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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.

(Continued from 26 October 2010.)

The CHAIR: We are now considering the Auditor-General's Report—Attorney-General, Minister for Justice and Minister for Tourism. We have 30 minutes. I remind members that the committee is in its normal session so any questions have to be asked by members on their feet and all questions must be directly referenced to the Auditor-General's Report.

Ms CHAPMAN: I will be principally referring to the Auditor-General's Report, Part B, Volume 1 of the Agency Audit Reports commencing at page 93. I will start at page 94, which relates to the prisoner movement and in-court management provisions. In this area the Auditor-General did undertake some scrutiny of the contract and, in particular, the management of this contract. My first question to the minister is: how is the renewal of this contract consistent with the government's no privatisation pledge?

The Hon. J.R. RAU: I do not believe there is anything in the report about privatisation by the Auditor-General. Could I be directed to that aspect?

Ms CHAPMAN: My apologies, Madam Chair; I did not stand before.

The CHAIR: I heard page 94.

Ms CHAPMAN: Page 94 relates to South Australian prisoner movement in-court management. What was under scrutiny was a tender process for the new contract for the provision of services for prisoner transfer and other in-court management. It is a $50 million contract, and my question is: how is this process consistent at all with the government's no privatisation pledge?

The Hon. J.R. RAU: I now understand the member for Bragg's question. As the honourable member is probably aware, some time ago—I think about 15 years ago, or thereabouts; I believe during the tenure of the Brown or Olsen governments, I cannot remember which—arrangements were made whereby an organisation eventually came to be a contracting party with the government. That organisation has been variously called GSL or G4S. I think that currently it is GSL. Anyway, it does not matter. The point is that this organisation entered into a contract—it is G4S, I am sorry.

G4S, or its predecessor GSL, has, for many years, been the organisation which has provided certain services to the courts and to the prison system; and, essentially, those services are the transport of prisoners to and from court attendances and the assistance, I guess, of corrections and the courts in the movement of prisoners so that that work is no longer performed by SAPOL or by corrections.

If I understand the honourable member's question correctly, she is asking why that is still happening. The answer is that that contract has been on foot now for some 15 or so years, as I am advised (certainly for a long time), and all that has happened, as I understand it, is that that contract has continued to subsist.

In as much as the question was about whether this government had privatised anything, the answer to that is, I believe, no. All that has happened is that the arrangements that had previously been made by the former government have continued.

Ms CHAPMAN: I will take that as an endorsement of the excellent work of the privatisation previously. In any event, two entities applied. At page 95, the Auditor-General tells us that one of them withdrew, and there are a number of aspects in relation to what was then able to occur in terms of the overall procurement process. What entity withdrew?

The Hon. J.R. RAU: I just indicate that those who advise me are presently not in a position to assist me with answering that question. I should indicate that, subject to the arrangements that applied at the time, it may be that some commercial confidentiality is attached to the tender or the invitation process.

If there are not, the best I can offer the honourable member is that I will have those who advise me find out the answer to that question. If there is no reason of that type for not providing the answer, it will be provided.

Ms CHAPMAN: I thank the minister for that, because this is a $50 million contract. As the Attorney would be well aware, very often the Treasurer comes in to tell us who the short-listed bidders are for what he considers to be the important contracts. This is also an important one. If there was some confidentiality clause as to the terms of withdrawal or even application, we would respect that, but we would certainly like to know the name of the entity, and, if it is a non-corporate entity, who is in the consortium.

The Auditor-General on page 96 identifies the development of a contract management plan and raises some concern about it not having been applied. The department gave its explanation about what it relied on instead, but it still was recommended that there be a plan. So, my question is: is that being prepared, and will it be in place before it is necessary to undertake a procurement again in the future—particularly this contract, which is probably the biggest?

