Auditor-General's Report

AUDITOR-GENERAL'S REPORT

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (11:05): I move:

That standing orders be so far suspended as to enable the report of the Auditor-General for 2009-10 to be referred to a committee of the whole and for ministers to be examined on matters contained in the report for a period of one hour.

Motion carried.

In committee.

The Hon. D.W. RIDGWAY: I indicate that the opposition has a series of questions. To make things work easier this morning, we will flow as we normally do for question time. I know that the Hon. Mr Parnell has a couple of questions, and I think the Hon. Mr Hood also has a question. The Hon. Kelly Vincent has made my office aware that she has a question, as does the Hon. Tammy Franks. We hope we can let everyone get a question in. My first question is to the Minister for Urban Development and Planning, but it can possibly be answered by the Minister for State/Local Government Relations, given that the two ministers report to the one department.

Page 901 of the Auditor-General's Report shows a statement of cash flows. Were payments made from the Office of Local Government to the Local Government Association to fund projects that would have been administered by the association? If so, when were these payments made, how much were those payments, and what were the projects for? Of the cash outflows, where any refunds made to the department by the Local Government Association for any projects, if any, that did not come to fruition?

The Hon. P. HOLLOWAY: I have Mr Andrew McKeegan with me, the chief financial officer for the Department of Planning and Local Government, to provide advice. Regarding page 901, the honourable member asked about all payments to local government more generally, or—

The Hon. D.W. Ridgway: In particular to the Local Government Association.

The Hon. P. HOLLOWAY: The joint Office for State/Local Government Relations and the Local Government Association application to the commonwealth government for funding under the Local Government Reform Fund included, under the Asset and Financial Management Technical Support Project, a cash contribution by the Office for State/Local Government Relations of $80,000. Minister Albanese has announced that South Australia has been successful in obtaining commonwealth funding of $1.65 million towards the project. The commonwealth funding is being provided under the national partnership agreement to support local government and regional development.

The LGA has established, within its accounting system, a mechanism to record and report all financial transactions associated with funding received for those projects and associated expenditure incurred. This will facilitate performance reporting to the commonwealth under an implementation plan established in accordance with the national partnership agreement.

As part of the collaborative arrangements agreed between the Office for State/Local Government Relations and the LGA, the $80,000 contribution by the office is intended to cover salary and related costs of John Wright's involvement in the Asset and Financial Management Technical Support Project. Amongst other things, that project builds on and extends the work that Mr Wright has been undertaking in driving significant improvements in local government financial management under the financial sustainability program. So, I gather I have really answered for my colleague.

The Hon. D.W. RIDGWAY: A supplementary question, if I may. Are they the only payments that have been made to the Local Government Association from the Office for State/Local Government Relations in the past 12 months?

The Hon. G.E. GAGO: I have been advised, yes. I think the member also asked a question in relation to refunds, and I have been advised that, no, there were no refunds.

The Hon. J.M.A. LENSINK: I have some questions to be referred to the Premier and one question to be referred to minister Caica. I refer to Volume 3, page 979, relating to the Premier's Climate Change Council. Part of the government's strategy is to establish industry sector agreements, one of which is with SA Water, which is dated December 2009. The agreement was jointly signed by the SA Water Chairman and the Premier on 16 February 2009, and it states that SA Water uses as much energy as the rest of government combined.

Page 5 of that document states that SA Water is 'working towards implementing major water resource programs in a carbon-neutral way' and 'investigating opportunities to reduce greenhouse gas emissions as part of developing future desalination plants in South Australia'. Can the Premier elaborate and verify exactly how this is to be achieved?

I refer to the same page reference and same document. Page 6 of the agreement is a table showing SA Water's historic and projected greenhouse emissions. It indicates that since 2007-08 SA Water has been failing to achieve its reductions, with emissions set to spike to over 1 million tonnes in 2011-12, presumably accounting for the desalination plant coming on line. How is this compatible with the Premier's claims that the desalination plant will be carbon neutral?

I refer to Volume 3, page 966, relating to Activity 1: Cabinet Office. The Premier wrote in January 2008 to all of his parliamentary colleagues, myself included, advising that South Australia had the first carbon-neutral cabinet. At the time, the minister wrote that the Premier and ministers would need to offset 3,000 tonnes of CO² at a cost of $60,000. Can the Premier advise how much this program is now costing and who was the successful tenderer for the program?

I direct the following question to the Minister for Environment and Conservation. I refer to Volume 2, page 418, relating to EPA Waste Levy. The audit notes that the EPA's waste levy audit reports summarising audit findings for 2008-09 were incomplete. As a result, there is an increased risk the EPA had not received all waste levies revenue it was entitled to under the regulations. Audit also reviewed progress to date with 2009-10 waste levy audit activities. For several waste depots assessed as extreme or high risk, there was no available documentary evidence at the time of audit that site inspections, weighbridge audits or surveillance activities had been performed. My question is: how will this be addressed, particularly in light of increases to the solid waste levy?

