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House of Assembly - Fifty-First Parliament, Third Session (51-3)
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

In committee.

(Continued from 28 October 2009. Page 4508.)

The CHAIR: We deal first with matters relating to the examination of the Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts and Minister for Sustainability and Climate Change, to last for 30 minutes. Premier, is there some arrangement for managing the team of supporters?

The Hon. M.D. RANN: I think we will manage. I want to say how much I appreciate the consideration of the Leader of the Opposition and the Opposition Whip in terms of changing the arrangements today to bring this forward.

The CHAIR: I remind people that this is the normal committee process and it is necessary to stand when asking questions. All questions must be referenced and relate strictly to matters contained in this year's Auditor-General's Report.

Mrs REDMOND: My first question relates to Volume III, page 931, and deals with the table which sets out remuneration of employees. I note that there are now six employees earning above $390,000 per annum. What are each of their roles?

The Hon. M.D. RANN: I will give the member the full list, but it is a good question.

Mrs REDMOND: I also note that, at the very bottom of the columns on that table, last year there was an employee in the range $560,000 to $570,000 (effectively). That position is no longer paid at that rate. Can the Premier explain who that was, what the position was and why that person is no longer there?

The Hon. M.D. RANN: I think that relates to the line that relates to judges and others, from memory, but I will get a full report on that.

Mrs REDMOND: Moving to a different part of Volume III at page 905 about a third of the way down is the heading of Shared Services SA. How many employees from the Department of the Premier and Cabinet have transferred to Shared Services SA thus far and how many more are expected to be transferred from the department?

The Hon. M.D. RANN: I will get those figures for the honourable Leader of the Opposition, but I would imagine there would be a number of IT people who would move over in terms of shared services in the future.

Mrs REDMOND: Moving to page 913 of Volume III on the issue of supplies and services, can the Premier explain the two categories of supplies and services, that is, the internal and external to the SA government? For example, accommodation appears in both lists. What is the difference between accommodation provided by entities within and external to the SA government?

The Hon. M.D. RANN: We pay accommodation costs, rentals and leases to the Department for Transport, Energy and Infrastructure (DTEI), so while it is government paying the government, that has always been the case. The various parts of the administration rent accommodation from DTEI but we also rent accommodation from outside or external bodies from the private sector.

Mrs REDMOND: Does that mean that, wherever an internal entry appears for something like accommodation, there will be a corresponding entry for remuneration or income to another department?

The Hon. M.D. RANN: I am advised that the suggested answer be yes.

Mrs REDMOND: That sounds more like a hope than an assertion. On page 915 of the same volume, so just over the page from where we were, in reference to the grants and subsidies which is at item 15, can you explain what 'in-kind revenue' is, since it was $1.23 million in 'in-kind revenue' received as grants and subsidies in the current year?

The Hon. M.D. RANN: I will get a report on that.

Mrs REDMOND: Madam Chair, I cannot tell you what a wonderful experience this is. It is so useful, getting all this information about the Auditor-General's Report. Over on page 921 still in the same volume, item 30 deals with unrecognised contractual commitments and, in particular, remuneration commitments. If you look at it, there's basically $27.199 million in wages for contractors and I want to know: is this $27.2 million in wages for contractors included in the $83 million employee benefits expenses on page 895, or is it separate?

The Hon. M.D. RANN: It is separate. Essentially, it is what we would have to pay out to those people in conglomeration; so it is separate.

Mrs REDMOND: Why are there so many contractors, and can these contracts for one year or five years be extended as they expire?

The Hon. M.D. RANN: I am advised that these would mostly be contracts for executives which can, of course, be terminated or can be extended.

Mrs REDMOND: Are there any standard conditions around extension or does that vary with each contract?

The Hon. M.D. RANN: As I understand it, normally the initial contract would be for five years, and then generally it would be a three year extension, which of course could then be extended again, although there have been circumstances where five year contracts have been followed by five year contracts when we have been keen to retain someone with outstanding merit.

Mrs REDMOND: Madam Chair, perhaps before I go on with some questions on the arts, I will ask the shadow for economic development to take some questions.

The CHAIR: Certainly. The member for Waite.

Mr HAMILTON-SMITH: There may be some overlap here with Trade and Economic Development which is the responsibility of the Treasurer so please let me know if that is the case. I am referring to page 1427 which deals with receipts from restructure activities within the Department of Trade and Economic Development. Was the almost $3 million indicated there the total amount paid for the DTED restructure, and what was this money spent on?

The Hon. M.D. RANN: We will get a report for the honourable member.

Mr HAMILTON-SMITH: Is the Premier able to tell us how many employees there are presently within DTED?

The Hon. M.D. RANN: I am not trying to dodge the questions because that is the last thing I would ever want to do, but I think you will find this comes under Kevin Foley's ministerial responsibility. I might be able to help actually. For FTEs for 2009-10, I am advised that the numbers are 204.6 FTEs, which compared to 2008-09, an estimated result of 214.8; and in 2007-08, it was 206.

Mr HAMILTON-SMITH: I move to the question of overseas offices. It is on page 1438 of Volume IV, section 11. There seems to have been an increase in operating expenses to maintain our overseas offices. Could the Premier explain to the committee why that increase in expenses has occurred and what the money has been used for?

The Hon. M.D. RANN: Net expenditure for the overseas offices was $3.391 million in 2008-09 compared to $2.266 million in 2007-08. The increase is due to increased costs associated with the full year operation in India, because India was being set up. We have a fantastic person in India heading a good team. His name is A.K. Tareen. He used to work for the federal government. He is an Australian citizen of Indian origins. I know that the universities are very thankful for his work because, when ministers come through, he organises big recruiting drives to recruit Indian students, as well as skilled migrants, as well as investment.

We have had spectacular exponential results. In fact, the growth in Indian students has been recognised nationally to the point where Indian students are now second to Chinese students. Of course, overseas students are now our fourth biggest export. I understand we now have about 30,000 overseas students compared to about 6,000 or 7,000 at the start of the decade. We are very pleased, as are people from the wine industry, engineering, environmental services and others, with the work done by A.K. Tareen in Chennai.

We have established an office in Chennai. The reason that we chose to establish an office in Chennai, which might seem unusual, is that others were located either in Mumbai or Bangalore. Of course, there is an Australian trade commissioner and also Consul General in Mumbai and the High Commission in Delhi. I know certainly Queensland is represented in Bangalore. We thought it was a good match. Of course, Tamil Nadu is now a sister state. It is a very large state and Chennai (its capital) is regarded as one of the rising giants of India industrially in areas of interest to our state. In fact, I think you will find that most people in the business community believe that it was a wise decision to go with Chennai to catch a rising tide.

Mr HAMILTON-SMITH: I move to the issue of consultants and contractors, which is covered on page 1437 of the same volume. Will the Premier list the consultants engaged and the purpose of the consultancy for each of the 15 consultancies over $50,000?

The Hon. M.D. RANN: Above $50,000, they are:

Ernst & Young: provision of a strategic options analysis report for the Tonsley Park site and recommended structure for a business case; the development of a business continuity plan that incorporates work done to date, the pandemic influenza response and IT disaster recovery.

EconSearch: shift share analysis of regional growth/decline.

Brian Hayes QC, Special Envoy to India: required to strengthen bilateral relations between South Australia and India in the areas of trade, investment, education, migration and tourism. Again, he is doing an outstanding job. I do not know anyone better connected in India than Brian Hayes QC.

Mrs Redmond interjecting:

The Hon. M.D. RANN: Of course, you would be aware that Mr Hayes QC was the head nationally of the Australia India Business Council some years ago. The list continues:

Bruce Carter: provision of commercial and strategic advice in relation to the Olympic Dam expansion project.

Indecs Markets: provision of economic advisory services for the preparation of the economic statement.

Strategon Capital: development and delivery of workshop programs at metropolitan and regional locations, aimed at building business capability in workforce development.

ACIL Tasman: report on priority services for industry development in South Australia via a knowledge intensive services research project assessing SA's service capability.

