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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-10-27 Daily Xml
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (16:00): I move:

That standing orders be and remain so far suspended as to enable the report of the Auditor-General for the year ended 30 June 2009 to be referred to a committee of the whole house and for ministers to be examined on matters contained in the report in accordance with the timetable as distributed.

The SPEAKER: I have counted the house and, as an absolute majority of the whole number of members of the house is not present, ring the bells.

An absolute majority of the whole number of members being present:

Motion carried.

In committee.

The CHAIR: I remind members that the requirements are the same as for normal committee processes. Questions must relate to the Auditor-General's Report and must be referenced.

Dr McFETRIDGE: I refer to Part C: State Finances and Related Matters, page 51, and savings which were to be achieved but which have not been achieved. Minister, advice given to the Auditor-General was that operational savings would not be achieved. Yesterday in the Budget and Finance Committee, evidence was given that the department in 2006-07 was $90 million over budget, in 2007-08 it was $70 million over budget and last year it was $144 million over budget.

It is estimated that there will be a blow-out in 2009-10 of $78 million. Can the minister advise the committee how you are able to meet the government's savings target without cutting any services? It appears from the Auditor-General's Report and the evidence given to the Budget and Finance Committee yesterday that the department is not going to meet those targets.

The Hon. J.D. HILL: I am happy to try to answer the question, but I point out that this is really outside the audit. The audit is really examining the financial statements, and so on, but I am happy to talk about what we might do in the future.

As I have said many times, the health budget consumes just under 30 per cent of our state's budget. The growth in expenditure is somewhere between 8 and 9 per cent. That is driven by a range of factors, primarily the demand for services, which, in turn, is connected to the ageing of our population and the incidence of chronic disease amongst older people. If you are over the age of 65 you are twice as likely to need a hospital bed, for example, as someone under the age of 65, so the older you are the more likely you are to need health services and, of course, we have a growing population.

There is enormous pressure on our health care system. It is a similar pressure that every state in Australia and every comparable jurisdiction in the world is trying to deal with. We have embarked on a reform agenda, which is multifaceted and which aims to make our health care system sustainable. To make it sustainable, we have to bring down demand for health services and at the same time optimise the supply that we have. We also have to find additional resources to increase supplies. So, we have embraced a range of strategies to reduce costs.

Just this week, for example, the health regions announced a new strategy for dealing with the costs associated with staff going on leave and a greater coordination of leave. We will be putting more effort into making sure people take leave when it falls due and also coordinating the leave that staff have at a particular time of the year so there is less interruption during the course of a year. That will save a sum of money. There will be no fewer services delivered by doing this: it just means the same number of doctors and nurses will be working and providing services and they will just do it in a more coordinated way.

Of course, when this was brought out in the media during the week it was attacked by certain media organisations, and it was attacked and criticised by the opposition. In fact, the opposition said it would not go down this track if it were in office. When we announced we will build a new Royal Adelaide Hospital to create greater capacity in our system to ensure we have sufficient numbers of beds, operating theatres and emergency department space by the year 2016 and, in addition, make recurrent savings of, we believe, somewhere between $50 million and $100 million a year, it was of course once again attacked by the opposition. Every single time the government attempts to implement a strategy to reduce costs while maintaining services, the opposition attacks us. It cannot have it both ways. It cannot, on the one hand, cry crocodile tears over alleged overruns in the cost of the provision of services yet resist every single strategy that is embarked upon to make savings.

We are committed to ensuring that no services are reduced. In fact, we have been putting more resources into the system to ensure there are more services available to our population—more doctors, more nurses and more hospital beds. We are doing all of that and, at the same time, we are trying to make the system work more efficiently by reducing overlap and duplication and ensuring we are optimising the use of the existing resources. Sometimes that is politically painful, but if you are a grown up government you have to take the political pain to make the gains that you know the system needs. We are seriously looking at every aspect of our health service to ensure that we make savings. There will be little bits of work that are done all over the system to make sure that happens, so the holiday leave provisions that I identified will be continued with.

We are working with the various regions to ensure that we make efficiencies in how we do our accounting. A number of positions within those financial management services and human resources services can be done away with. We have had reports—I think Ernst & Young produced a report for us which identified a potential 300 salary saving without any reduction in services and, in fact, producing a stronger and more resilient system in our services. So they are the kinds of things we are doing.

In relation to clinical services, we obviously do not instruct doctors about what services they provide to staff, but I have spoken to surgeons as recently as last week and they said they are happy to work with us to try to reduce waste so that when there are alternatives in terms of devices or procedures that can be used they will work on making sure that they use the best device which gives the best value for money. So there is a range of things.

I acknowledge that we have not met all the savings targets that have been set for us, but we have done the best we can in the circumstances we find ourselves in without reducing services. A lot of the extra growth in the cost overruns is related to the increase in demand for services and the increase in the cost of provision of services. The inflation rate within health is far greater than the inflation rate in the rest of the community and so when we have to provide those services it sometimes costs more. That is the reality of health. It is the same here as in every other state and it is the same whichever side of politics is in government.

Dr McFETRIDGE: I refer to the same document. It states at page 51:

The shortfall of $38 million was essentially due to the Department of Health where health service reforms and operations savings would not be achieved.

Can the minister guarantee that no services will be cut? Yesterday, the Under Treasurer Mr Wright, in evidence to the Budget and Finance Committee, indicated on page 1166 'there is scope for us to provide a lower level of service in some areas'. He went on to say, 'there are policy choices there at the edges to save some money'. Will it be dental treatment or will it be outpatients where the patients will have services cut?

The Hon. J.D. HILL: My reading of what the Under Treasurer said was that hypothetically there is a range of ways that you can reduce costs. When the Liberal Party was in office, the way it reduced costs was to cut the number of beds and reduce services. That is what it did. It privatised one hospital and attempted to privatise another. We are still trying to clean up the mess from that decision in relation to Modbury Hospital.

Theoretically, you could cut costs by cutting services, but that is not our intention. It has never been our intention. In fact, our commitment has been to maintain and expand services, and that is what we have done. We just want to deliver those services in a more efficient way. If that means coordinating services in one hospital rather than having them spread over a range of hospitals, we will do that. That is not reducing services: it is making better use of resources so that we can continue to give the best delivery for the community, and there are some great examples of this coordination and focusing of services.

On the other hand, we want to provide more services in country South Australia, and we have had some success. In the last year or so, we have increased the amount of elective surgery occurring in country South Australia and, as a result, there has been something like a 5 per cent reduction in the number of country patients on any given day using a hospital bed in Adelaide. That is equivalent to freeing up about 25 metropolitan beds. That is a good outcome. It is cost effective, because it means we are using the resources in the country more efficiently and it takes the pressure off the city hospitals.

So, they are the kinds of things that we will do with services. However, it is not about cutting services: it is about delivering services in a cost-effective way and going through the process of ensuring that every single part of the department works as effectively and efficiently as it can. If we find waste, we will get rid of it. However, I just point out to the member for Morphett that it is really outrageous for the opposition to be critical about overexpenditure in budget and at the same time be critical about every single decision that the government makes to try to reduce it.

Dr McFETRIDGE: It is not about cutting services, it is about cutting some of the bureaucrats, and we will talk about that in a moment. I refer to the same document with respect to savings. Yesterday the Under Treasurer told the Budget and Finance Committee: 'The obligation is still on the agency to deliver the savings in future years.' Will those blow-outs—the $90 million in 2006-07, the $70 million in 2007-08 (I think there have been some bail-outs there, to quote from the Paxton report), the $144 million in 2008-09 and the estimated $78 million so far this year—be bailed out again or will they be carried over?

The Hon. J.D. HILL: This government, unlike the former government, continues to put in additional resources. When the former government was in office (I think when Dean Brown was the last Liberal health minister), money that was overspent by regions was maintained on the books as a debt. So, it avoided, as I understand it, this level of scrutiny. It just sat out there as a debt. In fact, we had to bring a $50 million debt (from memory) to book two years ago. That was a debt that had accumulated when Dean Brown was minister for health—and he was last minister for health at the beginning of 2002. So, that debt was dealt with some six or so years later.

