Yvette D'Ath (Petrie, Australian Labor Party) Share this | Hansard source

I present a supplementary explanatory memorandum and move government amendment (1):

(1)   Schedule 1, page 2 (line 1) to page 5 (line 12), omit the Schedule, substitute:

Schedule 1—Functions and powers of the Auditor-General

Auditor-General Act 1997

1 Subsection 5(1)

Insert:

assurance review means a review conducted in accordance with the standards set by the Auditor-General under section 24 for assurance reviews.

2 Subsection 5(1)

Insert:

Commonwealth partner has the meaning given by subsection 18B(2).

3 Subsection 5(1)

Insert:

priority assurance review has the meaning given by subsection 19A(5).

4 Subsection 5(1) (at the end of the definition of responsible Minister )

Add:

  ; (d)   in relation to an audit of a Commonwealth partner—the Minister responsible for achieving the Commonwealth purpose concerned.

5 Subsection 5(1) (definition of senior manager )

Repeal the definition, substitute:

senior manager:   (a)   in relation to a Commonwealth company or a subsidiary of a Commonwealth company—has the same meaning as in the Commonwealth Authorities and Companies Act 1997; and   (b)   in relation to a Commonwealth partner who is an individual—means the individual.

6 Subsection 5(1)

Insert:

wholly owned Commonwealth company has the same meaning as in the Commonwealth Authorities and Companies Act 1997.

7 At the end of subsection 15(2)

Add:

  ; and (d)   to the extent that the report relates to the operations of a Commonwealth partner—give a copy of the report to a director or senior manager of the Commonwealth partner.

8 Subsection 16(2)

Omit "the responsible Minister, the Finance Minister or".

9 Subsection 16(2)

Omit "The Finance Minister is to consult with the responsible Minister before making a request.".

10 Subsection 16(3)

Omit "a responsible Minister, the Finance Minister or".

11 At the end of subsection 16(4)

Add:

  ; and (d)   to the extent that the report relates to the operations of a Commonwealth partner—give a copy of the report to a director or senior manager of the Commonwealth partner.

12 Subsection 17(2)

Omit "the responsible Minister, the Finance Minister or".

13 Subsection 17(2)

Omit "The Finance Minister is to consult with the responsible Minister before making a request.".

14 Subsection 17(3)

Omit "a responsible Minister, the Finance Minister or".

15 At the end of subsection 17(4)

Add:

  ; and (d)   to the extent that the report relates to the operations of a Commonwealth partner—give a copy of the report to a director or senior manager of the Commonwealth partner.

16 Subsection 17(5)

Repeal the subsection.

17 Paragraph 18(2)(g)

After "operations of a person", insert "who is not a Commonwealth partner".

18 At the end of subsection 18(2)

Add:

  ; and (h)   to the extent that the report relates to the operations of a Commonwealth partner—give a copy of the report to a director or senior manager of the Commonwealth partner.

19 After section 18

Insert:

18A Audit of performance indicators (1)   The Auditor-General may at any time conduct an audit of:   (a)   the appropriateness of the performance indicators (however described) of:      (i)   an Agency; or      (ii)   a Commonwealth authority (other than a GBE), or of any of its subsidiaries; or      (iii)   a Commonwealth company (other than a GBE), or of any of its subsidiaries; and   (b)   reporting by the Agency, authority, company or subsidiary against those indicators.(2)   If the Joint Committee of Public Accounts and Audit requests it, the Auditor-General may conduct an audit of:   (a)   the appropriateness of the performance indicators (however described) of:      (i)   a Commonwealth authority that is a GBE, or of any of its subsidiaries; or      (ii)   a wholly owned Commonwealth company that is a GBE, or of any of its subsidiaries; and   (b)   reporting by the authority, company or subsidiary against those indicators.(3)   Nothing prevents the Auditor-General from asking the Joint Committee of Public Accounts and Audit to make a particular request under subsection (2).(4)   As soon as practicable after completing the report on an audit under this section, the Auditor-General must:   (a)   cause a copy of the report to be tabled in each House of the Parliament; and   (b)   give a copy of the report to the responsible Minister; and   (c)   give a copy of the report to:      (i)   the Chief Executive of the Agency; or      (ii)   an officer of the Commonwealth authority or the subsidiary of the Commonwealth authority; or      (iii)   a director or senior manager of the Commonwealth company or the subsidiary of the Commonwealth company.(5)   Subsection (4) does not apply if the report is, or is to be, included in the annual report of the Agency, Commonwealth authority or Commonwealth company.(6)   The Auditor-General may give a copy of, or an extract from, the report to any person (including a Minister) who, or any body that, in the Auditor-General's opinion, has a special interest in the report or the content of the extract.

