Auditor-General's Department, $18,445,000

Minister:

Hon. S.S. Marshall, Premier.

Departmental Advisers:

Mr A. Richardson, Auditor-General, Auditor-General's Department.

Mr I. McGlen, Deputy Auditor-General, Auditor-General's Department.

Ms M. Stint, Manager, Finance, Auditor-General's Department.

The CHAIR: We move now to the Auditor-General. For the Auditor-General's Department, the minister appearing is the Premier and I declare the proposed payments open for examination. I will give the Premier or leader the opportunity once again to make a statement, if they wish.

The Hon. S.S. MARSHALL: I will just introduce the people who will be supporting me during this committee. They are, of course, Andrew Richardson, Auditor-General; Ian McGlen, Deputy Auditor-General; and Megan Stint, Finance Manager, in the Auditor-General's Department. I should have pointed out in the previous examination, with regard to the Legislative Council, House of Assembly and Joint Parliamentary Services, that I was supported by Rick Crump from Parliament House.

The CHAIR: Yes, it was my omission too, Premier. I should have invited you to introduce your advisers, but thank you for that. Questions, leader.

Mr MALINAUSKAS: I refer to Budget Paper 4, Volume 1, page 74. Why would there be a reduction in FTEs from 128.9 in the financial year 2019-20 to 124.2 in 2020-21?

The Hon. S.S. MARSHALL: I am advised that the current headcount is above the determined headcount for that area, and the Auditor-General advises me they will return to their nominated headcount during this financial year.

Mr MALINAUSKAS: Has the Auditor-General made any request for any additional resources or FTEs?

The Hon. S.S. MARSHALL: The Auditor-General made a request for additional funds for special investigations and that was provided: $189,000 in the 2019-20 year and $195,000 in the current financial year.

Mr MALINAUSKAS: Moving on to a different line, Budget Paper 4, Volume 1, page 76, Sub-program 1.1: Prescribed Audits and Examinations. Does the office of the Auditor-General monitor the requirements for proactivity of disclosure by agencies and ministerial offices?

The Hon. S.S. MARSHALL: I am advised no.

Mr MALINAUSKAS: Who does?

The Hon. S.S. MARSHALL: I will take that question on notice.

Mr MALINAUSKAS: On the same budget line, has there been occasion in the 2019-20 financial year, or this financial year, to advise officers of their noncompliance with proactivity of disclosure, as outlined in the Premier and Cabinet Circular 35?

The Hon. S.S. MARSHALL: I am advised no.

Mr MALINAUSKAS: I refer to Budget Paper 4, Volume 1, page 77, Sub-program 1.2: Special Investigations. What criteria does the Auditor-General use to select issues that require special investigations?

The Hon. S.S. MARSHALL: I am advised by the Auditor-General that these special investigations are done for regular investigations that are required under statute.

Mr MALINAUSKAS: Very well. I refer to the same budget line. One of the highlights 2020-21, under Special Investigations, states that the Auditor-General's Department will report on the probity process in relation to the service contracts awarded for the bus and light rail services and also the heavy rail service—that would be the trains. Has the work in relation to the bus and light rail services been completed?

The Hon. S.S. MARSHALL: Yes, I am advised that that report has been tabled. That is the type of special investigation that we referred to, so something that is irregular. Those contracts do not come up very often. They might be a 10-year or a 15-year contract, but they are required under statute.

Mr MALINAUSKAS: Indeed irregular: it has never happened before. Was the report tabled in the parliament, which I assume you were just referring to, on 7 August, entitled Passenger transport service contracts: Bus and light rail, the final report or is there any other investigation underway with regard to that contract?

The Hon. S.S. MARSHALL: I am advised that there is no other investigation under that contract.

Mr MALINAUSKAS: Will there be a supplementary report or is that literally the final report?

The Hon. S.S. MARSHALL: As I have just stated, there is no ongoing investigation into that. If there is a requirement under the statute to do any further special investigation, that would be the subject of a separate report.

Mr MALINAUSKAS: Sorry, just say that again.