Do not come in here and pretend that the overexpenditure in health is something new. All governments of all persuasions have difficulty properly estimating the amount of cost required over the course of the year. We budget appropriately and then we make whatever changes are required in order to make sure there are sufficient funds to cover the cost of the services and any increase in the range of services. You cannot—

Dr McFetridge interjecting:

The Hon. J.D. HILL: You can ask any number of questions you like, just let me answer, please. You cannot estimate or anticipate unforeseen things. For example, the flu pandemic that occurred in the course of the last 12 months, that was unforeseeable. In the first two or three months of this year, we have had an increase of something like 12 per cent in attendances at our emergency department associated largely with this pandemic. That is unforeseeable.

What we had done though in 2007, when we released our Health Care Plan, was provide extra investment in out-of-hospital care and, as a result, we saw attendances at our emergency department which had been averaging around 5 per cent I think—in 2006-07 it was about 5 per cent—decline to about 2.5 per cent in 2007-08, and in 2008-09, it had gone backwards—negative growth in our attendances at our emergency department—because of the many things we had done. However, that turned around very quickly in the first two or three months of this calendar year as a result of the swine flu.

It is very hard to predict in an orderly way. It is much easier, for example, in education—and I am not reflecting in any way on the education system—because you know how many children there are, you know they are going to go to school and you can make reasonably good guesses. It is a bit difficult at the year 12 level perhaps, but you can make pretty good guesses about how many kids will be in the system. It is very difficult to anticipate accurately how many services will be required in the health system.

The member sort of obiter dicta made some reference to getting rid of bureaucrats. That would be his response. I say to him that, every time I or the government announce a plan through shared services, the Ernst & Young report or the Paxton review to reduce bureaucratic staff or services, the opposition has criticised. One of your country members will say, 'Oh, you can't have shared services because it will take jobs—that is, bureaucrats—away from country regions. You can't reduce the financial and human services areas because it will take jobs away from country regions. You can't coordinate the purchase of goods and services through one procurement office because it means people will not be buying toilet paper in country communities.' All those things which I have described reduce bureaucracy and reduce costs, yet every single time the opposition has been critical. They come in here with a false argument in relation to this.

Let me just tell you in relation to full-time equivalents in the health service, since the member referred to 'bureaucrats', at June 2009, there were 28,888 full-time equivalents employed in SA Health, representing an increase of 4 per cent since June 2008. The health regions represent 93 per cent of that: 62 per cent of employees were employed under the nurses award; 18 per cent were medical officers; 11 per cent were other health professionals; and a large proportion of the remainder are people who work in non-medical areas but in hospitals—orderlies, hospital services, all those kinds of things. In the same period, when we have had a 4 per cent increase in all the other staff across the system, there was only an increase of 0.2 per cent in administrative and clerical within the system. Our emphasis has been on employing more—

Ms Chapman interjecting:

The Hon. J.D. HILL: —0.2 per cent, I said—non-administrative, non-bureaucratic staff, more people who provide services and fewer people who do the administrative work. You cannot run a smart system without smart public servants. I really reject the underlying sort of notion that public servants—'bureaucrats', as we like to characterise them—are somehow a problem. We need smart public servants like those joining me today to help us manage our system, because if we do not have smart public servants we will not be able to run the system at all.

Ms CHAPMAN: My question relates to Part A: Audit Overview, page 20 and the USB memory stick. The Auditor-General reports on the incident in respect of its loss and describes it as having 'the potential to weaken the integrity and competitive strength of the procurement process'. We know from the information the minister has already provided to the parliament that this was lost on 2 June 2009, and that you and the Hon. Mr Foley were informed on 12 June 2009. When did you and/or any member of your department report this incident to the Auditor-General?

The Hon. J.D. HILL: I fail to see the point of this question. It is not a reference to the Auditor-General's Report. Again, it is a little witch-hunt that the former deputy leader of the opposition likes to pursue. It is this kind of pseudo legalistic nitpicking she is famous for, which is why she has been dumped from the deputy leader's position and why she has been dumped from the health portfolio. I have given a full account to this parliament on numerous occasions in relation to the USB, and the deputy leader and I will make further statements in days to come.

Ms CHAPMAN: On the same subject—

The CHAIR: Member for Bragg, I did not get the reference?

Ms CHAPMAN: Page 20 of the Audit Overview, Part A. The minister also reported to the parliament (as has the Attorney-General and, I think, the Treasurer) that the Crown Solicitor's Office conducted an investigation into this matter and had reported. One of the matters about which the Treasurer advised the parliament in response to a question I asked you, minister, in June was that he would be seeking some information as to why it took nine days for each of your respective departments to tell you of this incident. Now that the report has been received, what is the explanation as to why you were not told about this incident for nine days?

The Hon. J.D. HILL: Let me read, for the benefit of the committee, everything the Auditor-General says in relation to this issue. I refer to page 20, which states:

In an incident that has received recent attention, a USB memory stick containing confidential and sensitive information in relation to the new Royal Adelaide Hospital Public Private Partnership procurement process was lost.

True. Page 20 continues:

Such an incident has the potential to weaken the integrity and competitive strength of the procurement process.

That is the view expressed by the Auditor-General. The next paragraph, headed 'Management of incidents', states:

The government's policy on notifiable incidents requires agencies and contracted suppliers to notify the Office of the Chief Information Officer about security incidents which disrupt government information and telecommunication services. Notifiable incidents can include disruptive events, misconduct, or criminal activity. They can have an adverse impact on the trust and confidence in government services.

The matter of the need for improvement in security incident notification arrangements was the subject of audit comment in the review of DTEI in relation to arrangements with external contracted service providers.

All those things we have taken on notice. As I have said—

Ms Chapman: What is the answer?

The Hon. J.D. HILL: I say to the member for Bragg that I am happy to answer any question she would like in question time. You go ahead. This is not related to the Auditor-General's Report. You are playing funny buggers with this, Vickie.

The CHAIR: This question will need to relate to the Auditor-General's Report.

Ms CHAPMAN: It certainly is and I refute the assertion that it does not. It is clearly in the report. In fact, he raised his concern about it.

The CHAIR: Order! Member for Bragg—

Ms CHAPMAN: My question now is in relation to the Modbury Hospital—

The CHAIR: It is not anywhere relating to a word.

Ms CHAPMAN: I will tell you exactly where it is. The Modbury Hospital is referred to in Part B, Volume II, page 607. It relates to the staff at the hospital. I will refer to this as well because it refers to outstanding issues from the 2008 report, which is detailed at Part B, Volume II, pages 541 and 542. Minister, you provided a statement to the parliament in respect of a $3 million liability that you estimated the government may have to guarantee—in fact would guarantee—in respect of employee entitlements on 14 July this year. My question first is: have you and/or your department informed the Auditor-General that there was legal action pending and that in fact Healthscope was already suing you for $2.3 million, and, if so, when?

The CHAIR: Order! That is not the reference to the Modbury Hospital in the Auditor-General's Report. If the minister wishes to place any comments on record, he is welcome to.

Ms CHAPMAN: Madam Chair, I just want to direct you again to that. I am talking about the Auditor-General's Report 2008. I have given a reference and I have also given the Modbury Hospital staff, Part B, Volume II, page 607—which relates to the staff.

The CHAIR: That's right, and I have read that section. Minister, do you wish to make any comments?

The Hon. J.D. HILL: I do. Any member of parliament can ask any question in question time about any of the issues that are of moment in South Australia for which I am responsible, and that is clearly one that I have some responsibility for. I am happy to answer any of those questions should the member for Bragg wish to raise them. She chooses to raise them in an inappropriate place in relation to another—

Ms Chapman interjecting:

The Hon. J.D. HILL: Speaking over me, member for Bragg, will get you nowhere.

Ms Chapman interjecting:

The CHAIR: Order, member for Bragg!

Ms Chapman interjecting:

The CHAIR: Order, member for Bragg! Member for Morphett, do you have a question?

