Thursday, 18 October 2018
Public Accounts and Audit Committee; Report
On behalf of the Joint Committee of Public Accounts and Audit, I present the committee's report, incorporating additional comments, which I will remark upon in a moment, entitled Report 472: Commonwealth procurement—second report.
Report made a parliamentary paper in accordance with standing order 39(e).
by leave—I will keep my remarks fairly succinct because there is a lot to say on this report. It covers a huge range of turf—we have been working on it since February. It will be referred to the Federation Chamber for further statements. To precis and signal some of the issues, because members may wish to add their names to the speaking list for further consideration: this is the committee's second report on Commonwealth procurement. It sets out the findings of the committee's inquiry, which is based on three individual ANAO audit reports.
Chapter 2 of the report discusses the committee's findings on Audit report No. 12 of 2017-18, concerning contract management of the telephone universal service obligation by the Department of Communications and the Arts. The Audit Office raised a range of concerns, including value-for-money principles, and concluded that the department had not actively managed the contract towards achieving value for money. The committee was unanimous in that section of the report.
I would note that there is a strong tradition of bipartisanship in this committee. Over the 100 years or so that it's existed there have been very few dissenting reports. It's the mechanism through which the parliament holds the Public Service to account for the expenditure of public money and public administration. However, for the first time in some years now, whilst the committee signed off on the substantive report, we did reach a point after some months of consideration where some members of the committee felt the need to make additional comments which were not agreed to by all members of the committee. They are in relation to the second of the ANAO reports that we considered. In just touching on those, I would note the statement by the chair of the committee, Senator Smith, and thank him for his acknowledgement that he regards this as the committee working as it should. We did sign off on the substance of the report.
Chapter 3 of the report discusses the committee's findings on Audit report No. 9 of 2017-18, concerning management of the preconstruction phase of the Inland Rail program by the Australian Rail Track Corporation. The report reveals through the inquiry some serious concerns regarding the financing and delivery of the $10 billion Inland Rail project. As is well known, it still fails to connect trains to the Port of Brisbane and, curiously, it is being financed by the government off budget, rather than by a grant using an equity injection of some billions of dollars to the ARTC. Just to record two quotes, this should mean—I quote the First Assistant Secretary of the Department of Finance in the inquiry:
The government needs to get a real rate of return on the project over the life of the project.
Yet, astoundingly, through the inquiry we heard the former CEO of the ARTC, John Fullerton, admit clearly to the committee under questioning in a public hearing that the project is never likely to repay its capital cost and provide a return to the government. He stated:
… no, the revenues that flow to us wouldn't cover the full capital cost and provide a return.
Despite questioning, the committee was not able to be assured of or given access to information, even in confidence, that provides an understanding of the expected rate of return of such a significant, multibillion-dollar investment. The point that is made in the additional comments is that, if such investments in rail projects outside the general government sector of the budget were used in this way on a wider scale, this would seriously risk decreasing the profitability of government entities and dividends to governments, repayment of their capital and net value.
So there's a range of concerns raised in the additional comments about the lack of transparency by the ARTC, which point blank refused to address a range of questions that the committee had and hid behind what I consider a spurious defence of legal professional privilege. It's well known in the practice of the Senate and the House that legal professional privilege is not to be used as an excuse to not provide information to the parliament, but we were not able to pursue that further. So, more can be said in the Federation Chamber on that.
The final part of the report is chapter 4, which discusses the committee's findings on Audit report No. 61 2016-17, concerning the procurement of the rather controversial National Cancer Screening Register by the Department of Health. Overall, I consider this a scathing report. It was a unanimous report by a government-controlled committee, which, in my words, slammed the government's failure to deliver the lifesaving National Cancer Screening Register for cervical and bowel cancer. In a recommendation—quite astounding—the committee recommended that the government consider terminating this bungled $222 million contract with Telstra Health. It has been disastrously handled over the last few years. It's cost taxpayers millions, as the committee was told, and risked the lives of Australian women due to delays with the new Cervical Cancer Screening Program, which is replacing the former Pap smear test. The failings are so serious that the unanimous report recommended:
Of course, this contract was rushed into just days before the 2016 election, with a questionable contract signed after a dodgy tender process in which senior health department staff who owned Telstra shares did not declare them when voting on the tender panel. The tender evaluation process was so flawed that the department could not rule out the possibility that, if they'd followed their own procedures in the tender evaluation plan, Telstra Health may not even have been awarded the contract.
Despite the urgency to privatise this register before the 2016 election, we also note that the bowel cancer screening component is nowhere to be found, lost in a dark place, no movement, and the old paper-based system continues. Telstra Health and the Department of Health cannot even guess when the new Bowel Cancer Screening Program might commence, which has left the committee to order six-monthly report-backs on progress until they find out what's going on and can tell us.
We also noted concerns during the inquiry—the subject of much questioning—regarding the impact of the lengthy delay on mortality rates of Australian women. It was a rather Fawlty Towers-Yes Minister kind of episode, because, very clearly, the new register and the HPV tests were intended to 'prevent an additional 140 cervical cancers each year and decrease mortality and morbidity rates by test 15 per cent'. That's from the government's explanatory memorandum. Then there were the press releases from the member for Farrer, when she was the minister, telling us how urgent it was that we privatise this register and pass the legislation. Mysteriously, nothing's happened since they signed this dodgy contract with Telstra Health, and yet they're trying to claim that no women would have died and no new cancers would have been created. So, I think there's more to be said in the Federation Chamber on this. I commend the report to the House and I move:
That the House take note of the report.