The Hon. S.S. MARSHALL: If there is further investigation required for a subsequent contract that is required under statute, that would be the subject of a separate investigation and a separate report.

Mr MALINAUSKAS: On the same page and the same sub-program, being Budget Paper 4, Volume 1, page 77, sub-program 1.2, has the investigation into the probity and process relating to the contracts awarded for the heavy rail services commenced?

The Hon. S.S. MARSHALL: Yes.

Mr MALINAUSKAS: How long will this investigation take?

The Hon. S.S. MARSHALL: I am advised that statute dictates that this should be provided by 15 February next year.

Mr MALINAUSKAS: Is there a mechanism for an extension of time if the Auditor-General sees fit?

The Hon. S.S. MARSHALL: I will take that question on notice.

Mr MALINAUSKAS: As it currently stands, does the Auditor-General believe he will be able to comply with that time line previously foreshadowed by the Premier?

The Hon. S.S. MARSHALL: I am advised that this is a very tight time frame.

Mr MALINAUSKAS: Why is it a tight time frame?

The Hon. S.S. MARSHALL: I am advised that it is because this investigation is taking place over Christmas and we really do not know the full extent of what any COVID restrictions might be in regard to access to people for this investigation.

Mr MALINAUSKAS: Will the investigation include speaking with unsuccessful bidders and external parties?

The Hon. S.S. MARSHALL: That may be considered.

Mr MALINAUSKAS: Will the investigation include looking into if the contract signed delivers a benefit for South Australian taxpayers? To be more specific, the cost of currently operating the services versus the amount being paid to the private operators?

The Hon. S.S. MARSHALL: The scope of the investigation is dictated by the statute, which focuses on the probity of the contract and that will be the priority of the investigation.

Mr MALINAUSKAS: Does the scope of the investigation preclude the Auditor-General from forming a view about the value to taxpayers?

The Hon. S.S. MARSHALL: I am advised that the statute is clear on this and that the priority is to examine the probity and the contract itself. That will be the priority between now and 15 February.

Mr MALINAUSKAS: Continuing on the same budget line, has the Department for Infrastructure and Transport provided the Auditor-General with a copy of the Ernst and Young report, who prepared pro forma financial statements used by bidders during the tender process?

The Hon. S.S. MARSHALL: We will take that question on notice.

Mr MALINAUSKAS: Is the Auditor-General aware of an Ernst and Young report regarding the cost of operating the heavy rail service in South Australian hands?

The Hon. S.S. MARSHALL: I am advised that he is aware of that report.

Mr MALINAUSKAS: So the report exists?

The Hon. S.S. MARSHALL: If the Auditor-General says that he is aware of it, then it exists.

Mr MALINAUSKAS: Will the Auditor-General release a copy of the Ernst and Young report being used during the course of his investigation?

The Hon. S.S. MARSHALL: I am advised if it was relevant to the investigation and it was available, then it may be used by the Auditor-General.

The CHAIR: Leader, could I interrupt. It sounded to me very much like you were addressing that question to the Auditor-General. Please choose your words carefully.

Mr MALINAUSKAS: I will rephrase it. My question being to the Premier on the same item, given the Auditor-General is aware of the Ernst and Young report and will use the Ernst and Young report—

The Hon. S.S. MARSHALL: May.

Mr MALINAUSKAS: May—well, let's start there then. Has the Auditor-General furnished himself with the information in the Ernst and Young report?

The Hon. S.S. MARSHALL: Not at this point.

Mr MALINAUSKAS: Will the Auditor-General furnish himself with the information in the Ernst and Young report?

The Hon. S.S. MARSHALL: The reality is we have every faith that the Auditor-General will look at that report if he believes that it is relevant to the probity of the contract, which is his priority for investigation through to 15 February.

Mr MALINAUSKAS: Does the Auditor-General have a copy of the Ernst and Young report in his possession, not on his person now but generally?

The Hon. S.S. MARSHALL: We will take that question on notice.

Mr MALINAUSKAS: Is the Auditor-General unaware of whether or not his office is in receipt of that report?