Dr McFETRIDGE: Thank you, Madam Chair—

The Hon. J.D. HILL: I have not finished, Madam Chair.

The CHAIR: Sorry, member for Morphett, the minister wishes to continue.

Ms Chapman interjecting:

The Hon. J.D. HILL: I am so grateful for your presence, member for Bragg. I would just say to the member for Morphett: you may well go around the health service saying you are not the member for Bragg, and they are very grateful for it, but if you allow her to use up your Auditor-General's time with the kind of muck and nonsense that she does, then you will be tarred with the same brush.

The relationship between us and the Healthscope issue is one that is problematic, and it does involve legal action on both sides. Where that legal action is, I cannot say, because I am not briefed today in relation to that because it is not part of the question before us in relation to the Auditor-General's Report. If any member wishes to ask me questions about it, I am happy to get a report. Needless to say, we have claims against Healthscope. It believes it has claims against us and those matters are being worked through. Whether or not it goes to court is a matter for our legal advisers.

That is what that issue is about. It has absolutely nothing whatsoever to do with the Auditor-General's Report, and for the member for Bragg to try to use this report to make base political points against me just shows how pathetic she is and why she has been dumped and why she has lost every time she has tried to stand for leadership of that party, which is so hopeless; they have been through four leaders in four years. She cannot even get up in that sort of poor competition they have over there.

Dr McFETRIDGE: The reference is to the Auditor-General's Report, Part B, Agency Audit Report, Volume II, page 607, 'Health Sector Staffing Statistics'. I will read the Hansard and see what the minister said about the numbers of staff that are increasing, but my accounting there—and I think I can add up—is that there are 13,885 staff who are not doctors and nurses and there are 13,865 who are doctors and nurses—20 fewer—so there are more staff who are not doctors and nurses than those who are.

According to me, in the department staffing stats of the Department of Health full-time equivalents, there is an increase from 819 in 2008 to 938 in 2009—a 14.5 per cent increase. The target for TVSPs in health was 750 but only 64 have been reached yet. What are you doing about attaining that target of TVSPs because obviously there are significant savings?

The Hon. J.D. HILL: In relation to health regions, if you refer to page 607 of the Auditor-General's Report 2009, it shows that there are 11,337 nurses, 2,528 medical staff, 1,188 scientific and technical staff and 5,078 administrative and clerical staff, of whom a large majority are hospital-based people who work to support doctors and nurses in their day to day duties. Then there are 6,680 largely allied health staff, but also some hotel and other staff. The categorisation does not make it plain how many people sit outside of a hospital, but the advice I have, as I said before, is that there is an increase of about 0.2 per cent in administrative and clerical staff generally. A large number of ambulance staff need to be brought into the equation as well.

The Department of Health itself, that is, the head office, has 3 per cent of the total workforce; that is 938 full-time equivalents. Many would be considered as bureaucrats in that sense. There are, of course, public health officials, environmental health officials, and the like, contained within that. That has increased 15 per cent, by 119, since June 2008.

The reasons for those increases include the following: the full-time equivalent cap adjustment based on recommendations of the SA Health Review of all positions in 2008-09 (that was a technical adjustment made when we worked out exactly how many full-time equivalents, so it is not an actual increase; it is an apparent increase); the transfer of full-time equivalents related to the major projects office from health regions (we brought together various health regions into one central office so that we can get better bang for our buck); the creation of the SA Health Distribution Centre and the transfer of distribution warehouses from the Department of Treasury and Finance (more public servants, if you like, working in health, but they are public servants who are working elsewhere); and the commencement of centralisation—and this has been the largest part that growth—of ICT services across SA Health.

The coordination of ICT has brought together staff who are spread out across the regions, and that will eventually produce efficiencies and reduce the number of staff required. All these figures can be explained. The central point is this: we are increasing the number of doctors, nurses and allied health and reducing the number of non-essential public servants.

The CHAIR: The time for the examination of this section of the Auditor-General's Report has expired. I now call the Minister for Correctional Services, Minister for Gambling, Minister for Youth, Minister for Volunteers and Minister Assisting the Minister for Multicultural Affairs. I repeat that the normal procedures for committees occur, not the arrangements for estimates committees, and all questions must be directly referenced to the Auditor-General's Report.

Mr PENGILLY: I will come to the page number. Where did the extra $4 million for correctional services' net cost of providing services come from? For example, noted on page 4.153 of the 2008-09 budget, for the net cost of providing services for correctional services, there was an estimated budget of $172,455,000. However—

The CHAIR: Order! The minister does need to be able to follow this, so can you give him the page reference?

Mr PENGILLY: Yes; I am coming to the number, Madam Chair.

The CHAIR: Order! Other members need to be able to follow the questions. Give the page reference at the beginning. It is polite. The member for Finniss.

Mr PENGILLY: If it helps the minister, I refer to page 191 of Part B, Volume I. There was an estimated budget of $172,455,000. If the Auditor-General's Report summarised a figure on page 191, Part B, Volume I of $176 million, therefore leaving a financial gap of $4 million, where did this extra funding come from and what projects has this money been taken away from?

The CHAIR: Member for Finniss, I remind you that other members are present in the chamber and they deserve the consideration of being able to follow every question.

Mr PENGILLY: It is page 191 in the Auditor-General's Report: 'Net cost of providing services'. It is about halfway down the page.

The CHAIR: Yes, I have that one, but I have no idea about the rest of the data you gave.

Mr PENGILLY: Well—

The CHAIR: Order! That will do.

The Hon. A. KOUTSANTONIS: Was the question: what is the increase?

Mr PENGILLY: There seems to be a financial gap of about $4 million in actuals.

The Hon. A. KOUTSANTONIS: In the budget?

Mr PENGILLY: Yes.

The Hon. A. KOUTSANTONIS: I thank the member for his question. I understand that in the Mid-Year Budget Review we received extra funding for extra prisoner accommodation.

Mr PENGILLY: I refer to page 191. My question to the minister is under the heading of 'Net cost of providing services'. It states that the increase in prisoner numbers is costing the government $14 million, along with employee benefits and other additional expenditure. Given that the government scrapped the new prisons and secure facilities (NPSF) project in June 2009, how does the government place this expenditure as adequate spending and how long will the rack 'em, pack 'em and stack 'em approach continue?

The Hon. A. KOUTSANTONIS: This government is committed to providing humane custody and we do it exceptionally well, and we make no apology for the way we incarcerate our prisoners. Opposition members, who cry tears for prisoners who are doubled up, are happy for us to have people six to a room in the old Royal Adelaide Hospital and sharing one toilet. It is okay for people in the public health system but for our prisoners we demand the very best and latest accommodation!

I shed no tears for our prisoners, and our prisoners are accommodated humanely. We are investing in our prisons in South Australia. We are investing in additional beds: 12 in Port Augusta, 41 at Mobilong, 20 at Mount Gambier, 22 at Cadell, and 232 beds to come. We are investing in new accommodation. We make no apology for our tough law and order policies. We make no apology for our prison system accommodating more prisoners and we make no apology for doubling up—no apology at all. But I know that the opposition cries tears of sympathy for people who are doubled up in prison and has no sympathy at all for those people in our old Royal Adelaide Hospital who are six to a room and sharing one toilet.

Mr Goldsworthy: Are you going to build a new hospital?

The Hon. A. KOUTSANTONIS: We are.

Mr Goldsworthy: We are.

The Hon. A. KOUTSANTONIS: No, you are not.

Mr Goldsworthy: Yes, we are.

The Hon. A. KOUTSANTONIS: You are fixing the old one.

Mr Goldsworthy interjecting:

The Hon. A. KOUTSANTONIS: What is for the people there? Where are they going to go?

The CHAIR: Order!

Mr PENGILLY: I listened with interest to what the minister said and I do not know that he has been listening properly, but never mind. My question to the minister relates to page 191 of the Auditor-General's Report, under the heading 'Net cost of providing services'. Will the minister elaborate on and break down how much of the $14 million is spent on providing services for the increasing number of prisoners?

