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House of Assembly - Fifty-Second Parliament, First Session (52-1)
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

In committee (resumed on motion).

The CHAIR: We will now proceed to an examination of the Auditor-General's Report in relation to the Minister for Industry and Trade, the Minister for Small Business, the Minister for Correctional Services and the Minister for Gambling for 30 minutes. I remind members that the committee is in its normal session so that any questions must be asked by the members on their feet and all questions must be directly referenced to the Auditor-General's Report. The member for Waite.

Mr HAMILTON-SMITH: I refer to the Auditor-General's Report, pages 1513, 1515 and 1519 and 'Employee benefit expenses' and 'Remuneration of employees' at page 1527. Minister, in budget estimates you stated that the DTED restructure to abolish 78 positions by 1 January 2011 would be finalised by 25 October this year.

In light of this, has that been completed in accordance with your deadline, and, if so, can you now inform us how many of the proposed reductions will come from non-renewal of short-term contracts? What degree of notice and termination package does the government intend to give these contracted employees? How many will come from TVSPs, and how many will be found in other ways?

The Hon. A. KOUTSANTONIS: You want to know about the structure; is that right?

Mr HAMILTON-SMITH: Firstly, I just want to know if the deadline has been met and, secondly, how many will be contract non-renewals, how many will be TVSPs and how many 'other'?

The Hon. A. KOUTSANTONIS: The advice I have received is that we did meet the deadline on 25 October. In terms of contractors, that is yet to be determined. I will endeavour to get a detailed answer to the member on its completion. In terms of the structure, we are still seeking classification advice.

Mr HAMILTON-SMITH: I understand the decisions have been made in accordance with your deadline. The minister seems to be saying that the decisions have been made but, in regard to the number of persons who are contracted staff who will not be renewed, the decisions have not been made. In regard to TVSPs, you seem to be suggesting that decisions have not been made. So, were the decisions made on the 25th and, if they have been made, are you in a position to tell us what the break-up of those cuts will be?

The Hon. A. KOUTSANTONIS: The advice I have received is that the department is undertaking its skills-matching program with the staff available in DTED for the positions that will be available under the new structure. Until that is completed, we cannot give you a definitive answer.

Mr HAMILTON-SMITH: I understand that the new structure has been agreed to, but the decisions have not yet been reached in regard to who will go. Am I understanding correctly?

The Hon. A. KOUTSANTONIS: The advice I have received is that people have not transitioned into the new structure as yet.

Mr HAMILTON-SMITH: Do you know what the savings will be? If you do not know, how many of the people who will not be re-employed are contracted or TVSPs, because there are different payout structures for both? Do you not know what the savings will be from the restructure at this point?

The Hon. A. KOUTSANTONIS: The advice I have received is that, once we have completed the skill matching based on positions available, the department is confident it can reach the savings targets that have been set in the budget.

Mr HAMILTON-SMITH: So, do I understand that we will get that information at the next budget but not before?

The Hon. A. KOUTSANTONIS: I am sure that as soon as I am aware of the final outcome, I will endeavour to let the member know.

Mr HAMILTON-SMITH: I refer to the same subject and same page numbers. Does the agreed restructuring of DTED, now decided on 25 October, differ from what you advised estimates some weeks ago? If it is different in any way, is it exactly what you told estimates in regard to the number of staff who will be constituted into various sections of DTED? Has there been any further change?

The Hon. A. KOUTSANTONIS: The advice I have received is that, in terms of total numbers, the numbers given to you during estimates are accurate. In terms of the breakdown, if there are any changes, I will definitely come back and inform the member and the committee.

Mr HAMILTON-SMITH: Just moving onto page 1527 of the Auditor-General's Report, what is the number of staff being paid over $100,000—an increase from 44 to 55 in the 2009-10 period—and how many of those staff will be targeted for removal? The number of staff being paid more than $100,000 went up from 44 to 55, which is a significant increase—25 per cent, or so. How many of them are to go?

The Hon. A. KOUTSANTONIS: The advice I have received from the department is that that increase in staff receiving more than $100,000 per year in salary is based on a bracket creep through already negotiated agreements. In terms of the number of those staff who will be targeted for TVSPs, until the skills matching and the programming is completed, I cannot give you a definitive answer.