The Hon. J.R. RAU: Before I attempt to answer that question, I add that it might be of interest to the honourable member to also keep in mind that the organisation G4S which does this prisoner transfer is also, I believe, the manager and operator of the Mount Gambier Prison facility. So it is a bigger job than just driving people around the metropolitan area and so forth, but that does not alter whether we are going to get the answer—if we can, we will. However, it is quite a big job that they are undertaking—as I guess you would expect, with $50 million being involved.

In relation to the question the honourable member asks, I am advised by the department that the prisoner movement and in-court management agreement is the main document used for the purposes of a contract management plan, as it establishes the objectives, scope and governance and management framework under which the contract operates—and I have just explained that that is quite diverse because it is prison management, transport of people and so forth. Audit is of the view that a plan is still required to be implemented consistent with the requirements of the State Procurement Board guidance and the contract risk that was identified in the risk management strategy established by the project.

Following discussions with the State Procurement Board secretariat, it has been agreed between the department and the board that, where the contract management requirements (as outlined in the contract) satisfy the elements of a contract management plan, a separate document is not required. The department intends to raise this approach with the Auditor-General in order to satisfy the department, the Auditor-General and me that that is satisfactory.

Ms CHAPMAN: I appreciate that, but if you look at page 96, that is exactly why the department advised the Auditor-General that it did not do a plan: it did not think it was necessary because it was already covered by another process. The Auditor-General has reported to us in the parliament that that is not good enough and he expects that there will be a plan. The department at about point 9 on that page says it will conduct a review with a view to preparing this plan.

It may well be that they go back to the Auditor-General and ask whether, in these smaller cases, they have to have a plan and whether it is really necessary, but he has made it clear that he expects there to be a plan and that the department's explanation as to the effectiveness of its alternative does not cut it with him. Essentially, he needs the department to have a plan. If there is going to be simply an attempt to put back what the Auditor-General has already rejected, we would want an explanation for that; otherwise, we would like some indication about when the plan is going to be in place so that it will be used in future.

The Hon. J.R. RAU: It is my understanding from speaking to those who advise me that it is the intention of the department that there will be discussions with the Auditor-General and that a position satisfactory to the Auditor-General will be arrived at with him. If that means a departure from the practice that has gone on until now and if that is what is required to satisfy the Auditor-General, it will indeed happen.

To fill out my earlier answer a little bit further, the Mount Gambier Prison contract to which I referred is, in fact, a separate contract but includes the same parties.

Ms CHAPMAN: Page 101 relates to questions of fraud and risk management. My question for the minister is about fraud policy. Has the fraud policy that was being developed been finalised; and, if not, when will it be?

The Hon. J.R. RAU: I am advised that the audit and risk management committee endorsed the draft Attorney-General's Department fraud and corruption control policy and framework in its meeting on 30 September 2010. The draft was then issued for consultation. Feedback has been received which will be incorporated where appropriate. The policy will then be referred to the chief executive for approval. The Attorney-General's Department audit and risk management services unit is monitoring the business unit risk assessment for 2010-11, and the status of risk assessments is reported to the audit and risk management committee.

Ms CHAPMAN: So when does the minister expect the draft fraud policy (not the risk management policy), once it has gone through this process, to be in place or at least presented back to the Auditor-General for approval?

The Hon. J.R. RAU: I am advised that the expectation is that that will occur within the next month or so.

Ms CHAPMAN: I refer to page 102, Shared Services, which indicates that the payroll disbursement file was under review by the auditor, in particular the CHRIS payroll system disbursement, which revealed a number of limitations, to put it that way. With regard to page 102, what steps is the department taking to minimise the risk of fraud in relation to the payroll disbursement file? For example, will it make the file 'read only', limiting access to one person, and so on?

The Hon. J.R. RAU: I am advised that, as would be clear to some extent from a perusal of page 102, the area in question is primarily a question for Shared Services rather than AGD as such. However, I am advised that, given the nature of the operations of Shared Services, audit consider it relevant to also include these findings among the findings for individual agencies. This obviously includes AGD. Any details, however, on these findings really are matters that should be taken up properly with Shared Services.