The CHAIR: The honourable member does not seem to really understand the Auditor-General's Report process, but I will ask the minister whether he wishes to respond.

The Hon. A. KOUTSANTONIS: This is my first Auditor-General's Report, as well.

Mr Pengilly: A pair of virgins together.

The Hon. A. KOUTSANTONIS: We are a pair of virgins together. The Auditor-General has made no adverse finding on this matter. The honourable member concedes that point. The Auditor-General has made no adverse finding. We are talking about the net cost of providing services—labour, rehabilitation, food, utilities, and so on.

I will get a more detailed answer for the honourable member but, with all due respect—and I am not trying to be smart—this is a budget estimates question rather than an Auditor-General's question. I am happy to take the question on notice. Given this is my first time, I know the honourable member is being gentle, so I will get back with a more detailed answer.

Mr PENGILLY: Thank you, minister. I refer to page 190, 'Payroll'. The audit review identified a number of control weaknesses in relation to payroll. The first dot point states that a bona fide certificate register was not maintained by the department to ensure all bona fide certificates were reviewed on a timely and consistent basis.

I note that the department has responded that it is expanding requirements for reviewing bona fide information. Will the minister give an explanation as to why this was not occurring and whether the systems that are now in place are satisfactory?

The Hon. A. KOUTSANTONIS: This is my first Auditor-General's question. The Auditor-General noted that no register of bona fide certificate return was maintained. The Department for Correctional Services communicated with all managers to ensure that they maintain a bona fide register within business units. The managers were also reminded to review bona fide certificates and leave returns on a fortnightly basis; so we have accepted the criticism and acted upon it.

Mr PENGILLY: Continuing with that line of questioning on the same page, the next dot point says that the bona fide policy issued by the department did not include a requirement to check all relevant information and was not consistent with the requirements of the service level determination between the department and Shared Services SA for human resources services. Is it a difficult task for the Department for Correctional Services to comply with this monstrosity called Shared Services and its demands? Yes or no will do.

The Hon. A. KOUTSANTONIS: Like any new program, there are always teething problems, but there is no problem too large for the Department for Correctional Services.

Mr PENGILLY: The third dot point says that documentation, including bona fide certificates, was unable to be provided to audit relating to some areas of the department. Why?

The Hon. A. KOUTSANTONIS: The audit found that a number of documents could not be located and provided, and the action that we took related to the bona fide certificates relating to Mobilong and Adelaide Women's Prison and supporting documentation relating to the termination of one employee. The revised bona fide certificate policy has been communicated to all managers. The circulation of the policy has provided further opportunity for the Department for Correctional Services to remind managers of the importance of maintaining bona fide certificates and other standard documentation, and the auditor was satisfied with that response.

Mr PENGILLY: The next dot point says that human resources delegation documents have not been updated and do not reflect current business practice relating to the approval of certain types of allowances. Why was this not done, as it probably should have been, and I am assuming that it is now? However, I ask the question why it was not done in the past. Indeed, how long had this been occurring?

The Hon. A. KOUTSANTONIS: I will discuss the finding first. The audit found and noted that the human resources delegations were outdated and did not reflect the department's current business practices. This issue had been raised in the previous year. Human resources delegations are currently being reviewed and updated (this should be completed by November this year), with the intention of communicating the information to the relevant areas of the agency and Shared Services as soon as possible, and the auditor was satisfied with that response.

Mr PENGILLY: Under the heading 'Expenditure' on page 190 again, could the minister expand on and give more information about the fact that the audit testing identified a material payment not approved within delegated authorisations? The department clearly has indicated it has responded to this matter, but I would like the minister's answer to flesh this out a little bit further and tell the house why this occurred and what the problem was.

The Hon. A. KOUTSANTONIS: An invoice payment was found—and I am talking about one out of thousands—that was authorised even though it was slightly out of the delegation. There was one invoice—not hundreds, not thousands, but one. The department reinforced to all staff the requirement to adhere to the approval delegations of authority when financial authorisations were reviewed and revised in July of this year. Corporate Finance conducts sample testing of invoices to monitor compliance with authorisations. This was a one-off mistake.

Mr PENGILLY: The minister has demonstrated that the audit process of the Auditor-General has identified that, indeed, the department has acted most appropriately probably 99.99 per cent of the time, so I take the opportunity to commend the department for the way it operates. In the short time I have been in this role, I have been around and looked at a few of the facilities and am most impressed with the officers and management. So, really, on this section of the Auditor-General's Report there is not a lot to ask. I understand the member for Kavel has a question about another of the minister's portfolio areas so I hand over to him and thank his officers for their replies.

The Hon. A. KOUTSANTONIS: I thank the member for his glowing references to the hardworking public servants of the Department for Correctional Services, and how wonderful they are and how hard they work; and how the Auditor-General, an independent officer, has found almost no complaint with the way they operate. It still surprises me that the opposition calls for an ICAC.

Mr GOLDSWORTHY: My next question is directed to the Minister for Gambling. I refer to the Auditor-General's Report, Volume I, page 101. Given that the government was cutting the number of poker machines several years ago, why has there been an increase in machines from the year 2008-09? On page 101 it is noted that the number of gaming machines installed as at 30 June increased by 55 from 2008 to 2009 and by 101 from 2007 to 2008. I thought it was the policy of the government to reduce poker machines, not to increase them.

The Hon. A. KOUTSANTONIS: I will take the majority of that question on notice. However, I will say this. It is the policy of this government to reduce the number of poker machines, but I also remind the member for Kavel that there are people who hold poker machine licences that are not active; that is, the machine is not physically on the floor, like the casino and some other clubs. I can only imagine that that is part of the reason. However, I will obtain a more detailed answer for the member for Kavel and bring it back to the house.

The CHAIR: There being no further questions of the minister, the examination is concluded.

Mrs GERAGHTY: Madam, I draw your attention to the state of the committee.

A quorum having been formed:

The CHAIR: We now proceed to examination of the Auditor-General's Report in relation to the Minister for Employment, Training and Further Education, Minister for Road Safety and Minister for Science and Information Economy. I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet and all questions must be directly referenced to the Auditor-General's Report.

Mr GOLDSWORTHY: I refer to the Auditor-General's Report in relation to road safety. There is not a great deal in the Auditor-General's Report on that specific area of responsibility, but there are two pages to which I would like to refer. I first refer to Volume V, page 1497, which has a schedule of expenses and income which obviously relates to the office of road safety. Can the minister tell the committee how many staff are in the office of road safety—because there is an employee benefit expenses line, and so on?

The Hon. M.F. O'BRIEN: Can we reverse the order? I have just come from a meeting, and the Chief Executive of DTEI is in the building.

Mr Goldsworthy: What do you want to do?

The Hon. M.F. O'BRIEN: If the member is agreeable, we will deal with further education.

Mr PISONI: Madam Chair, can we start the clock again, please?

The CHAIR: We have just stopped the clock.

Mr PISONI: Can we start it again, was the question.

The CHAIR: No, we have stopped the clock.

Mr PISONI: You are not going to start it again? A minute has gone by.

The CHAIR: The member for Kavel asked a question—

Mr PISONI: But the minister cannot answer it. He said his advisers are not here and he cannot answer it.

The CHAIR: No; the question is on the record. It is all right. Proceed with questions. The member for Unley, do you wish to ask questions?

Mr PISONI: There are only 28 minutes on the clock, chair. It is in Hansard that we are being robbed of this time to question the minister. In last year's Auditor-General's Report, the department advised that the Scanning Workflow Accounts Payable System (SWAP) has been implemented and was effective in reducing the risk of unauthorised invoices being processed for payment. However, this year, the Auditor-General's Report highlights that unauthorised accounts, payable invoices, are still going unchecked. The system does not ensure the correct authorisation of transactions in accordance with delegated authorities and there are no checks and balances regarding a single officer purchasing, receipting and approved payment of goods. Such examples of blatant non-compliance not only increase the likelihood of serious fraud but highlight the complete lack of accountability in managing the expenses.

The CHAIR: Can we have an identification for this, please, a reference? You are making many statements.

