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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 17 November 2009. Page 4669.)

The CHAIR: I remind members of the committee that the normal committee rules apply and that people are required to stand to ask and answer questions and that questions must relate to specific lines in the Auditor-General's Report for 2009.

The Hon. I.F. EVANS: My question relates to page 1776, footnote 28, 'Funding ratio'. It is floated that the board-approved policy requires a funding ratio of 90 to 110 per cent, with any shortfall in funding to be recovered over a board-approved time line. Can the minister advise the committee of the board-approved time line for WorkCover to be fully funded?

The Hon. P. CAICA: Of course, the time line to be fully funded is dependent upon a variety of factors, not the least of which, of course, are the improvements that will need to be made with respect to those people who are on the scheme and our ability to return them back to work, amongst other things. In addition, and as the honourable member would be aware, if we look at the assets of WorkCover, if you like, money is under investment as well as liabilities that exist going forward with respect to the continuation of obligations in respect of workers' entitlements.

To cut a very long story short, it is very difficult to predict a time frame with respect to when a fund, such as WorkCover, will be fully funded. Of course, having said that, with respect to the legislative changes that were supported by this parliament (and the most recent legislative changes), it is certainly the view of the government—indeed, supported by the opposition—that that would have the fund heading in a proper direction with respect to addressing the unfunded liability. It is very difficult, I believe, to put a time frame with respect to when the fund, in the honourable member's words, would be fully funded.

The Hon. I.F. EVANS: The Auditor-General's Report is clear. The board has an approved policy requiring a funding ratio of 90 to 110 per cent, with any shortfall in funding to be recovered over a board-approved time frame. Does the board have a time frame and, if so, what is it? I refer the minister to the annual report which says that as of July 2008 the new legislation would enable the South Australian scheme to be fully funded within six to seven years. The board is saying six to seven years. I am asking you: is that the approved time frame as per the reference in the Auditor-General's Report?

The Hon. P. CAICA: Given the fact that it is an annual report provided by the board, I think it is safe to say that that is the board's objective. In fact, they are the figures that have been promulgated previously—that six to seven year time frame. I am saying that variables will impact upon the scheme going forward, some of which we have, as a fund and as a government, no control over. In fact, we have recently gone through what is one of the most unprecedented economic crises this world has seen for a period of time, and that, of course, has an impact on anyone and any organisation that has money under investment.

I would like, and certainly I would hope, that the time frames that have been promulgated by the board are those that will be achieved. I will temper that by saying there are variables over which the fund, the state and our nation will have little control.

The Hon. I.F. EVANS: Page 1750 talks about the probability of sufficiency (one of my favourite topics), and it mentions that it is noted by the Auditor-General that it is the intent of the board to move to a higher level of probability of sufficiency as full funding is achieved. They talk about going to a 75 per cent and an 80 per cent probability of sufficiency. I wonder why they have decided to do that and, if it is such a good idea, why they are delaying its implementation. Also, is the reason they are delaying the implementation that it will have a negative effect on the unfunded liability and therefore it is politically unacceptable, even though it might be prudent?

The Hon. P. CAICA: The honourable member is correct that the Auditor-General requested as part of the preparation of the 2008-09 financial statement that the management and the WorkCover Board consider the probability of the sufficiency level to be applied for the 2008-09 outstanding claims liabilities estimation. I guess the key point I would like to make is that WorkCover's charter requires it to estimate its claims liabilities using an appropriate risk margin which is based on at least 65 per cent probability and that provision for outstanding claims will be adequate. Accordingly, WorkCover's estimates of the outstanding liability, as contained in its annual reports, are determined using a prudential margin of 5.2 per cent, which translates to 65 per cent of probability of sufficiency.

Again, the honourable member (as is usually the case) is correct in saying that the Australian Prudential Regulation Authority sets a minimum of 75 per cent probability of sufficiency in its Prudential Standard GPS 310. Public sector entities are not bound by this requirement. However, some WorkCover schemes in Australia, as well as other statutory authorities, use 75 per cent or more. The board, as it does annually, looked at these matters and decided to maintain the 65 per cent probability of sufficiency in preparing its 2008-09 statements. The board also fully disclosed the impact of using a higher level of probability, so I think we were actually upfront about that.

