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House of Assembly - Fifty-First Parliament, Second Session (51-2)
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

In committee.

(Continued from 14 November 2007. Page 1585.)

The CHAIR: We will deal first with the Minister for Health, Minister for the Southern Suburbs and Minister Assisting the Premier in the Arts.

Ms CHAPMAN: Minister, I refer to Volume II, page 561—Remuneration of Employees. Three employees were paid remuneration packages of between $380,000 and $610,000. These employees, in the explanatory material, had left the department, and it included their long service leave and other entitlements. My question is: who were these three employees, how much were they each paid, and were their contracts terminated or expired, or had they resigned?

The Hon. J.D. HILL: I am not going to mention the names; I am assuming that the member is not asking for their names. I am advised that, in relation to the three officers, two retired—if I give their positions, of course, I would virtually give you their names—and the third officer went on to a job outside the agency, I think in the national health call centre, from memory. The superannuation, of course, was paid out, and that is what produced the outcome that is noted in the Auditor-General's Report. However, I would point out that, in 2006-07, 65 people were paid over $100,000, and in 2005-06 there were 61. If you take out the three positions that I have just described, you roughly have the same number of people. If you take into account that there would be a number of people, I guess, whose salary would have pushed them into that $100,000 pay packet for the first time, it is a fairly good set of figures. I know that, since he has been there, the new CE of the department has reduced the number of staff in our head office.

Ms CHAPMAN: I refer to Volume II, page 564; funding to non-government organisations. Funding to SHine SA increased from $3.9 million to $8 million in 2006 and to $6.459 million in 2007. It is noted that this organisation has sold its property at Kensington (in my electorate) and purchased a property at Woodville to relocate its headquarters. As this is now the Woodville GP Plus Centre, how much of this funding was allocated for the provision of health and allied health services that is not provided by SHine SA employees, and how much funding has been allocated to SHine SA for the 2007-08 year?

The Hon. J.D. HILL: I am happy to take this on notice, but I point out to the member that, if she asks questions like this, I will not be able to answer them, because these are really budget questions; they are not questions which are the subject of the audit. As the member said, SHine SA has sold its property and moved. The government invested in it to build a GP Plus health care centre at Woodville, and SHine is running its operations from there. I have been there a few times, and I know that it is operating very successfully. The after-hours GP services are running from the premises as well, and they are going very well. They are being well supported by the local community.

As to the details of how much, and so on, I am advised of the following. Total funding provided in 2006-07 to SHine SA (as the member referred to it) was $6.431 million. That consisted of base recurrent state funding of $2.186 million, commonwealth-related funding of $1.745 million and other one-off funding programs—and that was state-funded capital allocation, $2.5 million, which I assume is for the building works. That produces $6.431 million. Ongoing for 2007-08 and 2008-09, funding to be allocated in the 2007-08 year will be about $4.553 million. That consists of base recurrent state funding of $2.273 (so, just a slight increase, I guess, in line with inflation there). Commonwealth-related funding will be $1.78 million (once again, slightly more, based on inflation, or CPI), and there will be a state-funded capital allocation of $0.5 million, I think, for continuing with building works (I am not sure about that: if it is not, I will certainly provide more information.)

I am not sure whether the member wanted to know which services are run through there, but there is a whole range of clinical, counselling and other services, such as community capacity building, library and resource services, professional education, health promotion, leadership, and so on.

Ms CHAPMAN: I am aware of the extensive nature of the services that SHine provides because, as I said, it is an operation that has been in my electorate for a number of years. With respect to the money that is going to SHine SA, as a non-government organisation recipient—that is, the $4.553 million for this forthcoming year, for example—is any of that to provide GP Plus services, or is it all to provide for SHine? My understanding was that this facility was to be purpose-built to accommodate SHine SA, but also that there would be clinical services—and, indeed, a five to nine, I think, after-hours GP service is available at this facility. Does it have a separate budget to provide the other GP Plus services that SHine SA, as I understand it, expects it to provide? If a separate funding amount is allocated for the GP Plus services, how much is it?

The Hon. J.D. HILL: I can perhaps obtain more detail of precisely how much money, and so on. However, the general point is that the amount that I just described is for the allocation to SHine to run SHine-type services. The other services, particularly the after-hours GP services, are run through other budget lines, and I believe that is through the Central Northern Health Service budget. The arrangement in place is that the contract is signed with the provider of the locum services—I think it is GP Solutions in the case of Woodville. We have a contract with that organisation, and it provides the service. Those people then bill Medicare for the clients who come to see them.

So, it is a relatively inexpensive service, from a state point of view. We need to provide the space, and there might be some other costs that we provide, such as ongoing infrastructure costs. However, essentially, Medicare is providing those services—and, of course, it is the responsibility of the commonwealth government to provide GP services to the community. We have really set up a system that allows that to happen in a sensible way for the community. The services operate on weekends and after hours, which means that a whole range of people who normally find it difficult can get to see doctors. Of course, it then takes pressure off the emergency departments, particularly with respect to those category 4 and category 5 type patients who, most properly, should be seeing a doctor.

Ms CHAPMAN: At page 564, of the other NGOs that received $14.924 million in 2007, who received these grants and how much was paid to each?

The Hon. J.D. HILL: Once again, I am not trying to be unhelpful here, but how much money is given to each non-government organisation is properly a budget question. It is certainly not a secret, but I just do not have those figures here. That is a budget matter. The audit goes through issues it has with the way we manage those kinds of services; and audit did have an issue about funding to non-government organisations and, in fact, has recommended some tightening up of the arrangements. The health department has certainly taken that on board and will, in fact, do that.

As to which organisations are provided which sums of money, I can tell the house in general terms. In 2006-07 the Department of Health allocated around $93.8 million in grant funding to a range of non-government organisations for the provision of community health services. In addition, approximately $17.5 million in grant funding was allocated to a range of non-government organisations through regional health services.

The information provided on grant expenditure administered by the Department of Health in 2006-07 of $93.8 million reflects actual expenditure up to 30 June this year, in contrast to the amounts published in the 2007-08 portfolio statements, which for the 2006-07 estimated result reflects the revised budget for 2006-07.

For example, we give money to Red Cross, we give money to the RDNS and, of course, the Royal Flying Doctor Service. There is a range of services like that which are non-government services which have typically provided services to the state. As to the exact figures, I do not have them with me, but I am happy to get a breakdown for the member.

Ms CHAPMAN: It is the last item on the list of non-government organisations. It is just described as 'Other'. I note in the NGO list, again at page 564, that funding to the Nganampa Health Council was reduced from $1.652 million in 2006 to $1.289 million in 2007. Given the chronic issues of child abuse which, of course, your government is investigating in an expansion of matters to be considered under the Mullighan inquiry on the APY lands, why has this funding been reduced?

The Hon. J.D. HILL: Once again, this is a budget matter. I appreciate those figures are in the report, but it really is a budget issue rather than an audit issue. There is no audit problem with those figures. They are properly audited. There could be a range of reasons why the figure was greater last year than this year. There might have been a one-off funding for some particular enterprise. I am not sure. I am happy to get the advice. I do not think we have the advice here.

While I have the opportunity, having visited Nganampa Health in each of the last couple of years, I have to say that it does an outstanding job in the APY lands. The doctors and nurses, and others who work for that service, are outstanding servants of the public, providing services through a non-government, Aboriginal-run organisation which is managed by Paul Torzillo, who is based in North Sydney. It sounds like a complicated set of arrangements but I believe it works very well.

Certainly, the services they provide to that community are outstanding. For example, 100 per cent of the children born in the lands are vaccinated, and I think that is a statistic that no other community in Australia can replicate. The birth weights of children have steadily gone up over the period that Nganampa has been working in that area. I think it is one of the great institutions we have, and it is well supported by the state and federal governments.

Ms CHAPMAN: I thank the minister for his extra information on that, because I also visited the APY lands, and I wonder whether he can indicate whether the Ernabella health centre, which burnt to the ground a few years ago and has been rebuilt, was relying on state funding.

The Hon. J.D. HILL: The advice I have in relation to the Ernabella centre, which I also inspected this year, is that there has been agreement reached finally between Nganampa, the state insurance corporation and the Department of Health to rebuild it, and the matter has gone out to tender.

Ms CHAPMAN: At page 885, Volume III, relating to the SA Ambulance Call Direct service, the revenue received from Call Direct was $2.033 million in 2007, an increase on $1.939 million in 2006. What is the cost of providing the service as at 30 June 2007, and what is the budget and income expenditure for the 2007-08 year if this service is to survive?

The Hon. J.D. HILL: I think I have already provided information to the house. I will certainly get it checked. From memory, the service is costing more—I think it is either $2 million more or $1 million more—to run than it actually collects. As I think I have mentioned to the house previously, it was a good idea a number of years ago to set it up as a way of trying to bring some revenue into the ambulance service. It was an idea to create income for the service to defray other costs but, unfortunately, it has not been successful as a commercial enterprise.