Hudson Howells: Immigration SA On Arrival Services Housing Feasibility Study—to develop a feasible model for the delivery of a private and non-government accommodation service for newly arrived migrants to South Australia; cost/benefit analysis of major development proposals in Whyalla; and prepare a scope document for the development of a support system for delivery of inwards investment.

Aurecon Australia: review of the operations of ICNSA in order to identify ways in which to improve the services and promotion of services to increase the opportunities for local businesses to generate business from major projects being undertaken in South Australia.

AECOM Australia: mapping South Australia's potential marine energy zones; benchmarking review into industrial development in South Australia; involved in undertaking an examination of costs and relevant frameworks associated with developing industrial premises for occupation and operation. Obviously, that is a number of different things.

Tourism Futures International: review of stages 2 and 3 of the development of the South Australian government's aviation strategy 2009-14.

KPPM: organisational strategists that developed a scoping paper on the future small business development council work plan for the next two years; review of the manufacturing consultative council; review of existing MCC membership appointments as a result of the Government Reform Commission and DPC Circular No. 22; project management of regional profiles project involving a socioeconomic environmental analysis and review of regional profiles.

Aspirion: advice on aviation industry attraction opportunities.

KPMG: application security risk assessment of DTED's visa processing application; report on the effectiveness of the existing DTED small business programs; the development of IT Strategic Plan 2009-11; risk assessment of the migration website; assess the competitiveness of SA's residential, commercial and industrial land supply in comparison to the greater metro regions of other capital cities.

TMP Worldwide: online and offline creative strategic services for careers promotion campaign, including advice on public relations strategies, project management, website design/scope and creative development of project.

I think that seems to be it. If the member does not mind, I will track back to the overseas offices. I mentioned India, but we also have offices in Dubai, Singapore, Shanghai and Jinan. In 2008-09, the commercial overseas office network directly facilitated in excess of $90 million in exports from South Australia; 27 South Australian delegations (including official ministerial-led missions) and various participant groups for offshore trade exhibitions; the provision of commercial advice and/or market intelligence to more than 300 South Australian businesses and organisations; and numerous buyer/investor group inbound missions to South Australia.

In addition to those offices that have been long standing (although when we got in we got rid of, I think, one or two offices in Indonesia and the office in the United States, based on performance), during the year the South Australian government announced an extension of the overseas network into the emerging markets of Chile and Vietnam, which will take effect from April and August respectively: Santiago in Chile (I think that is co-located with our federal colleagues) and Ho Chi Minh City in Vietnam. The Hong Kong, Chile and Vietnam office services are delivered through service agreements with the Australian Trade Commission (also known as Austrade). Additionally the office of the Agent-General in London, covering the United Kingdom and Western Europe, also contributes to the state's trade, investment and migration targets. However, this office is administered and managed separately by the Department of the Premier and Cabinet.

Mr HAMILTON-SMITH: I refer to Volume IV, page 1421, 'Financial assistance grants'. I note audit's comment that 'some project managers were not providing the officer with sufficient and prompt information on the status of outstanding obligations'. I think this observation by the Auditor-General relates to $20 million in financial assistance grants paid in 2008-09 to organisations mainly for industry and regional development. The grant recipients must fulfil certain obligations specified in the grant agreements, and the auditor suggests that that process is not being followed there and makes the appropriate comment. Will the Premier explain to the committee what action has been taken to remedy that observation?

The Hon. M.D. RANN: Certainly. I guess this comes down, on financial assistance grants, to the issue of monitoring of obligations. The department recognises the importance of monitoring outstanding obligations and now reports on obligations outstanding for more than 60 days instead of 100 days (what it was before). So, a tightening up from 100 days to 60 days. Obligations outstanding greater than 60 days and the status of each obligation are reported to the budget and finance executive committee on a monthly basis. The department is addressing all outstanding obligations greater than 60 days and aims to clear all obligations outstanding for more than 60 days. The types of obligations overdue relate to the provision of progress reports or financial acquittals. Generally, these types of obligations do not relate to clawback provisions.

Mrs REDMOND: I want to ask some questions about the arts portfolio, and I refer to Volume I, page 38. Under the heading 'Internal controls' there is a statement: 'The audit identified some areas where internal controls, documentation of procedures and compliance with existing procedures could be improved.' It then details a whole string of areas where they could be improved. The first part of the question is: when does the minister expect that his department will, as recommended by audit, establish formal processes to ensure compliance with Treasurer's Instructions Nos 2 and 28?

The second part of the question is: what is the penalty to be imposed, given the failure to comply to date with Treasurer's Instructions, no matter what they are, given that this government sacked Kate Lennon for failure to comply with a Treasurer's Instruction?

The Hon. M.D. RANN: In responding, I would like to mention assistance being given to me by the new head of Arts SA, Alex Reid, who has just had her position confirmed, having been acting in it for some time. As I understand it, what the leader is referring to are some internal controls, and what the auditor identified and what the leader has mentioned are some areas where internal controls, documentation, procedures and compliance with existing procedures could be improved.

For the benefit of this committee and this house, these mainly relate to maintaining current policies and procedures for all areas, controls over vendor master file maintenance, controls for BASS EFT collections from agents and BASS event bill changes, returning appropriate payment delegations for large payments such as BASS settlements as required by TI8, and timely approval of the trust's charter performance statement and financial obligations. The Adelaide Festival Centre Trust (AFCT) has advised the Auditor-General that it will continue to review and update policies and procedures to ensure that information is accurate and that current processes are outlined.

The Festival Centre Trust will also establish and monitor a timetable for the regular review and update of all policies and procedures. Considerable progress has already been made towards updating existing policies and procedures and addressing gaps identified through the development of a financial management compliance program. Steps have already been or will be taken to improve controls over vendor master file maintenance and BASS EFT collections and the timeliness of approvals. The trust is in discussion with the Auditor-General about controls for BASS event bill changes.

The trust has agreed to seek approval for its annual performance statement as soon as practicable following notification of its annual funding and the approval of its budget. The charter will be reviewed annually after the audited financial results are available. The minister and Treasurer will be notified about the charter at the same time as the actual results against the prior financial year's performance statements are reported.

The trust also intends to seek clarification from Treasury on the application of TI8 to payments for BASS settlements. These are transfers of promoter funds held in trust. Under approved contracts, box office takings are transferred to promoters' designated accounts on the completion of shows, net of any Adelaide Festival Centre fees or charges for services, as authorised by the relevant business areas.

Mrs REDMOND: Again I ask the Premier the question that I just asked, and I had already read all that information in response. The question was twofold: when does the Premier expect that these Treasurer's instructions will be complied with by this organisation, and why is it that this government saw fit to dismiss Kate Lennon for failure in a very minor way to obey a Treasurer's instruction and yet seems to ignore it on every other occasion for every other organisation?

The Hon. M.D. RANN: I think I just pointed out the time lines in terms of the obligations when the budget has been approved.

Mrs REDMOND: I give up. I ask the Premier about the statement of cash flows for the Adelaide Festival Centre Trust on page 42. I was a little puzzled reading that statement of cash flows, and maybe it is just because I am dumb, but the notes underneath indicate that the cash held includes $4.2 million held for promoters. I could not find a figure that represented that anywhere, and I assume from the table on page 42 that because it is held for promoters it is in effect held in trust and therefore does not appear in the books. Can the Premier confirm whether that is the case, and also explain the very last statement that cash flows from the SA government amounted to $13.5 million and are included in operating activities? The last sentence states:

The trust is highly dependent on the SA government for funding both operating and investing activities.

I wanted an explanation of why that is the case given that my understanding was that when we passed legislation in this house specifically to enable the trust to get rid of the ownership of the building, the debt that went with it, and so on, that we would then find that the trust was self-sufficient. My understanding is that, in fact, the trust is able to manage its affairs. I was concerned when I read that last sentence, which said that the auditor found that:

The trust is—

not was, but is—

highly dependent on the SA government for funding both operating and investing activities.

The Hon. M.D. RANN: I will get a report for the honourable member. Some of the matters I did address in the previous reply, but I will get a fuller report.