The Hon. P. HOLLOWAY: We will refer those questions to the Premier and the Minister for Environment and Conservation, who is obviously the relevant minister in relation to the EPA, and we will endeavour to bring back a response.

The Hon. J.M.A. LENSINK: I have some direct questions for the Minister for Consumer Affairs. I refer to Volume 1 of Part B of audit, page 99: 'Review of the Residential Tenancies Fund and Retail Shop Leases Fund bank reconciliations and supporting documentation prepared by OCBA throughout the year'. Audit states that there was no evidence to show that bank reconciliation procedures were regularly reviewed, and so forth. What is OCBA doing to remedy the Auditor-General's findings?

The Hon. G.E. GAGO: The Chief Executive has advised that OCBA has reviewed and updated the bank reconciliation procedures and completed outstanding bank reconciliations for the period ending 30 June 2010 and had them independently checked. The reconciliations have been updated on a monthly basis since then and a resource has been dedicated to ensure that further bank reconciliations will be completed on a timely basis. In order to further strengthen controls in this area, the finance officer responsible for reconciliations has now been relocated to work more closely with the management accountant so that, if any issues arise, they can be dealt with in a more timely manner.

The Hon. J.M.A. LENSINK: On the same page reference, the Auditor-General sought that all births, deaths and marriages fees are checked by an independent officer for accuracy, as part of an annual fee update review and evidenced to indicate performance of this review. On what basis were fee increases made on 1 July 2010 and in previous years, and does the government intend to further increase fees in the next couple of budgets?

The Hon. G.E. GAGO: I thank the member for her questions. Responsibility for Births, Deaths and Marriages in fact comes under the Attorney-General. It is very complicated and convoluted, so I will refer those matters to him. In relation to fees, that is really a matter for Treasury and the A-G, but I will refer those questions to the Attorney-General.

The Hon. J.M.A. LENSINK: Referring to the same page, I think this probably falls into the same category that the minister has just referred to in occupational licensing. The Auditor-General sought that outstanding licensing systems penalties are followed up immediately to ensure valid penalties on a timely basis. What is the government's plan to deal with this particular matter?

The Hon. G.E. GAGO: This one is mine. I have been advised that OCBA has advised that it would continue to review and minimise the number of outstanding penalties as appropriate, so it has taken measures in relation to that. Before issuing penalty notices, an officer must check that annual returns received have been receipted and that any that are part-processed (for example, when the return has been received but some changes still have to be entered onto the occupational licensing system) are not sent a penalty notice.

Accordingly, some licensees listed on the penalties due report should not be issued a penalty. As there is work involved in checking and producing penalty notices, it is also not always possible to issue them on the first day upon which they are able to be issued. This work must be scheduled along with other tasks and can be delayed for short periods in the event of other priorities or things like staff absences, etc.

A check of the penalties due report as at 2 August 2010 shows that there are 160 on that report for checking. This is considered a reasonable level, considering that the Business and Occupational Services Branch administers over 65,000 licences. Notwithstanding the above, OCBA will continue to review and minimise the number of outstanding penalties appearing on the report as soon as is practical.

The Hon. M. PARNELL: I have a number of referred questions and, as the ministers are swapping seats, I will direct my first one to the Minister for Mineral Resources Development, representing the Minister for Infrastructure, in relation to the Land Management Corporation. I refer to page 687 in Volume 2 concerning the Port Adelaide waterfront development. The Auditor-General notes that the Land Management Corporation's obligations under the development agreement amount to $44 million in 2004 dollar terms over the life of the agreement. My questions of the minister are as follows.

Firstly, could he outline in more detail the Land Management Corporation's obligations under the development agreement? Secondly, what is the anticipated net return to the LMC resulting from the development agreement? Thirdly, are contracts for the sale of land between LMC and the Newport Quays developers subject to development approval being granted and, if so, what will be the financial impact on LMC of the delay or possible refusal of development approval for the Dock One redevelopment?

Fourthly, are any payments to the Land Management Corporation tied to the value of property sales in the Newport Quays development? Fifthly, are there any performance bonuses payable or paid to LMC executives or board members and, if so, what is the nature and amount of those bonuses?

The Hon. P. HOLLOWAY: I will refer those questions to the minister in another place and bring back a response. I think that, in relation to the latter question, though, there are broad government guidelines that obviously apply in relation to such policies. Again, I will refer that on, although I do note that many of the honourable member's questions go to commercial details involving the LMC's relations with private contractors. So, as to the availability of that information, whether it is subject to commercial confidentiality provisions, I am not sure. I will refer those questions on to the minister in another place.