So, as the member might have suggested, there was no political motive in what was happening, because the board fully disclosed the impact of using a higher level of probability. The board also noted its intent to move towards a higher level as full funding is achieved. It, accordingly, notes (as pointed out by the honourable member) that 18(e) of WorkCover's 2008-09 financial statements outlines the increase in net outstanding claims liability with a 75 per cent and an 80 per cent probability of sufficiency.

A prudential margin is a margin added to the best estimate of a particular insurance liability that reflects the uncertainties in the underlying liability, and I think that, essentially, a prudential margin adds a layer of fact to an estimated liability so that it is more likely that the eventual actual liability ends up being less than what is estimated. I think it is adequately answered by the board's having stated and noted its intent to move towards higher levels as full funding is achieved.

The Hon. I.F. EVANS: Minister, is there not a problem there? The board has taken an in-principle decision that for prudential management reasons it is in the best interests of the board to move to a higher level of probability of sufficiency, but only when it becomes fully funded. In its annual report it says it is not going to be fully funded for five or six years, so we have this theory that there will be better management through lifting the sufficiency of probability but we are not going to do it for six or seven years, and the reason for that is disclosed in the annual report, that is, because the claims liability would increase, in the worst case scenario, by $144 million, which would be unpalatable. So, if it is such a good idea, why are we not doing it now? Why are we waiting for six or seven years?

The Hon. P. CAICA: I will reinforce the point. The board fully disclosed the impact of using a higher level of probability. The board also noted, as was highlighted again, its intent to move towards a higher level as we go forward. But it is an accounting standards issue, and my view would be that, if the Auditor-General was unhappy with what is occurring, he would have qualified the accounts.

The Hon. I.F. EVANS: I will go on to another topic, minister, but I note that the Motor Accident Commission, from memory, is not fully funded and has a higher level of probability of sufficiency, and it seems to me that the answer has not really addressed the issue. It has given me a nice brief on what the board's position might be, but we will move on.

I refer to Project Harry. Project Harry is obviously in big strife. I refer to page 1774. Can the minister let me know the original cost of Project Harry, and what is the estimated actual cost of delivery of Project Harry?

The Hon. P. CAICA: The Auditor-General's Report noted that format governance practice was found to be in place for Project Harry and Project WIRE, so I am not quite sure of the orientation of the question in respect of being in strife. The Auditor-General, however, also noted the importance of continued monitoring against any potential risk to the corporation's ability to deliver the projects prior to the 2010-11 cycle, and also a need to continue the ongoing project for an information security classification. He also noted the requirement for the development of a more comprehensive levy system than the current system, access control and procedures documentation, and a need to also reassess the adequacy of testing data and resources for Project WIRE.

The Auditor-General also considered it important that WorkCover continue to actively monitor the status of both projects, and that is appropriate. It was noted that the response from WorkCover was comprehensive. As I said, the Auditor-General's Report considered it important that WorkCover continue to actively monitor the status of both Project Harry and Project WIRE. It was noted that the estimated cost is $40 million, and at 30 June 2009 $26.7 million had been incurred. The background to this is that WorkCover is currently undertaking an information system replacement program, and it is appropriate that it does so, to move away from the current ageing system.

The Hon. I.F. EVANS: What is the cost of Project Harry?

The Hon. P. CAICA: The estimated cost is $40 million.

The Hon. I.F. EVANS: That is both of them together, according to the Auditor-General.

The Hon. P. CAICA: It is the estimated cost of the two projects because they are certainly projects that are being operated in tandem. With respect to the specific cost of Project Harry, I will continue to say that the costs of the ICT replacement are $40 million, but I will, of course, as I always do, get back to the honourable member with respect to the specific question that he has posed in relation to compartmentalising, if you like, Project Harry independently of the overhaul of the entire ICT system, which needs to be done.

The Hon. I.F. EVANS: There are a number of contracts that are signed by the board where the board members are also representatives of organisations that are parties to the contract: SA Unions, Business SA, Sandra De Poi are three mentioned in the Auditor-General's Report. The Auditor-General's Report states that they represent the same value as if it had gone to other parties. I am wondering: how is that independently audited? Who actually decides that? If it is the board then one assumes the board members declare a conflict of interest and leave the room when those contracts are discussed. How is it independently assessed so that they actually represent the real value that would have been gained outside from other organisations?

