Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, may I congratulate you on your unanimous election to this high office. On behalf of the Joint Committee of Public Accounts and Audit, I present the committee's report entitled Report 449: Regional Development Australia Fund, military equipment disposal and tariff concessions, review of Auditor-General reports Nos. 1-23 (2014-2015), and I ask leave of the House to make a short statement in connection with the report.

Leave granted

This report details the findings of the committee's examination of three Australian National Audit Office reports. A key theme emerging from the committee's review of these reports was encouraging better practice—both in terms of grants administration and implementation of audit recommendations.

Grants administration is an important activity involving a significant amount of public funds each year. Transparency and accountability of grant funding decisions have been matters of longstanding parliamentary and public interest. The grants administration framework, through the Public Governance, Performance and Accountability Act 2013 and the Commonwealth Grants Rules and Guidelines, promotes accountable and cost-effective grants administration. Similarly, agency implementation of audit recommendations, which often reflect the Audit Office's experience of practices that other departments have found to be beneficial, is another area of longstanding committee interest.

Chapter 2 of the report discusses the committee's findings concerning audit report no. 9 on the design and conduct of the third and fourth rounds of the Regional Development Australia Fund, known as RDAF. The administration of this fund was suboptimal. The Audit Office found that there was not a clear trail through the assessment stages to demonstrate that the projects awarded funding were those with the greatest merit in terms of the published program guidelines. The Audit Office also noted that the then Department of Regional Australia, Local Government, Arts and Sport had not fully implemented recommendations from a previous audit of the first RDAF funding round, and that inadequate attention had been given to relevant aspects of the grants administration framework. A key message from the audit was that considerable work remains to be done to design and conduct regional grant programs in a way where funding is awarded to those applications demonstrating the greatest merit in terms of the published program guidelines.

The committee made four recommendations, including that the Audit Office consider: establishing a standing audit focus on regional grants administration; a follow-up audit of the effectiveness of grants administration by the Department of Infrastructure and Regional Development; a future audit of the department's implementation of audit recommendations; and incorporating a new section on 'Regional grants administration' in the next update of its better practice guide on grants administration.

Chapter 3 of the report discusses the committee's findings concerning audit report no. 19 on the management of the disposal of specialist military equipment. The Audit Office highlighted a number of issues, including: the disposal of decommissioned warships; the disposal of specialist military equipment in operational areas; financial delegations; conflicts of interest; and staff training and corporate knowledge.

Despite this, the committee was encouraged by the fact that it was the Department of Defence itself that requested this audit, having recognised problems existed regarding disposal of specialist military equipment. Defence provided an overview of the reforms the department had instituted to address the concerns raised in the audit report. The committee commends the audit recommendation that Defence rationalise the framework of rules and guidelines for this area. The committee also notes Defence's assurances that it is developing a more streamlined framework.

The committee made two recommendations: that the Audit Office consider a follow-up audit of progress in Defence reforms concerning the disposal of specialist military equipment; and that Defence develop comprehensive training and handover procedures for staff in the Australian Military Sales Office, the office that manages disposals.

The last chapter of the report deals with the committee's findings on the administration of the Tariff Concession System. The Tariff Concession System—or TCS—is a long-lived program designed to help industry become more internationally competitive while at the same time reducing costs by allowing duty-free entry for goods not produced locally. Although the existing administration of the TCS has been supported by mature arrangements established over time, areas of its administration could be improved, particularly in relation to compliance.

The committee found that the process of organisational change currently taking place at Customs—including its amalgamation with the Department of Immigration and Border Protection, and the creation of a single border control and enforcement entity, the Australian Border Force—provides opportunities for the agency to improve integrity assurance of the TCS assessment and decision-making process. Accordingly, the committee made two recommendations: that Customs report back to the committee on its continued progress implementing the ANAO recommendations; and that the ANAO consider undertaking a future cross-agency audit of the administration of the TCS following finalisation of the current organisational restructuring.