Mr HAMILTON-SMITH: The top salary level bracket indicated in the Auditor-General's Report signals a salary of $330,000 to $339,000. Is that the salary package of the CEO, Mr Lance Worrall?

The Hon. A. KOUTSANTONIS: On the advice I have received, no.

Mr HAMILTON-SMITH: Who is that payment for?

The Hon. A. KOUTSANTONIS: Paul Case, the Chief Executive Officer of the Olympic Dam Task Force.

Mr HAMILTON-SMITH: Why are we paying Mr Paul Case more than the CEO of the entire department for his work on the Olympic Dam Task Force?

The Hon. A. KOUTSANTONIS: The salary negotiations for Mr Case were negotiated before I became minister.

Mr HAMILTON-SMITH: I understand that, minister, but I still ask the question: why is that job more important than running the entire department?

The Hon. A. KOUTSANTONIS: I know that the member is looking for me to expand on my answer. I was not present in cabinet. I was not responsible for the negotiation of his package, so I would be misleading the committee if I gave details on something on which I do not have any information.

Mr HAMILTON-SMITH: I will move to page 1513 of the Auditor-General's Report, which deals with grants and subsidies. I asked this question during estimates, and I think you were going to come back to me. Now that it has been a few weeks, hopefully you are able to respond. What is the government's current policy in regard to the referral of proposals for grants and subsidies to the Industry Development Committee, a subcommittee of the Economic and Finance Committee? Have all of these proposals gone to the Industry Development Committee in accordance with statute?

The CHAIR: For my clarification, member for Waite, was that one question or two?

Mr HAMILTON-SMITH: Really, one—a comprehensive question.

The Hon. A. KOUTSANTONIS: The advice I have received is that the Treasurer has delegated powers of referral to the Industries Development Committee (IDC) to the Minister for Industry and Trade: me. Referral to this committee is at the discretion of the minister—again, me—and I am advised that there is no statutory obligation on me to refer matters to the IDC. However, I have always seen the importance of the IDC; I think it is a robust way of us having a bipartisan approach to certain industry development, and I will be taking a more liberal view on referrals of these matters to the IDC.

Mr GRIFFITHS: I have a supplementary question. Being a member of the Economic and Finance Committee and an appointee to the IDC, it would give me great pleasure to have something to consider, but it is my understanding that the IDC has not met—certainly not since the 2006 election. Can the minister indicate when he intends to refer an item to the IDC?

The CHAIR: For my own clarification, member for Goyder, are you still referring to page 1527?

Mr GRIFFITHS: Madam Chair, I did indicate that it was a supplementary question.

The CHAIR: Indeed, but is it a supplementary question relating to exactly the same page?

Mr GRIFFITHS: It is related to the answer provided by the minister.

The CHAIR: So which page is it related to?

Mr GRIFFITHS: The page that you referred to, Madam Chair.

The CHAIR: What is that page? Would it be page 1514?

Mr GRIFFITHS: I would rather talk about the specifics of the issue rather than the page reference.

The CHAIR: But I would like to know if you know what you are referring to, member for Goyder.

Mr GRIFFITHS: Yes, Madam Chair.

The Hon. A. KOUTSANTONIS: The member for Goyder served under me for four years on the committee. He was an excellent member of that committee and I think he is a fine member of the IDC. I look forward to using—

Mr Hamilton-Smith interjecting:

The Hon. A. KOUTSANTONIS: He caused a lot of trouble; he was a very fine member and a great advocate for the Liberal Party of South Australia. We miss him.

Mr HAMILTON-SMITH: Is the minister aware of the protocols that were applied up until 2002 in regard to Industries Development Committee referrals where all projects over a certain limit were referred to the IDC at the insistence of the now Treasurer? How long has it been since a matter has been referred to the IDC? Did this policy change after 2002 or was it only after 2006?

The Hon. A. KOUTSANTONIS: I cannot speak for what happened before I had referral statutory authority. I know that the shadow minister is trying to make a political point and that is fine, I understand that. What I am saying is that I think it plays an important role, and from this point forward if I think there is something that needs to be considered by the committee I will forward it there, because I believe it has an invaluable role.