The Hon. M. PARNELL: I have another series of referred questions, this time addressed to the Minister for State/Local Government Relations, representing the Minister for Water, in relation to the Adelaide desalination plant. I refer pages 30 to 32 of Part A of the Auditor-General's Report, and note that on page 31 the Auditor-General states that the Department of the Premier and Cabinet has advised that, 'a mutually agreed position has been reached on the issue of reduced reliance on the Murray River'. He goes on to say that these negotiations have been led by the Minister for Water.

My questions of the minister are: firstly, what is the position that has been agreed? Secondly, will there be a net reduction in the amount of water that is taken by SA Water per year for Adelaide's water needs, as a direct result of the mutually agreed position?

Thirdly, is the position that has been negotiated with the commonwealth consistent with the government's previously announced policy in the Water for Good plan? I also point to figure 24 on page 52 of the Water for Good plan which indicates that reliance on the River Murray will remain constant at over 100 gigalitres per year through to the year 2050.

Fourthly, when will the funding agreement with the commonwealth be finalised? I note that the Auditor-General, in his concluding comments, stated that, 'confirmation on a significant funding condition has not yet been obtained'.

The Hon. G.E. GAGO: I am pleased to refer those questions to the Minister for Water in another place and bring back a response. I must say that I think these questions generally relate to broad policy matters and are really not particularly relevant to the Auditor-General's Report before us. Given that, I will refer those questions.

The Hon. T.A. FRANKS: My question is to the Minister for Mineral Resources Development, representing the Treasurer, on the issue of public-private partnership funding for the new Royal Adelaide Hospital. I refer to pages 589 and 590, Part B: Agency Audit Reports, Volume 2.

My questions are: how does a government-funded financial model compare under the public sector comparator with the government's preferred PPP model? Under what conditions would the government abandon the PPP model? Will the government involve the Auditor-General in any analysis of the two competing financial models—a government-funded financial model versus a PPP—or will it be done on the basis of Treasury advice alone? What are the indicative yearly costs arising from the preferred PPP company having to provide insurance against project blowouts, funding collapses or construction failures?

Has the state government sought a co-financing partnership with the federal government for the RAH, as an alternative to a PPP? If the government decided to abandon the PPP process, how much would the government expect to pay in compensation to the two bidding parties?

The Hon. P. HOLLOWAY: The honourable member would well know that there are currently consideration of tenders in relation to the new Royal Adelaide Hospital, so I am not sure that the government will be in any position to provide too much detail until that process has been completed. I will see if the Treasurer is able to provide some broad policy advice in relation to the direction that the government may or may not take in relation to those issues of the type of funding. Given that we, as I understand it, are still in the process of tender, then clearly what information the government can provide at this time is obviously going to be restricted.

The Hon. D.G.E. HOOD: I have a question as well which I suspect will be referred. I refer to Volume 2, page 446. There is a reference there to cabinet grants made to a number of NGOs to fund the purchase of disability equipment. The report notes that the Julia Farr Association was granted some $2.92 million in June 2007 and $2.15 million in June 2008 to purchase disability equipment. The report is quite critical of the fact that this money was 'stashed' (to use the term in the report) in an NGO that had no involvement in providing the equipment—a middle provider, if you like. Rather than labouring on the financial rights and wrongs of this action, I note the reference to the fact that:

The cabinet-approved funding for disability equipment was received too late in each of the financial years to provide the manageable opportunity for the orderly purchase of disability equipment...

My question is about this failure to provide funds on time. Firstly, is that the government's view? Would it have resulted in some clients with a disability not adequately being resourced? Indeed, is this partly to blame for a widely reported backlog of requests for disability equipment in this and other areas?

The Hon. G.E. GAGO: These are matters that relate to the responsibilities of the Minister for Disability, and I will refer those questions to that minister in another place and bring back a response.

The Hon. R.I. LUCAS: My question is to the Leader of the Government. On page 1868 of the Auditor-General's Report, under WorkCover Corporation, there is a list of the remuneration bands for employees of WorkCover. The Auditor-General's Report notes that, of the highest two employees in the previous financial year of 2008-09, the highest one was in the remuneration band $400,000 to $410,000, and the second highest was in the remuneration band $370,000 to $380,000.

The Auditor-General's Report on that same page notes that in the following year, the most recent year, the highest band employee within WorkCover has increased to $520,000 to $530,000. I repeat that, in the previous year, it was $400,000 to $410,000—so an increase of $110,000. The second highest banded employee for WorkCover was in the band $410,000 to $420,000.