18B Commonwealth partners (1)   The Auditor-General may conduct a performance audit of a Commonwealth partner:   (a)   if the partner is, is part of, or is controlled by, the Government of a State or Territory—at the request of the responsible Minister or the Joint Committee of Public Accounts and Audit; or   (b)   otherwise—at any time.(2)   A person or body is a Commonwealth partner if:   (a)   the Commonwealth provides money for a particular purpose (the Commonwealth purpose); and   (b)   the person or body receives some or all of the money, whether directly or indirectly, because the person or body:      (i)   agrees to use the money in achieving the Commonwealth purpose; or      (ii)   has entered into a contract that relates to the Commonwealth purpose; and   (c)   an audit of the person or body could not be conducted under another section of this Division.(3)   The audit may be conducted only to the extent that it assesses the operations of the Commonwealth partner in relation to achieving the Commonwealth purpose.(4)   The audit may be conducted as part of an audit under section 15, 16, 17 or 18.(5)   The report on the audit must include the reasons for conducting the audit.(6)   As soon as practicable after completing the report on the audit, the Auditor-General must:   (a)   cause a copy of the report to be tabled in each House of the Parliament; and   (b)   give a copy of the report to the responsible Minister; and   (c)   give a copy of the report to a director or senior manager of the Commonwealth partner.(7)   Subsection (6) does not apply if the report is, or is to be, included in the report on an audit under section 15, 16, 17 or 18.(8)   The Auditor-General may give a copy of, or an extract from, the report to any person (including a Minister) who, or any body that, in the Auditor-General's opinion, has a special interest in the report or the content of the extract.(9)   Nothing prevents the Auditor-General from asking the responsible Minister or the Joint Committee of Public Accounts and Audit to make a particular request for the purposes of paragraph (1)(a).

20 Subsections 19(1) and (2)

Repeal the subsections, substitute:(1)   After preparing a proposed report on an audit of an Agency under section 15, the Auditor-General must:   (a)   give a copy of the proposed report to the Chief Executive of the Agency; and   (b)   to the extent that the proposed report relates to the operations of a Commonwealth partner—give a director or senior manager of the Commonwealth partner:      (i)   a copy of the proposed report; or      (ii)   extracts of the parts of the proposed report that deal with the audit of the Commonwealth partner; or      (iii)   extracts of the proposed report that include the parts of the proposed report that deal with the audit of the Commonwealth partner.(2)   After preparing a proposed report on an audit of a body under section 16 or 17, the Auditor-General must:   (a)   give a copy of the proposed report to:      (i)   if the body is a Commonwealth authority or a subsidiary of a Commonwealth authority—an officer of the Commonwealth authority or the subsidiary of the Commonwealth authority; or      (ii)   if the body is a Commonwealth company or a subsidiary of a Commonwealth company—a director or senior manager of the Commonwealth company or the subsidiary of the Commonwealth company; and   (b)   to the extent that the proposed report relates to the operations of a Commonwealth partner—give a director or senior manager of the Commonwealth partner:      (i)   a copy of the proposed report; or      (ii)   extracts of the parts of the proposed report that deal with the audit of the Commonwealth partner; or      (iii)   extracts of the proposed report that include the parts of the proposed report that deal with the audit of the Commonwealth partner.(2A)   After preparing a proposed report under section 18A on an audit of the performance indicators of a body and the body's reporting against those indicators, the Auditor-General must give a copy of the proposed report to:   (a)   if the body is an Agency—the Chief Executive of the Agency; or   (b)   if the body is a Commonwealth authority or the subsidiary of a Commonwealth authority—an officer of the Commonwealth authority or the subsidiary of the Commonwealth authority; or   (c)   if the body is a Commonwealth company or a subsidiary of a Commonwealth company—a director or senior manager of the Commonwealth company or the subsidiary of the Commonwealth company.(2B)   After preparing a proposed report on an audit of a Commonwealth partner under section 18B, the Auditor-General must give a copy of the proposed report to a director or senior manager of the Commonwealth partner.(2C)   Subsection (2B) does not apply if:   (a)   the proposed report is included, or is to be included, in the proposed report on an audit under section 15, 16 or 17; or   (b)   the audit of the Commonwealth partner was conducted as part of an audit under section 18.