The Hon. P. CAICA: I thank the honourable member for his question. The Auditor-General's Report noted that WorkCover Board members Ms Sandra De Poi, Mr Peter Vaughan and Ms Jane Tongs had related party transactions with WorkCover. The key points, of course, are that Ms Sandra De Poi and Mr Peter Vaughan are current members of the WorkCover SA Board, but Ms Jane Tongs resigned from the WorkCover Board on 31 December 2008.

With respect to Ms De Poi and the companies in which she has an interest, De Poi Consulting Proprietary Limited and Refining Skills Proprietary Limited have current contracts with WorkCover for the provision of rehabilitation services as directed by the WorkCover claims agent. As I am advised, these are standard contracts that relate to the provision of rehabilitation services. Mr Peter Vaughan—and we all know Peter very well—is the Chief Executive of Business SA, and WorkCover currently has a contract with Business SA for the provision of services.

In respect to each of the above board members, the terms and conditions of the transactions of these board members were no more favourable than those available or which might reasonably be expected to be available on similar transactions to non-board member related entities at an arm's length, that is, that they are standard contractual arrangements for the provision of that particular service.

The WorkCover Board, as it quite rightly should, and does, closely manages conflicts of interest to ensure that where a conflict may arise appropriate arrangements are made to prevent any issues arising. Board papers are not provided to the member concerned if there is a possible conflict of interest and the member excuses themself, as you would expect, from the meeting for the consideration of that particular item.

I might have implied—more than implied, I might have said—that Peter Vaughan and Business SA's contractual arrangements were standard arrangements with respect to the provision of that service. Indeed, I am advised that the contractual arrangements with Business SA are for advocacy services.

Mr PEDERICK: I have a Primary Industries question. Volume III, page 934, 'Assessment of controls', the last dot point referring to the inadequacy of a spot check of invoices in not including a significant portion of the department's expenditure, and then the top of page 935, that a review of COGNOS financial management reports was not formalised by developing documented policies and procedures. My question regarding these matters is: given that reference is made to these matters having been raised in 2006-07, 2007-08 and 2008-09, why has the department not been more resolute in rectifying them and why has the minister not been more vigilant in ensuring that they are addressed?

The Hon. P. CAICA: I very much thank the honourable member for his question, save and except for that last component of the question because I am, of course, diligent in all that I do. The audit review of paper-based controls implemented by the department over accounts payable processing has highlighted opportunities to improve controls in the following areas. I make this point, that the Auditor-General is there for a variety of reasons, not the least of which is to audit the financial accounts of the organisation which is being audited, but also to make recommendations about how things can be done better than otherwise would be the case.

The Auditor-General highlighted opportunities to improve controls in the following areas: controls implemented by the department did not provide assurance that all purchasing transactions were authorised, not all purchase orders are raised in accordance with departmental policies and procedures, and the department had not implemented either a manual signature register or an automated approval system.

It is the department's view, and I am advised, that given the current controls in place, the potential risk of fraud, or where an unauthorised office has approved an invoice, is low, and there has been no evidence of unauthorised expenditure. PIRSA maintains the view that contract delegation as defined in Treasurer's Instruction No. 8, 'Financial authorisations', may be exercised in a number of ways other than the raising of a purchase order, and therefore the lack of purchase order does not mean that the appropriate approval to commit the department to the expenditure has not been exercised.

The main concern is the lack of evidence of the contract delegation being exercised and the documentation supporting approved payments. In addition to raising a purchase order, contract delegation can be exercised and evidenced through the approval of contracts or by other approval mechanisms provided by an appropriate purchasing delegate.

It is clear that, despite regular reinforcement and communication of PIRSA policy, the raising of purchase requisitions, and untimely purchase orders, has not been successful, due to the timing, that most purchase requisitions are, in fact, raised and processed after the invoice has been received. It has provided an appearance—and I make that point: an appearance—that a purchasing delegation has not been exercised in these instances, and PIRSA is reviewing its approach to the issuing of purchase orders.

The Department of Treasury and Finance, through Shared Services SA, is now well advanced in establishing a process to implement a whole-of-government e-procurement solution, providing functionality across the full procure-to-pay process. This will include automation of requisition and purchase order creation, automated workflow approvals for requisitions and invoices and automatic matching to purchase orders. Implementation is planned to commence across South Australia during 2009-10. I could keep going, but I think you probably want to ask another question, is that right?