Can the minister indicate, as the new minister, whether he has been briefed on the remuneration package of the new chief executive officer of the WorkCover Corporation? If he has, does the employee in the band $520,000 to $530,000 refer to the remuneration package of the CEO of WorkCover Corporation?

The Hon. P. HOLLOWAY: Of course, we are talking here about the Auditor-General's Report for 2009-10, so clearly it cannot refer to the new chief executive's remuneration. That will be in next year's. I am not quite sure what his starting date was but it was certainly around about the middle of the year. It was in early June, so it would not be there.

What I think needs to be pointed out is that when you look at the Auditor-General's tables for employee benefit expenses, it is misleading to relate those directly to a salary paid to individuals. In fact, I am advised that the highest band of $520,000 to $529,000 was someone who had departed but had substantial accumulated long service leave and other benefits which are incorporated in that figure. When we look at the employee benefit expenses, often the figures on the higher tables will not reflect the actual salary paid to those people. In many cases, it is actually the final salary in relation to people who have been paid out with TVSPs and accumulated leave. My advice is that this particular band of $520,000 to $529,999 referred to an employee who had left with significant accumulated long service leave and other benefits.

The Hon. R.I. LUCAS: Just to pursue that issue, other aspects of the Auditor-General's Report for departments for similar tables note with an asterisk those employees in an employment band where the issue that the minister has just raised (that is, the possible payment of a termination payment) might give a higher figure. Given that there is no such asterisk in the WorkCover Corporation section, I seek a confirmation from the minister that he has had specific advice in relation to that.

I do not have all the volumes of the Auditor-General's Report with me but, from my previous reading, I know that some of the departments—when you look at the remuneration bands of their employees—make it quite clear that an employee in a particular band has an asterisk next to it, which points out the fact that a termination payment has been included in that. I seek specifically: is the minister saying to the committee that he has received specific advice in relation to this particular band that that person was someone who received a termination payment?

The Hon. P. HOLLOWAY: Yes, I have that advice, but I do refer to the note that is under that particular table. Note 9 covering the report states:

The table includes all employees who receive remuneration of $100,000 or more during the year. Remuneration of employees reflects all costs of employment, including salaries and wages, superannuation contributions, FBT and other salary sacrifice benefits, and payments of accumulated annual leave, long service leave and superannuation in respect of certain employees whose employment terminated in the financial year. The total remuneration received by these employees for the year was $9.1 million.

I take the point the honourable member has made. It was a recommendation of the Economic and Finance Committee back in the early 1990s (when I was a member of another place) that we include these bands, but the $100,000 threshold that we used then is the same threshold 20 years later. Clearly, what is happening in a large number of departments (if one looks at these figures) is that, whereas the $100,000 figure then chosen did reflect the salaries that most or many executives would be paid above that figure, clearly, now a number of other people can come within that.

I mean, someone could be on a quite modest salary in a modest level of employment but, if they get a TVSP or a payout, they could appear in one of these bands because they have not been indexed in the 20 years that these have been covering. I agree with the point that I think the Hon. Mr Lucas is making, that it would be clearer if we could, perhaps, have some indication in relation to these figures as to what the component was.

Perhaps it would make more sense if we had tables of what were executive positions and the salary components of those rather than just have the remuneration bands. As I said, this was the recommendation of the Economic and Finance Committee 20 years ago. As I say, it is a useful comparator, but anyone who uses these figures needs to bear in mind that those figures do reflect payouts and accumulated leave, which can often distort the figures.

As I say, it is by no means now executive level employment. A number of employees with overtime benefits and the like (police officers, for example) can easily appear then in those bands, and that has a distorting effect on the statistics. If one is using employment comparators with previous years one does need to take into account the composition of the remuneration and the fact that it may be, as in this particular case, that the top level does not represent the CE's salary but, in fact, that it was a former executive who had significant accumulated benefits.

The Hon. R.I. LUCAS: What is the total remuneration package of the new chief executive officer?

The Hon. P. HOLLOWAY: We will take that on notice.

The Hon. R.I. LUCAS: On that, if one can make the assumption that the person who received $520,000 to $530,000 is most likely to be the former CEO, Ms Julia Davison—

The Hon. P. Holloway: It wasn't.

The Hon. R.I. LUCAS: It wasn't? I have two questions then: first, what was the level of any termination payment made to the former WorkCover chief executive Julia Davison and, if she is not the employee in the $520,000 to $530,000 bracket for the last financial year, in which bracket was Ms Davison?

The Hon. P. HOLLOWAY: My advice is that the former CEO of WorkCover, Julia Davison, resigned. She received the normal payout, which was her salary and accumulated leave, and she would be the second one from the bottom of that list.