I have spoken to members of this house who have served on that committee and, from memory, the people I spoke to who served on it in the past—and I am talking about a long time ago—found it a very valuable and useful tool for making sure there was no political rancour over some very important investment decisions that the government was making. I think it is something that we should be using again.

Mr GRIFFITHS: I have a page reference for a small business question, if I may. It is Volume 4, page 1527, Activity 5, Small Business Big Impact. Frustratingly, given the important role that small business plays in the South Australian economy, I can find very few references to it in the Auditor-General's Report. That means that either it is doing really well or that it does not get the level of financial support that it should from the state government. I had some questions for the minister in estimates, and I appreciated the candour of his answers, but I would like to ask some questions with regard to that Activity 5, which states that the aim is to support small businesses in their growth and expansion.

Does the minister believe that the decision not to renew funding for the business enterprise centres from 30 June 2011 and the Regional Development Australia structure from 30 June 2013 will meet that objective and function of DTEI and allow small businesses in South Australia to move forward.

The Hon. A. KOUTSANTONIS: As I said to the member in estimates (and I do believe this passionately), what small businesses are looking for from state governments is not advice on what products to buy or what colour displays they should have in their store, but a regulatory framework in which they can survive, and that regulatory framework is something to a small business. I am talking about the ability to have good faith negotiations and fair dealings when negotiating a retail tenancy agreement. It is about making sure that contracts are negotiated in good faith and that there are fair dealings. I think that is what the overwhelming number of small businesses in South Australia are looking for from the state government.

I understand the member opposite is lamenting the lack of funding from BECs and I understand his concerns. My view is that, if the BECs provide such a great service and they are so valuable to South Australian businesses, then they will survive, but I do not believe fundamentally that it is the role of the state government to subsidise business advice to private businesses.

Mr HAMILTON-SMITH: Minister, page 1512 of the Auditor-General's Report deals with financial assistance grants. Can you tell the committee about the strategic industry development fund and the strategic industry support fund? How much is in each fund and what are the different functions of these two funds?

The Hon. A. KOUTSANTONIS: To not waste the time of the committee, I will get you a detailed response very quickly on the roles and functions of those two grants.

Mr HAMILTON-SMITH: And the amounts of money in each fund. In the same response, could I also ask you to provide the quantum and the role and function of the SA Innovation and Investment Fund, which is a third fund that I think you manage? I look forward to those responses on notice.

On the same page, the Auditor-General refers to there having been 161 obligations overdue with regard to acquittals of funds given and that that is now down to around 66, with effect July 2010. How many grants have been given that have not been acquitted? As of today's date, how many are outstanding? Although you may need to take it on notice, would the minister be prepared to list those companies that are still to acquit their grant?

The Hon. A. KOUTSANTONIS: I am advised that as of 30 September 2010 the department has reduced the number of obligations outstanding for more than 60 days to 39. It continues to follow up all outstanding obligations, and I am not prepared to give you the names of the businesses.

Mr HAMILTON-SMITH: How many companies?

The Hon. A. KOUTSANTONIS: Thirty-nine. So as not to confuse this, I will restate that. As at 30 September 2010, the department has reduced the number of obligations outstanding for more than 60 days to 39—that is not the number of companies; it is obligations—and continues to follow up all outstanding obligations. I am sorry if I may have misled you earlier.

Mr HAMILTON-SMITH: What number of companies are overdue, because the Auditor-General mentions that it was 66? How many companies are overdue at the moment?

The Hon. A. KOUTSANTONIS: The advice I have is that this was always going to be a matter that would overrun every now and then because, often the moment the funds are given, the obligation has not been fulfilled. We will try to keep it as low as possible, but I do not have the exact number of companies that are outstanding to report, but I do not think it is a matter of concern.

Mr GRIFFITHS: Again referring to page 1527 and Small Business Big Impact, it is not specifically detailed here but there is a very common level of frustration among businesses about red tape. As I understand it, two targets have been set by the state government in regard to red tape reduction, and I think there has been an initial report on some $130 million or $150 million in what it states as being reduction in red tape and the savings that will be achieved. There is another target out there now, I think, in the range of $150 million to $170 million. Is the minister able to provide the chamber with an update on the progress being made on red tape reduction?