I guess you have to ask whether it is appropriate for a government agency to be trying to profit out of elderly and frail people. Our job is to provide a service. The ambulance service is a very good service and, as I have indicated previously, the board of the ambulance service is looking at this particular issue and trying to work out how to manage it appropriately. But, clearly, it is not sustainable to run it at a loss.

Ms CHAPMAN: I will take the minister as being on notice as to the actual amount, because we have the amount of the income.

The Hon. J.D. HILL: Yes, I will take it on notice.

Ms CHAPMAN: I refer to Volume II, page 566, the Australian Immunisation Agreement. Of the $20.946 million unexpended as at 30 June 2007, $8.526 million was for commitments pursuant to the Australian Immunisation Agreement. Has that money been spent since 30 June? If not, why not?

The Hon. J.D. HILL: My advice is that the bulk of this money has been spent; not all of it, but the bulk of it has been spent. I am not saying it is particularly related to this issue, but one of the issues that affects our books at a state level is that often the commonwealth government puts funds out the door in the last week or two of its budget year to make its books look good and then we end up with a whole lot of money sitting in our books which we have not been able to spend and which we have to spend over the next year.

I am not sure whether that is the case in relation to this, but I suspect there is an element of that in it. It is an inevitable part of transfers between various levels of government, and presumably local councils may say some things about us. If we do not get the money on 1 July it is hard to run a full year's program, even if you get a full year's amount.

Ms CHAPMAN: I refer to Volume II, page 556. Of the $3.508 million unexpended for other programs, which of these organisational programs is entitled to receive the same; and how much for each of them?

The Hon. J.D. HILL: Are you asking specifically about the $3.5 million out of the $20 million amount? My advice is that there is a series of very small amounts. The issue of materiality comes into play, but I will get some advice and give you some further information in relation to those as soon as I can.

Ms CHAPMAN: I refer to Volume III, page 894, which is a tax obligation of SA Ambulance Service. The Auditor-General's Report tells us that last year a $273,000 grant was received from the Australian Taxation Office to fund the additional fringe benefit tax impact on the ambulance service as a result of a loss of public benevolent institution status. Is this an ongoing expense that will have to be met every year? How does it sit with the plan of the government to provide emergency services exclusively to SA Ambulance Service as a provider under the public benevolent qualification? If it is an ongoing obligation, who will be paying it?

The Hon. J.D. HILL: My advice is that support for the benefit runs out on 30 March 2008. There are a number of institutions which used to get that public benefit status and which no longer get it. Transition arrangements have been put in place for the past four years, and that runs out in March next year.

The CHAIR: The time having expired, I congratulate the minister on there being no audit issues.

The Hon. J.D. HILL: Madam Chair, I draw your attention to the state of the committee.

A quorum having been formed:

The CHAIR: I call the Minister for Transport, Minister for Infrastructure and Minister for Energy.

Dr McFETRIDGE: I refer to the Auditor-General's Report, Volume V, page 1395. What measures will the department introduce to ensure that commonwealth grants are recognised correctly as revenue received in advance, rather than reporting the amount as deferred income and ensuring that financial statement lines are not misstated in future budgets?

The Hon. P.F. CONLON: The money that we are talking about is $100 million and, I think, another $12 million, from memory. It is a matter of an accounting argument, but let me tell the committee what the relevance of that accounting argument is. What happened was that, at the end of the financial year before last, some 48 hours before the end of the financial year before the last, the commonwealth sent me a note saying, 'Here is $100 million we would like to send you for the Sturt Highway. Please respond within 24 hours.' Pretty obviously the commonwealth was seeking to get money off its books before the end of the financial year and send it to us.

We took advice from Treasury on how that money should be accounted. It is accounted in the way in which it is accounted here. We talked about this last year. They recognised at the time that there would be some risk that the Auditor-General would not agree with accounting standards. However, were we to ignore the advice of Treasury and account for it in the way the member for Morphett would like us to, we would have been unable to accept the money, because it would have then appeared as income in one year but been counted as expenditure in the next. That would have exposed us to a $100 million hole in the budget.

It might seem very bizarre to an ordinary person in the street that we cannot take money two days before the end of the financial year and spend it in the next financial year on the matter for which the commonwealth sent it to us, but that is the Auditor-General's view of the accounting standard that should apply. However, make no mistake, if we were to apply the accounting standard for which the honourable member is arguing, then we would not have been able to accept that money. The net result of the honourable member's argument would have been that we would not have been able to spend $100 million on roads in predominantly the member for Schubert's electorate.

My view at the time—and it remains—was that, given the advice of Treasury on the accounting standards and given that we could add $100 million of road infrastructure in South Australia, I was prepared to take the risk of the Auditor-General thinking that it should be accounted differently. I am still of that view because, if I had taken the view that the honourable member appears to take, I would have played it safe and South Australia would have had $100 million less spent on its roads.

If my punishment every time we get more money from the commonwealth for roads is to have a qualification from the Auditor-General, I will take the qualification and the $100 million every time—and I will take the $12 million, which is in the same category. Just so members understand, the accounting treatment and the matters that govern that accounting treatment would be bewildering to an ordinary person. It is possible—and Treasury advice confirms it—that that money might have been treated in the way Treasury believes it should have been treated—and there are a number of things about it such as conditions about where it will go and those sorts of things.

For the ordinary South Australian interested in spending money in South Australia, he or she would be astonished if we were to knock back an offer of $100 million on the basis that someone wanted one accounting standard against another. That is the long and short of the $100 million and the $12 million. We accept Treasury advice as it should be accounted. If we did not, we would not be able to take the money. I hope that the commonwealth rings up a few hours before the end of the next financial year and asks me whether I would like $100 million because I think I would probably make the same mistake again, if I could get away with it.

Dr McFETRIDGE: I am just an ordinary person and I tell the minister that I would take the money as well. I have never claimed to understand the ins and outs of some of these budgets and accounting, but I do take advice from the Auditor-General. I refer to Volume V, page 1396. When will the department address the strengthening of the internal control environment as recommended by the Auditor-General?

The Hon. P.F. CONLON: The matters raised are the matters raised the year before, and all those matters have been addressed. I am told that the only area with further work ongoing is the expensing of exclusions, but those matters that have been identified in previous years' Auditor-General's reports have been addressed by the department. It is important to note that I, along with representatives of the department, met with the Auditor-General some 12 months ago to ensure that we understood what the Auditor-General wants and he understood what we were able to do. My understanding is that that relationship has been a good strong one. In my view, this is exactly why an Auditor-General exists; that is, to put to departments how the Auditor-General thinks they should be doing things better, and the healthiest possible relationship is one of a conversation between the department and the Auditor-General.

On most occasions, the Auditor-General's advice is taken and changes and processes are made. On other occasions, because of a healthy conversation, sometimes the Auditor-General discovers (or his or her office discovers) matters that are relevant to that judgment and the judgment is changed. I am quite happy that there is a very healthy conversation between the department and the Auditor-General and the Auditor-General's concerns from the previous audit were addressed.

Dr McFETRIDGE: The next question relates to the same reference at page 1396. When will the department adopt audit recommendations to review accounting policies, procedures and systems for recording capital works expenditure to ensure the department complies with Australian accounting standards?

The Hon. P.F. CONLON: The answer to your question is just below the paragraph to which you referred. As I understand it, the answers are being provided within a month of being received by financial operations, which, as I understand it, is what the Auditor-General required.

Dr McFETRIDGE: I refer to page 1397. Does the minister continue to expect significant delays in the preparation and independent review of key reconciliations, including bank reconciliations?

The Hon. P.F. CONLON: Again, the answer is in the next paragraph, which states:

The Department has put in place certain accountability processes including performance monitoring and reporting to senior management. These processes have resulted in key reconciliations being performed and independently reviewed in a timely manner for each month throughout the 2006-07 year.

I am reliably advised that we are continuing that process this year. Again, it is an example of a very healthy conversational relationship with the Auditor-General.

Dr McFETRIDGE: I refer to page 1397. When will bona fide certificates and leave return reports be reviewed in a timely manner and has fortnightly, instead of monthly, return processes been introduced, as advised by the department?

The Hon. P.F. CONLON: I am advised that, on receipt of the Auditor-General's recommendation, that is now being done on a fortnightly basis.

Dr McFETRIDGE: I refer to page 1398, the mobile phone review. Can the minister provide the committee with an update of the policies and procedures for the control and management of mobile telephones within the department?

The Hon. P.F. CONLON: The member will note that this year's audit has identified that the department has made progress in addressing the issues raised previously by audit. DTEI policy requires all departmental mobile phones to be approved by the employee's manager. The process for allocating and approving mobile phones requires a business case providing justification and outlining the business need for the mobile handset/service/accessory. It must be approved by the section manager or nominated delegate prior to the acquisition of services from the service provider.