The CHAIR: The time for this examination has concluded. We now proceed to the examination of the Minister for Transport, the Minister for Infrastructure and the Minister for Energy for 30 minutes. I remind members that normal committee rules apply, that is, people are required to stand to ask and answer questions, and questions must be about matters referenced by line in this year's Auditor-General's Report. The member for Morphett.

Dr McFETRIDGE: I refer to the Auditor-General's Report, Part B, Volume V, page 1467 relating to total remunerations. What are the seven positions listed in 2009 that attract remuneration over $160,000 and what do those people do? Also, who are the two at the top being paid $230,000; what are their roles?

The Hon. P.F. CONLON: If I understand the question, the honourable member wants to know who are the people who earn—

Dr McFETRIDGE: Not by name, by position.

The Hon. P.F. CONLON: Yes, who earn over $100,000; is that right?

Dr McFETRIDGE: Who earn over $160,000.

The Hon. P.F. CONLON: Seven people earn over $160,000. I will bring that information back for the honourable member. I imagine that they are the chief executive, the deputy chief executive and the various executive directors. I think there are five of those. No, there are 12 executive directors. Off the top of my head—but we will get the honourable member the detail—we are talking about the chief executive, the deputy chief executive, the general manager of TransAdelaide—I am sorry, these are the TransAdelaide positions. We will get that detail for the honourable member. Obviously, there is a general manager of TransAdelaide. There is a manager of operations, which is a new position. I will find out who the others are.

Just so we understand before we get off on some sort of criticism of people being paid too much at TransAdelaide, TransAdelaide is better funded under this government than it ever was before. It was set up for privatisation by the previous government. It became a place where redeployees were sent before it was corporatised as a vehicle to sell. Since coming into government there has been a transformation by us. The funding has been restored, and we are going to invest in rail in a way that we have not done before. However, before we go too far down the path of suggesting that these people might be paid too much, it is regrettable that the general manager, Bob Stobbe, who has done a terrific job since he has been there, is leaving to go to ETSA. That is because the private sector pays much more than we do.

I will give the answer now. They are: the general manager; the chief financial officer; the executive manager, safety; the executive manager, customs; the chief operations officer; the executive manager, infrastructure; and the executive manager, special projects. However, as I said, unless you want people who have less than the skills that you need for the organisation, they are the sort of salaries that need to be paid.

Dr McFETRIDGE: I am certainly not criticising their remuneration or the job they do. In fact, it is disappointing that Mr Stobbe is leaving, and it would be nice if we could match the private sector. I think I remember that if Mr Hook was paid at the same rate as the first rail commissioner he would be getting $1.5 million, and I do not think we are going to pay him that.

On the same reference, page 1467, the total TVSPs in 2009 amounted to nil. How many TVSPs does the department expect in 2009-10?

The Hon. P.F. CONLON: This is for the department of transport or TransAdelaide?

Dr McFETRIDGE: TransAdelaide.

The Hon. P.F. CONLON: We do not forecast any TVSPs, which is understandable, given the expansion program in TransAdelaide. In fact, I think we are training 20 new drivers as we speak, 10 of whom are women. So, while across government there are savings, given the massive investment of this government in public transport, TransAdelaide is not a place where we will need fewer people. It is a place where we will need more people.

Dr McFETRIDGE: I refer to the Auditor-General's Report, Part B, Volume V at page 1469—consultancies. The number of consultants has gone from 39 to 84. The cost has only increased by $128,000, which is remarkable. Can the minister give details about the types of consultants and how the government is able to get such value for money?

The Hon. P.F. CONLON: I will get the details, but most of those consultancies go to getting experts around, for example, asset management, which is an area where we see the need for improvement. Members will remember that in the last few years, and I think coincidental with Bob's appointment, we appointed an operations manager. I went to the station a few months after the appointment and they were very pleased to see an operations manager on the shop floor, so to speak. We have some experts looking at the various areas where we think we want to improve coincidentally with the massive rail revitalisation program. In regard to the details, I assume these are people who come in and go out rather than being long-term appointments, and we can get that for the member. I do not have it here.

Dr McFETRIDGE: I refer to the same volume at page 1475, remuneration commitments. The explanation is that these items relate to fixed term contracts, which are, understandably, financial commitments but not yet recognised as liabilities. The financial commitment has increased from $4.9 million to $14.3 million. The majority of these increases are accounted for by an increase in contractual commitments within the one to five year time frame. Can the minister tell the committee the number of contracts in existence which make up the $1.43 million total?

The Hon. P.F. CONLON: I would have to take that on notice. I do not have that level of detail with me.

Dr McFETRIDGE: Can the minister also let us know whether these contracts are mainly for outsourced work for departmental employees? That is all for TransAdelaide. Can I thank Mr Stobbe for his input into the state. He is a delightful person to have dealt with.

Minister, I refer to the same volume, page 1479. This is probably not quite groundhog day but deja vu or 'deja three'. Regarding the basis for a qualified auditor's opinion on commonwealth grants on pages 1478 and 1479, the report comments that there were certain inconsistencies in the accounting methods used and that one of the problems this has caused is an understatement of the department's operating income where the receipt of commonwealth grants is concerned. I think you have explained this before, minister, but you are obviously still having the disagreement with the Auditor-General on the way commonwealth grants are being reported.

The Hon. P.F. CONLON: It is not commonwealth grants: it is the particular $100 million. Again, we were offered it with 24 hours to go towards the end of a financial year and told by the commonwealth to accept it or not within 24 hours. I must put on the record that it is a much happier relationship with the commonwealth now, a much more cooperative one, and you would understand that as a minister responsible for road building, if the commonwealth offers you $100 million and tells you to work out whether or not you can take it 24 hours before the end of the financial year, then your tendency will be to take it if it is at all possible because it is $100 million spent on roadworks in the state.

At the time, we were told in an opinion from Treasury—and to be very fair to Treasury, it is a pretty heated time frame in which to offer an opinion—that in accounting standards, it could be accounted a certain way. The Auditor-General subsequently did not agree with that. So, what will happen is that, until such time as those moneys are fully expended—and can I say we were very happy that, from memory, the first expenditure of those funds where we expected to use the $100 million on the Sturt Highway only cost us $80 million, so we had $20 million to carry over and add to some other programs. I have to say it was mostly for the benefit of the member for Schubert's electorate and perhaps a little bit of the member for Stuart's electorate. Anyway, it is money well spent.

Until such time as that project is absolutely completed, the Auditor-General will continue to give a qualified audit on those accounts. It will be a number of years yet, but I am more than happy to provide you with the actual detail of those grants. We try to do everything the Auditor-General asks of us. That is what we do. We try to establish a relationship so that we understand what the Auditor-General requires and we try to do that. At the end of the day, I would rather be criticised by the Auditor-General and spend the commonwealth funds in South Australia than be lauded by the Auditor-General and leave the money in Canberra.

Dr McFETRIDGE: It just seems strange that we cannot satisfy the Auditor-General or that he has to change his—

The Hon. P.F. CONLON: I can satisfy the Auditor-General by not taking the money. That would have been satisfactory to everyone except the people who got the roads built.

Dr McFETRIDGE: No, I do not believe in giving the commonwealth its money back on anything. I refer to Volume V, page 1479, and that dear old favourite of ours, TRUMPS. The Auditor-General confirms that an appropriate standard of control was not in place over the last financial period and that audit is still unsure whether all transactions have been accurately reflected. Is the minister able to assure the house that these transactions are accurately reflected in the budget papers?

The Hon. P.F. CONLON: You have to understand that the Auditor-General looks back on the entirety of 2008-09 and you will note in the text of the Auditor-General's Report that he identifies that the department has implemented comprehensive and coordinated action to address those concerns. But the simple truth is that those concerns were addressed during the audit period. For the entirety of 2008-09 they were not in place and, if they were not in place for the entirety, therefore you get a qualified audit for that which relates to that proportion of 2008-09 where those things were not in place. What we are confident of now is that all is in place that should be and that everything being equal we will not be seeing any more reference to these matters in the Auditor-General's Report for 2009-10 because the entirety of that financial year would have seen those matters and those processes in place to satisfy the Auditor-General.