The Hon. R.I. LUCAS: The second one being $410,000 to $420,000?

The Hon. P. HOLLOWAY: That would have included accumulated leave and the like.

The Hon. R.I. LUCAS: The minister has confirmed, for the benefit of Hansard, that Ms Davison was in the $410,000 to $420,000 bracket when one took into account termination payments. Will the minister take on notice what was the level of termination payments for Ms Davison? Who was the executive who, together with termination payments, was paid a total of $520,000 to $530,000 in 2009-10, and what was the level of termination payment and other payments in addition to salary and annual payments that were paid to that particular person?

The Hon. P. HOLLOWAY: My advice is that the person was a former general manager, Mr Stan Coulter, but I believe he was retained on contract in relation to the introduction of the new computer system for WorkCover—the new Curam system—which was introduced in the first half of this calendar year, the last half of the financial year. Apparently he was retained on contract in relation to that new computer system.

The Hon. R.I. LUCAS: I ask the minister to take the question on notice. I understand the minister has told the committee that Mr Coulter received a total of $520,000 to $530,000 in the last financial year. He has now indicated that that includes salary for part of the year, termination payments and, I understand from what the minister just said, having been terminated he has been re-employed on a contract as a consultant to WorkCover for the second half of the financial year, for which he has received further payments.

I seek from the minister the detail of the salary package for Mr Coulter, the termination payments for Mr Coulter and the terms upon which someone who has received a termination package from WorkCover has been re-employed as a consultant or contractor within WorkCover during the financial year. Subsequently, for the 2010-11 financial year is Mr Coulter still being employed as a consultant or contractor by WorkCover Corporation?

The Hon. P. HOLLOWAY: Given that it is not really fair to the individuals concerned, we should get all of the details on this matter, so I will take the questions in relation to that on notice. I just do not think it is a fair way of dealing with individuals. I am not quite sure that the assumptions that the Hon. Mr Lucas is making in his situation—

The Hon. R.I. Lucas: No; that's what you told me.

The Hon. P. HOLLOWAY: Well, you are putting words. I think it is best that we take it on notice. In fairness to the individual, I think it is best that we take the question on notice and explain the breakdown. As I said, I have given the honourable member and the council an indication of who the person is in the broad parameters. In fairness to the person concerned and all other employees of government, I think it is wise to take that on notice. We will be happy to provide that information.

The Hon. K.L. VINCENT: My question on the Auditor-General's Report for the year ending 2010 refers to page 446, which notes that the Department for Families and Communities paid two one-off grants of $2.92 million and $2.15 million respectively in 2007 and 2008 to the Julia Farr Association as equipment grants. However, the department sought to recoup both those payments during 2007 and 2008 and 2009 and 2010. In view of the fact that the Julia Farr Association had no role in managing, prescribing or providing equipment during 2007 or 2008, my questions to the minister representing the Minister for Families and Communities are:

1. Why did the government make equipment grants to the Julia Farr Association when it is not a supplier of equipment?

2. Why did the government make equipment grants to the Julia Farr Association for two years in a row?

I am also concerned as to whether the provision of these funds to the Julia Farr Association has led to further delays in the provision of equipment for people with disabilities; however, I note that that question has already been asked.

The Hon. G.E. GAGO: I will refer those questions to the Minister for Families and Communities in another place and bring back a response.

The Hon. R.P. WORTLEY: I have a question for the Minister for Industrial Relations. What are the benefits for WorkCover in recently—

The Hon. R.I. Lucas interjecting:

The CHAIR: Order! The Hon. Mr Ridgway.

The Hon. D.W. RIDGWAY: Is there a page reference to the Auditor-General's Report, given that this is an examination of the Auditor-General's Report?

Members interjecting:

The CHAIR: Order!

The Hon. D.W. RIDGWAY: Can the member please provide a page reference?

Members interjecting:

The CHAIR: Order! The Hon. Mr Wortley's question relates to the Auditor-General's Report.

The Hon. D.W. RIDGWAY: Well, what page number?

The CHAIR: The Hon. Mr Wortley.

The Hon. R.P. WORTLEY: What benefits are there for WorkCover in recently implementing a new ITC system?

Honourable members: Where?

The CHAIR: In the Auditor-General's Report.

The Hon. J.M.A. Lensink: Which volume?

The Hon. R.P. WORTLEY: The minister will know, obviously.

Members interjecting:

The CHAIR: Order! The opposition has had a fair sling at this.

Members interjecting:

The CHAIR: As long as it is relevant to the Auditor-General's Report. The honourable minister.