The Hon. S.S. MARSHALL: He has advised me that his office does collect relevant information. He is not aware of whether or not this is part of that at this stage.

Mr MALINAUSKAS: How will the Auditor-General form a view about whether or not it is relevant if he does not have a copy of it?

The Hon. S.S. MARSHALL: We have just said that we will take that question on notice.

The CHAIR: Next question, leader.

Mr MALINAUSKAS: Will the Auditor-General undertake to release that report publicly if it is referred to in his investigation in any way?

The Hon. S.S. MARSHALL: It would be highly unusual for that to occur, but the Auditor-General will be making his special investigation findings available by 15 February.

Mr MALINAUSKAS: How will the Auditor-General determine if the Ernst and Young report is relevant to his investigation?

The Hon. S.S. MARSHALL: I think I have answered this several times, and I am happy to answer it again. The Auditor-General's Department is looking to gather all relevant information for this special investigation, which is due under statute and will be provided by 15 February unless there is an extension, but certainly at this stage it is 15 February. If that is relevant to the probity issues with regard to the statutory obligations for this investigation, then it will be looked at very carefully.

Mr MALINAUSKAS: I might move on to a slightly different budget line but on a similar topic, which is Budget Paper 4, Volume 1, page 78, explanation of significant movements. Regarding the $338,000 allocated over two years for the completion of the two special investigations in relation to the awarding of service contracts for both the bus and tram services and the heavy rail services in metropolitan Adelaide, to what extent is that allocation made to one investigation versus the other?

The Hon. S.S. MARSHALL: I am advised that it is roughly a fifty-fifty split.

Mr MALINAUSKAS: Regarding the special investigation, has this been initiated at your own volition, or has it been at the request of the Treasurer, the Independent Commissioner Against Corruption or any other external authority?

The Hon. S.S. MARSHALL: I am advised that it is required under the Passenger Transport Act.

Mr MALINAUSKAS: Has the Auditor-General had any discussion with the Independent Commissioner Against Corruption regarding either contract?

The Hon. S.S. MARSHALL: I am advised that those matters are not for public disclosure. There are very strict requirements under the act, and whether or not a conversation has taken place is something that would not be permissible to be made public.

The CHAIR: And the leader would be aware of that.

Mr MALINAUSKAS: Other than the $338,000 that has been allocated for the investigation of the bus, light and heavy rail contracts, can the Premier advise if the Auditor-General has sought any further funds for special investigations?

The Hon. S.S. MARSHALL: Only as I outlined before in my earlier answer.

The CHAIR: Before you go, leader, could you please repeat your answer for my benefit, Premier?

The Hon. S.S. MARSHALL: Only as we outlined in an earlier answer, which was the line made available, which was requested and granted for last financial year and the further line for this financial year.

The CHAIR: Thank you.

Mr MALINAUSKAS: Moving on to a different budget line, Budget Paper 4, Volume 1, page 77, targets 2020-21. Have there been any other procurements that have attracted the attention of the Auditor-General in 2019-20?

The Hon. S.S. MARSHALL: I am advised that the only areas outside the normal focus were procurement with regard to bushfires and also with regard to our COVID response.

Mr MALINAUSKAS: Are there any other additional investigations or reviews currently underway?

The Hon. S.S. MARSHALL: I am advised that it would be better to refer to these as audits rather than investigations. With regard to the audits that are currently underway, there is the heavy rail, which we have obviously already referred to, but there is also an audit currently underway with regard to local government, in particular their cybersecurity preparedness. The Auditor-General is also completing a report into information technology across government, and obviously the budget has just been released.

Mr MALINAUSKAS: I might move back, then, to Budget Paper 4, Volume 1, page 78 and the $330,000 allocated over two years referred to in that line item. Why is the additional funding for those special investigations required?

The Hon. S.S. MARSHALL: I think I outlined before that these are investigations that are not required on an annual basis. They are investigations required under statute that might occur on a more intermittent basis. This is a contract in particular that has only come up for the first time in a decade, so special funds are sought and they have been provided.