I note that in the Ombudsman's report on energy this year, for example, two of the energy firms introduced new billing systems and had their complaints go through the roof. A factor of new and complex software is that you tend to have teething problems and some process issues. I think it has probably gone better than the private sector in terms of some of the private firms and their billing. But the matters were addressed and put in place, we believe, at present to the satisfaction of the Auditor-General, but we obviously do not get that answer until the Auditor-General's Office looks back on the year that will be concluded at the end of June next year.

Dr McFETRIDGE: I was helping a friend get their late husband's car registered the other day and I casually asked about TRUMPS and how it was getting on. The person said that they seem to fix half a dozen things and upset three things in the process, so let's hope we do get it sorted. On page 1480, the audit says it still has no assurance for the 2007-08 period that all payments received were recognised in TRUMPS, that the funds recognised were in fact received and banked, and that payments to third parties were correctly calculated. What planned action and committed resources have been dedicated to resolve these issues, minister?

The Hon. P.F. CONLON: Essentially, it is the same answer. The Auditor-General recognises that those resources have been committed and that the problems have been addressed. I do not have a time machine so I cannot really go back and fix things that have happened in the past. All we can do is fix them up at a point in time into the future and that is what has occurred and that is what the Auditor-General has recognised. It is fruitless to ask why we cannot go back and fix the ones before because we cannot because they have been and gone. It is the past.

It is just so gratuitous to come into the parliament, a serious place, examining the Auditor-General's Report and throw in a little alleged hearsay from some person working at Services SA on the performance of TRUMPS. It is pretty cheap, isn't it? Some unnamed person allegedly told the member for Morphett that it is no good. Some member, some person—

Mr Goldsworthy interjecting:

The Hon. P.F. CONLON: Modus operandi.

Mr Pengilly interjecting:

The Hon. P.F. CONLON: No. I tell the member for Finniss that the big difference is that when I was in opposition, I pursued your premier and got him because I was telling the truth. I was not hearing voices like the member for Morphett. I was not hearing voices.

The CHAIR: Order!

An honourable member: You said you didn't want to get him in the end.

The CHAIR: Order!

Dr McFETRIDGE: Yes, you're right: he didn't want him. He can't help himself this bloke, he really can't.

The CHAIR: Order!

Dr McFETRIDGE: Volume V, page 1484, the final paragraph states that the chief executive must approve the deferral of recreation leave balances when that balance is in excess of one year's entitlement. In prior years, audit has found that a number of employees had balances in excess of 150 hours and that situation remains. Is the minister aware of the total leave entitlements in monetary terms held by staff within the department?

The Hon. P.F. CONLON: Can you say that last bit again, please?

Dr McFETRIDGE: Is the minister aware of the total leave entitlements in monetary terms held by staff within the department in excess of 150 hours?

The Hon. P.F. CONLON: Your question is: do I know which staff in the department have leave entitlements in excess of 150 hours?

Dr McFETRIDGE: What is the total of them?

The Hon. P.F. CONLON: What is the total of them? I have to say that I did not think it would happen but he has got me. I do not know that. I do not know whether there has ever been a minister in the history of the department for transport who has known that but I tell you what: I will make sure that I get a note from the department. How many employees do we have in total across Energy and Infrastructure? There are 3,200. I will make sure that I find out to the person as up-to-date as I can who has more than 150 hours' leave. Can I say that some people who are extremely valuable find it hard to take leave. It has been the way of world as long as I recall it.

Mr Pengilly interjecting:

The Hon. P.F. CONLON: What's that, the member for Finniss? You reckon I should take more leave?

Mr Pengilly interjecting:

The Hon. P.F. CONLON: That's the nature of it. It is very hard. It is a good idea to get people off on leave and then, at the end of the day, it is often difficult. It is something that we try to manage and I will get that answer for you but you will have to forgive me for not knowing. I don't think anybody here knows that off the top of their head.

Dr McFETRIDGE: On page 1485, Volume V, audit has identified poor follow-up procedures of outstanding debtors and that the contract between the department and the debt collection agency has expired. What is the current balance of outstanding debts for DTEI?

The Hon. P.F. CONLON: Page 1518 of the Auditor-General's Report under placitum or item number or paragraph No. 25, 'Receivables', shows current receivables of $93,417,000 and non-current receivables of $401,000. I am not sure if that satisfies the question you have asked but that is the information available. We can provide you with the detail if it is really of interest to you.

Dr McFETRIDGE: On page 1487 the report states that TRUMPS was implemented without a formal sign-off report being presented to the steering committee and the chief executive. How does it occur that such an influential system was implemented without undergoing an appropriate approval process?

The Hon. P.F. CONLON: I think we just discussed this. I can assure you that the chief executive and I were both entirely aware of the 'go live' date because I asked a number of questions in the lead-up to it because you would remember that Western Australia introduced a like system with some dreadful consequences at the start-up.

The 'go live' date was very keenly on our mind. The project sponsor for TRUMPS was the executive director, Safety and Regulation Division, who also chaired the project steering committee. The executive director had the single point of accountability for the project outcomes. Where there were specific matters that should be brought to the attention of the chief executive, they were dealt with on an individual basis, but whether there is some issue about the formality of the sign off with the chief executive, I can give you an ironclad guarantee in this chamber that the chief executive and I were very conscious and aware of the 'go live' date. We discussed it a number of meetings in the lead-up, but the process that was used was to make the executive director of safety and regulation the responsible officer and to chair the project steering committee. While I assume the Auditor-General may have looked at the formality of the process, I can assure the Auditor-General and this parliament that the chief executive was very well aware of the 'go live' date and the significant dates leading to it and afterwards.

Dr McFETRIDGE: Further down the same reference page, it goes on to say that personnel in the department had excessive privileges presenting possibilities for unauthorised transactions, low integrity data and access to confidential data. I note the comment that resolution of all matters was expected in 2009-10. Where are we with that particular issue?

The Hon. P.F. CONLON: It is one of those matters that has been addressed during the timetable. Again I go back to the point that the Auditor-General looks back at the total time, that is, 1 July to 30 June 2008-09. So, for that period and until they were addressed during that period, those matters were still alive and still subject to the audit comment. Can I explain again, as I did last year—I think the member for Mitchell asked a question on this last year—the privilege we are talking about was not access to any confidential or any other information that the department held, but access to web pages; that is, as I understand it, the person had more access to it than they needed for the job they were doing, and if they got off on a frolic on their own they might change the look of one of our web pages, which it would seem to me to be a peculiar thing to do in any event, but that is what we are talking about.

The notion that there was any access to any information of a nature that we would be concerned about their having is simply not the case. The matter was raised by the Auditor-General. The controls were put in place. From memory, we are talking about software designers who work on some web pages getting access to web pages that perhaps they should not have or was not necessary for their job. There is no evidence that they ever used that privilege for anything, because, I have to say, you would have to be a complete nerd and very boring to want to do something like that, I would have thought, but, then again, there are in nerds in this world—I have seen the program.

Dr McFETRIDGE: I refer to Volume V, page 1496, fees and charges. There has been a variation in fees and charges. Most of the revenue has gone up. Minister, will you be able to maintain that level of increase if, as was reported, you are cutting transport compliance officers at Murray Bridge?

The Hon. P.F. CONLON: I am not quite sure where one thing led to the other—cutting compliance officers at Murray Bridge and fees and charges increasing. I will set aside the bizarre comment about compliance officers. The truth is that fees and charges in this government are adjusted in most areas of government, including ours—with some exceptions which I can come back to—according to a formula created, I would guess, under the time of Rob Lucas being treasurer; that is, a parcel of matters are looked at, including CPI. I have a note that registration and licensing revenues are not related to compliance officers.

We are criticised for increasing fees on exactly the same basis that was created by the Liberal treasurer. I am sure you would have thought that it was appropriate then. We do not believe that absolutely everything you did was wrong, and we continue to use that. I do not know what association you can have between regulation and licensing revenues and compliance officers. What I can say is that we use the formula that you used, but, from memory, we adjusted some items in accordance with cost recovery in order to make sure that we can provide the services more promptly, which was a balance between subsidising those services and their not being available to people when they needed them, for example, vehicle inspection. Mostly we move things by the formula that was being used in the past.