The Hon. P. HOLLOWAY: Just briefly, there are significant advantages in—

Members interjecting:

The CHAIR: Order!

The Hon. P. HOLLOWAY: —introducing the—

Members interjecting:

The CHAIR: Order!

An honourable member interjecting:

The Hon. P. HOLLOWAY: Well, it is not a precedent, actually. I mean—

Members interjecting:

The CHAIR: Order! It is nice to get a question that is not attacking an individual.

The Hon. P. HOLLOWAY: In fact, it is not a convention: it is—

The Hon. R.I. Lucas: It's a convention.

The Hon. P. HOLLOWAY: It isn't. Go back and look. Mr Chair, I will be happy—

Members interjecting:

The CHAIR: Order!

The Hon. P. HOLLOWAY: —to come back at question time today and produce copies of the previous—

The Hon. R.I. Lucas: I negotiated it with the Labor Party opposition. You weren't even there.

The CHAIR: The honourable minister will complete his answer once the chamber comes to order. If the opposition wants to waste a bit of its time, that is fine.

The Hon. P. HOLLOWAY: It is an important question, because there has been a significant change to WorkCover's computer system during the previous 12 months. The new Curam software, which is a commercial software product specifically designed for social enterprise management organisations, has been introduced. It is used by a number of organisations in the social services area, including: WorkSafe British Columbia, Ontario, the United Kingdom Department of Work and Pensions, the New Zealand Ministry of Social Development, the Department of Veterans' Affairs and Disability Services in Queensland, so it is broadly used.

As a result of that, a key benefit of Curam is that it can support a much more sophisticated approach to case management which can be tailored to the needs of individual workers. The main benefit for employers is that Curam allows them to register and update their details and provide remuneration terms efficiently online. Curam also has the capacity to capture and store more information so that WorkCover can be better informed and respond to employers, workers and providers. It is an important change that has been made. As I said, introducing any new system is fraught with risk, but I compliment WorkCover on the way it has managed the introduction of that new system.

The Hon. D.W. RIDGWAY: I have some questions for the Minister for Planning and Local Government in relation to employee remuneration. Similar to the question that my colleague the Hon. Mr Lucas asked, I note on page 910 of the report that in 2009 there were 23 employees who received in excess of $100,000, and in 2010 there are 33 employees. I note that the minister quoted the footnote that it 'reflects all costs of employment including salaries and wages, superannuation contributions, FBT and any other salary sacrifice benefits', but my question is: is the increase of 10 in those 12 months purely because of salary increases and bracket creep (which, I guess, is the best way to describe it) or have an additional 10 people been employed in those bands within the department? It is interesting to note that the highest band in 2009 was $260,000 to $269,999 and there are now five positions in excess of that, with the top band being $420,000 to $429,999.

The Hon. P. HOLLOWAY: My advice is that seven employees moved over the $100,000 bracket due to enterprise bargaining and indexation growth or due to changes of role within the department. These seven were all existing employees of the department during 2008-09.

The Hon. D.W. RIDGWAY: Can the minister provide some details on the other three?

The Hon. P. HOLLOWAY: The table in note 6 shows an increase of 10 staff from 2009 to 2010 due to the following reasons. There were four directors appointed during 2008-09, that is, in May 2009. They did not appear in the 2009 table. They were the Director of Strategic Policy, the Director of Legislation and Governance, the Director of Strategic Communications, and the Director of Major Projects. Of course, during that period the department was being formed, and there was a merger with the Office for State/Local Government Relations. As I said, there were new directors appointed in May 2009, but they did not appear in the 2008-09 report, because they were appointed towards the end of the year.

The Hon. D.W. RIDGWAY: On page 911 of the report, under point 7, Supplies and Services, the bottom paragraph reads, 'The number and dollar amount of consultants paid/payable (included in supplies and services expense) that fell within the following bands', and there were three consultants below $10,000, between $10,000 and $50,000 there were three, and above $50,000 there were four consultants. Can the minister provide details of what those consultancies were for?

The Hon. P. HOLLOWAY: I am not sure whether the honourable member wants all of them. The consultancies above $50,000 were Connor Holmes, to provide the expert planning advice and independent reviews of the development plan amendment process and planning policy development priorities, including the planning policy library, and GHD for the national project to provide a draft set of common performance measures that will be used to assess the health of the development assessment system for all Australian states and territories—and, if I recall correctly, that was one of South Australia's projects under the COAG agreement.

I chaired a subcommittee of planning ministers, which was looking at various projects under the COAG scheme, which also had some commonwealth funding provided. South Australia had one particular task, as did Queensland, and Victoria and New South Wales were looking at various aspects. I think that relates to that particular project.