Mr MALINAUSKAS: What is the additional funding actually for? The purpose is understood, but is it required for external specialist services?

The Hon. S.S. MARSHALL: I am advised that that money is used for a variety of purposes, including some specialist contract staff, external legal advice but also the ability to flex up the internal capacity. I think the parliament would appreciate that when you are only looking at some specialist areas once every 10 years, it would not be prudent to have those specialist skills there permanently. So it is seen that in these circumstances we do bring those specialist skills in. The Auditor-General's Department does not have their own in-house legal capacity for this so that work is also outsourced.

The Hon. A. KOUTSANTONIS: My question to the Premier is on Budget Paper 4, Volume 1, page 77, Sub-program 1.2: Special Investigations. Does the Auditor-General have the power to call witnesses for his audits?

The Hon. S.S. MARSHALL: I am advised that yes, he does have that power.

The Hon. A. KOUTSANTONIS: On the same reference, is it usual for the Auditor-General to call witnesses from participants in a tender process who were unsuccessful?

The Hon. S.S. MARSHALL: No, that is not usual.

The Hon. A. KOUTSANTONIS: Could I ask why?

The Hon. S.S. MARSHALL: I am advised there just has not been a need for that.

The Hon. A. KOUTSANTONIS: On the same budget reference, is the Premier aware that the participants in the most recent heavy rail tender process have raised probity issues, access issues and information issues towards their bids? Would it help the Auditor-General's audit in understanding the probity issues if he did hear from the proponents who were unsuccessful?

The Hon. S.S. MARSHALL: What I am aware of is that there is a statutory requirement to conduct an investigation with regard to this contract. The Auditor-General has sought funding for that special investigation. That money has been made available. That statutory audit is required by 15 February next year unless there is an extension. I have every confidence that the Auditor-General will be able to conduct that probity audit appropriately.

The Hon. A. KOUTSANTONIS: There is no question about the Auditor's abilities—

The Hon. S.S. MARSHALL: Then why are you suggesting—

The CHAIR: Member for West Torrens—

The Hon. S.S. MARSHALL: Why are you providing suggestions on how the Auditor-General should go about his job? I did not know you had an audit qualification. I know you are a very talented person, but I had no idea that your skills extended to audits.

The Hon. A. KOUTSANTONIS: Well, I was not—

The CHAIR: Member for West Torrens, if you could address me and speak clearly into the microphone, please.

The Hon. A. KOUTSANTONIS: Thank you, sir. I was not making assertions about the ability of the Auditor-General; I think he is a very well-qualified individual—

The CHAIR: Indeed.

The Hon. A. KOUTSANTONIS: Indeed he was appointed under our government. Same budget reference: will the Auditor-General allow submissions to his audit from proponents who are unsuccessful in their bid to run the Adelaide Metro heavy rail?

The Hon. S.S. MARSHALL: I have every confidence the Auditor-General's Department and the Auditor-General himself will seek all of the relevant information to form his opinion with regard to the probity of this contract and provide the people of South Australia with his report on 15 February unless an extension is sought and received.

Mr MALINAUSKAS: On the same budget line, in regard to the special investigation to the train contract, is there a mechanism for people to volunteer submissions to the Auditor-General to assist him in that investigation?

The Hon. S.S. MARSHALL: As I previously stated to this question on several occasions, I have every confidence in the Auditor-General's Department to gather all relevant information and to provide it to the audit team that is doing this work. It is very important work. It is required under the statute. I have every confidence the Auditor-General is more than capable of forming an opinion as to what documents he requires and will look at those documents if they are relevant to his special investigation, which, as I have provided to this committee on several occasions already, is to prioritise the probity and the contract itself.

Mr MALINAUSKAS: Again, I appreciate those remarks and the repetition of them. My question is a bit different. My question is rather specific in nature regarding this special investigation. Is there a mechanism for someone to voluntarily make a submission to the Auditor-General to aid them in their investigation; for instance, a would-be bidder or someone close to the process who may have information? Is there a mechanism for someone to do that?