Ms CHAPMAN: Page 103 refers to the Masterpiece financial system security access, which also services the minister's department. Does the minister know how many officers are authorised to have access to the Masterpiece financial system and how many unauthorised officers currently have access to it?

The Hon. J.R. RAU: I am advised that those with whom I appear today do not have that information. I suggest, with respect, that the honourable member might be able to pursue that issue more effectively with Shared Services, and that is with the Treasurer.

Ms CHAPMAN: Page 109 relates to victims of crime. Given that the maximum payable is $50,000 under the eligibility on application provision under the Victims of Crime Act, will the minister advise how many recipients have received the maximum payment during the 12 months of this audit?

The Hon. J.R. RAU: I am able to provide some information about that now and some I will have to take on notice. What I can provide to the honourable member now is that my advice is that there were 1,031 claims during the relevant period. However, I do not presently have a breakdown as to how much each one of those claims amounted to. That is something I believe we can obtain, but I just cannot provide it now, and I will have that information obtained.

Ms CHAPMAN: My next question is, in fact, in relation to the 1,031 claims but from a different perspective. That is the number of claims that were paid out, but do you have any information as to how many claims were made?

The Hon. J.R. RAU: I am advised that I do not have that advice available, and I do not know whether that is something we can readily obtain, but we can certainly look for it.

Ms CHAPMAN: Referring to page 151 and the figures columns, given that the recoveries for 2009-10 were $762,000, the other income in 'Recoveries and other income' would be about $1 million. Where does the other income come from?

The Hon. J.R. RAU: I am just seeking clarification: is the honourable member referring to the reference there to the $1 million in brackets after 762,000, or where is the $1 million to which the honourable member is referring? I am not sure I understand the question properly. I see the recovery figure of $762,000 and I understand what the honourable member is talking about there, but is the honourable member talking about the $1 million in parentheses after that?

Ms CHAPMAN: No, that is usually the year before—and I am assuming it is, because that is consistent through the reporting. I do have some questions about victims of crime legal aid on page 151, but I have not marked it. The financial reference to the point we are discussing is at page 151, line 2, under 'Recoveries and other income': recoveries from offenders is $762,000 this year and was previously $1,072,000. Underneath that, and this should be 'other income'—

The Hon. J.R. RAU: I do not know whether I can help the honourable member, but is her question to me: are there other sources of income to the fund?

Ms CHAPMAN: And, if so, where they come from?

The Hon. J.R. RAU: I am sure that is obtainable, but I think that we will have to take that on notice so that we can provide that properly.

Ms CHAPMAN: Back to page 110, what is the nature of the outstanding debt of $64 million?

The Hon. J.R. RAU: As the honourable member would no doubt be aware, the basis of this fund is that, when a person is entitled to recovery, pursuant to the Criminal Injuries Compensation Act, and there is a known offender, the recovery is paid out of the fund to the injured party (the victim) and a notional debit is raised in the fund against the offender. It probably will not come as a surprise to anybody in here today that some of these offenders are not particularly cashed up—

Ms Chapman: Because half of them are in gaol.

The Hon. J.R. RAU: —because they are in gaol, or they are otherwise ne'er-do-wells or miscreants, could I say, and as such do not busily fill their piggy banks full of money that can then be handed over to the Crown. I think the explanation is that, over the many years that this fund has been in operation, it has tended to accumulate what we in a professional life, member for Bragg, might call bad debts. The likelihood of recovery of these, I believe, is not the best, but when you understand the people from whom the recovery is going to be sought, I guess that is not entirely a surprise; but that is how that number accumulates.

I am just checking with my advisers, but I believe that those funds, or those notional debits, have been accumulating since the 1970s, and therefore we are looking here at the product of many years of non-paying miscreants.

Ms CHAPMAN: I will not dwell on it, but I do note that, since the inception of the fund, it appears that $46 million has been written off, but in brackets it is $40 million. I am assuming that somehow or another $40 million was written off last year.