The consultancy for Hassell Limited was for the preparation of a draft structure plans for the north-west corridor that will be used as an exemplar of how structure plans can be delivered for other key corridors. The consultancy for KPMG was for the completion of the contract to deliver the 30-Year Plan for Greater Adelaide, including design, plan and advise on the implementation. They are the four consultancies that are above $50,000.

The Hon. D.W. RIDGWAY: Do you have any details on the $10,000 to $50,000 range?

The Hon. P. HOLLOWAY: Yes. Botten Levinson was paid a consultancy to identify options for establishing a body for the registration and audit of private certifiers and other building-related practitioners. Connor Holmes provided advice on density and urban growth areas and conducted training sections and provided examples of best practice site value analysis. The Ernst & Young consultancy was to develop an activity-based costing model to enable the department to better analyse the resource effort and costs associated with the provision of certain services, and the consultancy for Graham Winter Consulting was to conduct leadership development workshops, including profiling of team styles, and coaching for executives and senior managers.

The Hon. D.W. RIDGWAY: I refer to the same page and the same heading 'Supply and Services'. Under 'Staff development and safety', it states that in 2009, it was $132,000 and in 2010 it is $303,000 for staff development and safety. Can the minister provide some details of how that figure was arrived at?

The Hon. P. HOLLOWAY: Can I say, as Minister for Industrial Relations, I am very pleased that departments are taking seriously their expenditure on safety. We have been leading the nation in terms of reducing our workplace injuries. We had a target of reducing workplace injuries by 40 per cent. It is absolutely important. We have had questions about WorkCover, but one of the best ways of reducing the cost of WorkCover is to stop workers being injured in the first place, and that applies to public servants as much as anyone else.

The point that needs to be made is that the Department of Planning and Local Government is a new department formed from the old Planning SA, which had been shifted around, in combination with a whole lot of other departments. Planning SA merged with the Office for State/Local Government Relations to become the new Department of Planning and Local Government. So, the context in which that trading and development took place in areas such as performance management, leadership, values, induction, mechanics of government, business writing, managers' foundations and safety training were really the formation of the new department.

As the minister, I am very proud with how far the department has come in a couple of years to have a key role, which it needs to have, in terms of the future direction of the state through planning, and I am sure that my colleague the Minister for State/Local Government Relations is likewise pleased with the performance of the department.

The Hon. B.V. FINNIGAN: One of the initiatives of the government of which I am aware was allowing the Auditor-General to play a role in WorkCover's finances. My question to the Leader of the Government and Minister for Industrial Relations is in relation to Part B, Volume 5 of the Auditor-General's Report, page 1839 and following. What is WorkCover's financial position, and can the minister report on positive developments in WorkCover's finances?

The Hon. P. HOLLOWAY: WorkCover's results for the financial year reflect a profit of $77 million and a reduction in its unfunded liability to $982 million, which is, of course, a funding level of 61.5 per cent, which is much too low but, clearly, the changes the government has introduced are working to address that. The 2009-10 financial year is the first time that WorkCover has recorded an annual profit for 10 years, since the year ended 30 June 2000. This positive result continues a recent trend of real improvements in WorkCover's claims liability. For the fifth half-year in a row, WorkCover has recorded a claims result better than projected by its actuary which is a considerable improvement on the previous year when the corresponding figures were a loss of $75 million and unfunded liability of $1.059 billion for a 56.7 funded level.

The result for the 2009-10 financial year is particularly pleasing as the final result was adversely affected by over $100 million in movements in long-term interest rates which are outside WorkCover's control. Without these movements in financial markets, WorkCover's results would have been better. Following the changes to legislation that were made to WorkCover, there are still a number of matters that are of course before the courts and obviously the decisions taken there will be important in determining the long-term viability of the scheme.

The Hon. D.W. RIDGWAY: This question is for the Minister for State/Local Government Relations, but I suspect that the same officer will be required. I refer to pages 787-8 of the Auditor-General's Report and the heading 'Audit findings and comments'. The report contains an extract from the 2009-10 Independent Auditor's Report which details the qualification to the authority's financial statements as follows:

Basis for qualified auditor's opinion

In 2009-10 the Local Government Finance Authority of South Australia (the Authority) recognised a grant payment of $1 500 000 ($250 000 in 2008-09) as a distribution from Retained Profits in the Statement of Changes in Equity.

Section 5 of the Local Government Finance Authority Act 1983 specifies that Councils are members of the Authority. The payment was made to an external entity which was not a Council.

In my opinion, the payment was not a distribution to owners in accordance with [Australian Accounting Standard Board principle] 101 Presentation of Financial Statements but a grant expense that should be recognised in the Statement of Comprehensive Income.

As a result, the following items are misstated in the Statement of Comprehensive Income:

Expenses understated by $1,500,000...