A variation of 18 million in motor registrations was a result of an increase of 3.5 per cent for the 2008-09 financial year, which is consistent with the formula used across government for fees and charges. I do not know that anything happened that would not have happened every other year and, of course, compulsory third party is a matter for MAC and not the Department for Transport, Energy and Infrastructure.

The CHAIR: The time allocated for examination of matters relating to the Minister for Transport, Minister for Infrastructure and Minister for Energy having expired, we now move to examination of matters raised in the Auditor-General's Report in relation to the Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations. I remind members that the normal rules relating to a committee of the whole house apply and members must stand to ask and answer questions. All questions must be referenced by line in the Auditor-General's Report of June 2009.

Mr GRIFFITHS: I refer to Part C, page 12, specifically the comment towards the bottom of the page which refers to public sector wage increases and 2.5 per cent. Previously you have said that, if wage outcomes are limited to 2.5 per cent growth, the saving will be some $290 million of the $350 million that is targeted and required as part of the Sustainable Budget Commission in 2012-13. We know that $150 million of that target is in 2010-11, $250 million in 2011-12 and $350 million in 2012-13. If wage outcomes are kept to 2.5 per cent, will the Treasurer provide comment on the savings outcomes that will be achieved in 2010-11 and 2011-12?

The Hon. K.O. FOLEY: I have already made those comments public. I am not about to do the job of the opposition. What I have said is that we will not be able to demand a 2.5 per cent outcome. We will be seeking a 2.5 per cent outcome. Should we not be successful in 2.5 per cent, it will add to the savings task that will have to be obtained from non-wage areas. In terms of the potential savings, I think the honourable member outlined that in the question itself.

Mr GRIFFITHS: Certainly, the Sustainable Budget Commission total requirement savings for each of those financial years is well known, but my question relates to retaining budget outcomes to the 2.5 per cent and what portion of the $150 million and $250 million claims in those two years will be achieved?

The Hon. K.O. FOLEY: I have answered the question. I do not want to do the work of the opposition. I have said what my goal is and I have said what in quantum that will give us in relation to our savings requirement. Anything more than 2.5 will be an added component that the budget commission will have to find post the election.

Mr GRIFFITHS: The Treasurer has certainly commented on the fact that $290 million of the $350 million in 2012-13 is out there. Given that 2010-11 and 2011-12 results are important, I want the parliament to be advised of the outcomes in relation to the $150 million and $250 million targets by keeping wage outcomes to 2.5 per cent.

The Hon. K.O. FOLEY: Parliament may be wanting that information—but think it through! Various wage agreements are coming up for negotiation. The timings vary and they have various classifications. I certainly do not have that information at hand. Secondly, I am not wanting to flag for the groups with which we will be negotiating anything more than what I have said publicly already in the budget. I will not give forensic information to either the honourable member or the various unions involved about what the breakup may be, but you can go back to the original answer that there is a quantum of $290 million in aggregate terms across all sectors.

The main one we are going for initially will be the Public Service Association. I am not sure exactly when that EB comes up, but I think it will be negotiated before the end of this year or it may drift into next year. If the honourable member's question is, 'What is the exact timing of when the savings will be allocated in each year,' it will depend on the cycle of the EBs, as and when they come through. I do not have that information here, and I do not intend to make information public as it relates to wage negotiations so that I do not in any way further complicate what is always a very sensitive issue for governments.

Mr GRIFFITHS: I appreciate that this is a sensitive issue because, with a public sector remuneration cost of some $6 billion in the current year, the total cost paid to about 90,000 people who work in the Public Service is an enormous issue. The Treasurer has flagged that part of the responsibility of the Sustainable Budget Commission is to identify these levels of savings. He has flagged the fact that $290 million in 2012-13 will be achieved through a particular method. I understand the timing of the different EBs and how they might impact upon that, but I would hope the Treasurer has information available to him that identifies what percentage of the savings of the $150 million and the $250 million components will be met by retaining outcomes to a 2.5 per cent wage increase.

The Hon. K.O. FOLEY: The honourable member is asking me to make assumptions about the timing of wage outcomes. It may well be—and it is highly probable —that some of the unions will not accept the hard line we have taken. They have redress to the Industrial Relations Commission—for example the teachers—and it is then in the hands of the commission as to the quantum and timing. Is your question, 'In what year will each of these savings be accruing?' Is that the question?

Mr GRIFFITHS: I will clarify it for the Treasurer's benefit. I understand the demands that have been put in place by you on the Sustainable Budget Commission. I understand your statement as part of the budget this year about the 2.5 per cent outcome. If you are able to provide a figure in 2012-13 of $290 million in savings, are you able to break down a figure for 2010-11 and 2011-12 as it relates to wage outcomes of 2.5 per cent—if they are achieved?

The Hon. K.O. FOLEY: I do not want to be too repetitive, but I have just said that that is not possible. What I have said is that, at the end of the period as we go through the cycle of all the outstanding EBs, if we can magically land them all at 2.5 per cent I am advised that there is a quantum saving of about $290 million. However, exactly when those outcomes will be achieved will obviously be determined when the EB is agreed to, and we cannot assume that all EBs will be landed at certain dates. Unions have a redress to the commission. The teachers dispute is now with the commission. We are paying interim payments, but the final timing of when new wages will be paid is subject to negotiation. So, I can make some assumptions—and, clearly, we will have done that in terms of our own internal budgeting—but I have no intention of making those figures public because, in my view—the deputy leader can smirk all he likes—

Mr Griffiths interjecting:

The Hon. K.O. FOLEY: I am sure the deputy leader is, but if you have ever been involved in such matters, it does not take a lot of genius to work it out. I do not want to flag to unions what I expect wage outcomes to be. The deputy leader can ask this question in as many ways as he likes, but I am not going to do his work for him, nor am I going to break up the timing of each EB and what its contribution to budget savings may be. It may well be that we land some unions at well under 2.5 per cent. We might land some unions at 2 per cent and we might land some unions at 3 per cent. Unfortunately, it is an incredibly complicated exercise and there are a lot of variables and assumptions. Whatever assumptions I make and present to you will only be thrown back at me if they are not achieved, and I do not intend to give the deputy leader ammunition or have my Treasury officers undertaking an exercise which is purely hypothetical at this point in time and which is not of any value either to me or to the public at this stage.

Mr GRIFFITHS: The Treasurer makes many assumptions with respect to the basis on which I am asking the question. I have asked the question in exactly the same way every time. If there is some confusion, it is not in my mind, as to how I pose this issue to the Treasurer. I understand that there are variables in it and I understand that enterprise bargaining agreements finish on different dates. However, as I understand it, when an EB negotiation occurs, even if it takes some time after the current one that has expired, traditionally, there is a payment that is backdated to the expiry date. Therefore, my belief would be that Treasury and Finance has done the work to determine if it knows what the saving will be in 2013 and what it would be in 2010-11 and 2011-12. It is as simple as that.

The Hon. K.O. FOLEY: The deputy leader is showing his naivety and lack of experience, because it is not always a given that if a wage dispute goes to arbitration or goes to dispute it is automatically back paid. That is a risk that the bargaining parties take if they disagree. What I have attempted to do is put an aggregate number out there; that if we land all of them at 2.5 per cent, 290 of the 350 can be achieved from wages.

I am a realist: it is an unlikely scenario to get everyone down at 2.5 in this environment. I am hoping to get as many as I can at 2.5, and I have simply made it a very clear message to the Public Service unions that if they want to get a higher wage outcome than 2.5 they will have to expect that fewer public servants will be employed in government and there will be other cuts to make sure that the books balance. What I am saying to the deputy leader is that it is a difficult exercise—and I think not necessarily a meaningless exercise—and one that is simply based on assumptions.

I can give the deputy leader the schedule of EBs as and when they come up—that is not secret information—and he can do the mathematics himself. However, I would caution him about doing that because of all the variables. It may well be that, if the Liberal Party is successful next year, the deputy leader will be the one doing this exercise and he will have to work it through himself. It may well be that if I go public on these numbers I am making his job harder than it might otherwise need be. Whether the deputy leader likes the answer or whether he thinks I am confused, that is as much as I am going to say on the point.