The Hon. J.R. RAU: I am advised that the cumulative figure to last year was $40 million, and the cumulative figure to this year is $46 million.

Ms CHAPMAN: So, the position is that, since the days of the Criminal Injuries Compensation Act, when the limit was $1,000, even if you had a multiple rate, this has been the continued accumulation and it is never written off; it is notionally written off but left on the books. Is that the position?

The Hon. J.R. RAU: I am advised that that is the position.

Ms CHAPMAN: On page 130 there is a reference to the remuneration for employees by category. There is an increase in the number of employees, which I think is in full-time equivalents, but it may not be. If that is not the case, perhaps you could identify it, minister. What accounts for the 21 per cent increase in staff from 227 to 228?

The Hon. J.R. RAU: As to the first part of the question about whether they are FTEs or something else, my understanding is that they are individual employees. The second thing is that they are made up of a number of different groups, and I will do my best to identify, for the honourable member, how that number is made up.

The total increase is 49, from which 14 are legal officers within the department. That would include the Crown Solicitor's Office, the DPP, policy planning, legislation and parliamentary counsel; so that is across all the range of legal offices within the AGD. That also includes officers at classification levels in the LEC range who were not previously included in this note, but due to enterprise bargaining increases over time are now included. Additional funding provided for legal resources has also contributed to the increase.

In the executive stream, there has been an increase of two in the number of executive officers included in this note. This increase includes an executive who transferred with the Office for Youth to the Attorney-General's Department on 1 July 2009. The other ones are, in number, 33. There are obviously other officers with remuneration in excess of $100,000. The majority of this increase, I am advised, includes officers in the ASO, MAS, OPS and PO classification streams. They were not previously included in this note, but due to enterprise bargaining increases over time, they are now included. This accounts for around 20 of that increase.

A further three officers received termination payments in 2009-10 which led to their inclusion in the note. A further two officers were transferred into the department through structure of government changes since 2008-09 for the Office for Youth and the Office for Recreation and Sport. It should be noted that this includes the following officers and statutory appointments: forensics scientists, Director of Public Prosecutions, Commissioner for Victims' Rights, President of the Guardianship Board, and the Police Complaints Authority.

Under the AGD heading, the total number of employees who received remuneration within AGD administered items greater than $100,000 in 2009-10 was six, compared with six in the previous year. Unless there is anything further, I think that probably covers it.

Ms CHAPMAN: How many employees are there in the Crown Solicitor's Government Investigations Unit?

The Hon. J.R. RAU: Are you asking how many fall into that category?

Ms CHAPMAN: Yes.

The Hon. J.R. RAU: We will get back to the honourable member. It may be one, but we are not sure.

Ms CHAPMAN: I will resist the temptation to ask how many are allocated to investigating lost USB sticks. During the 2009-10 year, was the Crown Solicitor's Office asked by the Department for Families and Communities or anyone else to provide legal advice as to the legality of paying $5.1 million to the Julia Farr Association, and, in particular, was it asked whether there was any breach of the Public Finance and Audit Act 1987 or any of the Treasurer's Instructions? If it was not in that financial year, is it in this financial year?

The Hon. J.R. RAU: I am not sure that bears any relationship to any of the page numbers that we have here.

Ms CHAPMAN: It is page 446, Part B, Volume 2.

The Hon. J.R. RAU: Can I suggest that possibly the best person to whom that question might be directed is the relevant minister, namely the Minister for Families and Communities, who would have made such a request.

Ms CHAPMAN: I have asked her; she doesn't know.

The Hon. J.R. RAU: Well, I think all I can do is indicate that we will look at it.

The CHAIR: We now proceed to the examination of the Auditor-General's Report in relation to the Minister for Transport, Energy and Infrastructure for 30 minutes. I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet, and all questions must be directly referenced to the Auditor-General's Report.