Mr PISONI: Part B, Volume II, page 530, under 'Expenditure'. However, apparently the department does not consider this to be a high risk. Can you explain that minister?

The Hon. M.F. O'BRIEN: In response to the comments contained within the Auditor-General's Report, the chief executive officer of DFEEST responded in writing in September. I will read in the propositions outlined by the Auditor-General. In relation to SWAP and expenditure, the Auditor-General said:

The Scanning Workflow Accounts Payable (SWAP) system was implemented in May 2008. Audit review revealed some control deficiencies:

SWAP does not ensure authorisation in line with the Delegations of Authority.

The chief executive officer responded:

The scanning workflow accounts payable system (SWAP) has significantly reduced the risk of unauthorised invoices being paid.

The system automates the entire accounts payable process.

Insertion of the authorising officer's position title and name is a mandatory requirement.

The responsible officer receives email notifications of an invoice for authorisation which includes reference to delegations and direct links to the delegations manual.

Immediately prior to payment processing, the responsible officer is again prompted to ensure they have the appropriate delegation.

Internal Audit reviews are undertaken to complement this system's functionality to ensure Delegation of Authority compliance.

SWAP is now managed by Shared Services SA who has indicated that it will eventually be replaced by an Electronic Procure to Pay system. This will be the next opportunity to consider automation of links to Delegation Manuals.

The Auditor-General then commented:

Independent checks are not performed where scanned invoice balances are overridden in SWAP.

The chief executive officer responded:

A system problem was identified by DFEEST several months ago whereby payments were being allowed to be processed for amounts that varied from the scanned invoice.

It should be noted though that the system advised the delegate of the difference, and provided an opportunity to abort the process, prior to the payment being processed.

This issue has since been rectified and corrective action initiated for the erroneous payments.

The Auditor-General also commented:

The Department responded that it considers the introduction of SWAP has significantly reduced the risk of unauthorised invoices being processed for payment and that the processes that are now in place through SWAP improve and appropriately manage the risk of inappropriate payments. It was also advised that the system has provided additional controls and importantly systems generated notifications to those exercising delegations for payments. This response will be considered as part of the 2009-10 audit of expenditure.

A lack of segregation exists as the same officer purchases, receipts and approves payment of goods.

The chief executive officer responded:

This was a potential risk which had arisen from a problem with the Scanning Workflow Accounts Payable (SWAP) system which has since been rectified.

The goods or services are receipted in the financial system (Masterpiece) prior to the invoice being scanned in SWAP.

SWAP recognises the goods or services have been received against the Purchase Order file uploaded each night and automatically checks the 'goods received' box.

An independent officer then authorises the payment via SWAP.

I refer again to the Auditor-General's Report:

In addition, the Department has investigated the lack of segregation and, although it does not consider the occurrences are frequent or high risk, it intends to resolve the issue through a system modification to be undertaken by Shared Services SA (SSSA).

That is dealing with expenditure under SWAP and that is the strategy that the chief executive officer intends to implement in dealing with those issues identified by the Auditor-General.

Mr PISONI: Given that the Auditor-General last year identified similar areas of non-compliance with basic internal controls such as delegated authorities and accuracy of invoices were being disregarded and this year's report outlines the same flaws, does that indicate sloppy government to the extreme? Two Auditor-General's reports in a row!

The CHAIR: Order! Last year's Auditor-General's Report is not under consideration.

Mr PISONI: I know that the chair does not want to hear it, but it is two Auditor-General's reports in a row.

The CHAIR: Order! The member for Unley will resume his seat. There are to be no comments in relation to the chair.

The Hon. M.F. O'BRIEN: I will quote from the Auditor-General's Report in reference to the claim made by the member for Unley in relation to assessment of controls. The Auditor-General said:

In my opinion, the controls exercised by the Department of Further Education, Employment, Science and Technology in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities, except for matters raised in relation to expenditure, grant expenditure, student revenue, payroll, risk management, budgetary control and policies and procedures, as outlined under 'Communication of Audit Matters', are sufficient to provide reasonable assurance that the financial transactions of the Department of Further Education, Employment, Science and Technology have been conducted properly and in accordance with the law.

Mr PISONI: I refer to page 51 of that same volume, 'Payroll'. The Auditor-General's Report revealed that fortnightly payroll disbursements can be manipulated prior to release as they are transferred through multiple departmental networks. The department's response is that it will undertake to investigate tighter systems controls. Will the minister advise how many staff have been overpaid in the last 12 months, and will the minister advise when these tighter systems controls will be implemented? In light of these inconsistencies, will the minister confirm that the actual sick leave being accurately recorded in the Employee Self Service ( ESS) system is correct, and have the average sick days taken per DFEEST employee increased above the 7.49 days as per his advice to my estimates committee question in July this year and his response dated 9 September this year?

The CHAIR: Can the member for Unley give that reference again, please?

Mr PISONI: Volume II, 'Payroll', page 531.

The Hon. M.F. O'BRIEN: The department has put a great deal of effort into the issue of overpayments and has been able to establish that they are negligible in number, but I will take that matter on notice and return with precise figures. Again, I will return to the comments of the Auditor-General and the department's response which was provided by way of correspondence between the chief executive officer and the Auditor-General. The Auditor-General's Report under 'Payroll' states:

The audit of payroll revealed control deficiencies in the following areas:

Although statistics have improved from last year [a sign of improvement, and this is not in the report], some managers are still not reviewing and returning bona fide certificates within the required time frame.

The chief executive officer responded as follows:

Human resources departments are increasing their monitoring and follow-up of outstanding bona fide certificates.

Bona fides are being sent out on or just after the period end date, which provides another level of internal control to ensure that appropriate certification and return can only occur.

The human resources director will personally analyse outstanding or late returns and will follow up with non-compliant areas and remind them of their management responsibilities.

The Auditor-General's Report further states:

The department responded that managers will be reminded of the need to return bona fide certificates in appropriate time frames and will report upon and action non-performance. The department does not review payroll master file information prior to or after SSSA process changes. The fortnightly payroll disbursement files can be easily changed prior to disbursement as they are transferred through multiple computer network drives to which numerous department and SSSA employees have access.

This is a point picked up by the member for Unley. The response of the chief executive officer states:

DFEEST processes have been reviewed extensively and it is considered that the risk of inappropriate file manipulation is well managed through the timing of file transfers and the monitoring of system-generated error messages by designated finance staff.

Discussions have been held with Shared Services SA regarding their component of the process, and an undertaking has been given to investigate tighter systems controls as recommended by audit. This undertaking will be formalised and service agreements adjusted where appropriate.

Mr PISONI: The minister provided some information showing that the total average sick days per full-time equivalents in sections of his department, such as the Director, Employment Services, Planning and Support, ACE & Community Partnerships is up to 11.53 sick days a year; regional initiatives, 6.74; Skills Recognition Services, 8.68; and Aboriginal employment initiatives 11.11 days. Bearing in mind that this is the average, it means that a lot more are taking many more days than the average number of sick days. Will the minister confirm whether these figures are higher than the average in the South Australian public sector? Also, what happens to the payroll for those members who have taken more than their entitlement of sick days? Are they, for example, working extra time, are they taking annual leave or are they being paid from some other mechanism available to the minister?

The CHAIR: Member for Unley, are you referring to some prior communication with the minister?

Mr PISONI: I am referring to the Auditor-General's Report on payroll.

The CHAIR: And the average number of sick days, etc., where is that documented?

Mr PISONI: I am referring to payroll.

The CHAIR: I do not find the number of sick days in that data that you cited. If the data is not before the committee, then it is not a committee question.

Mr PISONI: The question is about payroll and the way it is administered. The Auditor-General has been critical—

The CHAIR: Member for Unley, I am aware of that.

Mr PISONI: —of the way in which the payroll is administered, and I am using my knowledge of the portfolio and this opportunity of the Auditor-General's examination to get some more information about the inefficiencies that are occurring in this department.