Mr PEDERICK: Yes, a forestry question. I refer to Volume IV, page 1112: implementation of the revised Treasurer's Instructions 2 and 28 and, as stated in the last line, 'the need for the incorporation to finalise and issue a fraud policy'. Does the corporation accept that need, and, if not, why not? If so, when will a policy be developed?

The Hon. P. CAICA: Forestry SA has a vision going forward that is underpinned by policy arrangements, and the review of its various areas of policy are, quite rightly, ongoing. There are many impacts upon the forestry industry going forward, some of which I think will be extremely positive and others somewhat concerning. The impacts may involve the role forestry has going forward with respect to the carbon pollution reduction scheme, what advantages can accrue to forestry in regard to the role that it plays in carbon sequestration and a whole host of issues that will be advantageous to it, and the future of forestry in the context of appropriate water allocation plans.

In my view, and I presume it is your view as well, Adrian, forestry needs to account for the water that is being used in the context of a triple bottom line in regard to the best use of that land and also from an economic and social perspective. There is an ongoing review of a variety of policies in that area in the context of what will be a changing environment going forward with respect to where forestry sits.

One thing that I do know and feel very confident about, notwithstanding the federal government's 2020 vision in relation to the expansion of forestry in this country, South Australia is well positioned, through Forestry SA and our other assets in the forestry area, to leave a very substantial mark with respect to our particular role in South Australia and the advantages that will accrue to our state, our nation and even internationally when we take into account some of those other factors.

I believe that we have a very positive future going forward in forestry, and Forestry SA, as always, is at the forefront of efficiency in the way it runs its business. In fact, I would say that there is probably no other such forestry corporation in Australia. You might say that my view is a bit biased, and you might be sitting over here one day (not too soon, I hope), and you will also have a high regard for the way Forestry SA positions itself in the context of what forestry is in Australia as a whole.

Mr PEDERICK: In regard to the specifics of the question, the report states the need for the corporation to finalise and issue a fraud policy, will you be progressing that in a timely and expedient manner?

The Hon. P. CAICA: It is always the case that, I, as minister and, I expect, many of the agencies and corporations for which I am responsible will take all matters raised by the Auditor-General seriously. Certainly, the development of policy in certain areas is something that will be tempered with those factors that are still evolving in relation to what impact it will have on forestry. The short answer is that we will continue to not only develop but promote and at the earliest possible time promulgate policies in those particular areas. I will just leave it at that.

Mr PEDERICK: I refer to Volume IV, page 1112, paragraph 3, communication of audit matters relating to the purchase of land for a total of $4.5 million, which should have been approved by cabinet as it exceeded the $4.4 million threshold. I note that the corporation deemed the relevant figure to be $4.3 million, with the additional $200,000 being costs related to the transaction. Has it since been determined what the $4.4 million limit refers to specifically and whether future purchase amounts may be similarly dissected?

The Hon. P. CAICA: This particular matter relates to a Forestry SA's purchase of a property in Wattle Range to expand its forest estate. The purchase consideration was $4.3 million. A stamp duty cost of $230,330 was imposed, which, added to the purchase, gives a total cost of acquisition which exceeds $4.4 million, which is the level at which cabinet approval is required by Treasurer's Instruction 8: financial authorisations (paragraph 8, point 13.1). The acquisition was approved by the Forestry SA Board and the Minister for Forests. However, it was not submitted to cabinet, as was highlighted by the Auditor-General and the honourable member in his question.

It is certainly the view of Forestry SA that Treasurer's Instruction 8 does not make clear whether the $4.4 million refers to purchase consideration or total acquisition cost, including the transaction costs such as the stamp duty that I mentioned. As a result, Forestry SA, in accordance with established practice and advice from the Department of Treasury and Finance has interpreted TI8 as being based on the purchase consideration.

Forestry SA has advised me that it submits that it has not breached the Treasurer's Instruction as the interpretation adopted is consistent with the interpretation adopted by the Department of Treasury and Finance being the issuer of Treasurer's Instruction 8.