Mr HAMILTON-SMITH: The DTEI audit overview, page 15, deals with bank reconciliation and agency audit reports. It is Volume 5, page 1567. The Auditor-General states:

The review of [DTEI's] bank reconciliations for 30 June 2010 found that [Shared Services] SA had not satisfactorily completed the bank reconciliations at the time of finalising this report. The reconciliations contained significant bank deposits and withdrawals which were not recorded in the general ledger and transactions recorded in the general ledger which were not matched to bank records...Audit review in both 2008-09 and 2009-10 identified deficiencies in controls over DTEI's cash at the bank and related reconciliation processes.

The Auditor-General also states:

I was unable to obtain sufficient audit assurance that DTEI had addressed all matters associated with bank reconciliations. On this basis, I have concluded that it was appropriate to provide a qualified Independent Auditor's Report for the 2009-10 financial statements of DTEI.

My first question is: why is it that for three consecutive years the Auditor-General has found it necessary to report these problems? Can the minister explain to the committee why a process has not been put in place over the last three years to fix the problem raised by the Auditor-General?

The Hon. P.F. CONLON: For the benefit of the member—and I can understand why he might think that this is a failure to fix the problem from last year—this is, in fact, a completely different issue. The problem last year, from memory, was TRUMPS reconciliations, and you will find that the Auditor-General refers immediately below that to the TRUMPS reconciliations now meeting audit standards.

This is instead the migration of work that was done by departmental people, now Shared Services SA. They are in the early stages of doing this, and there are some complexities about the reconciliations that I think Shared Services SA has not met to the satisfaction—I suppose is the proper way of expressing it—of the Auditor-General. In fact, that is something about which DTEI has had correspondence with Shared Services SA, and we would expect to be able to fix this problem. However, this is a new issue that has arisen.

The issues that had been raised with TRUMPS reconciliations last year have, in fact, been addressed, on my understanding, to the complete satisfaction of the Auditor. I am told that there are a couple of minor outstanding issues with regard to TRUMPS, but nothing to raise any sort of qualification.

In fact, without wanting to avoid it, the questions would probably be more readily addressed to Services SA which, of course, is not run by DTEI; it is DTEI itself. However, I can assure the member that this is a totally new and different issue, and it arises from the migration to Shared Services SA doing what was formerly done in-house at the Department for Transport, Energy and Infrastructure.

Mr HAMILTON-SMITH: I thank the minister for his reply. Moving to the cash at bank concerns raised by the Auditor-General on page 1566, where he confirms that DTEI and Shared Services SA were unable to ensure that the general ledgers bank account balance was reconciled with the department's bank account records as at 30.6.10, what steps have been put in place to ensure that reconciliation of the account does occur at all times, and what was the level of imbalance at the end of the month for each month of 2009-10?

The Hon. P.F. CONLON: We would have to take the second part of the question on notice, because Shared Services actually does that now; we would have to get that from them. In fact, my understanding is that even before the Auditor-General's Report the department had written to Shared Services raising some of these issues, so we are confident that it will be fixed quite soon. The department was aware of the issues and moved.

I am reliably advised that they will not have any practical effect on the reconciliations. There are an enormous number of transactions out of the Department for Transport, Energy and Infrastructure in its total, but I can assure you that the department was well aware of the requirements and has had correspondence with Shared Services, even prior to the Auditor-General's Report, to attempt to assist Shared Services to meet the required standard.

Mr HAMILTON-SMITH: Volume 5, page 1569, of the report deals with the South Australian Transport Subsidy Scheme voucher misuse and fraud investigations. Voucher misuse and fraudulent activity has been detected within the scheme, and the matters have been referred to DTEI's investigations and audit unit and some to SAPOL. Some of the matters being investigated include systematic fraud for large amounts involving multiple drivers. What amount of money is estimated to have been lost through these fraudulent activities?