Mr GRIFFITHS: I refer to Part A of the Auditor-General's Report, page 10, where it talks about the shared services savings task. We know that, as part of the Treasurer's presentation of the 2006-07 budget (which I believe was in September), the savings from the shared services program from this year was intended to be some $60 million per year and, certainly, the Auditor's report identifies that. However, the Under Treasurer told the Budget and Finance Committee on 27 July 2009 that shared services savings achieved would only be some $33 million for the forecast $60 million by 2013. The Under Treasurer told the committee: 'Because we realised that it was a high risk exercise we put in a savings shortfall contingency, so we have an offset in that.' Given that we have talked about the Sustainable Budget Commission and the fact that shared services, as one of your major initiatives, had an offset contingency in place and, indeed, similarly, for the Sustainable Budget Commission and the expectation of $750 million in savings, if that is unable to be achieved does the Treasurer have a contingency offset for that sum also?

The Hon. K.O. Foley: For what sum?

Mr GRIFFITHS: For the $750 million from the Sustainable Budget Commission.

The Hon. K.O. FOLEY: That is the reality; that is the figure. That figure may vary when it comes time for the Sustainable Budget Commission to commence its work, and that may be because revenues and expenses may have been stronger. The 750 number will be updated in the Mid-Year Budget Review, but at this stage we are tracking around that number. There is not a contingency in there. That will be the work of the budget commission to undertake, and it may choose to put a contingency in there and, hopefully, it will identify a lot more options. I would be looking for a menu of savings well in excess of 750, because I am a political realist, as I have been in all these exercises. One thing I have learnt is that you can get experts to do this, and the Treasury can do it, but they will also uncover a number of things that the government of the day, be it your government or my government, politically or for other reasons, may choose not to undertake. You would always want a menu in excess of $750 million. So, the issue of a contingency is not relevant until such time as you finalise exactly what items or suite you have chosen from the options put forward.

In terms of shared services, I have made it very clear that the savings have not been as quick as we had hoped. It is a very complex exercise. I am advised that we have landed $33 million worth of savings to date, and we have a contingency there of $20 million, but I am very confident that shared services savings will be at least the benchmark we have put down, and I would like to think it will be in excess of that over time. The reality with shared services is that every major government is doing it; every minor government is doing it; in your day local government was at it; and every major corporation is in the shared services space.

It is a sensible reform, and I am extremely excited about the future and the work that is being undertaken by the team at Shared Services so that we will develop a truly world class public sector shared services entity that will deliver good, solid, ongoing savings and give governments opportunities into the future to expand the scope of the work that Shared Services will undertake. It is a very sensible thing to do. These are not easy things to land, but I am confident enough to say that that once this is fully operational we will have the best public sector shared services model in Australia.

Mr GRIFFITHS: I ask a question that relates to part of the answer provided by the Treasurer when the said that as part of the Mid-Year Budget Review he would provide an update to the $750 million in the Sustainable Budget Commission. What does the Treasurer mean by that? Is that how it is tracking, or is it intended to be more than that? I am seeking clarification on the words he used.

The Hon. K.O. FOLEY: I do not know where you have developed your understanding of how budgets work, and I am trying to be as patient as I can, but things change. Things change from budget time to budget time, and what is budgeted and what is actual can change as a result of economic activity, negative or positive, and net expenses. I am saying that that is a figure that will be updated again as we see how things are tracking, and you will get that information at the time of the Mid-Year Budget Review.

What I am saying is that it is around that $750 million number. I have not seen anything that has suggested to me that there will be a wild swing on that number, but clearly the economy has performed better than expected but, on the down side, the health budget continues to be of great concern with the overspend that is occurring in health. One will probably counteract the other. At this stage, the $750 million figure is still the number we are working with and, should that figure in any way alter, it will be provided in the Mid-Year Budget Review.

Mr GRIFFITHS: I appreciate the answer from the Treasurer. My understanding is that several meetings of the Sustainable Budget Commission have taken place already, and the Treasurer confirmed that previously. Will the Treasurer confirm whether the terms of reference have been provided to the group and, given that savings are not intended to be achieved until 2010-11, what will be in place at the time of the Mid-Year Budget Review or indeed the election?

The CHAIR: I invite the minister to make a response, but it does not appear to relate to the Auditor-General's Report.

The Hon. K.O. FOLEY: It has nothing to do with the Auditor-General's Report, but I would not have expected that any of the questions would, to be honest.

Mr Griffiths interjecting:

The Hon. K.O. FOLEY: The member for Kavel. The savings task required—the bottom line result—does not alter. At this stage it is a figure of $750 million. I do not expect that number to be a major swing item; I think it will be around that number. I do not think we need worry that it will be anything less or greatly more than that. We will just see how the numbers land when I release the Mid-Year Budget Review. The Sustainable Budget Commission has had a number of meetings. At present I am writing out to all chief executive officers as we speak, wanting to get what we call a data set. You two have a chat, and when you have finished I will give an answer.

Ms Chapman interjecting:

The Hon. K.O. FOLEY: If the guy asks a question I expect he would want me to answer it. I have written out to all chief executive officers asking for a data set of all their programs, their expenses on those programs, and the benefits of each of those programs. What the budget commission will need to do, in my view, is an exercise that should be undertaken on a regular basis, be it every eight or 10 years or whatever, to forensically look at the nature of programs we fund in government, what the outcomes of those programs are meant to be, whether they are being met and whether they are worthwhile.

One thing we will have to realise in government financing is that over time state governments cannot continue to fund all the activities that we have funded in the past, because we simply do not have sufficient income. Under the current system of funding of states it is simply a reality that there are some programs that we currently do in government that over the decades ahead will have to be either trimmed or abolished as we reprioritise what are the priorities of government. We only have a certain bucket of money to spend and, regardless of what we call inefficiencies, we continue to look for efficiency savings, but if you are going to take a meaningful cut to government outlays you have to look at programs.

There is no way to avoid that, and that is only going to get more and more significant as the years roll by, because health funding is running at about an 8 to 10 per cent compounding figure per year, if not slightly more, and we simply do not have that increase in revenue coming into our coffers. Regardless of what changes occur with health—the commonwealth government has outlined some things it may wish to do—the reality is that state governments, not just for this exercise but over time, should have a process of ongoing evaluation of the worthwhile value of certain projects and will have to find the political courage to cut some of those programs.

Mr GRIFFITHS: I want to seek clarification from the Treasurer on a point in that most recent answer when he talked about forensic reviews. I believe the Treasurer said, 'every eight years or so'. With the election in March 2006 and a delay of the budget presentation until September 2006, was not part of the justification for the delay in the budget presentation to undertake that level of review?

The Hon. K.O. FOLEY: No. What I have said previously is that the Greg Smith review was a blunt instrument whereby he was given a very short space of time in which to find some headline savings, some low-hanging fruit and some savings that were easily identified to deliver the budget outcomes for the period of this last Labor government which, up until the GFC, had seen our budget strongly in surplus. The exercise I undertook when I first came into government was a more forensic exercise than the Smith exercise. The work undertaken by Dean Brown and the Audit Commission of 1993 was a very worthwhile exercise, whereby you bring in some external people and objectively have a look at what you do as a government. It is all about varying degrees of how you undertake these exercises.

Given my experience as Treasurer now for eight years, I think it is worthwhile to have a more significant review of government outlays using external as well as internal expertise to do a thorough audit of the programs of government to get a more sustainable budget foundation going forward. The Greg Smith exercise was excellent. It has served a purpose for the past four years. What I am saying to the honourable member (regardless whether it is me or him as treasurer) is that the challenges for state finances for the next four years are far greater than they have been for the last four years, and that is not just because the boom has ended and all of that: it is because we are rapidly ageing.

We have had a massive under-investment in decades past—by both sides of politics—in public infrastructure all around the country, and we are seeing large outlays to restock our public capital. When I came into office, the last Liberal government was spending less than the depreciation of the value of our capital stock. I make no bones about it, and we can all play political ping pong across here, but I can tell members that the problems in health are frightening when one looks out 10, 15 and 20 years from where we are today—frightening—and the Australian community has not come to grips with how we are going to meet that. We are living longer, we have technological advancement, new drugs and new preventions.