Having said all that, Forestry SA's view to which I subscribe is that in order to avoid any further confusion about this and similar matters that might arise in the future, Treasurer's Instruction No. 8 should be amended to remove this ambiguity. Of course, it is all well and good for us to say and for me to advocate that the instruction should be amended to remove that ambiguity. It is the subject (and continues to be the subject) of discussions between Forestry SA and me as minister and directly with the Treasurer subsequent to that so that we can come to a landing on that. Our position (that of Forestry SA) is that, if nothing else, we need to clarify that ambiguity.

Mr PEDERICK: This is a regional development question relating to Part B, Volume IV, page 1437. I refer to the table of remuneration of employees on that page. How many worked on the regional development portfolio and what was the total wages bill for the offices of regional development and small business?

The Hon. P. CAICA: I do not have the specific detail in relation to the carve up of the responsibility as to what is being undertaken in regional development. That was the question, wasn't it?

Mr PEDERICK: How many worked on the regional development portfolio?

The Hon. P. CAICA: Yes, and I do not have that with me but I will undertake to get back to you on that specific question. What was the other component of that question?

Mr PEDERICK: The total wages bill for the offices of regional development and small business?

The Hon. P. CAICA: I do not have that compartmentalised either but I will get back to you on that as well.

The Hon. I.F. EVANS: Page 1749 of the Auditor-General's Report shows an increase in fees to EML from $25 million to $49 million over the past two years. There was a special payment of $2 million to EML. Is that included in that fee structure? If not, where is it included and what was the payment for?

The Hon. P. CAICA: I thank the honourable member for his question. I am advised that it is contained within a total of $49 million that was attributed as payment to EML during that period of time.

The Hon. I.F. EVANS: What was it for?

The Hon. P. CAICA: As I have been advised, the contractual arrangements were set in place. Given the nature of the legislative change, some variations to that contractual arrangement needed to be entered into in regard to variations. It was a payment to cover—and I will correct the record if I am wrong—the costs of the changing work patterns required as a result of the legislative change that in turn required a different focus of work from EML.

The CHAIR: That concludes the time allocated for examination of the Minister for Agriculture, Food and Fisheries, Minister for Industrial Relations, Minister for Forests and Minister for Regional Development. We now proceed to the examination of the Minister for Police, Minister for Emergency Services and Minister for Recreation, Sport and Racing in relation to the Auditor-General's Report 2009. The normal committee procedures apply, that is, members must stand to ask and answer questions, and all questions must be referenced to a line in the Auditor-General's Report.

Mr PENGILLY: I refer to the Auditor-General's Report, Volume III, page 1002, and I address my question to the Minister for Police. Page 1002 of the report discusses issues surrounding the SYSB mainframe. One such matter was the need to identify, construct and implement a standard set of security reports suitable for monitoring the overall security environment of SAPOL. Will the minister provide details on the functions of the SYSB mainframe, the problems identified by audit and how they are being resolved? Given the technological nature of this page of the report, I want to ask the minister another question, so I will let him answer this one first.

The Hon. M.J. WRIGHT: The shadow minister, the member for Finniss, asks about the SYSB mainframe which, as he correctly outlines, is on page 1002 of the Auditor-General's Report. When he asks about the functions of the SYSB mainframe, the advice I can give is that the audit finding identified an inability of SAPOL to assess the effectiveness of existing controls within the security environment due to insufficient staff knowledge. SAPOL has agreed to identify the current reports available and to define requirements for reports that need to be constructed and implemented.

A gap was identified in relation to whole of SAPOL training as result of changes to information security policy documents. These changes originated from SAPOL's compliance with the government information security management framework. SAPOL has agreed to identify an appropriate communication strategy to address this finding. I think it would be fair to say that SAPOL acknowledges the comments of the Auditor-General, and it has put in place the required functionalities to deal with those and is getting on with the job.

Mr PENGILLY: As a follow-up to the last question, I want to ask about SAPOL's staff use of the software. I refer to the same volume and the same page. In April last year, The Advertiser reported that there may have been some copyright infringement, when officers allegedly used SAPOL's DVD software to copy movies. The commissioner stated that it would be investigated. The minister then informed the parliament that the director of information technology in SAPOL would conduct an audit. What were the outcomes of that audit?

The Hon. M.J. WRIGHT: I do not have the outcomes of the audit with me, but you are right that an audit was done and I undertake to get that information for the shadow minister.