The Hon. P.F. CONLON: We did identify the matters raised and there is an ongoing investigation, so we will provide the information about the total extent of any misuse or fraud when that is concluded. I can say that in 2009-10 there were, I think, 21 fraudulent claims identified by departmental staff and a further eight reported by members of the South Australian Transport Subsidy Scheme. These were reported to the department's investigation unit, which confirmed that fraud had occurred in those instances.

All the cases were forwarded to the Passenger Transport Standards Committee; 16 were disciplined by that committee, with penalties ranging from suspension of the driver's or operator's accreditation for periods varying from three months to two years and/or fines of up to $1,000; and there were three instances forwarded to SA Police. As a result of that, one driver has been charged with 166 counts of deception, another with 26 counts, and the major fraud squad is investigating an operator and his eight drivers, which involves a great many trips. They are confident they will lay charges in that regard.

The department's fraud control framework strategies for fraud prevention, detection, investigation, awareness and training are based on the Australian Standard 8001 Fraud and Corruption Control, providing a rigorous internal control environment, and a specific fraud and corruption control plan relating to fraud detection within SATSS is being developed to complement the fraud minimisation plan implemented this year.

Fraud control is thoroughly embedded in the process. It is regrettable that there are individuals who choose to attempt to do these things, but we have implemented what we believe are the appropriate standards in fraud control and these people have been identified and dealt with appropriately. We find the most serious cases disturbing; obviously, we cannot say too much about police inquiries but, if the allegations are correct, they appear to be people who have decided to knowingly embark upon fraudulent behaviour. We find that unacceptable and we will prosecute.

Mr HAMILTON-SMITH: Could the minister give us some examples of the sort of fraud that is being committed and indicate what action is being taken to recover the funds? Is it to be left to the courts both to impose fines and to make orders with regard to the repayment of lost funds, or is there separate action being taken to recover the money? If he could give us some examples of the sort of fraud that is being committed with this scheme the committee would be grateful.

The Hon. P.F. CONLON: I do not have the appropriate person here, but there is no doubt that if those people are convicted there will be a capacity to pursue them—whether it will be worthwhile pursuing it will be another matter. I am not going to throw taxpayers' money away against men of straw, but if those matters proceed to a conviction—I do not have the appropriate officers here to answer that, but we can give you further information—then the department would seek to recover that if it is, in fact, practical to do so.

Mr HAMILTON-SMITH: The same line of inquiry. Have people been suspended, as a result of these investigations, from providing services through the SATSS?

The Hon. P.F. CONLON: Yes, some have been suspended. I cannot tell you what the details of the actual cases were, but some have been suspended for a short period of time, some for up to two years, and with fines of up to $1,000. I assume that means that the range of behaviour is very different from those at the lower end and those who have been prosecuted, but I would have to get the details from the investigations unit.

Mr HAMILTON-SMITH: The minister has clearly identified the need for action to be taken to reduce this fraud. Is the idea of implementing smart card technology, GPS and other trip data to improve internal controls over the scheme being considered by DTEI? Can the minister advise whether such technology will be implemented to reduce the risk of drivers manipulating the system?

The Hon. P.F. CONLON: I am advised that we are looking at the introduction of some smart infrastructure in a number of areas. Rod Hook's people have been dealing with the appropriate departmental people about the possibility of electronic tracking through smart cards and GPS technology, and we will get advice on the feasibility of that. These things are complex systems. When Victoria introduced a smart card ticketing system for public transport, it had some issues, so it is important that we know of the feasibility. Work is being done to see whether there is feasibility in tracking that in real time. I am absolutely certain that down the track you are going to see smart technology that will be able to track all sorts of vehicles and length of journeys and such like. So, it is certainly possible and the feasibility is being explored.

Mr HAMILTON-SMITH: Moving onto Volume 5, pages 1567 and 1577 of the report, which deal with TRUMPS, it has been highlighted in the report that there have been significant issues with the TRUMPS system and DTEI advised in 2009 that, due to the complexity of some matters, they would not be addressed until the end of 2010. Have the issues with the TRUMPS system been resolved, and, if not, what outstanding issues need to be resolved and when will they be resolved?