DTEI has a process that requires all users of departmental mobile phones to identify that the calls recorded on the individual mobile phone reports are valid and to identify any personal calls. The employee is required to reimburse the department for private use of the phone.

Dr McFETRIDGE: I refer to the Auditor-General Report, Part A: Audit Overview, page 14, Transport Regulation User Management Processing System (TRUMPS). Given that there are still ongoing software problems occurring with TRUMPS, how much has been expended on the system to date? The last figure was $14.7 million as at June 2007.

The Hon. P.F. CONLON: As I understand it, the $14.7 million remains the full figure. In his question, the member suggested that TRUMPS continues to have software problems. It is necessary to put that into perspective. There were issues in the early stages of TRUMPS, and some of them were not software problems. From the advice I have received, we do not have any ongoing software problems. There have been issues with data being inputted incorrectly, which is not a software problem but the result of ordinary human error.

As I understand it, there have also been issues with slowness with some of the Telstra lines, and some of those lines have since been upgraded to a greater capacity by Telstra. So, before we go too far in talking about that, it is important to place on the record that it has not been caused by software problems. There were some issues originally; it is a very complex new system. It is a very good system and, ultimately, it will provide a far better electronic service that people have ever had before.

Of course, there will be ongoing maintenance to the system, as one would expect. However, while we would have preferred there not to be any early issues with the system, I remain very confident that not only will it provide a better service than we have been able to provide in the past electronically but we believe that some other states may well want to look at what has been done here. Contrary to the things that have been said, we understand that some people will be quite interested.

People have to put in context the complexity of introducing software systems. Looking at The Advertiser today, I note that Sydney Water is actually engaged in legal action following a $61 million failed customer information billing system. There is always a risk with new systems. Also reported in The Australian today, I note that the rail operator in New South Wales has had issues with actually getting its ICT agenda up. In fact, I think it has been reported that it has run $13 million short on its technical revamp, the simple reason being that these are complex and difficult things.

South Australia is no orphan in having complexities in replacing old legacy systems with new systems and providing better services. If we do not do what we are doing now, we will not be able to provide what I have indicated to the house previously will be a much better service for those who wish to use the electronic services of Transport SA. There is always a risk with the new system. One does not get any reward without risk in this world. I am very confident that it will be a very good system for people.

Dr McFETRIDGE: I refer to the Auditor-General's Report, Volume V, Part B, page 1364. What changes will occur to the five-year contract and joint venture agreement between TransAdelaide and Australian Transit Enterprises Pty Ltd to provide passenger transport services, given the minister's recent announcements?

The Hon. P.F. CONLON: As indicated in my ministerial statement on the day, there are no changes to the bus services at present, and that contract runs until April 2010. We do not have any intention of disturbing an existing contract. I think that would be bad form.

Dr McFETRIDGE: I refer to the same volume, page 1383. How will profit distributions and annual management fees from the joint-venture entity be affected? Not at all?

The Hon. P.F. CONLON: No. I am surprised by the question, because we have been very careful not to interfere with—or attempt to change—any contractual relations. I am reliably advised that the status quo will prevail. That would be the obvious course, given that the contract was entered into. I repeat: I do not think that we will do anything to disturb the discharge of our obligations to each other. I think that it would be very unwise to do that.

Dr McFETRIDGE: I think you are quite right, minister. It is probably an unnecessary question. I refer to page 1366 of the same volume. What measures will be implemented to ensure that up-to-date documented policies and procedures are kept in the area of payroll, fixed assets and expenditure?

The Hon. P.F. CONLON: First, I indicate that the corporate governance policy statement is presently being updated. It will be put before the TransAdelaide board in December. In terms of payroll, a full review of payroll processes was carried out, and a plan is being developed for the progressive implementation of internal controls. Immediate controls have been put in place to address those risks that would be deemed to be the most serious ones. In terms of fixed assets, my advice is that the matter addressed by the Auditor-General was implemented and, as a result, carried out, and it resulted in a write-off of $75,614, which was treated as an adjustment to the depreciation expense in 2006-07. I would be the first to say that I have no idea why we do things like that.

Dr McFETRIDGE: I again refer to Volume V, page 1366. What has been done to address the lack of independent checking of new and terminated employees on the payroll system which has resulted in the risk that invalid employees may be put on to the payroll system and paid?

The Hon. P.F. CONLON: Again, I stress that those matters identified were risks, but they were risks that were never realised. There has never been a case of an invalid employee—no ghosts. The risks that were identified have been addressed according to priority: the most important ones first. As I understand it, other processes are being implemented there and, while risks were identified, no risks were realised, which I think is a good thing.

Mr HAMILTON-SMITH: I would like to ask a question on infrastructure, particularly on the ICT contracts and aspects of them. I refer to Part A: Audit Overview, page 14 and the TRUMPS system. The Auditor-General notes that an additional $3.3 million was injected into the TRUMPS program and that the system is now back on track. The Auditor-General notes:

...the complexity of the business analysis work relating to the development had been underestimated in the original business case.

He notes that financial transaction components are now on track. Could the minister tell us which parts of the TRUMPS program are on track and which parts of the program are still issues we are dealing with or are still a problem? In particular, how much more money will be needed to sort out the program to finality?

The Hon. P.F. CONLON: It would help the Leader of the Opposition if he would listen to the answers provided to his shadow. I will explain it again for his benefit. The TRUMPS system is operational; no part remains unoperational. It has been the subject of some early teething problems, and I will refer to some other things in a moment about that. It is a big, new, complex system that offers a much better electronic service than people have ever had in the past. It had one or two set-up issues. It has also had issues related to data which had been entered incorrectly, which caused a few small problems, and we have had some problems with speed associated with a Telstra line. That Telstra line has since been upgraded but, of course, those issues were lumped at the feet of the system.

We will obviously have ongoing maintenance as a further cost, but the only cost increases to the system were to add capacity to do certain things, in particular, the graduated licensing scheme which was a far more complicated licensing scheme than we had previously, and the system had to be adjusted to deal with that. There was also a suggestion that when major changes to the program occurred, while they had been ticked off, cabinet had not been advised as often as the Auditor-General would have liked. I indicate that cabinet is now pretty fed up with its quarterly updates on the TRUMPS system and, to a degree, I think we have probably over-responded to the Auditor-General. It is up and running; no part of it is not up and running.

Again, I refer to the answer I gave to your colleague: the big, complex, new systems are difficult and the difficulties are not limited to here. I note an article in The Australian today reporting that Sydney Water is launching legal action against its service provider (or non-provider, although I do not want to buy into their argument) following the $61 million failure of a customer information billing system. I think we have done considerably better than that, no disrespect to my friends in New South Wales.

On a more relevant issue, I note that New South Wales' rail operator, RailCorp, has had trouble spending its $13 million for technology investment targets because of, as I have said before, the complexity of legacy assets and updating systems. So, while there has been a bit of criticism of our TRUMPS system, I am reliably advised that it offers a much better service than we have been able to offer before and it will be a very good system. It may well attract the interests of some interstate people in terms of adopting the system. Certainly, as I have alluded to what has happened in New South Wales, I can also indicate the introduction of our TRUMPS system is superior to that which occurred in Western Australia at the start of the new system which I think crashed in its entirety for several weeks.

I think it is necessary to be fair when you look at these systems. The truth is that, while there have been one or two start-up issues and issues for which people have sought to blame us which have not been the fault of the system—and, in particular I refer to the need for Telstra to improve some of its bandwidth, as I understand it, to speed up the service—by and large, it has been much more successful an introduction than we can refer to in at least two places. I believe it will be a very good system for us. I believe that South Australians will have the best electronic system in the land very soon.

The bottom line is that the way to avoid problems with a new system is not to have a new system but to keep the old one. This was a difficult and complex project and one which a lot of people worked on. I want to put in a word for those public servants who worked on this project for a very long time. It was a very difficult job—they worked under a lot of stress. I went over to the Walkerville building at the end of it to talk to those people, and I think that time will show that they have a very good achievement in this system. Time will show that they have, in my view, the best introduction of this type of new software in Australia, and I think that time will show that we have done very well with this.

Mr HAMILTON-SMITH: I refer to Part A: Audit Overview, page 12, where the Auditor-General makes the point that in 2005-06 he wanted to see finalisation of a whole of government ICT strategy planning document and he makes the point again in this report for a second year that that has not been completed. It is still under consideration. He also makes the point that planning requirements of the ICT frameworks were not being met by all agencies. Does the minister have an idea of a deadline when a whole of government strategy will be completed? Is there a plan in place to make sure all agencies comply with the ICT frameworks?