The Hon. S.S. MARSHALL: I refer you to my previous answer.

Mr MALINAUSKAS: But your previous answer did not answer that question.

The Hon. S.S. MARSHALL: My previous answer was very clear that I have every confidence that the Auditor-General's Department will gather all relevant information, and that is my answer.

Mr MALINAUSKAS: Sorry?

The Hon. S.S. MARSHALL: That is my answer.

Mr MALINAUSKAS: On the same budget line, on the same line of questioning, with all due respect to the Auditor-General, the Auditor-General only has the information that is available to them. The Auditor-General does not know what they do not know, as is the case with everybody. Is there a mechanism for other people who may have information to provide that to the Auditor-General?

The Hon. S.S. MARSHALL: I refer you to my previous answer.

Mr MALINAUSKAS: Is the Premier able to ask the Auditor-General what mechanisms are in place for people to make submissions to him and his office to provide additional information for this investigation?

The Hon. S.S. MARSHALL: I have every confidence that all relevant information will be gathered by the Auditor-General's Department. I have nothing further to add.

The CHAIR: Perhaps we will move on to another line of questioning.

The Hon. A. KOUTSANTONIS: If I can go back to the same reference, Budget Paper 4, Volume 1, page 77, sub-program1.2, will the Auditor-General be given access to the losing bids in the heavy rail privatisation that he is auditing?

The Hon. S.S. MARSHALL: The Auditor-General advises me that he will have access to all aspects of the procurement that we are discussing.

The Hon. A. KOUTSANTONIS: On that same budget reference, is it normal for the Auditor-General to have access to all the bids that are unsuccessful or is this something he is asking for for the first time?

The Hon. S.S. MARSHALL: I am advised that this is a normal course of the investigation.

The Hon. A. KOUTSANTONIS: On the same reference, can he then call people who prepared those bids if he sees fit?

The Hon. S.S. MARSHALL: I am informed that, yes, the Auditor-General does have access to all the information that has been provided as part of that bidding process.

The Hon. A. KOUTSANTONIS: On the same budget reference, Premier, if employees of the Department for Infrastructure and Transport are interviewed by the Auditor, is that made public to the organisation or is that kept within the audit process and is that published after they are interviewed?

The Hon. S.S. MARSHALL: I am advised that the Auditor-General generally does have the power to conduct those interviews.

The Hon. A. KOUTSANTONIS: The reason I asked that question is in terms of whistleblowers who wish to give evidence or information to the Auditor without it being made known to their employers or their political masters, whoever they may be on either side of politics. Is that ability available to keep that confidential?

The Hon. S.S. MARSHALL: I am advised that the Auditor-General would observe any of the provisions within the Public Interest Disclosure Act.

The Hon. A. KOUTSANTONIS: So any potential witnesses would have to make a complaint first before they would be given any immunity from prosecution?

The Hon. S.S. MARSHALL: I do not want to be providing legal or interpretive advice with regard to the statute, but we would be perfectly applying all aspects of that legislation.

The Hon. A. KOUTSANTONIS: I take it from that answer that it would be impossible for a public servant to give evidence without the protection and immunities—

Mr CREGAN: Point of order: that is clearly argumentative within the terms of standing order 97. There is an opinion, and then that opinion extends into an argument about what might or what might not be possible.

The CHAIR: Yes, I uphold the point of order from the member for Kavel. We are delving into the realms of legal responsibilities, member for West Torrens, rather than relating to the budget.

The Hon. A. KOUTSANTONIS: I disagree, sir, but I honour and respect your ruling.

The CHAIR: You may, but I might suggest that you rephrase the question, if you would like to.

The Hon. A. KOUTSANTONIS: No, sir. I take it that the government does not want to answer that question.

The CHAIR: The leader.

Mr MALINAUSKAS: Thank you, Mr Chairman. In that context, I would like to thank the Auditor-General for his time and move on to the Department of the Premier and Cabinet.

The CHAIR: There being no further questions, I declare the examination of the proposed payments for the Auditor-General's Department complete.