Mr PENGILLY: On page 1004 of the Auditor-General's Report there is a $48 million increase in employee benefit expenses. At the top of page 1005, it states that this is partly due to a small increase in employees. For that $48 million increase how many additional sworn and operational police officers did the state receive?

The Hon. M.J. WRIGHT: I can provide part of the answer. The advice is that at 30 June 2009, the total number of sworn officers and cadets is 4,384.7. We do not have with us the figures for 30 June 2008. I will undertake to get those figures for the shadow minister.

Mr PENGILLY: Under 'Net results', Volume III, page 1004 illustrates the net results of SAPOL over a four year period. The deficit is minus $46 million which is the biggest deficit in four years. The deficit has actually increased by $27 million in the last year reflecting mainly employee-related costs. Can the minister provide a more specific breakdown of the nature of these costs?

The Hon. M.J. WRIGHT: In 2008-09, SAPOL's net operating result is $46.2 million unfavourable. I will run through some of the bigger items that that figure reflects. Firstly, there is the rephasing of major projects, $30.579 million; then we need to look at a cash alignment policy payment to the Department of Treasury and Finance of $3.817 million; a revaluation of workers compensation liabilities of $12.519 million; a revaluation of annual leave and long service leave liabilities, $7.975 million; and a higher accrual expenditure of $4.2 million.

They were the major items, as I said, and they were offset by: vacancies and delays in recruitment, $2.6 million; lower superannuation costs, $2 million; delays of recruit 400 on non-salary and related expenditure, $1.6 million; mixed change from operating to investing capital, $1.8 million; receipt of donated assets over and above the budget, $1.4 million; unbudgeted minimum nationwide person profile funding, $1.2 million—and so the list goes on.

Mr PENGILLY: Minister, you mentioned the WorkCover issue and quoted a figure. Can you break down that WorkCover figure at all into segments; that is, whether it is long term, stress related, accident related, whatever? Are you able break that down?

The Hon. M.J. WRIGHT: I can provide a little additional detail. The most common injuries for claims registered during the 2008-09 financial year were caused by body stressing, 30.2 per cent; being hit by a moving object, 19.6 per cent; falls, trips and slips (which, as the member would be aware, is quite common across a broad range of industries), 17.2 per cent; and mental stress, 12.4 per cent.

Mr PENGILLY: Is SAPOL putting in place any sort of program to try to pick up on some of those major areas of concern so that we do not have it come through to the same extent in the Auditor-General's Report next year?

The Hon. M.J. WRIGHT: The simple answer is yes, of course. All agencies would turn their mind and their energies to what their greater claims and their increase in percentages are. I could give numerous examples, but SAPOL has introduced a number of initiatives to reduce the number of work-related injuries and illnesses to staff. A peer support program is presently being piloted at the South Coast LSA to provide support to fellow staff members. Early indications are that this program will be a resounding success. Similar programs in other states have also been successful.

The police chaplaincy program is being enhanced to ensure that a wide network of chaplains extend across the state to ensure a communications option is available to all SAPOL employees who are linked to the various services. A health and wellbeing project has just completed, focusing on initiatives to tackle the overall community problem of obesity and mental illness within SAPOL. Recommendations from this project have yet to be implemented but will be within the next 12 months. SAPOL's flu vaccination project provided flu vaccinations to all SAPOL members. Information fact sheets have been made available to the Health, Safety and Welfare Branch website and through statewide emails. There are many others, including a daily tactical coordination group.

The Commissioner of Police has endorsed the occupational, health, safety and welfare injury management targets of reducing work related injuries and illnesses. All work site inspections and OH&SW and injury management auditing have been integrated within the existing and well established SAPOL auditing system. Obviously a range of programs are tailored to those earlier areas to which I drew the member's attention. The member made reference to whether we would stop it from coming back here in future years. Obviously, we would be looking to reduce it, to minimise it. Whether you knock it out all together is problematic because you will always have injuries at the worksite. Certainly, these programs, as the honourable member has highlighted, will go part of the way to arresting some of the issues that have been identified by the Auditor-General.

Mr PENGILLY: Page 1005 of the report states that, as at June 2009, SAPOL had a workers compensation liability of $87 million. This is 30 per cent of SAPOL's total $288 million non-current liabilities. How many sworn operational police officers are currently on WorkCover, and what was the figure for the financial years ending June 2006, 2007 and 2008? The minister might need to take that last question on notice.