The Hon. P.F. CONLON: There certainly has been. People understand the complexity of the ICT procurement. It is a very big ticket for government. Some successes have already been achieved through the adoption of a centralised strategy. Some budget savings have been achieved, and we have also achieved some remarkable reductions in unit costs in many, many services. Unfortunately, every time we reduce unit costs somebody wants to use more of them, but that is the nature of ICT. But we have had some very significant achievements. It is a matter that has seen a move to centralise control, a number of matters having been referred to cabinet for a whole-of-government approach. It is a complex matter, and what I would say is that we are doing quite well at it.

The CHAIR: The time having expired, I call the Deputy Premier, Treasurer, Minister for Industry and Trade and Minister for Federal/State Relations.

Dr McFETRIDGE: The reference is Auditor-General's Report, Volume V, page 1340. What measures will be implemented by the Department of Trade and Economic Development to address the lack of consistency in use of requisitions and purchase orders to document purchasing transactions before entering commitments to purchase?

The Hon. K.O. FOLEY: DTED has implemented a new procedure with its shared service provider to return all invoices if they are not attached to a relevant purchase order. Where a purchase order not required due to the payment being of a grant or utilities nature then a purchase order exemption form is to be attached outlining why there is no purchase order. Regular training of DTED officers in procurement practices is continuing to occur. Directors have been advised of the outcome of the audits and to ensure continued monitoring of this issue. Procedures were amended during the year to ensure that low value transactions could be processed using credit cards, which has simplified internal processes but it also ensured that suppliers were paid in a more efficient manner. DTED will review its procurement practices with a view to further streamlining and simplifying practices, as part of the overall internal red tape reduction initiatives. This process is expected to be completed by the end of December '07, when new training will be provided to relevant staff.

Dr McFETRIDGE: The next reference is Volume V, page 1356. It refers to the net loss of $121,000 from disposal of assets. What assets/plant and equipment was disposed of, and can the minister provide details?

The Hon. K.O. FOLEY: We will take that on notice and come back to the house.

Dr McFETRIDGE: The next page, 1357, same volume: what is the exact amount of funds specifically held in the Accrual Appropriation Excess Funds Account?

The Hon. K.O. FOLEY: We will come back to the house with that answer.

Dr McFETRIDGE: Page 1358, same volume: can the minister advise me what exact amount was spent on the minister's, ministerial and DTED staff travel for the year 2006-07? It says in the Auditor-General's Report that creditors and accrued expenses were $2,739,000.

The Hon. K.O. FOLEY: You want how much I spent on my travel—

Dr McFETRIDGE: Can the minister advise me what exact amount was spent on the minister's and ministerial and DTED staff travel?

The Hon. K.O. FOLEY: The cost of oversees travel incurred by the department during 2006-07 relating to departmental staff was $558,000. That amount is disclosed in the annual report. In addition, $299,304 was incurred by the department in relation to costs for the minister—that being me—and his staff. Total costs incurred by the department for overseas travel was $857,383.

Dr McFETRIDGE: I refer to Volume V, page 1360. Can the Treasurer provide me with a list of the remuneration of all board and committee members, including the Economic Development Board, the Defence Industry Advisory Board, the Manufacturing Consultative Council, the Small Business Development Council, the Regional Communities Consultative Council, and the South Australian Export Council?

The Hon. K.O. FOLEY: We will get details of those. I am sure they are all on the public record somewhere, but we will get someone to dig them up.

Mr HAMILTON-SMITH: I am referring to Part A: Audit Overview, page 2, which refers to 2007-08 budget savings over four years of $202 million, additional to the $695 million of saving over four years under the 2006-07 budget. Can the Treasurer explain what devices will be used to monitor and check to ensure that those savings are achieved?

The Hon. K.O. FOLEY: One of the things that struck me, when I came into office, was how little rigour, if any, there was in maintaining an overview of any savings initiatives—and I think under the last government there was very little, if any, savings initiatives—and very little monitoring of agency expenditure. I think, from memory, that the health department did not report at all to the Treasury until the end of the financial year, which I found a very odd thing to do. What I brought in was quarterly reporting of agencies' progress towards meeting the government's budget, in both spending and savings initiatives. Quarterly monitoring continues, and will continue, where agencies report their expenditure to date and the meeting of their savings targets.

Mr HAMILTON-SMITH: Can the Treasurer go into a little more detail about how frequently agencies will report and what process will be used to ensure that savings targets and expenses are kept in check? Will it be a quarterly process, will Treasury officers be located in respective agencies and departments to monitor expenses on an ongoing basis, or will it be a six or 12 monthly review of expenses? How will the Treasurer physically manage that expenses control management?

The Hon. K.O. FOLEY: I am not sure whether the leader was listening: I just said that we do it on a quarterly basis. Agencies are mandated to report to Treasury on a quarterly basis about their performance with respect to expenditure and savings initiatives. On top of that, we have the normal bilateral process of the budget and, in addition, we have end of year one-on-ones with agencies. The first run of that was with all agencies, but we now do it with agencies that are giving us particular concerns.

As well as that, I have ad hoc meetings on a regular basis with ministers and agency heads. We also have repeated meetings between Treasury officers and departmental officers. For example, David Imber, the head of our finance branch, is currently assigned as Assistant CEO of the Department for Families and Communities, to help with its budget management, and we also have monthly reporting on expenditure and revenues into the Treasury. So, have a very robust reporting mechanism, and I am very happy with the way in which that is performing.

It is no secret that we are not successful with all the savings that we try to get out of a budget process (that is nothing new), and we have to be very vigilant in maintaining pressure on agencies. From time to time, we have reversed some savings options and have sought savings elsewhere. However, as has been identified in the outcome for the 2006-07 year, we had a net underspend of some $80 million. Some of that will be carried into this year, but some of it has been the result of very good budget management and achieving savings initiatives.

Mr HAMILTON-SMITH: I want to pick up on the point just raised by the Treasurer about the underspend of $80 million. I refer to page 1.4. The Treasurer mentioned an $80 million underspend, but is that not taking the estimate provided in the 2007-08 budget? What I am saying is that, at the beginning of 2006-07, in the budget, estimated expenses were $5.215 billion, the outcome being $5.439 billion. You have gone beyond your expenses, based on what you anticipated them to be at the beginning of the financial year.

The Treasurer is suggesting that there is an $80 million underspend in expenses, but that is based on an estimate made just a few months ago, in the 2007-08 budget. If one looks at the expenses target that you set yourself at the beginning of the financial year 2006-07, you have run over on expenses, as I see it, by a significant figure—I think it is about $374 million—based on what you forecast at the beginning of the financial year compared with what was delivered.

The Hon. K.O. FOLEY: That is not a matter raised in the Auditor-General's Report. I have released today the final budget outcome, which is actuals. The leader is comparing budget forecast as against actual results. The actual result is that we have an $80 million underspend in our budget, compared with what we forecast in our 2007-08 budget as being the position.

Mr HAMILTON-SMITH: I accept that. However, I am just making the point that, in the 2007-08 budget, you were looking back. What I am saying is that you set out to have your expenses at a certain point, and it has gone well beyond that, according to the document that was tabled in parliament this afternoon. In other words, I am saying it is not quite right to say that you have had an $80 million underspend on expenses. It is something like a $374 million overspend on expenses, when one looks at the expenses budget that you set yourself at the beginning of that financial year. Anyway, I accept the point: it is not part of the Auditor-General's Report, so we can move on.

The Hon. K.O. FOLEY: My advice is that the figures to which the leader referred are parameter variations that relate to flow through expenditure from increases in commonwealth specific purpose payments; grants for non-government schools; a big chunk of money we received with respect to AusLink in that financial year (I think we received a big one-off payment); accounting variations, such as reclassification of expenditure between operating and investing expenditure; changes to estimates of interest expenses and nominal superannuation interest expenses; and carryovers of expenditure.

Mr HAMILTON-SMITH: I now refer to Part C, State Finances and Related Matters (page 7), which talks about public-private partnerships. The private sector capital expenditure for projects is estimated to be nearly $700 million, well beyond recent PPP projects. Can the Treasurer tell us whether he has decided how he will account for that private expenditure? Will it be on balance sheet/off balance sheet? Has the government made up its mind how it will reflect those very large figures in its accounts?

The Hon. K.O. FOLEY: I will be making a statement in the midyear budget review which will be brought down shortly, but my expectation will be, as I think I have mentioned to the house, that these will be almost certainly on budget, as the government will be retaining land ownership for the schools and the prisons.

On the issue of the hospital, we have not made a decision yet as to whether or not that will be a PPP. My expectation is that it will be, but that final decision has not been taken. Again, my guess would be that would be on budget transaction as well.

Mr HAMILTON-SMITH: If the Treasurer is able to explain at this point, noting that cabinet decisions have not been made, how will he reflect the full picture of that PPP? For example, if it is $700 million of private investment in terms of capital spend, looking at the full term of the PPP, the total capitalised cost over, say, 30 years would be significantly more than the $700 million. How does the Treasurer envisage that liability being shown in the accounts?

