill will also update the penalty provisions in the Auditor-General Act to bring them in line with the current criminal law policy. The member for Lyne was talking about greater openness, greater accountability and greater capacity for people to be able to respond to a report. An Auditor-General’s report is a pretty important thing, and there can be some pretty damning recommendations that arise out of the report. You can have a report that, let us face it, could in effect be damning of an entire agency, a person, a chief executive officer et cetera, and one of the refreshing things in this piece of legislation is that it has a provision where people have a right to have look at what the Auditor-General is putting forward and the right of reply—which, in my view, offers the balance, fairness, openness, accountability and transparency which are required.

In summing up, I think these amendments are characterised as minor changes but they are in keeping with greater accountability and a greater capacity for people to respond to what could be adversarial reports by the Auditor-General. In that vein and in that spirit, and with the consent of the members present, I commend this bill to the House.

Question agreed to.

Bill read a second time.