The Hon. M.J. WRIGHT: I will take all of that on notice. That is quite a detailed question. It is a relevant question, nonetheless, but we will need to take advice and come back to the shadow minister.

Mr PENGILLY: My final question on the police portfolio refers to page 1019 of the report, which shows that the number of staff at SAPOL on over $100,000 has increased by 377. How many of the total 1,315 staff on over $100,000 are operational police officers?

The Hon. M.J. WRIGHT: I am sorry, I do not have that detail. I will get the precise answer for the honourable member who would be aware that the most recent EBA for police was about two years ago which, obviously, pushed a number of people above $100,000. I am advised that in previous years the total number of employees in this category consisted primarily of senior officers and executives.

The large increases in each of the last three financial years is not reflective of any significant increase in the numbers of senior officers and executives. Predominantly, the large increases comprise middle management and police in acting positions (such as senior sergeant and sergeant) where base salaries have been incrementally increased pursuant to enterprise agreements. I will get a figure for the honourable member. He is asking how many of those 1,315 on a salary above $100,000 are operational. I will get an answer for him.

Mr PENGILLY: Finally, and the minister can take this question on notice also, the number of staff on a salary of over $200,000 per annum has increased from five to 11. What were the five positions attracting that wage last year and what are the 11 listed for this year? If the minister takes that question on notice, that is fine.

The Hon. M.J. WRIGHT: I will come back to the honourable member with that detail.

Mr GOLDSWORTHY: I have some questions relating to the South Australian Fire and Emergency Services Commission. I refer to the Auditor-General's Report, Part B: Agency Audit Reports, Volume III at page 1078. At the top of the page it refers to issues raised concerning purchase card payments. There are seven dot points relating to issues that the Auditor-General has raised concerning purchase card payments. I ask the minister: given the fact that the Auditor-General raised similar concerns on page 1944 of his report for the year ended 30 June 2008, why have these issues again been raised in the 2009 report?

The second to last dot point highlights that terminated employees still had active purchase cards, and the same issue was raised in the 2008 report where it says 'purchase cards are promptly cancelled for terminated employees'. That is an opportunity to improve on practice and for purchase cards to be promptly cancelled for terminated employees. The same issue is raised two years in a row, so what action is being taken to ensure that does not happen again?

The Hon. M.J. WRIGHT: The shadow minister specifically highlighted the termination of employees who still had active purchase cards. Whilst no transactions were reported on two terminated employees' cards, in addition to advice from the supervisor of termination, the notification and deletion of terminated employees has been improved by reporting from payroll services of all terminated staff.

The shadow minister also made reference at the top of page 1078 to other items that have been raised by the Auditor-General. Audit noted that the controls associated with the allocation of purchase cards and accountability for expenditure required strengthening. Action has been taken, and I can report on what has been put in place as a result of the Auditor-General's recommendations.

Purchase card holders not listed on delegation schedule in 2008-09: staff transferring to Shared Services did not have access to updated delegation versions and were forwarded a hard copy of all delegations. In the period between updates, individual delegation changes were advised to Shared Services staff.

Purchase cards not supported by receipts and other documentation: a list is maintained of all purchase card returns for each month for each entity, and card holders are required to provide copies of tax invoices and management authorisation of each month's accounts. Delays in receipt of this documentation were experienced in 2008-09 for several officers and, whilst all returns were received by June 2009, the delay in completing each month's consolidated return impacts on the clearing account reconciliation. Delays beyond 90 days will be reported to chief officers for appropriate action.

Temporary purchase card limits not being subsequently decreased: applications for a temporary increase in limit for major incidents are unable to be processed by ANZ Visa without a subsequent request for reduction in limit.

An internal review has determined that a small group of appropriately authorised staff involved with major incidents require ongoing increased delegations to enable immediate response in the event of an incident. It would otherwise take one month to process a delegation increase, which would be counterproductive to an immediate response to a major incident. These levels are reviewed quarterly.

Purchase card reports not updated to reflect correct business units: this is a minor administrative matter which has been addressed by closer liaison with Shared Services, in advice of businesses' unit addresses.