This has been work done by Costello in the intergenerational report as it relates to pharmaceuticals; and the work that COAG and CAF have done demonstrates that, unless we can find a way to rebalance how we fund this, in 20 years health will consume, if not all, pretty close to all our state budget.

Mr GRIFFITHS: Treasurer, I certainly respect the fact that an ageing population extends to the early 2030s when the last of the baby boomers reach about 70. The crunch is from now until then. I understand that. I come back to the question I asked in regard to shared services (Part A, page 10). The Treasurer alluded in a previous answer to the projection of $60 million in savings and his very firm belief that it will in fact be achieved even though the Auditor-General's Report identifies shortfalls, and a significant one of about $7 million. Is the Treasurer able to identify a time when the full $60 million will be achievable?

The Hon. K.O. FOLEY: Not that at this stage, no.

Mr GRIFFITHS: Therefore, what work has been done to work to a time frame to ensure that, given the importance that it plays to the ongoing role of the budget, you get it to that $60 million?

The Hon. K.O. FOLEY: We are bedding down this system as quickly as we possibly can. We update the achievements of the shared services as they relate to savings each year. One of the difficulties with savings—as again you will experience if you become treasurer post the next election—is that identifying savings and capturing them to the bottom line are two different beasts. One of the things that you find in government is that we can identify savings and make savings, but then capturing those savings from the agencies becomes a different exercise again.

There is both internal pressures and friction about who should keep a saving, or whether that was our saving or your saving. Agencies are reluctant to pass on all savings—not all government agencies, it is just the dynamic of public administration. It is not an easy exercise. I would be confident that we will land the $60 million very soon, but I will not put a time line on that. For me it is about getting this right because this is an ongoing stream of savings. It is far more important than trying to put undue pressure on the entity to land those savings for the sake of one particular budget.

Mr GRIFFITHS: I refer to Part C, page 48, and the issue of targeted voluntary separation packages. The Treasurer advised the house in mid-October that some 1,150 of the 1,200 required for this financial year had been taken up. Of that number, how many have been taken up by people who were identified by the Commissioner for Public Employment as being one of the 419 people on the unattached list, the group of people who did not have specific roles in place?

The Hon. K.O. FOLEY: I understand that question was asked of the Hon. Jay Weatherill, the Minister Assisting the Premier in Cabinet Business and Public Sector Management. He took it on notice, so we will come back to the honourable member. My immediate answer would be that, in this particular tranche of FTEs, we have looked beyond the unattached list. We have looked for new positions and new savings. People who are on the unattached list would have been part of previous exercises. Whether or not numbers of those have taken up packages, the minister for public sector reform has offered to come back to the house with a more detailed answer on that.

The unattached list is a perennial problem for both sides of politics, because both sides of politics, unless the opposition is about to change, have a no retrenchment policy. That means that people get stuck on the unattached list. That is unfortunate and we are always looking at ways to reduce that but, as to whether or not any of these packages have gone to any of these particular people, I will have to defer to my colleague to come back with an answer.

Mr GRIFFITHS: I thank the Treasurer for that, and I certainly did ask the minister assisting the Premier in public sector employment that question also, and he has offered that information. However, can I seek clarification? Given that there is, according to the commissioner's figure provided in June, a $30 million cost in employing these 419 people, can the minister ensure that the answer provided identifies not only the number of those 419 who have accepted the TVSPs but, indeed, of the 419, how many were offered TVSPs?

The Hon. K.O. FOLEY: As I said, I would not be surprised if none were offered TVSPs because my expectation would be that they would be new positions that we have identified. But we have offered to come back with those particulars, and there may well have been some.

Mr GRIFFITHS: I refer to Part C at page 47. Again, there is some question in regard to the Sustainable Budget Commission and the $750 million. Can the minister provide some details on how he identifies that specific figure as being the savings target over that three year period?

The Hon. K.O. FOLEY: Sorry, can you ask that question again?

Mr GRIFFITHS: In regard to the $750 million Sustainable Budget Commission target, can you provide some information to the committee on how that figure was the targeted amount? What was the discussion that took place to identify that as being the target that you wanted to achieve which formed the basis of the decision?

The Hon. K.O. FOLEY: Honestly, I would have thought that is a pretty obvious answer. It is the deficit that we have in that year—the gap we have to close—as well as getting the net financial liabilities to revenue ratio into a band that is acceptable to the rating agencies. I would have made it very clear at the budget as to why the $750 million figure is there. It is a factor of the deficits that we are dealing with and projected to deal with, and also a factor of the net financial liabilities to revenue ratios that we need to keep to to ensure that we maintain our AAA credit rating.

Mr GRIFFITHS: I refer to Part C at page 47 where table 8.2 for the 2008-09 financial year identifies the cumulative expectation of savings, which from 2006-07 through to 2009-10 is $276 million—2009-10 being not applicable, of course. For 2006-07 it was $223 million, for 2007-08 it was $45 million and for 2008-09 it was $8 million. Can the Treasurer update the committee on how much of that $76 million in savings has been achieved?

The Hon. K.O. FOLEY: As I said before, we have gone a long way to achieving the savings requirements and I do not really need to say much more about it.

Mr GRIFFITHS: Madam Chair, the Treasurer certainly talks about it. The Treasurer announces the savings requirements as part of the budget, but it is not my observation that the reports confirm what level of savings has been achieved.

The Hon. K.O. FOLEY: How can you substantiate that? Show me.

Mr GRIFFITHS: I am asking you to clarify—

The Hon. K.O. FOLEY: Show me how you can substantiate that statement that you have just made.

Mr GRIFFITHS: In the review that I have undertaken of Auditor-General's Reports—

The Hon. K.O. FOLEY: Then show me the data you are referring to.

Mr GRIFFITHS: I am asking you at table 8.2—

The Hon. K.O. FOLEY: No, show me the data.

Mr GRIFFITHS: I am asking you about table 8.2 at page 47—

The CHAIR: Order! Questions must relate to lines in the Auditor-General's Report. I understand that you are asking for information relating to the Auditor-General's Report.

Mr GRIFFITHS: I am, Madam Chair.

The CHAIR: The Treasurer also is able to say he is not able to provide the information at this stage. The Treasurer's answer is acceptable in terms of his ability to choose the way in which he answers.

The Hon. K.O. FOLEY: What I can say is this. I do not believe I have to defend my track record on achieving savings or achieving good budget outcomes, because they have been there for all to see. We have delivered, each and every year up until the last budget, strong budget surpluses. We delivered to this state a AAA credit rating. In my very first budget over the course of four years it was about $1.4 billion. It might have been $750 million—I do not have the exact figures of what was our savings in our first term of government. It was $750 million in the first four years and then I think $600 million or $700 million in the next four years. Whatever the number was—I do not have the exact figures here—I have driven this public sector on efficiency, savings and cuts well in excess of anything that former treasurer Lucas ever did, former treasurer Baker ever did and, certainly—

Mr Hamilton-Smith: What! For 1994, 1995 and 1996 you are saying you exceeded Baker's cuts to government spending?

The Hon. K.O. FOLEY: Well, I may not have exceeded Baker's cuts. I do not have them in front of me. That is a fair point—I may not have, and that is a big statement to make without having checked my notes. What I can tell you is that certainly Lucas never cut—if he did cut budget expenditure, it was a minuscule amount, in my view.

Ms Chapman: His was sensible in the first place.

The Hon. K.O. FOLEY: Was it, now? You ran budget deficits each and every year, even though you sold ETSA. Even though you sold ETSA, you could not balance your books. You were a hopeless outfit when it came to trying to manage the state's finances. What this Labor government has done in my tenure as Treasurer is deliver consistently strong and positive budget outcomes, and the nitpicking of shadow treasurer Lucas and the deputy leader over many years is really just diversionary tactics from the main game—that is, that we have delivered the vast bulk of savings that we have outlined; we have been upfront with those that we have reversed and have not been able to achieve; and we are being incredibly upfront (more so than any other government that I can recall leading into a state election) in saying exactly what the savings target is and how we are going to go about achieving it. No other government has ever done that in the past, and I am very proud of our record as a government in delivering good budget outcomes.