In conclusion, I thank committee members for their deliberation on these matters. I also thank departmental representatives who appeared at public hearings to assist the committee. I would like to also thank the committee secretariat for their work in the preparation of this report. I commend the report to the House.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to make some brief remarks regarding the Joint Committee of Public Accounts and Audit report entitled Regional Development Australia Fund, Military Equipment Disposal and Tariff Concessions: Review of Auditor-General Reports Nos 1-23 (2014-15).

Leave granted.

Mr Speaker, can I congratulate you on your election to your high office. I am sure you will do a wonderful job. I want to add some remarks on chapter 2, which is probably the most contentious part of the entire report, regarding the Regional Development Australia Fund. The ANAO audit and hearings rested on two agreed facts that are contained in the report: firstly, that the minister was subjected to conflicting and flawed advice from the department advisory panel and chose projects listed as suitable for funding and a small number of projects not recommended by the panel; secondly, that the incoming minister, the member for Mayo, when presented with the same advice from the department around value for money confirmed funding for the dozens and dozens of projects that were uncontracted in rounds 3 and 4. This was despite his clear right to cancel these grants, as he did for the publicly announced grants in RDAF round 5. These are the two central facts of this entire audit, and both of them confirmed that the previous minister's role in this program was exemplary.

The ANAO audit confirmed the following issues: there were flaws in departmental methodology, there was a problematic panels process and there were serious contradictions between the advisory panel and departmental assessments. Fully one-third of applications awarded the highest possible ranking against each selection criteria by the department were placed in the lowest merit category by the panel. Furthermore, the formal advice to the minister was flawed, poorly constructed and contained numerous mistakes. On this basis, the minister ultimately had no choice but to trust her own judgement about what projects were suitable for grants funding.

Mr Taylor interjecting—

Regarding the ultimate distribution of grant funding in this project, given the interjections from the member for Hume, across RDAF rounds 1 through 4, 46 per cent of funds went to the coalition held seats; 46 per cent of funds went to Labor held seats. In fact $4½ million of additional funding went to coalition seats compared to Labor seats. As a proud regional Labor member, I think this is a fair distribution of funds.

Furthermore, nearly half of the projects approved in the not recommended for funding panel category by the minister were in non-Labor seats. If we strip away all the political rhetoric, all the false bluster from those opposite, when Minister Briggs had the choice to cancel projects under RDAF rounds 3 and 4, he chose not to. He had that right. He exercised that right in RDAF round 5. In rounds 3 and 4, when presented with exactly the same facts that the previous minister had, he confirmed funding for those projects.

Furthermore, this audit and the hearings did reveal that the ANAO misunderstood or misapplied the AEC geographical classification of electorates. For example, the seat of Macarthur, which is classified as outer metropolitan, has the town of Appin, which is 30 kilometres from Wollongong and 75 kilometres from Sydney. Yet again, they drew conclusions about the classification of that seat. The seat of Franklin has towns 100 kilometres from Hobart and there are towns in the electorate of Canning 140 kilometres from Perth that are still regarded as outer metropolitan, which skews the analysis of the electoral distribution of grants in this scheme.

The committee hearings also explored where there was usual practice for projects that were not recommended that received funding, and projects that were recommended that did not receive funding. For the list of those projects to get into the public domain, the department confirmed that this was very unusual. The committee furthermore confirmed that the only people outside the department and the former minister who were given this information was the panel and the incoming minister, the member for Mayo. I draw no conclusions about how this information entered the public domain in newspaper reports but merely make the point about who had that information.

I was heartened by the ANAO's commitment to look at the Stronger Regions Fund, the current regional grants fund run by the current government. I agree with the recommendations from the committee's report around strengthening oversight of regional grants programs.

I thank the secretariat for their excellent work in this audit and hearings. I thank the ANAO and the departmental officials who appeared. I also thank the committee chair for the very mature way he ran the committee hearing in what was obviously a very politically contested audit. I commend the report to the House.