The Hon. K.O. FOLEY: We will be giving further precise clarification of this, but I am advised that we will be presenting on our balance sheet in our midyear budget review the net present value of the lease payments over the term of the projects. In terms of our operating account, when we start to make our payments once we take possession of these assets, we will be reflecting in our net operating account the actual lease payment itself. I might add that we are putting in an approximate account of what our net present value will be, because we have not gone to tender yet and we do not have the specific payments. We are putting in an estimation for our balance sheet.

I have just asked the reason why we are putting this on our balance sheet at the midyear review as against perhaps at the budget or the time we actually sign off on the leases. We put out the forward estimates, so it will be in the forward estimates for the year in which we take possession of these assets.

Mr HAMILTON-SMITH: I thank the Treasurer for his reply. I move to Volume V, page 1465, which talks halfway down about the department's advising audit that in some instances funds transfer requirements were not being met by agencies and the department will act to ensure this is not repeated in 2007-08. I seek an explanation of what action is being taken. We had the infamous stashed cash affair. Is this to do with breaches of Treasurer's Instructions and the movement of cash from one department to the other or, indeed, within one department backwards and forwards in financial years?

The Hon. K.O. FOLEY: I am advised that the departure from established procedures did not result in any shortfall in payment to the accrual appropriation excess funds account or any breach of Treasurer's Instructions. I can say that in 2005-06 a procedure was established for the deposit of funds into that account. Amongst other things, this procedure provided that DTF pay accrual appropriation directly into the account rather than payments by individual agencies, as was the previous practice. Audit commented that on a few occasions this process was not followed and that a small number of agencies deposited directly into this account. DTF acknowledged that the established procedures were not followed in this instance. However, this was largely due to operational complications arising from the later-than-usual state budget in that year.

Agency chief finance officers were sent two separate minutes that clearly set out the requirements for 2006-07 as part of DTF requests for appropriation drawn-down schedules for 2006-07. As I said, I am advised that these were small in nature and did not result in any breach, and we are comfortable that we are now on top of this.

Mr HAMILTON-SMITH: In the same budget paper, Volume V, page 1468, I note that there is an income provision under net gain from disposal of assets of $1.252 million. Can the minister tell us what assets were disposed of?

The Hon. K.O. FOLEY: We will take that on notice.

Mr HAMILTON-SMITH: At page 1471, I note the report shows cash outflows on the purchase of property, plant and equipment of $56,725,000. Could the Treasurer provide a breakdown of these purchases?

The Hon. K.O. FOLEY: I will get a breakdown. My advice is that the bulk of it is our fleet car purchases.

Mr HAMILTON-SMITH: Page 1469, Program 3, refers to shared services reform. Will the Treasurer tell us where the budget is at in relation to savings from shared services reform?

The Hon. K.O. FOLEY: These questions are better directed to minister Wright. I can say that already we have achieved savings of $25 million a year from future ICT for 2007-08 going forward. Those savings have been captured. We are now looking at getting $35 million a year from shared services from 2009-10 going forward. At this stage we are working very hard towards that and I am confident we will get there.

Mr HAMILTON-SMITH: I refer to page 1496, Volume V, dividends. I notice grants of $4.593 million to non-government entities. Is the Treasurer in a position to provide a breakdown of these grants?

The Hon. K.O. FOLEY: We will take that question on notice.

Mr HAMILTON-SMITH: In the same column I notice that TransAdelaide returned a dividend of $5.296 million. Will the Treasurer explain the source of that revenue? I assume some of it was from the Transit Plus contract.

The Hon. K.O. FOLEY: That is just a normal dividend payment from TransAdelaide. We provide a community service obligation in order to have the enterprise trade as best it can as a commercial entity. That is why the Liberals corporatised it when it was in government, and under our system we have to pay a CSO to have them operate as a commercial entity, but it is the normal dividend.

Mr HAMILTON-SMITH: I am intrigued to know how the dividend rate might be struck and the source of those dividends. I know there is some revenue from Transit Plus, the bus enterprise. Is it sourced from a particular business operation of TransAdelaide, or is it something it is required to pay as a flat rate, or does it vary from year to year?

The Hon. K.O. FOLEY: We have not gone through a full government overview of TransAdelaide (as we have done with SA Water) to put new governance arrangements in place. I will come back to the house with the answer. As a result of the Liberals establishing TransAdelaide as a corporation, Treasury makes an appropriation to TransAdelaide for its community service obligation. That part of its operations is its community service obligation; it then has its normal revenue stream. It acts and behaves like a public corporation and provides a dividend to its shareholder. I understand that structure was put in place by the former Liberal government.

Mr HAMILTON-SMITH: I move to page 1502, Volume V. I notice that the agreement between the government and the netball association has guaranteed the repayment of a loan of $1.8 million. Is that loan secured? Is there any indication we may have to pay all or part of that sum, or is it all in order?

The Hon. K.O. FOLEY: I do not know the answer to the question, but I will come back to the house with an answer. I understand that arrangement was entered into by either treasurer Lucas or treasurer Baker under a former Liberal government, and for my sins I carry on the guarantee. We will check it out. The netball association facility was built was under a former Liberal government.

Mr HAMILTON-SMITH: We inherited a few liabilities when we came into government in 1993.

The ACTING CHAIR (Mr Koutsantonis): If the leader wants to reminisce about days gone by, we will give him Dean Brown's phone number.

Mr HAMILTON-SMITH: Thank you, Mr Chair. As always, I accept your discipline without question. I refer to page 1465, Volume V, and a disbursement error. Has the Treasurer ensured that officers are now complying with standard policies and procedures in relation to the appropriation of funds, and what action has been taken to ensure that this type of mistake does not occur again?

The Hon. K.O. FOLEY: On 18 June 2007 an electronic funds transfer (EFT) of appropriation for $16.44 million was sent to the DTED's Westpac bank account in error. The EFT was approved appropriation payable to the Department of Transport, Energy and Infrastructure. The error was discovered when officers from DTEI contacted the Department of Treasury and Finance on the morning of 19 June 2007 to advise they had not received the appropriation. DTED was contacted immediately the error was discovered. The matter was rectified within 24 hours of its being detected. An error had been made by DTF in selecting the bank account for crediting when processing the EFT.

Only the accounts of government departments and entities are available for selection in the Westpac EFT model. No external bank accounts appear on the menu of choices, consequently there was no risk of an erroneous transfer to an entity outside government. The processing of appropriation transferred by DTF required two authorised officers to approve the EFT electronically before sending it to Westpac before processing. This checking process failed in this instance. DTF procedures surrounding the transfer of appropriation have since been strengthened to include a third person (being a senior officer in DTF) to verify and sign off on bank account details before appropriation is transferred.

Mr HAMILTON-SMITH: Further, $16.4 million transferred into the wrong account does raise some concerns. The Treasurer mentioned that external accounts do not appear on the screen, if you like, of options. Is there any branch of government where funds such as those could accidentally find themselves in a contractor's account or some private sector organisation with which government is dealing? Have we fail-safe devices in place to ensure that $16 million cannot accidentally find its way into someone's pocket.

The Hon. K.O. FOLEY: Human error occurs. You can have the best check procedures in the world, but human error does occur. I will not whip DTF staff for an error. I am advised that all these appropriations are to government entities, and obviously, if a human error is made and an agency has not received appropriation that it is expecting, the red flag goes up very quickly and the error is identified. Two officers are required to approve it. An error happened. We have now put a third officer in the mix.

We have had electronic funds transferring occurring in government for many years, including under your regime. My guess is that you probably put it in place, and if we went back and had a look, we could well find errors. Electronic funds transfer errors happen, and I am sure from time to time some of us at least have had it happen to our own accounts. It happens. It should not, but it does. However, I am confident that, given that this is all within government, these errors will be quickly identified.

Mr HAMILTON-SMITH: I refer again to Part C, State Finances and Related Matters, page 3. I was interested in the Auditor-General's observations about expenses controlled generally within government. He makes the point that the estimated result was a surplus of $38 million but the budgeted amount was $91 million. The Treasurer has just updated some of that today. He says that solid growth in revenues that exceeded budget were, however, exceeded by increases in expenses.

The Treasurer answered a question a moment ago about how he monitors expenses quarterly etc. Will the Treasurer explain what discipline he applies over budget estimates during the bilaterals process from departments when they set out to estimate their expenses for the forthcoming year? How does Treasury dig into the accuracy of those estimates on expenses, because what seems to be happening from the Auditor-General's findings is that departments seem to be consistently estimating that they will spend a certain amount and then are finding that, at the end of the year, cost pressures have emerged or certain things have taken place which have caused them to run over their budget significantly, which means, of course, that you then have to find the money from somewhere to fix it.

I am sure the Treasurer is pulling his hair out on a daily basis. How does the Treasurer ensure that they get it right; that is, that they anticipate those cost pressures and try to get their estimate of expenses as accurate as possible? I know the Treasurer has mentioned how he monitors it on a quarterly basis once we are running through the year, but I am talking about looking forward?