The CHAIR: Member for Unley, questions in this section are only related to data and figures in the Auditor-General's Report. Questions relating to general issues such as sick leave, for instance, can be asked of the minister at any time during question time. Minister, you are not required to answer this question, but do you wish to?

The Hon. M.F. O'BRIEN: I think the member for Unley is referring to figures that arose through the estimates process. I suggest that he frames that as a question on notice and I will definitely reply, but it is not dealt with.

Mr Pisoni interjecting:

The Hon. M.F. O'BRIEN: Member for Unley, we will expedite this, but there is an enormous amount of data collection involved. You have asked for comparisons across the South Australian government by way of averages and that is going to take a little while to pull together. Supply it as a question on notice, otherwise I think we are corrupting the process.

Mr HAMILTON-SMITH: I want to ask a question of the Minister for Science and Information Economy. In Volume II, page 553 of the report deals with grants and subsidies, and I notice that for science and technology programs, there has been a reduction from $29.6 million in 2008 to $24.9 million in 2009. Just beneath that, under 'Grants and subsidies paid/payable to entities within the SA government', for science and technology programs the report notes a drop from $13.7 million to $11.2 million. I am just interested in how these two figures disconnect, what the total reduction in the number of grants and subsidies is across programs and also what the impact of this has been on portfolio outcomes?

The Hon. M.F. O'BRIEN: I thank the member for Waite, a fellow MBAer, so I can refer to accounting process. Science research grants are actually treated on a cash flow rather than an accrual basis, so it really is a question of the time that the money was received. The discrepancy really is a result of a timing issue rather than there having been a drop away in the level of commonwealth funding.

The majority of the decrease relates to science and technology related grants of $4.73 million and a one-off higher education capital-related grant of $5 million shown in other specific grants paid to the University of Adelaide to enable the university to establish a new veterinary science school at the Roseworthy campus in 2007-08 which was not paid until 2008-09, so it was really an issue of the timing of the payment.

Mr HAMILTON-SMITH: I seek the minister's guidance. In the same volume on page 530, the Auditor-General observes that there were some control breakdowns in the area of grant payments. Could the minister explain to the committee in more detail the substance of those control breakdowns and what has been done to fix the problem?

The CHAIR: Can the member tell us which section that is under?

Mr HAMILTON-SMITH: Page 530, under 'Grant expenditure', halfway down: 'Audit found that the effectiveness of control activities differs across each grant area', etc.

The Hon. M.F. O'BRIEN: I will not read out the section within the Auditor-General's Report—I think the member for Unley has done that—but again referring to the correspondence of September, the chief executive's response states:

A review is underway which will develop a Grants Management Framework with a consistent set of principles that will underpin the administration and distribution of grants. Detailed reviews of the system and processes associated with the specifically highlighted grant arrangements have been undertaken and it is considered that all reconciliation processes have been streamlined and are effective in ensuring appropriate controls.

So, we are addressing that particular matter and the chief executive officer has indicated that one of the things we will be doing within the new grants management framework is separating out the process that allocates the grants from the grant recipient so that there is no blurring of responsibilities.

Mr HAMILTON-SMITH: Page 551 of the Auditor-General's Report, Volume II, outlines subprogram expenditure, particularly the subprogram on 'Science and innovation' and the subprogram on 'Information economy'. There just seems to be some overlap here with the functions of the Department for Transport, Energy and Infrastructure which manages the ICT projects for the government's own business. I would just like to ask what overlap or duplication is there, if any, between the activities of this particular subprogram mentioned in the Auditor-General's Report and the ICT program in DTEI for whole of government business? Does your subprogram have some connection there?

The Hon. M.F. O'BRIEN: My understanding is that there is no overlap. This is a high-level policy group that advises government on strategy. It was responsible for the broadband black spot program, among other things, with the commencement of a rollout in the Adelaide metropolitan area. It was responsible for the network put in place on Yorke Peninsula, which is regarded as nation leading. I know that the federal government is looking at that model, which was run out of that particular secretariat, as a nationally applicable model. My understanding is that there is no overlay of functionality between the two departments.

Mr GOLDSWORTHY: My question refers to issues of road safety. I will just pick up where we left off before: Volume V, page 1497. There is not a lot in the Auditor-General's Report in relation to road safety issues. As it relates to the expenses and income schedule, in '08 the employee benefit expenses and the like was $6.7 million, increased to a fraction over $7.4 million. How many employees are employed in the office of road safety?

The Hon. M.F. O'BRIEN: There is not an office of road safety as such. As you would appreciate, it is an administrative unit within DTEI, entitled the Road Safety Directorate. The financials, by and large, are the responsibility of the Minister for Transport, but I can inform you that there are approximately 140 staff within that directorate.

Mr GOLDSWORTHY: What was the reason for the increase of $700,000 from '08 to '09 in the employee benefits expenses line?

The Hon. M.F. O'BRIEN: I will take that on notice, but I think the response will probably come from the Minister for Transport.

Mr GOLDSWORTHY: How does the relationship between you and the Road Safety Directorate work? If you have the Minister for Transport and you are the Minister for Road Safety and you have a Road Safety Directorate, what is the relationship? Do they report to you or the Minister for Transport? What is the deal?

The Hon. M.F. O'BRIEN: My function is that of policy development, and the financial management of DTEI in its entirety is the responsibility of the Minister for Transport. I can make general comments and take matters on notice, but as to the actual financial management, ultimately the Minister for Transport has the responsibility for the entirety of DTEI.

Mr GOLDSWORTHY: I presume, referring to page 1499, the balance sheet or assets and liabilities schedule is all zero because it is all part of DTEI, part of the department, and you do not have a separate asset liability for the Road Safety Directorate.

The Hon. M.F. O'BRIEN: That would be correct.

Mr GOLDSWORTHY: I refer to Volume V, page 1513. The Road Safety Advisory Council employs Mr Alex Gallacher and Sir Eric Neal. The remuneration of board and committee members shows that 26 are in the remuneration bracket of $1 to $9,999. How many people comprise the Road Safety Advisory Council? Is it just Mr Gallacher and Sir Eric Neal, or are there other people? I presume there are other people. Do those two people only receive sitting fees for the advisory council? Do other members of that council receive sitting fees?

The Hon. M.F. O'BRIEN: That is correct. In 2008-09, two members of the Road Safety Advisory Council were remunerated through the Department for Transport, Energy and Infrastructure, and they were Mr Alex Gallacher and Sir Eric Neal. Each member received remuneration for the cost of performing board and committee member duties, including sitting fees, superannuation contribution, fringe benefits tax and other salary sacrifice arrangements. The total payable by DTEI and received by members of the council was the princely sum of $5,400.

Mr GOLDSWORTHY: How many members are on that council? There would be some that obviously don't receive remuneration. Just ballpark—six, ten?

The Hon. M.F. O'BRIEN: There are seven. The other five are not paid.

The CHAIR: The time for examination of this section of the Auditor-General's Report having expired, we will now move to the Minister for Families and Communities, Minister for the Northern Suburbs, Minister for Housing, Minister for Ageing and Minister for Disability.

Ms CHAPMAN: The Hon. Stephen Wade is the opposition spokesperson on families and communities and he has conferred with me on his concerns, particularly arising out of the Auditor-General's assessment of this portfolio this year. I refer to page 477, Volume II. I am talking about the administered items of the Department for Families and Communities, in particular consultancies. There is one consultancy fee paid at $150,000 during the subject year. My question is in respect of the details of this consultancy: who was engaged, for what purpose and for whom was the consultancy engaged?

The Hon. J.M. RANKINE: That was not one consultancy but three consultancies.

Ms CHAPMAN: It says there is one.

The Hon. J.M. RANKINE: I am sorry, I do not have that information. I will get that for you on notice.

Ms CHAPMAN: I refer to page 611. This is a question about HomeStart. There is a statement of the comprehensive income of HomeStart. At about point 8 or 9 on that page it refers to the net interest income and interest margin of HomeStart. In the explanation as to why there had been a net interest income by some $7.2 million in the past financial year—that is, extra income of HomeStart—one of the reasons identified there is as follows:

HomeStart not passing on some Reserve Bank of Australia interest rate cuts to customers, in line with the general market response.