The Hon. A. KOUTSANTONIS: To be entirely honest, I think it would be exceptionally unfair of me to start reading out the response that I had ready for estimates because it would take up the remaining time so, to be fair to you, I will give you a detailed response.

Mr GRIFFITHS: I move now to the gambling area, and I ask this question on behalf of the Hon. Terry Stephens. My question relates to page 1640, Volume 5, under the heading Service Level Agreements, where the Auditor-General noted that the department has not revised and renewed expired service level agreements with at least six government departments or statutory authorities, including the Independent Gambling Authority. Minister, can you advise why these service level agreements have not been revised and renewed?

The Hon. A. KOUTSANTONIS: From the advice I have received from the department in the course of the 2009-10 audit, it was noted that the Department of Treasury and Finance had not revised and renewed some expired service level agreements. One of those was an agreement with the Independent Gambling Authority. When queried by the Auditor-General's office, DTF later advised that it had developed documents but that it had been experiencing delays. I will get further information to the house as soon as it is available.

Mr GRIFFITHS: So that I may be very sure, there have been no consequences as a result of not renewing those agreements at this stage, but you will provide details of the implications at a later date.

The Hon. A. KOUTSANTONIS: Yes, that's right.

Mr GOLDSWORTHY: My questions are again on behalf of the Hon. Terry Stephens in relation to Correctional Services. I refer to the Auditor-General's Report Part B, Volume 1, page 217, under point 5 on employee benefits expenses and remuneration of employees. We can see that in 2009 there were 47 employees within the department (DCS) earning $100,000 or more, and in 2010 there are 62—an increase of 15 fat cats, an explosion of more than 30 per cent. Minister, how can you justify this explosion in the number of fat cats at a time when the Rann Labor government is slashing public sector jobs and workers' entitlements? Are any of these employees part of your own staff? Have any DCS staff been seconded to your office?

The Hon. A. KOUTSANTONIS: The advice I have in response to the first part of that stupid question is no, and the rest of the stupid question I will answer. The number of employees with packages over $100,000 in 2009-10 was 62 compared to 47 in 2008-09 and this equates to approximately 4 per cent of employees. The remuneration includes all costs of employment including salaries, wages, superannuation contributions, fringe benefits tax and any other salary sacrifice benefits.

In 2009-10 there were 27 pay periods compared to 26 in 2008-09. The 27th pay period resulted in an additional nine employees receiving a total remuneration package greater than $100,000. Additionally in 2009-10, public servants received a $600 once-off payment as part of the public sector enterprise bargaining agreement and this resulted in a further three employees receiving total packages greater than $100,000. The total remuneration received by the 62 employees with a total remuneration value in excess of $100,000 for the year was $7.9 million. I also advise the member sitting opposite who asked the question, if he thinks everyone earning over $100,000 a year is a fat cat, then he is talking about himself.

Mr GOLDSWORTHY: Referring to page 204 in the same volume, where the Auditor-General makes mention of the management of the Mount Gambier Prison, I understand that the shadow minister visited that prison a few months ago. We would be interested to understand how the tender process is progressing, given that the contract had been extended by six months. Minister, will there be any further extensions to the current contract; and are you able to advise when the tender process will be completed?

The Hon. A. KOUTSANTONIS: The advice I have received is that the tender is on schedule. It will be commissioned before 30 June next year.

Mr HAMILTON-SMITH: I will just go back to industry and trade, if I may. What are the exact details of the government's plans for G'Day USA? I understand their funding has been cut, but can you just confirm what is to happen with South Australia's involvement in G'Day USA henceforth, if any?

The Hon. A. KOUTSANTONIS: Alas, I do not have any information about G'Day USA, but if the member is seeking a ticket, I will do my best to get him one.

Mr HAMILTON-SMITH: It is actually the Treasurer who is sitting to your right who has been to every single one ad nauseam and at length, so perhaps you might like to talk to the Treasurer. Do I take it from your answer that—

The CHAIR: Your time has fully expired.

Progress reported; committee to sit again.

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