The Hon. K.O. FOLEY: I will answer that in a number of ways. First, that is the challenge of every budget. The challenge of maintaining agencies to operate within the budgets that they are given was no different under your government as it is under our government. I am confident and pleased in many respects that we have improved the budget forecasting significantly, but a couple of agencies have caused us problems. The key one is the health agency. What we tried to do in our first budget after the state election was to put a big quantum of money into the out years.

What we had been doing up until that budget was putting a standard growth amount into the health budget and then trying to keep the clamps on them—and we ended up having to put more money into them through the course of the year. What we tried to do in that first budget after the election was to put some serious growth money into the out years. We have had to do that in the last budget and, according to the mid-year review, we will still have to put some more in again.

We are managing a health system that is growing at anywhere between 9 and 11 per cent compounding per year. That is activity levels: people coming into emergency and people accessing the health system. Of course, the commonwealth is only giving us about 45 per cent when it used to give us 50 per cent. We are having to manage the vast bulk of that growth money and that, as often said, is due to the ageing of our community, as well as the technological advancement. That is one of the major reasons why we are reconfiguring our health system: to allow us a better system of managing these cost pressures.

Health is a significant issue for government and will continue to be well beyond the life of this government, given the ageing of our community. Families and Communities has been a problem for us. Much has been said about that. Again, it would appear that, because of the ageing of our community, we now have fewer foster carers available to the system. We are now taking many kids into care who otherwise may have been put out to foster parents but, because we have an ageing community, I am advised that fewer people are making themselves available as foster parents. They are the two main pressure points that we deal with throughout the course of the year.

However, on top of that, you have decisions taken by cabinet through the course of a budget year. They are deliberate decisions of government like the one we announced today to fund a significant resource upgrade for our bikie gang laws, which, I think, will see a $4 million or $5 million recurrent outlay.

So, government makes policy decisions through the course of the year, where it sees the capacity to do it. As you monitor the revenue flow in, you monitor your debt position and, if you have some further capacity to spend, you do so. Of course, the other issue is unexpected and unforeseen activities, whether it is a bushfire or whether we need to spend more money on water tankers. That will always occur.

Quite often, what that surge in revenue can be is money from the commonwealth, or expenses, such as Auslink. Two years ago we were told that the commonwealth was giving us an extra $100 million, I think, of Auslink money. We had to take that—you cannot say no to that—but that comes up as an expense. They are the sort of issues.

However, overall, with our monthly monitoring by Treasury and our quarterly monitoring to ERBCC, we keep a pretty good check on government expenditure. I am relatively pleased that, overall, government agencies are living within their means, except for the pressure points of Families and, of more concern, Health. I am not gilding the lily here. It would not matter whether it was your government or whether it was this government. You have had problems with it in the past; we are having problems with it now; and it will be a problem for state government treasurers probably for ever to try to manage this incredible growth rate we have in health needs in our community.

Mr HAMILTON-SMITH: I thank the minister for his reply, but I note that, on page 6 of Part C of the Auditor-General's Report, the Auditor-General makes the following point:

Net operating balance surpluses were achieved after revenue windfalls (unbudgeted) allowed for funding of initiatives and expenditure pressures to be addressed.

So, the Auditor paints a picture of expenses rising and windfall income, if you like, enabling services to be delivered.

Turning to page 5, I note the graph of general government sector purchase of non-financial assets paints an interesting picture where, in 2005-06, capital payments were to trend down, and then, in the 2006-07 budget, that was revised to trend them up, particularly from 2007 to 2009, and then the capital payments now forecast. I hear what the Treasurer is saying about these processes that are in place, but the bottom line is that that is going up from one budget year to the next. There seems to be this growth in expenses that we are somehow not measuring accurately.

The Hon. K.O. FOLEY: No. What that is showing is that I receive updated revenue numbers from Treasury on a very regular basis—I meet with my Treasury office two or three a week—and I keep a very close track on the revenue. When you have strong revenues coming in, you can do three things with it: you can spend it, or give a tax cut, or pay off state debt. This year, as we sit here today, we have no state budget debt, so there is no debt to pay off, and we do not want to accrue financial assets. We have already put in what we believe to be a very significant suite of tax cuts, and that allows us, through the course of the year, to make some appropriations and undertake some spending that we think the budget can live with.

In terms of the capital payment, the Leader of the Opposition has this somewhat absurd policy that he would fund his capital programs through the recurrent budget. Well, I do not know how you would ever do that. We did it for a while when we were spending $500 million a year. However, we have critical infrastructure need. We have to build new prisons; we cannot run Yatala much more than we have to date—

Mr Pengilly interjecting:

The Hon. K.O. FOLEY: We have transport pressures; that is obvious. We need a women's prison; we cannot run the one we have any longer. Whether we rebuild the Royal Adelaide or whether we build a new hospital, it would involve very similar amounts of money. You cannot do that unless you borrow the money.

We have a very, very strong balance sheet. We can afford to increase borrowings and, provided that you can meet the borrowing repayments and appreciation out of your net operating account, that is an eminently sensible thing to do.

Standard & Poor's advice, in its 2007 rating report, stated that the state's balance sheet is expected to remain strong. South Australia's forecast of $1.6 billion annual capital spending to fiscal 2011 remains consistent with the AAA credit rating and, while it is likely to see the state's net financial liabilities as a proportion of revenue rise, it is unlikely that this increase alone would result in a lower rating.

Moody's reaffirm the state's AAA credit rating in its October credit option, and it noted that, while debt is expected to rise over the medium term, given greater capital spending, the state's debt burden is expected to be moderate.

Government budget debt could be $3 billion over the forecast period; we have not settled those numbers. As we look at our program going forward, our revenues are growing, our state budget is growing, and our state's asset base is growing significantly. So, provided you are borrowing that money for productive infrastructure, that is an eminently sensible thing to do.

As the shadow minister for finance would have known in his council, you do not pay for all of your capital out of your recurrent. When you were in government, you borrowed money for your capital program. In our first three or four budgets, we were able to fund our capital out of our existing budget. However, the capital needs in terms of the prisons and hospitals, etc., are so great that we have to spread those payments over many years. It is an eminently prudent thing to do, and it is reaffirmed by the credit agencies.

Mr HAMILTON-SMITH: Going back to the issue of capital works and PPPs, on page 7 of Part C of the budget report, can the Treasurer tell the committee which PPP projects are done and dusted? That is, of those PPP projects lined up at the moment, such as the super schools, the prison, and various other projects the government has mooted, how many have been signed off and agreed to?

The Hon. K.O. FOLEY: The new prison secure facilities PPP, that is, a new 760-bed men's prison, a new 150-bed women's prison, a 40-bed forensic mental health centre, a 90-bed youth detention centre, and a 80-bed pre-release centre, have all been approved. Within the next month, they will be going out to the EOI, as will six schools. Six super schools will be going out for EOI in November/December. We will want expressions of interest submissions from potential consortia back in government by January 2008. Do not hold us exactly to this, but these are the time frames we are working on, give or take a few weeks. We would like to be able to announce a shortlist for the schools and the prisons in March; that is our target date.

Requests for proposal submissions from the tenderers: we will be looking at the schools by July 2008 and prisons by September 2008; preferred bidders for the schools will be announced in October 2008 and the prisons in March 2009; the finalising of contracts for schools in December 2008 and the prisons in June 2009; and construction to start in January 2009 for the schools and July 2009 for the prisons. Having said that, as I have learned in this process, one needs to have a degree of flexibility if those dates slip, but that is our schedule at this point.

Mr HAMILTON-SMITH: I gather then that the dollar amount for each project and the financial arrangements the government expects to enter into have not yet been resolved; obviously, until it deals with the private sector interests involved in the consortia that might come together. So, do we have a dollar amount or a financial model and a signed off PPP for any of those that you have just mentioned?

The Hon. K.O. FOLEY: We do, in the sense that, if you recall when we announced these projects in the budget, we put indicative numbers into our press releases and into our budget speech, from memory. There have been some changes to those numbers. I think in the schools project the number has increased because we have added some increased scope to those projects—

Mr Griffiths interjecting:

The Hon. K.O. FOLEY: Well, let me finish the answer—based on increased student numbers in the school areas. What we are finding is that these new super schools will be very attractive to students, and we are having to reforecast the student numbers. I do not get quite so hung up on this issue of trying to estimate what these big capital projects will be and what you finally land projects at. I have not met a private sector organisation, a federal government or a state government that has been able to successfully pinpoint the exact number when they first make these announcements, particularly during a period of extreme construction activity and price escalation and inflation that is occurring in the construction industry. It is very difficult, but we will in our midyear review.

