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

On behalf of the Joint Committee of Public Accounts and Audit I present the following reports:

Report 431: Review of Auditor-General’s reports Nos 24 to 32 (2011-12), and

Report 432: APS—Fit for Service: Australian Public Service annual update,

In accordance with standing order 39(f) the reports were made parliamentary papers.

by leave—On behalf of the Joint Committee of Public Accounts and Audit I present the reports as well as executive minutes on reports 417, 429 and 430 of the Joint Committee of Public Accounts and Audit and government responses to several previous reports of the committee.

The Joint Committee of Public Accounts and Audit, as prescribed by its act, examines all reports of the Auditor-General and reports the results of the committee's deliberations to the parliament. Report 431 details the findings of the committee's examination of two performance audits selected for further scrutiny from nine audit reports presented to parliament by the Auditor-General between February and May 2012.

The committee focused its inquiry on government procurement, an area of public spending that has been of ongoing interest to the committee due to the ongoing disconnect between procurement guidelines and procurement culture. Under the financial framework, agencies must ensure each procurement delivers the best value for money using public resources in a way that is efficient, effective, economical and ethical. It is in this context that the committee inquired into the audit findings regarding the Australia Network tender and the establishment and use of procurement panels.

Dealing first with the Australia Network tender, a key lesson highlighted by the Auditor-General's report on the Australia Network tender process is that clarity around the decision making, at the highest levels, is essential. This is particularly important for tenders involving multiple ministers or departments. In the case of the Australia Network tender, it took five months for issues around the approval process to be resolved. If the actual decision making process involved had been clearly agreed and documented at the very start of the process, the lengthy delays and associated issues that affected the tender would have been avoided. In future the public disclosure of tender approval processes, as early as possible, is one very obvious way of avoiding similar problems in the future.

Other key issues discussed in the Auditor-General's report concern the handling of confidential tender information. The committee heard that standard practices for handling and distributing sensitive information were not followed, leading to a wider distribution of information than was desirable. The committee believes there are benefits from further clear guidance being provided to staff involved in future tenders about when and how tender information should be disclosed to ministers, ministerial staff, and other departmental staff.

While the responsibility for the problems found in the audit report rests with the parties involved, the committee considered that lessons from the Australia Network tender process should be shared more broadly and has therefore made a range of suggestions for improvement in this regard.

The second issue is that of procurement panels. The committee also examined how government agencies establish and use panel arrangements to obtain efficiencies in procurement. Procurement panels involve agencies conducting an initial procurement process to establish a panel of suppliers and then undertaking individual procurements from the panel on an as needed basis. The Auditor-General's report found that, while agencies generally had sound practices for initially establishing panels, performance was less satisfactory when it came to selecting suppliers from the panel to undertake work. The committee was disappointed to learn that many of the issues that came up in this audit report had previously been identified in internal audits by the agencies themselves. We were, however, pleased to hear that the Department of Finance and Deregulation is taking a more active role in helping agencies to improve their compliance with financial management obligations. The committee also supports the role of central procurement units within agencies, which can serve as the link with Finance and take a proactive role in assisting procurers.

Another point made in the Auditor-General's report is that agencies should be performing evaluations of each of their procurement panels at appropriate stages in their life cycle. The committee supports this recommendation, and has asked the audited agencies for updates on how they are implementing panel evaluations. The committee also examined the cooperative use of single panels by multiple agencies, an increasingly popular practice known as 'clustering' or 'piggy-backing'. We learned that while clustered panels can lower costs, particularly for smaller agencies, care is needed to make sure the services being supplied are actually appropriate for the needs of each agency. Governments also need to be aware of the perspective of suppliers themselves, as there is a perception that large, multi-agency panels may disadvantage small and medium enterprises. The number of SMEs on panels is not currently being monitored by departments, or across the APS, so this is an area that warrants additional attention in future. The committee will continue to keep a close eye on government procurement activities to ensure that public money is being spent in a way that ensures value for money and compliance with the financial framework regulations.