In other words, there is a bigger profit margin because they have not handed the interest rate benefit back to the customers. My question is: why didn't HomeStart pass on the interest rate cuts to its customers, considering the criticism of the federal Treasurer that failure to pass on rate cuts was hijacking Australia's monetary policy?

The Hon. J.M. RANKINE: I am happy to get a detailed response from HomeStart, but my understanding is that in some instances, when the federal government was urging other banks to pass on the interest rate cut, HomeStart did do that, but we found ourselves not where we would want to be placed within the market. We did not want HomeStart being seen to be the cheapest interest rate and undercutting commercial banks in South Australia. We are mindful to ensure that HomeStart is about mid ranking as far as interest rates go in South Australia.

Ms CHAPMAN: That would be a perfectly reasonable explanation if that was a question of each year adjusting the interest rate rebate, depending on whether or not you stay as middle of the market, but there is absolutely no reference here or in the HomeStart documents that that is a requirement of that entity. I am not aware of any Treasurer's Instruction which requires that.

As you know, HomeStart recipients are people in the community who struggle to get finance anywhere else, so this service is provided. It is a very good service, but there is a massive increase in income and profit in a situation where even the federal Treasurer speaks of this as hijacking Australia's monetary policy.

I have asked the Treasurer previously about why there has been a delay in the refund given to clients of HomeStart, when there is an expectation that clients of all the other banks would get theirs a day or so later. He has explained quite reasonably that from time to time, when there is a rate adjustment, it takes some time to work it through the system and sometimes it is not exactly the same as the Reserve Bank credit. Similarly, on occasions it is not given the debit.

It is very clear that there is an expectation for the banks across Australia to provide relief to their customers. Unless the minister can explain that a new direction requires that it be middle of the road, in the sense of a service that is available, when in fact its own documents suggest it is a facility which is available to a select group in the community who are not usually able to access loans elsewhere.

The Hon. J.M. RANKINE: The honourable member is correct. HomeStart does provide loans to people who generally cannot access finance through other banking institutions. We provide very different products from those which are available through banks. Customers are much more high risk than those who borrow from banks. The way in which the loans are structured is different from the way in which they are structured for the banks.

In the main people generally would not pay more than 25 per cent of their income on a loan repayment and, rather than have a set period of time in which to repay the loan, it is structured to take into account their ability to pay. HomeStart needs to juggle a lot of different factors. We are very fortunate to have HomeStart operating here in South Australia, and we have managed to get about 50,000 people into home ownership who would not otherwise have been able to do that.

Ms CHAPMAN: Has the federal government made any request that HomeStart pass on interest rate cuts and, if so, when?

The Hon. J.M. RANKINE: I understand that we have passed on interest rate cuts where it has been absolutely appropriate.

Ms CHAPMAN: Perhaps the minister misunderstood my question. I did not ask whether they had been passed on. I asked whether the federal government has asked HomeStart to pass them on.

The Hon. J.M. RANKINE: As far as I am aware, we have not received any correspondence from the federal government in relation to that matter. We have passed on interest rate cuts, as deemed appropriate by the board.

Ms CHAPMAN: I refer to page 431, which relates to one of the most significant areas of interest raised by the Auditor-General, that is, the general management of grant payments. One of the recommendations of the Auditor-General, with respect to the findings of the department's risk management and internal audit report in 2008-09, refers to the need for a high level needs assessment and for the mapping of services to these needs. I have a number of questions in relation to this matter. First, has such a high level needs assessment been conducted by the department, particularly of the unmet need in South Australia?

The ACTING CHAIR (Hon. P.L. White): I am on page 431, 'Management of grant payments—internal audit review'. To which line are you referring?

Ms CHAPMAN: About point 8. It starts at the paragraph, 'strong evidence supporting...'.

The Hon. J.M. RANKINE: I point out, first, that we really do appreciate the work the Auditor-General does in highlighting areas in which we can improve our processes—and we act on them. In the section to which the honourable member refers, it is worth pointing out that the Auditor-General has relied on the work DFC has done in-house to highlight these things. As he points out, our own risk management and internal report has highlighted these issues; and that is referred to in these particular paragraphs.

We have been examining existing grant management practices and implementing a number of reforms to streamline the functions, planning, funding, contracting, performance, management and evaluation of our grants over some months now. We recognise that it is essential to a strong evidence base underpinning our grant funding decisions in order to ensure that we target our resources appropriately and that we get best value for money in relation to our contracts; so that work is underway. We appreciate the Auditor-General noting the good work that has been done by the department.

Ms CHAPMAN: That is excellent, minister, but my question is: have you done the high level needs assessment which is recommended for each division? Has it been done? I will have other questions about whether or not it has been done.

The Hon. J.M. RANKINE: We have commenced the reform of funding and grants management process project, which examines existing grant management practices. As I said, we are implementing a number of reforms to integrate and streamline the functions of planning, funding, contracting—

Ms CHAPMAN: I have a point of order: I am not actually asking the minister about what the government is doing in respect of the management of grant payments. I am asking specifically about a recommendation in relation to a high level needs assessment being undertaken. My question is: have you actually done that?

The ACTING CHAIR: Member for Bragg, the minister had hardly begun to speak. I will let the minister speak in order to determine whether she is answering the question.

The Hon. J.M. RANKINE: I am trying to tell the member for Bragg that work is underway currently.

Ms CHAPMAN: On that?

The Hon. J.M. RANKINE: On all of it.

Ms CHAPMAN: Minister, does the high level needs assessment, which you are currently undertaking, include a term of reference to identify the unmet need and, in particular, the cost of that to the community, if it had to be provided? Is that part of the terms of reference of the report you are currently undertaking?

The Hon. J.M. RANKINE: I invite the member to access our website. The unmet need is already recorded on the DFC website.

Ms CHAPMAN: Do I take it, then, that the high level needs assessment that you are currently undertaking does not include that as a term of reference?

The Hon. J.M. RANKINE: It encompasses the whole portfolio.

Ms CHAPMAN: What is the cost of meeting the current unmet need in South Australia?

The Hon. J.M. RANKINE: Unmet need of what?

Ms CHAPMAN: The high level needs assessment refers to identifying the unmet needs and future priorities, which you have told us is already on the website. I am asking: what is the total cost of meeting the unmet need?

The Hon. J.M. RANKINE: I am referring to unmet need of disability services, which is on the website, and that is a complex calculation. I do not have that information. People are registered as having unmet need in a range of categories, with a range of different services required depending on the severity and complexity of their need and the service they require. So, it is a very individualised assessment. One person might require one service and another person might require four or five different services.

Ms CHAPMAN: The section I am asking about in this report relates to the whole department—in fact, it refers to doing this assessment in all of the divisions. Whilst I note there is a record of the unmet need in respect of the disability services the minister is telling us about, I ask this question: is the unmet need of all of the departments within families and communities, as per this recommendation, being undertaken as part of this high level needs assessment; that is, in addition to simply the disability?

The Hon. J.M. RANKINE: The needs assessment that is being undertaken is looking at what sort of services we require, the extent of those services and how we can get better value for money and better manage our contracts, service agreements and assets.

Ms CHAPMAN: When does the minister expect the high level needs assessment that is currently being undertaken to be completed?

The Hon. J.M. RANKINE: As the member would imagine, this is an extensive piece of work.

Ms Chapman interjecting:

The Hon. J.M. RANKINE: Well, I would expect it will take at least one or two years to be completed across the whole department.

Ms CHAPMAN: Can you tell me when it started?

The Hon. J.M. RANKINE: Around the time I became the minister.

Ms CHAPMAN: Give me a hint on that.

The Hon. J.M. RANKINE: I think that was about July last year.

Ms CHAPMAN: Will the government introduce individualised or self-directed funding to better map services to needs to meet the recommendation in the Auditor-General's Report—

The ACTING CHAIR: Order! Member for Bragg, to which line do you refer now?

Ms CHAPMAN: I am still in the same section.