It is our target, our aim, to have a best guess as to what we think the net present value of these projects will be, but it will only be a best guess. It will not be something that we should be held totally accountable for—or not accountable for, but we would not want to say that they are going to be the exact numbers. They will be based upon the public sector comparator that we have; that is, a model and a formula for what it should cost the government in terms of a private sector build, which we use as a public sector comparator to make sure that the private sector is delivering these projects in line with what we would expect to pay for them were we doing them ourselves. Obviously, we want to get a better deal through the private sector, and we will make those best guesses at the time of the midyear review.

The ACTING CHAIR: The time for the examination has expired.


The Hon. M.D. RANN: I move:

That the sitting of the house be extended beyond 6pm.

Motion carried.

The ACTING CHAIR: I call the Premer, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts and Minister for Sustainability and Climate Change.

Mr HAMILTON-SMITH: I will start with something fairly elementary. I refer to page 789 of Volume III of Auditor-General's Report. Under the heading, 'Communications and Audit Matters', some issues are raised surrounding the review of staff leave reports. Will the Premier explain what those issues are?

The Hon. M.D. RANN: I thank the leader for the very pertinent question. The issue relates to the management review of staff leave reports. In Volume III, page 789 it says:

Communication of Audit Matters

Matters arising during the course of the audit were detailed in management letters to the Chief Executive.

The principal matters raised included the need to strengthen the controls over the:

management review of staff leave reports;

I can reply to the leader that the Department of the Premier and Cabinet will strengthen its leave for audit processes through a range of initiatives. All employees with direct reports will receive formal communication advising of leave audit requirements. All employees with direct reports will be provided with the required process for leave audit requirements which will include either manual recording of staff absenteeism or the recording of absenteeism using the online calendar functionality for reconciliation against human resource management system-generated absence reports.

So, the divisions of the DPC will be asked to confirm that leave audit reconciliation processes are in place. I want to repeat that: it will be done either through manual recording or by using the online calendar functionality for reconciliation against human resource management system-generated absence reports.

Mr HAMILTON-SMITH: I refer to page 804 of the same paper which deals with remuneration of employees.

Members interjecting:

The ACTING CHAIR (Mr Koutsantonis): Could the people sitting behind the leader, if they want to have a conversation, leave the chamber because we cannot hear the leader over your voices.

Mr HAMILTON-SMITH: I draw to the committee's attention that in 2006 the number of employees paid in excess of $100,000 was 49, but now it is 116, which is an extraordinary increase. The reason that has been given in the house is that there have just been a few pay rises and people just happened to topple across the $100,000 mark. We have been told that your average policeman, firefighter and nurse now gets $100,000 or more. I am wondering whether you can explain why there has been this very substantial increase in the number.

The Hon. M.D. RANN: It is actually very easy to explain, and that is because my department has incorporated within it other agencies. You remember that DPC used to be the cabinet office, protocol and a few other areas, but because we wanted to reform the public sector, we brought in the Office of Recreation and Sport, SafeWork SA, State Records, the arts departments, industrial relations—

Mr Hamilton-Smith: That was there last year.

The Hon. M.D. RANN: No, some of these are quite new. We have been increasing the size of the department. You saw that large chunks of the department for administrative services were incorporated in my department. Aboriginal Affairs has been there for some years now. Essentially, I can explain the financial statements, including all employees who received remuneration of $100,000 or more during the year paid by the Department of the Premier and Cabinet. When employees have transferred to the department during the year as a result of an amalgamation or administrative structure, remuneration has been calculated as though the employees were employed by the department for the entire year due to a determination by the Auditor-General. Remuneration of employees reflects all costs of employment, including salaries, superannuation contributions, fringe benefits tax, and any other salary sacrifice benefits.

The number of employees earning over $100,000 in 2006-07 was 116. There are two primary reasons for the increase over the previous year. First, 49 positions transferred to the department due to a government restructure, nine from the Office of Public Employment, and 40 from the Department for Administrative and Information Services. Secondly, 17 non-executive staff cost over $100,000 for the first time due to either general inflationary rises in salary or the receipt of the pension superannuation scheme or being entitled to an allowance. So, some of it was done through bracket creep, in other words, with a number of people getting a rise in their salary, and that was the case for 17 people, and also 49 of those paid over $100,000 transferred into the department from elsewhere.

Mr HAMILTON-SMITH: I want to move to page 790 of Volume III which deals with SafeWork SA—Health and Safety Workplace Partnership Program, which is one you inherited from the former minister for administrative services. I note in the second paragraph that the audit highlights the point that it seems that, at the time this $3 million worth of grants was made to the union movement, SafeWork SA had not run the idea past the SafeWork SA Advisory Committee and, in fact, somehow SafeWork SA recommended in January 2007 (which is well after the grants were approved) that the advisory committee of their very own organisation should be advised of the program.

The committee was subsequently advised. The obvious question is why wasn't the SafeWork SA Advisory Committee brought into this process from the outset? Why was it done retrospectively once SafeWork SA and audit had begun some communication? Wouldn't it have been proper to make sure that this fund was managed carefully and properly by bringing them in early?

The Hon. M.D. RANN: I think this area still reports to the Minister for Industrial Relations, so I will do the best I can. As I understand it—and this is certainly my advice—the cabinet decision was made prior to that. It is a government policy decision made by cabinet. We do not resile from that. Perhaps I should just explain that SafeWork SA is responsible for administering industrial relations and occupational health, safety and welfare laws in our state and its primary role is to promote and encourage safe, fair and productive working lives in South Australia by working with employers, employees, unions and industry representatives.

As the Auditor-General's Report accurately describes, the funding, establishment and administrations of the health and safety workplace partnerships program are stipulated in the report. The government has allocated $1 million per year over three years to improve the level of training, resources and information available to workers through employee associations. This is specifically designed to better equip those employees who work in industries identified as having high levels of workplace injuries and compensation, with relevant skills and to increase participation to achieve safer workplaces.

The funding available has been divided evenly, I am advised, across four industry sectors: namely, community services; manufacturing; wholesale and retail; and construction, transport and storage. The independent panel, established to review applications received against the funding criteria, recommended funding for 12 projects covering all four industry streams, with the level of funding ranging from $20,000 to $150,000 per annum. SafeWork SA is responsible for administering the allocation of this funding in order to ensure that all accountability and reporting requirements and conditions are fully complied with.

To date, funding deeds with all 11 unions receiving grants in 2007-08 have been formally executed. First-year grants, totalling $1 million (that is plus GST) have been disbursed to the unions receiving the grants; the remaining union will receive funding in 2008-09 and 2009-10, and the funding deed will be finalised prior to June 2008. Obviously, this $3 million was designed to boost workplace safety. The initiative will help achieve a key target in the South Australian Strategic Plan to reduce workplace injuries by 40 per cent by the year 2012.

The program has been aimed at specific industries because they represent in excess of 80 per cent of the state's workers compensation schemes. The scheme is aimed at improving health and safety in South Australian workplaces and there is information to suggest that the number of compensation claims and overall costs are higher in those industries. Obviously, this work being done through the unions will also complement the excellent work being carried out by SafeWork SA inspectors (as well as unions) to improve health and safety standards in the workplace.

I find it interesting that no-one ever seems to complain when we provide grants to industry. We provide lots of grants to industry in many areas. That is apparently okay: it is okay to provide grants to employers but apparently not to employee organisations.

Mr HAMILTON-SMITH: Given that last time I checked, every single one of these unions (I hope I am not wrong; there might be one or two that did not) donated significant sums of money to you and your party prior to the last state election, you, as Premier, would have been very keen to make sure that the probity of this particular matter was first class. I am, therefore, intrigued because you have just confirmed that cabinet made a decision to approve these grants in December, yet the processes to make sure the money was managed appropriately—particularly the referral of the grants to the SafeWork SA Advisory Committee, and each of the processes the auditors pointed to, to make sure the money was properly, honestly and accountably managed—seems to have been put in place after cabinet made the decision.

Does every single decision on the granting of funds in such cases go through cabinet with a special submission? Why was this treated as special and, in particular, why was the SafeWork SA Advisory Committee, which I understand has a say in all other payments and programs to support workers, left out of the loop in this one? It raises unfortunate questions. I would have thought this would be handled particularly carefully.

The Hon. M.D. RANN: It is interesting that you say that the process should have been established by cabinet. Cabinet makes policy decisions and you would expect the appropriate probity and accountability arrangements to be then put in place. This is exactly what has happened. The issues of concern that you have raised have not been raised by the Auditor-General. Can you point out where he has criticised the disbursement? You also made claims that one of the unions was the Independent Education Union (IEU)—$180,000.

There is a press release of 30 June 2007 in which the state government announced the successful applicants under the Health and Safety Workplace Partnership Program. The headline is '$3 million to boost workplace safety' and it is by Michael Wright. I can refer any other questions to him, but there are no questions (that I can see) that have been raised by the Auditor-General that would point to the concerns that the Leader of the Opposition is seeking to infer.