21 Subsection 19(3)

Omit "or 18", substitute ", 18, 18A or 18B".

22 Subsection 19(4)

Omit "within 28 days after receiving the proposed report, or the extract from the proposed report", substitute "as follows".

23 At the end of subsection 19(4)

Add:

  : (a)   in the case of a proposed report on an audit under section 18A (audit of performance indicators)—within 14 days after receiving the proposed report, or the extract from the proposed report;   (b)   otherwise—within 28 days after receiving the proposed report, or the extract from the proposed report.

24 After Division 2 of Part 4

Insert:

Division 2A—Assurance reviews

19A Assurance reviews (1)   The Auditor-General may at any time conduct an assurance review of:   (a)   an Agency; or   (b)   a Commonwealth authority (other than a GBE), or of any of its subsidiaries; or   (c)   a Commonwealth company (other than a GBE), or of any of its subsidiaries.(2)   If the Joint Committee of Public Accounts and Audit requests it, the Auditor-General may conduct an assurance review of:   (a)   a Commonwealth authority that is a GBE, or of any of its subsidiaries; or   (b)   a wholly owned Commonwealth company that is a GBE, or of any of its subsidiaries.(3)   Nothing prevents the Auditor-General from asking the Joint Committee of Public Accounts and Audit to make a particular request under subsection (2).(4)   The Auditor-General may determine arrangements for the conduct of an assurance review, including arrangements for reporting to the Parliament.(5)   The Joint Committee of Public Accounts and Audit may identify an assurance review as a priority. A review so identified is a priority assurance review.(6)   As soon as practicable after completing the report on a priority assurance review, the Auditor-General must cause a copy of the report to be tabled in each House of the Parliament.

25 At the end of section 20

Add:(4)   Divisions 2 and 2A do not limit the power of the Auditor-General under this section to enter into an arrangement with a GBE.

26 Paragraph 21(1)(b)

After "company", insert "or a subsidiary of a Commonwealth company".

27 Paragraph 23A(b)

Omit "a performance audit under Division 2", substitute "an audit under Division 2 or 2A".

Note:   The heading to section 23A is replaced by the heading "Information sharing".

28 Paragraph 24(a)

Omit "referred to in Division 1 or 2", substitute "or review referred to in Division 1, 2 or 2A".

29 Section 30

Before "The operation", insert "(1)".

30 Paragraph 30(b)

Repeal the paragraph, substitute:   (b)   is not limited by:      (i)   any other law (whether made before or after the commencement of this Act), except to the extent that the other law expressly excludes the operation of section 32 or 33; or      (ii)   any rule of law relating to legal professional privilege or any other privilege, or the public interest, in relation to the disclosure of information or the production of documents.

31 At the end of section 30

Add:(2)   Disclosure or production of, or access to, information or a document under section 32 or 33 does not otherwise affect the operation of a rule of law relating to privilege or the public interest in relation to disclosure of the information or production of the document.

32 Before paragraph 31(a)

Insert:(aa)   an assurance review that is not a priority assurance review; or

33 Paragraph 33(1)(a)

Omit "or a Commonwealth company", substitute ", a Commonwealth company or a Commonwealth partner".

34 After section 56

Insert:

56A Constitutional safety net (1)   If a provision of this Act:   (a)   would, apart from this subsection, have an application (an invalid application) in relation to:      (i)   one or more particular persons, things, matters, places, circumstances or cases; or      (ii)   one or more classes (however defined or determined) of persons, things, matters, places, circumstances or cases;

     because of which the provision exceeds the Commonwealth's legislative power; and   (b)   also has at least one application (a valid application) in relation to:      (i)   one or more particular persons, things, matters, places, circumstances or cases; or      (ii)   one or more classes (however defined or determined) of persons, things, matters, places, circumstances or cases;

     that, if it were the provision's only application, would be within the Commonwealth's legislative power;

it is the Parliament's intention that the provision is not to have the invalid application, but is to have every valid application.(2)   This Act does not enable a power to be exercised to the extent that it would impair the capacity of a State to exercise its constitutional powers.