The ACTING CHAIR (Hon. P.L. White): Well, I will listen very carefully.

Ms CHAPMAN: Will the government introduce individualised or self-directed funding to better map services to needs to meet the recommendation in the Auditor-General's Report and, if so, when?

The Hon. J.M. RANKINE: I thank the member for this question because it is one of great interest to people in the disability sector and, certainly, people with disabilities themselves and their families. I think it is over 12 months ago that the former minister announced that the government was looking at that. The Department for Families and Communities has been doing a considerable amount of work in relation to individualised funding, recognising again that it is a very complex process to go through. Whilst it might sound simple to say to people, 'Here is your bucket of money. You go away and organise your own services,' that would cause enormous disruption and, I think, concern to many people.

We know it is not a one-size-fits-all, but we have committed to working cautiously towards that to provide the opportunity for people who are very keen to manage their own funding and be in charge of the services that are provided to them so they can maximise the benefits. We are very committed to working towards that and, in fact, I have said on numerous occasions that we will be doing that and I expect to announce very soon that we will be calling for registrations of interest to do exactly that.

Ms CHAPMAN: At page 432, which goes on to another area of concern of the Auditor-General in regard to brokerage payments, one of the issues raised is the delay in putting in place the client service agreements. As the minister would appreciate, if there is a delay in this, either the service discontinues or does not start, or the NGO picks up the tab, and there is always the risk then that upon subsequent approval for a lesser hourly period, for example, the NGO does not get paid but has already provided the service. This is an area that has obviously been of concern because it relates to people with disabilities and the Auditor-General points out the importance of these agreements being put in place prior to the services being provided. My question is: what strategies has the department put in place to address those concerns to make sure that that happens?

The Hon. J.M. RANKINE: Certainly, I understand the concerns of the auditor in relation to that, but I think it is worth pointing out that the provision of disability services sometimes is just not like contracting any other service. It is not like Housing SA contracting a plumber, builder, or whomever. There are circumstances where there are quite urgent situations and you need to get a service in place immediately to support a particular person. So there are instances when the services have been engaged before the contracts have been put in place. Obviously, from an audit point of view, that is not the ideal situation but it is, in fact, the reality in relation to disability services. Our focus is always about getting those services out to people.

I know that there was some concern at the end of the financial year around the renewal of some contracts with one particular agency. There were many hundreds of contracts with that agency and it was very keen for all its agreements to commence and end on a particular date, which put enormous pressure on the agency to get those contracts in place. We are working with it to have a different time frame across those contracts and stagger them so that we do not end up in that situation again. However, it was assured all the way along the line that payments would be made despite the fact that the contracts had not been finalised. So, there was no risk to anyone that they would not be paid.

Mr VENNING: This is the first time I have done this in relation to the Ageing portfolio, as shadow minister for ageing and also shadow minister for population. It is great to re-read the documentation. I found it fascinating; there is a lot of interesting stuff in here. When you look at it with a critical eye you can certainly find some detail. I refer to the Auditor-General's Report, Part B: Agency Audit Reports, Volume II, page 434. What impact has the inability of the Department for Families and Communities to comprehensively reconcile concession details with client details on the department's databases had on the concessions received by older South Australians?

The Hon. J.M. RANKINE: My advice is that they have received their concessions and, in fact, in some instances it was discovered, when some of the database came over from one of the other agencies, that a few people may have been receiving concessions to which they were not entitled. So, people have not suffered at all.

Mr VENNING: So, the Auditor-General, you think, did not get it quite right?

The Hon. J.M. Rankine: Sorry?

Mr VENNING: Does the Auditor-General update this material regularly? You are basically saying in your answer that he overlooked that.

The Hon. J.M. RANKINE: The audit identified that it had raised issues in the past about the ability of DFC to confirm concession payment details to the payments made to utility suppliers—so, water, etc.—and although the concessions utilises a database called CARTS to maintain client information, it is in the process of updating this system with the Concessions and Seniors Information System (CASIS). This system will significantly reduce DFC's effort and cost in managing concessions and senior cards, radically reduce administration required to reconcile payments with concession partners such as SA Water (as you can imagine, there are a lot of those), streamline relationships and services between concession customers and partners by using a single entry point to update and maintain customer records—and that is another good thing for seniors; one entry point for concessions and their not having to apply all over the place.

The implementation of CASIS will address specific concerns raised by audit re the validity of SA Water customer concessions by calculating all water and sewerage concessions and to system link via an automated system, ensuring that concessions applied by providers are to eligible customers. The reconciliation process allows matching details of the data sent from CASIS and the exceptions returned from providers.

Mr VENNING: It will certainly be interesting reading as we ponder over these in the days ahead. I refer to the Auditor-General's Report, Part B: Agency Audit Reports, Volume II, page 431. How has the department's practice of granting funding to the same non-government organisations year on year and making funding decisions prior to receiving the rationale and justification documentation for the proposal impacted upon funds available to organisations providing services for older South Australians? Is there a process, or is it just a rubber stamp?

The ACTING CHAIR (Hon. P.L. White): Member for Schubert, can you point to the line on page 431 to which you refer?

Mr VENNING: I certainly can, because I have read all this myself. I am referring to halfway down page 431, 'Needs based planning and sector analysis'. The last two lines of that paragraph state, 'funding was in many cases granted to the same provider involving the same amounts (plus indexation) year on year'.

The Hon. J.M. RANKINE: I would venture to say that the member for Schubert would be the first one to come in here bellyaching very loudly if we took HACC funding away from a range of agencies that provide services for older South Australians. In fact, HACC funding—

Mr Venning: Don't justify it.

The Hon. J.M. RANKINE: We are justifying it. If the member had listened to the responses to the member for Bragg he would have heard that we are going through a process in relation to contracts and our grant programs and service contracts. Home and Community Care is one of those areas in which there is significant funding growth, and we are doing a lot of work to make sure that we maximise the benefit of that funding for older people and people with disabilities.

Mr VENNING: I again refer to the Auditor-General's Report, Part B: Agency Audit Reports, Volume II, page 434. How has the $155 million in commonwealth revenue to the department been allocated and spent specifically in relation to the aged-care sector, and why has it fallen from $280 million the year before?

The Hon. J.M. RANKINE: That reflects the fact that the COAG payments are being made in a different way. The same amount of money is being receipted by the state, but it is going via Treasury before it comes back to the agency.

Mr VENNING: That really is a Yes Minister answer.

The Hon. J.M. RANKINE: But it is the truth.

Mr VENNING: Anyway, irrespective, I hear the answer. I refer to the Auditor-General's Report, Part B: Agency Audit Reports, Volume II, page 430. What guarantees can you give that the Department for Families and Communities will fully implement a financial management compliance program for the 2009-10 financial year when it was promised last year and did not occur; and what impact has this had on older South Australians?

The Hon. J.M. RANKINE: It has not had any impact on older South Australians. It is an internal requirement and one with which I understand a range of agencies have difficulty.

Mr VENNING: I understand we are finishing at 6pm. I have two other areas. Rather than miss out, can I put these on notice? I still have two to come.

The ACTING CHAIR (Hon. P.L. White): No, that is not allowed under standing orders. However, you can put questions on notice as per normal parliamentary procedure at any time.

Mr VENNING: I refer to page 431. What deficiencies and non-compliance were found by the department following its assessment of current controls and compliance programs, and how did they impact upon older South Australians?

The Hon. J.M. RANKINE: I am sorry, I am not sure what you are referring to.

Mr VENNING: What deficiencies and non-compliance were found by the department following its assessment of current controls? At the top it says:

Progress made as at June 2009 mainly involved evaluation of DFC's policies and procedures against Department for Treasury and Finance (DTF) guidelines. In 2008-09 implementation plan did not include work to ensure DFC complies with these policies and procedures.

The Hon. J.M. RANKINE: We have put in place some very robust compliance processes and, as I have said, we are doing ongoing work in relation to our contracts.

The CHAIR: The time for examination of this minister has completed.

Progress reported; committee to sit again.


[Sitting suspended from 18:03 to 19:30]


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