Mr HAMILTON-SMITH: The program came to light in about December, when we raised it. We noticed that the government had put out a media release and just forgot to post it on its website or distribute it. A copy was given to us and it was all done very secretly and, when we blew the whistle on it, suddenly things started to move. I just make that point.

The then auditor-general, Ken MacPherson, made the point himself that an auditor-general does not have the resources or the powers to properly investigate these things. Any government would want to protect itself from any suggestion that a deal might have been done, 'If you give us this money before the election, we will give you that money after the election.' I am not suggesting that happened in this case. However, an independent commission against corruption might be able to investigate such matters. I just make the point.

The Hon. M.D. RANN: I am happy to respond to that. I am aware of a series of industry grants given by the government that you were a minister in to a range of companies which gave donations to the Liberal Party. If I was to stand up—and I could name one of the big industry leaders—

Mr Hamilton-Smith: Who?

The Hon. M.D. RANN: I will tell the leader afterwards, straight away. If I was to get up and say the fact that those grants were made to assist employment by those companies was in exchange for the giant funding given to the Liberal Party by this industry leader, the Leader of the Opposition would scream foul. No-one is suggesting that, and that is the difference.

Mr HAMILTON-SMITH: Whatever standard the Premier applied in opposition when he was the leader, it might be a very good idea for him to apply it to himself as Premier. But I am happy to move on.

The Hon. M.D. Rann: I am happy to give the leader details of the company.

Mr HAMILTON-SMITH: I will look forward to receiving them. I think in some cases some of those unions, arguably, had a return on their investment of 300 or 400 per cent. It is a pretty good arrangement. I refer to page 799, note 2.3, which deals with the department's financial statements. It lists a number of agencies that have been transferred to the department because of the decision to dissolve the department of administrative services. Is the Premier able to advise of the total savings that have been made? The government made the point that it was trying to be more efficient and was trying to save money. What has been achieved?

The Hon. M.D. RANN: I will have to obtain a report on that one.

Mr HAMILTON-SMITH: I refer to page 798 of the same volume. Can the Premier advise, with the establishment of a central policy area within his department, how many employees are in the unit, what is the total salary cost and how many of these positions are new positions to the public sector and not transferred from other agencies? What does this central policy area do?

The Hon. M.D. RANN: This follows from recommendations of the Government Reform Commission, which was headed by the former premier of Queensland, Wayne Goss and which also, I think, included Warren McCann, the head of the Department of the Premier and Cabinet. It also included Sue Vardon, the head of the Department for Families and Communities, and Nick Rowley, a former senior adviser to the Right Honourable Tony Blair, former prime minister of the United Kingdom.

Essentially, the Government Reform Commission was charged with the task of coming up with a variety of recommendations to improve the quality of the South Australian public sector, to improve its customer focus and also to come up with ideas designed to reinvigorate the public sector and to recognise excellence in terms of innovation and service by the public sector. Indeed, I was very pleased to see the Leader of the Opposition last night at the South Australian Museum for the public sector awards (I appreciate his presence there), which recognised outstanding achievement by individual public servants and also by groups of public servants. We saw, for instance, Jos Mazel's unit in the Department of the Premier and Cabinet, which has been doing fantastic work in the APY lands, which has led to a 60 per cent drop in one year in petrol sniffing in the APY lands, plus a range of other outstanding innovations.

One of the recommendations was to improve the quality of advice through the cabinet office. This does not reflect in any way on people who occupied those positions before but, essentially, it was about ensuring that people were brought in from various areas of the public sector—not for life or for 10 years, but for a couple of years, from different areas—and a re-energised cabinet office that would give policy advice to the government at the highest level and also, of course, a policy input into the cabinet process through the cabinet submissions that come in from other ministers and departments. That is currently being settled down. I think there is a total of about 60 positions. It is supposed to be no net increase, and I think nearly all the positions are a result of transfer from other departments or from seconding.

Mr PEDERICK: I refer to Volume III, page 803, Program 3, Sustainability and Climate Change. According to this program, it implements the government's commitments on climate change and sustainability within South Australia, which includes international and national leadership in areas such as the development of renewable energy policy and initiatives and the reduction of greenhouse gas emissions. What saving in energy has the government achieved through its development of renewable energy?

The Hon. M.D. RANN: I am delighted to get this question. We have been in government for nearly five years and nine months. When we were sworn in on 5 March, I think, 2002, there were no wind turbines in South Australia. We now have a massive investment in wind farms in this state, to the point where we have almost 50 per cent of the nation's wind farms—

Mr Hamilton-Smith interjecting:

The Hon. M.D. RANN: —thank you—almost 50 per cent of the nation's wind power, we have almost 50 per cent of the nation's grid connected solar power and we have also just recently announced, through legislation, that we want 20 per cent of our power to come from renewable means by 2014. When I announced that, some people from industry said that was probably not achievable, and I am delighted to report to the house that we expect to reach the target of 20 per cent of South Australia's power coming from renewable energy not by 2014 but ahead of time, by the end of 2009, which would put us in an international leadership position.

Also, as a result of work done by the group referred to, we have now passed the first climate change legislation in Australia, which includes setting those targets of 20 per cent of energy consumed in South Australia coming from renewables by 2014, 20 per cent of energy generated in South Australia coming from renewables and also other targets, and provision for sector agreements.

In addition to that, we have announced an initiative that again has come from that area of government, and that is that 20 per cent of the power being used by, for instance, schools, hospitals, government departments, police stations, fire stations, and so on, will come from renewable energy by the end of this year. Again, we were the first to announce that and, of course, there are feed-in laws currently before this parliament. So, the principal thrust of this division of government is to ensure that South Australia remains a national and, indeed, international leader in the area of renewable energy.

Mr PEDERICK: Is each government department required to report annually on its own performance in energy use and, if any are not, when will they be required to?

The Hon. M.D. RANN: The South Australian State Strategic Plan target is to reduce energy consumption by government across the board by 25 per cent by 2014. I should point out to the honourable member that, if he wants to see how individual departments are doing, that is in their annual reports every year.

Mr HAMILTON-SMITH: Before moving on to the next topic, I commend the Premier for his work on wind farms. It has been great. I have made the point that we all know that most of the money has come from MRET, but it is a credit to the government that it has done the work and put the money to work. I acknowledge that freely; it is a good thing.

I move on to the Adelaide Airport solar initiative at page 805 of Volume III. I note there is a figure of $950,000 listed against that project. Has the project been completed, and what stage has the project reached?

The Hon. M.D. RANN: I will get a report on this at the next available opportunity, but I have to say that I have been significantly frustrated by the negotiations. We put solar panels on the roof of the parliament (although I must say there was a bit of resistance, I am told, from the former Speaker). We put solar panels on the roof of the South Australian Museum, and that was very strongly supported by Tim Flannery. We put solar panels on the roof of the State Library and the roof of the Art Gallery. We are rolling out solar panels onto the roofs of, eventually, 250 schools.

Never has it been so hard to give away money as it has been giving it to Adelaide Airport, but I am hopeful that things are now being resolved to everyone's satisfaction so that we can have the first airport that I know of that will have substantial solar powering. I understand there have been problems over design matters in terms of different issues that have been considered, but I want to see the money spent and I want to see a solar-powered airport.

Mr HAMILTON-SMITH: As a supplementary question to that, I take it from the Auditor-General's findings that the money has actually been spent, $950,000. So, given that the project is not completed and is not underway, what have we spent the $950,000 on?

The Hon. M.D. RANN: The money has been transferred, as I understand, and will be spent on solar panels. That is the understanding. We just want to see them put up.

Mr HAMILTON-SMITH: So we have given the money to the Adelaide Airport corporation? It has the money but it has not done it yet?

The Hon. M.D. RANN: It has not occurred as yet, but we are hopeful that it will occur very soon. I understand there are a couple of designs. One of them is extremely novel—maybe too novel—but all I want to see is a solar-powered—

Mr Hamilton-Smith interjecting:

The Hon. M.D. RANN: No, a partly solar-powered airport terminal.

I have an answer to a couple of other matters that were asked about. I should say this, by the way. The member was being very complimentary, but people keep saying to me the fact is that our solar and wind power comes from the use of the federal government's MRET scheme. That same scheme is available to New South Wales, Victoria, Queensland, Western Australia, Tasmania, the Northern Territory and the ACT. We have about the same amount of solar and wind power as all those much higher populated areas (that is, New South Wales, Victoria and Queensland) put together, and I think that is because it has come down to local initiative.

The member asked questions in relation to DPC savings from the transfer of business units from the former department of administrative services. It was $1.192 million in 2007-08 (index CPI, ongoing). So it made a saving of $1.192 million.

The CHAIR: The time for the examination of the Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts, and Minister for Sustainability and Climate Change has expired.

Progress reported; committee to sit again.

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