Purchase card applications not being properly documented: all purchase card applications require a recommendation by the card holder's supervisor, support by the business manager or regional commander and approved by the chief executive. The ANZ Visa card application form also requires chief executive approval. Existing policy is being revised to reduce administration, thereby requiring approval only once by the chief executive.

Purchase cards applied for but not received from Shared Services SA: in 2008-09, a group of 16 purchase card applications were submitted to Shared Services SA and cards issued but not received within the agency. All cards were subsequently cancelled and reissued. No transactions were recorded against the missing cards.

So, for each of those items that have been identified by the Auditor-General on page 1078, specific procedures have been put in place to remedy those items, and I have confidence that they are being correctly addressed.

Mr GOLDSWORTHY: So, minister, you can give an absolute guarantee, in view of your answer and the response and action taken, that these issues will not appear in the Auditor-General's Report next year?

The Hon. M.J. WRIGHT: What I am confident about is that, as a result of items raised by the Auditor-General, the appropriate action has been taken by the department. We have improved the procuring process with Shared Services and linked the termination of cards with the payroll system, so it is now more automated.

Mr GOLDSWORTHY: So, no guarantees can be given, but we will see how we go. I refer to page 1077, the same volume. Under 'Bona fides' it raises some issues that the Auditor-General has highlighted here. Under the heading 'Expenditure' it states:

...the results of the expenditure audit revealed instances where purchases and payments were not approved in accordance with the financial delegations...these instances revealed that they occurred before the transition to Shared Services SA and were also outside of the date range affected by the differing delegation versions. It was recommended that SAFECOM ensure that Shared Services SA is provided with revised documentation and payments are authorised by staff with sufficient, appropriate delegated authority. In response...the chief executive, SAFECOM, advised that the financial authorisations register will be updated independently of the policy approval process, and updates forwarded to Shared Services SA on the same basis as internal distribution.

Have those actions been put in place, have they been implemented and, if not, what progress has been made?

The Hon. M.J. WRIGHT: The issue is that Shared Services SA needs to have access to all current financial policies, including the schedule of delegations. This has been established. The way it has been established is financial delegations are updated on an ongoing basis and are placed on the emergency services intranet for access by staff. In 2008-09, staff transferring to Shared Services SA did not have access to updated delegations versions and were forwarded a hard copy of all delegations. In the period between updates individual delegation changes were advised to Shared Services SA staff.

In 2008-09, as a result of improved internal controls, the emergency services sector has expanded delegations listed from groupings of management levels to an individual listing of delegations, which are supported by a specimen signature of responsible officers. This has enabled improved internal controls over authorising officers and detection before payment processing by Shared Services SA accounts payable staff. Whilst instances where inappropriately authorised invoices are forwarded for processing are rare, internal controls now detect these before processing.

Mr GRIFFITHS: I refer to Volume III, page 914, specifically as it relates to the Active Club Grants, very important grants across South Australia, no doubt. I note, though, in information provided to me that the value of a grant last financial year was some $2.323 million, whereas in '08-09 it was reduced to $1.266 million. Can the minister provide some information as to why the significant reduction this year?

The Hon. M.J. WRIGHT: I will take that on notice. It does not quite sound right. It may relate to how much of the year was in that particular period referred to. I have some preliminary advice that it might have been nine months of the year, but I want to check that for the member. The advice I am being given is that it relates to the length of time that Rec and Sport were in AGDs, and that was only nine months. But I think we will find, and I am very confident in saying, that the actual expenditure year by year for Active Club is approximately the same.

I am advised that the amount is approximately $2.3 million per annum, and that figure was not reduced this year, but it is because of how long Rec and Sport were in AGDs. As the member would be aware and as he has already highlighted, it is an extremely important program. We have two rounds per annum. Each electorate in the two rounds of funding notionally gets $25,000 each round, so $50,000 for the year. But I am confident in saying that the amount, year by year, for Active Club has not varied by any significant amount. It would be pretty close to about $2.3 million. As I say, the advice I have been given is that the figure you are looking at relates to the length of time that Rec and Sport has been in AGD and payments made in that nine months.

Mr GRIFFITHS: Actually, I am reading from a Premier and Cabinet allocation of grants. I take on board your point, though, that it depends on the period it was in the various departments.

Progress reported; committee to sit again.


[Sitting suspended from 13:11 to 14:00]


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