Going to report No. 432, Fit for service: Australian Public Service annual update, the annual meeting with the heads of key agencies responsible for public sector governance and administration provides the committee with a regular opportunity to discuss whole-of-government issues and trends and review the overall performance of the APS. Previously held as a private briefing, to improve transparency the committee decided to open up this year's meeting to the public. This year, the committee was particularly interested in progress on the APS reform initiatives, the results of the latest State of the Service report, the potential impact of the increased efficiency dividend and to hear about future improvements planned for the Public Service.

The committee is also responsible for approving annual report guidelines for Commonwealth departments on behalf of the parliament. Questions relating to the proposed 2011-12 Requirements for Annual Reports were discussed at the public hearing. In regard to the annual report requirements, we were pleased to see a continued focus on streamlining and minimising duplication of reporting. This year, a proposal was put forward to amend the reporting of consultancy contracts. While maintaining the summary data, reports would direct readers to AusTender, the centralised procurement reporting site, rather than reproducing static lists of contracts. The committee agreed to support this proposal, after being informed by the Australian National Audit Office and the Department of Finance and Deregulation of the potential for improvements to accuracy and currency of information.

On another aspect of procurement, we wanted to be sure that agencies continue to improve on-time payments to small and medium enterprises. Responding to our concerns, the Department of Prime Minister and Cabinet informed us that the Australian government payments to small business: performance report will be enhanced with the inclusion of information on the performance of individual agencies.

On the broader front of improvements across the Public Service, the committee noted the status update on the initiatives stemming from Ahead of the game: blueprint for the reform of Australian government administration. There are two key points we would like to raise in relation to the reforms. The first is APS policy implementation capacity. For some time now the committee has been raising concerns about the capacity of certain departments to implement policy. PM&C outlined the engagement and support strategy developed to improve guidance and communication and increase agency capacity. The committee will now be looking for a reduction in numbers of audit reports critical of implementation.

The second area of interest is the establishment of further agency review options. The committee welcomed advice that further scrutiny of cross-agency performance and strategic assessment of future capabilities was underway. In particular, the committee was pleased to hear that the capability review process would be rolled out across agencies and the results publicly disclosed. However, due to the complexity of the different review options available, we would like to see the development of a simple explanation, in layman's terms, of how these reviews fit together and avoid duplication.

While the underlying major reform takes place, APS agencies will need to be considering how to improve the 'state of the service' while at the same time finding savings to meet the increased efficiency dividend. Issues in need of attention include addressing the continuing decline in diversity in terms of Indigenous employees and employees with a disability, and improving the average overall employee satisfaction with senior leaders. Leadership drives the success of an organisation and allows these major reforms to succeed. And it was the same message that the Sex Discrimination Commissioner gave yesterday. Leaders are also pivotal in ensuring diversity is encouraged and valued in a workplace, so it is of particular concern that there is ongoing dissatisfaction with those steering the course. The committee will continue to monitor results in this area over the next year.

When looking to the future, the Secretary of PM&C suggested that the APS needs to become Asia capable. The committee agrees that engaging with regional counterparts is an important goal and looks forward to hearing about developments in this area over the next year.

The committee appreciates the important work of the APS and the effort that has been put into reforming the state of the service. In our report we have made some additional suggestions, largely aimed at improving the accessibility of information to assist parliamentarians and the public in assessing the performance of the APS.

By convention, the Public Accounts and Audit Committee regularly tables government responses to its reports in the form of executive minutes. So today—by leave—I present several executive minutes received by the committee, constituting the government responses to the following recommendations: report 417, recommendations 6, 7, 15, 16 and 17; report 426, recommendation 4; report 428, recommendation 3; report 429, recommendations 1 to 3; and report 430, recommendation 4.

In closing, I would like to thank the numerous senior public servants who attended our public hearings for their time and for their frank and detailed engagement with the committee. Again, I thank committee members from a diverse range of political persuasions who continue to work in the national interest through this committee and I sincerely thank the committee staff and secretariat for their ongoing work. I commend the reports and the executive minutes to the House.