[assurance reviews; Commonwealth partners; government business enterprises; performance indicator audits; Corporations Act audits; privileges]

The functions performed by the Auditor-General continue to be a matter of great significance. It is important that the Auditor-General has the appropriate powers to respond to the audit challenges of today. Report 419 of the Joint Committee of Public Accounts and Audit made a series of recommendations aimed at ensuring that accountability and the role of the Auditor-General are kept current in today's challenges. The report recommended a range of measures. The most significant recommendations related to amendments to the act to allow the Auditor-General to assess the performance of bodies that receive Commonwealth money when there is a corresponding or reciprocal responsibility to deliver outcomes. In other words, the report recommended that the Auditor-General have the ability to follow the money when Commonwealth money is provided to other bodies, such as state agencies or contractors, for the delivery of Commonwealth outcomes.

The Auditor-General Amendment Bill 2011 is intended to implement various recommendations in the report of the Joint Committee of Public Accounts and Audit following its inquiry into the Auditor-General Act 1997. I advised the House on 21 March 2011 that the government intended to move an amendment to the bill to ensure that it operates as intended. This amendment to the bill will, with one exception, implement the recommendations of the JCPAA report as intended by the bill introduced by the member for Lyne. That exception relates to the performance auditing arrangements for government business enterprises. The Auditor-General Act currently provides that government business enterprises can only be audited by the Auditor-General at the request of the JCPAA, the minister responsible for the government business enterprise or the finance minister.

The JCPAA report recommended that the act should be amended to give the Auditor-General the authority to initiate audits of GBEs. Successive governments have taken the view that the Auditor-General should not have the ability to audit GBEs of his own motion. GBEs are subject to competitive pressures and disciplines that do not apply to other Commonwealth bodies and, to the greatest extent possible, should be subject to the same audit arrangements as their competitors.

The government considers that audits of GBEs should be requested by the parliament in response to genuine public interest concerns about aspects of their operations, rather than as an incidental part of an annual work program. The JCPAA, which compromises members from across the political spectrum and can conduct hearings in private, is the appropriate body to consider whether a particular GBE should be audited. Accordingly, the Auditor-General Amendment Bill, as amended, will allow the JCPAA alone to request an audit of a GBE by the Auditor-General. As is currently the case, the Auditor-General could ask the JCPAA to request an audit of a particular GBE. The most important change that would flow from the implementation of the JCPAA recommendations will result in the Auditor-General having the power to follow the money—that is, the Auditor-General will be able to undertake audits of Commonwealth partners, private sector and state and/or territory entities that receive Australian government funds to implement an Australian government program.

The Auditor-General's powers are limited at present to an assessment of the way that Australian government bodies implement government programs. This means that the Auditor-General is unable to assess the extent to which the individuals or entities that receive Australian government funds achieve the purpose for which those funds were provided. The amendments implement that unanimous recommendation of the JCPAA report—that the Auditor-General be given the authority to undertake audits of the Commonwealth partners, whether they are state or territory entities, or other individuals or bodies. The bill, as amended, contains appropriate restrictions on the extent of these powers, particularly in relation to state and territory entities, and the government anticipates that they will be used sparingly. For example, the Auditor-General will be able to assess the operations of a state or territory entity only after a request by JCPAA or the responsible minister, and only to the extent that they relate to achieving the purpose for which the funds were provided.

These amendments will ensure that the Auditor-General has the tools to respond to today's auditing challenges. The remaining amendments would make relatively minor changes to clarify the way that the act operates. They would, for example, provide clear authority for the Auditor-General to undertake assurance reviews and audits of performance indicator audits, which are currently carried out as audits by agreement under section 20 of the act, and clarify that the Auditor-General's powers to acquire the production of documents upon which legal professional privilege is claimed does not amount to a waiver of such privilege.

In conclusion, I would like to thank the members of the Joint Standing Committee of Public Accounts and Audit for the report, and the Chair, the Member for Lyne, who originally introduced the bill, for his cooperation in the development of the government amendments to ensure that the amendments to the Auditor-General Act operate as intended.

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