Mr GRIFFITHS: I have a recollection of the Treasurer informing the house not that long ago that some 93 per cent of those savings were achieved, which I believe was in the Smith review, so I recognise that that commitment was given as to the level of savings. I thought my question was reasonable in that the Auditor-General's Report identifies announcements in regard to savings; therefore, my question is that, only of those announcements, what has been achieved?

The Hon. K.O. FOLEY: I have answered that and I am not going to go through detailed work to reconcile the exact number. What I can say is, which should give good comfort to the opposition because it gives good comfort to the broader financial community, is that Moody's and Standard & Poor's in a number of their public statements on this government's budgeting and reaffirming of our AAA rating have stated publicly that one of the reasons is our government's track record on delivering and achieving savings outcomes that we have identified and our ability to deliver strong, disciplined budgeting. The rating agencies have been confident that, in general, we have delivered the quantums that we have outlined that are necessary. They believe that we have continued to demonstrate good budgetary discipline and that is why they have reaffirmed our AAA credit rating as recently as only some months ago.

Mr GRIFFITHS: I refer to Part C, page 69 and table 11.5 at the top of the page regarding agencies and total additional payments that were made. My question is specifically about $159 million that was paid to SA Health in 2008-09 from a contingency sum. Is this the same amount that is referred to in health's overspend? The Under Treasurer told the Budget and Finance Committee meeting on 27 October that the total health overspend was some $154 million. Can the Treasurer confirm why there appears to be some discrepancy of $15 million?

The Hon. K.O. FOLEY: I will get an exact answer for you but my advice is that that relates to wage outcomes. Contingencies are held. In part, it is the overspend but contingency provisions, as explained on page 68 of the report, are held for employee entitlements, supplies and services, and plant and equipment that are included in the total appropriation purpose administered items for the Department of Treasury and Finance.

My guess would be—and we will get this checked—that a large component of that would be for wages which are held in contingency. We hold them in contingency because we do not have a line that says wages because that then telegraphs exactly what we have in our budget for wage outcomes, so it is held below the line in a Treasury contingency and then reported as an actual expenditure when the EB is resolved. Some of it would be the overspend but the bulk of it I would imagine would be the actual outcome of the wages which does not represent a blow-out. The wages contingency was always provisioned within the budget. To the extent to which we exceeded what we had in contingency, we will get that information for you.

Mr GRIFFITHS: As an extension to that question on that same area, I understand that the Department of Water, Land and Biodiversity Conservation had additional payments made of some $60 million. Given that it is a much smaller agency, I would be rather surprised if wages costs made up that $60 million. Could the Treasurer provide some information on that?

The Hon. K.O. FOLEY: Again, I will take it on notice. My guess would be that we quite often hold large amounts of money in contingency. Given it is water, it may well relate to money we held in contingency for some of the programs that we have expended in terms of water. It may well have been some of the money for irrigators or for purchasing of water or some commonwealth money perhaps. Given the large size of that number, it is obviously not wages. My guess is it would be a contingency that we would have taken for some of the water.

Again, what you would do in that situation is, if you cost a program for irrigators for the purchase of water or whatever we may do, we will come up with a sum of money. We will not hand over that money to the department. You hold it in a contingency and the department will receive that money as it acquits it in terms of the uptake of that program. It is a common feature of budgeting where we are not sure what the final call on a sum of money may be. It is simply held in contingency as a more prudent way to manage that money. I will come back to the house with an answer.

Mr HAMILTON-SMITH: I refer to page 1444 of Part B, Volume IV, dealing with accommodation. I understand that DTED will soon be moving from Terrace Towers to Hindmarsh Square. Is that correct?

The Hon. K.O. FOLEY: Yes.

Mr HAMILTON-SMITH: Could the Treasurer explain the figures on this page for operating lease commitments later than one year but no longer than five years that are forecast at $19.2 million in 2008-09? I am interested in which lease commitments are included in this figure. Firstly, why are you moving? Secondly, what will the lease commitment be at the new premises, what will it be at the old premises and is there any carryover or dead rent factor involved in the switch?

The Hon. K.O. FOLEY: In answer to that question, as I am sure the member would appreciate, whenever these leases come up we are confronted with a number of options. One is you re-lease the existing space as is or you re-lease it with a fit-out if it is an old building. We will come back with a detailed answer for you, but my recollection of that decision was that we valued net present value for a number of options which was staying where they are with a re-fit, because their tenure had ended. We looked at the value of that as against a number of other sites around the city. There were two or three options. My advice was that the final site that was chosen was the best option for us. It had a more workable floor plate for us and provided a better option for us. As it relates to exact figures, I will come back to the member with a detailed answer.

Ms CHAPMAN: My question relates to Part B, Volume IV, page 1358, and it details the description and concerns raised by the Auditor-General in respect of the matters outstanding which are now the subject of proceedings of the South Australian Water Corporation and United Water in the Supreme Court.

In the 2007 report of the Auditor-General, he raises a number of concerns about contracts being let where there have been no tender specifications and, as you told the parliament, there have been negotiations since 2006 to try to resolve this matter between SA Water and United Water in the sense of having some moneys paid back for their behaviour in misleading and deceptive conduct.

My specific question is: why did the government allow SA Water to grant United Water approval to tender for contracts without tender specifications as commented upon adversely by the Auditor-General in his 2007 report when at the same time it was accusing United Water of misleading and deceptive conduct in respect of its metropolitan outsourcing contract?

The Hon. K.O. FOLEY: As a lawyer, I would have thought the shadow attorney-general would realise that this is now a matter before the courts.

Ms Chapman interjecting:

The Hon. K.O. FOLEY: No; it is a matter before—well, it might be. I would have thought that as shadow attorney-general, she would understand better than I that this matter is now in the courts.

Ms Chapman: You have made statements on this in the house.

The Hon. K.O. FOLEY: Prior to it going to court.

Ms Chapman interjecting:

The CHAIR: Order! Member for Bragg, please do not interrupt.

Ms Chapman interjecting:

The Hon. K.O. FOLEY: My statements made on this matter were before the matter was before the courts.

Ms Chapman: Don't mislead the house.

The Hon. K.O. FOLEY: I'm sorry?

The CHAIR: The member for Bragg!

Ms Chapman interjecting:

The Hon. K.O. FOLEY: Who issued proceedings?

Members interjecting:

The CHAIR: Order!

Ms Chapman interjecting:

The CHAIR: Order, member for Bragg!

The Hon. K.O. FOLEY: I am happy to defer to the legal brilliance of the member opposite and clarify that and, if I have given an inappropriate statement, it will be corrected. My recollection of events was in fact that I gave a statement saying that we would be serving a notice on United Water but had not done so at the stage that I gave the statement. Subsequent events were the serving of notice and legal proceedings commencing. That is my recollection of the series of events and I will get that checked if I have given incorrect information. As to the substance of the question, those matters are now subject to the proceedings currently—

Ms Chapman: I'm talking about other contracts.

The CHAIR: The member for Bragg has been warned.

Ms Chapman: It's nothing to do with these proceedings.

The Hon. K.O. FOLEY: It may be and that is why I will take the question on notice, and what I am able to answer outside of impacting on our case, but it may well be that the very reason that the contracts were awarded are subject to the actual contract itself and may well be matters that are now in dispute so I need to get—

Ms Chapman interjecting:

The CHAIR: Member for Bragg, I remind you that you have been warned and you are very close to a second warning.

The Hon. K.O. FOLEY: She has already had one earlier in the day so she has now had two.

Ms Chapman: So has the Attorney.

The Hon. K.O. FOLEY: Well, so be it, but I would have thought that the shadow attorney-general would be more aware than I of the dangers of damaging legal proceedings by making comments in the parliament or outside the parliament that may negatively impact on the state's case in relation to this matter. I will take full advice and guidance from crown law on this matter.

The CHAIR: The time for examination of matters relating to the Treasurer and Deputy Premier in his various portfolios has expired.

Progress reported; committee to sit again.

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