Profit before Income Tax Equivalents overstated by $1,500,000...

Income Tax Equivalent Expense overstated by $450,000...

Profit after Income Tax Equivalents overstated by $1,050,000...

Total Comprehensive Result overstated by $1,050,000...

The question is: what is the reason for the accounting error in relation to the grant that should have been recognised in the statement of comprehensive income?

The Hon. G.E. GAGO: I have been advised that the Local Government Finance Authority has received a qualified audit opinion for the 2009-10 financial year and that the LGFA is not part of the Crown nor is it an agency or instrumentality of the Crown. It operates under the terms of the LGFA Act, and the board of the LGFA is not under the direction and control of the minister.

In relation to the audit finding that the honourable member refers to related to the treatment of a grant to the LGA being recorded as a distribution from retained profits of the LGFA and not a grant expense, the qualification relates to the accounting treatment of this grant payment that the LGFA made during the 2009-10 financial year of $1.5 million.

Section 22(2) of the Local Government Finance Authority Act 1983 empowers the LGFA to apply surplus funds for the benefit of local government. The Auditor-General considers, though, that the grant should have been reflected as an expense item in the statement of comprehensive income and not as a distribution from retained profits in the statement of changes in equity.

As a result of the Auditor-General's opinion, some items are misstated in the statement of comprehensive income. These are expenses understated by $1.5 million, which is $250,000 understated in 2009: profit before income tax equivalents overstated by $1.5 million, which is $250,000 overstated in 2009; income tax equivalent expenses overstated by $450,000, which is $75,000 overstated in 2009; and profit after income tax equivalents overstated by $1.05 million, which is $175,000 overstated in 2009. The total comprehensive result is overstated by $1.05 million, which is $175,000 overstated in 2009.

I have met with the LGFA in relation to the difference of opinion. The Treasurer's view reflected that of the Auditor-General's. I met with the LGFA, and their financial advisers, and they insist that their advice is that their treatment is an accurate and legitimate one. So, there is clearly a very different point of view. I understand that this is not the first year that this treatment has occurred where the Auditor-General's view has been different to that of the LGFA's. I am in the process of communicating with the Treasurer in terms of whether there are any other steps that he would wish me to take in relation to this difference of opinions.

The Hon. R.I. LUCAS: My question is to the Leader of the Government. The leader referred, in response to a Dorothy Dix question earlier, to the introduction of a new IT system, in particular Curam. Can the minister indicate what the original budget was for Curam and what was the final cost of Curam?

The Hon. P. HOLLOWAY: The final cost is enclosed in the accounts, and we will endeavour to find the reference for that. It is under note 16, intangible assets, page 1870. The figure is $43.88 million.

The Hon. R.I. Lucas: The original budget.

The Hon. P. HOLLOWAY: Under Note 16, Intangible Assets, it has got IT development and software. It has got the cost balance at July, then goes through the balance at 1 July 2009 and the balance at 30 June 2010 is $43.88 million. If there is anything more specific the honourable member wants—

The Hon. R.I. Lucas: The original budget.

The Hon. P. HOLLOWAY: We will take that part on notice.

The Hon. R.I. Lucas: On page 1863 of the Auditor-General's report, there is a reference to the funds under management by WorkCover. It particularly refers to the fact that WorkCover, this last financial year, employed 18 separate external specialist fund managers to assist them in managing their funds under management, which was a reduction of two from 20. Can the minister take on notice—I wouldn't expect him to have the answer—the names of the 18 external specialist fund managers in 2009-10 and the names of the 20 external specialist fund managers in 2008-09, and the payments made by WorkCover to each of the external specialist fund managers in 2009-10, as referred to by the Auditor-General on page 1863 of the audit report?

The Hon. P. HOLLOWAY: We will take that on notice. As I said, whether there is any confidential clause or not, I cannot say, but we will take the question on notice and see what information we can provide.

The Hon. R.I. LUCAS: Given this is funds under management, it is employer funds that are going into WorkCover, there is clearly a public interest in how much is being paid and to whom by WorkCover for specialist fund managers. That is the reason for the questions.

Given the strongly differing views within government broadly about whether or not WorkCover Corporation should continue to manage its funds, the minister will be aware that Treasury has had a strongly held view for some time that Funds SA should take over management. Is the minister comfortable with the way WorkCover is managing it, and does he support their continued control over the funds under management as opposed to Funds SA?

The Hon. P. HOLLOWAY: I am comfortable with the decision as it is at the moment. Indeed, the government has made a decision in that regard. I guess, like all these decisions, one should continually have them under review.

The CHAIR: I conclude the examination of the Auditor-General's Report.