The Hon. P.F. CONLON: In terms of functionality, TRUMPS has no issues. I am advised, in fact, defects are well below industry standards for a system of this size and complexity. My friend cannot give an example, but he says the outstanding matters are very minor and are technical matters mostly around possibly programming.

We will get the detail, but I can assure you and the house that they are very minor and technical matters that do not go to the functionality of the system that is now performing above industry standards. I must say that, if you look at the introduction of these systems, there have not been very many around Australia that have not operated with some initial set up issues. They are complex systems and this one appears to be working at well above industry standards.

Mr HAMILTON-SMITH: Can the minister confirm if the implementation of an automated reconciliation system to improve the treatment and resolution of collection discrepancies is on track to be implemented in November 2010 and is the contract costing $953,000 over five years the one that has been awarded to the Chesapeake System Solutions Inc.?

The Hon. P.F. CONLON: There is a contract that has been awarded for some reconciliations for monies collected outside of TRUMPS in motor registration and through Services SA, and it is an automatic reconciliation system. I do not know to whom it has been awarded and I do not know exactly how it works. It would been a contract that would have been executed within the department by the appropriate officers. I will get you the details of it and I am not going to try and convey the explanation that I got because I am not sure I got it.

Mr HAMILTON-SMITH: Could the minister then tell us what the Chesapeake System Solutions Inc. contract for $953,000 is for?

The Hon. P.F. CONLON: I think it is likely to be that contract because the number sounds correct, but these officers will have to confirm that it is the Chesapeake system. There is a contract for about that amount of money for a reconciliation system. With an abundance of caution, we will check that but it would be very likely that that is the case. I cannot imagine that there are a number of contracts.

Mr HAMILTON-SMITH: I refer to page 1567 of Volume 5. DTEI is using dual receipting systems (GRL and TRUMPS) to process the majority of registration and licensing transactions, which is increasing the complexity of reconciliation and has increased the risk of errors by receipting staff. Can the minister advise how long DTEI will continue to use this dual receipting system?

The Hon. P.F. CONLON: I think you will find that the contract that we were talking about that will commence operation in November will remove the complexity referred to in that receipting system. The contract that was referred to will address that very issue. Again, if there is further detail we will give it to you, but my understanding is that the contract will address those issues that have been raised.

Mr HAMILTON-SMITH: I refer to page 1607 of Volume 5, employee costs. The number of DTEI employees earning over $100,000 per year has increased from 279 in 2009 to 362 in 2010. That is an increase of 83 people, and it seems very high. Can the minister advise if the number of employees within DTEI earning over $100,000 per year will decrease in 2011 following the announcement that there are to be public sector cuts? If so, from what areas will employee numbers be cut?

The Hon. P.F. CONLON: The increase is predominantly as a result of the salary increase paid in accordance with the South Australian Government Wages Parity (Salaried) Enterprise Agreement 2010. I think the question was asked in the house yesterday. It is far too early to identify clearly where some of those job cuts will come from. I am sure the information will be provided as soon as it is clearer, but it is certainly far too early to be doing that at this stage.

Mr HAMILTON-SMITH: On the same subject and page number, the number of employees paid in excess of $140,000 does seem extraordinarily high in this department; I think it is 16 in the $140,00 to $149,000 bracket and 12 in the $150,000 to $159,000 bracket. There are even nine employees paid $180,000 to $189,000, and so it goes on. Is the structure of the department top heavy, and why are there so many extraordinarily highly-paid people in this department?

The Hon. P.F. CONLON: It is one of the biggest departments in government by a long way. If you look at history, it actually incorporates a number of places that were stand-alone agencies. Energy is associated in there with infrastructure and the department of transport. A number of things that were actually done in other agencies have also been shifted in there, including the real estate management group. I would be quite happy to show you a diagram of all those, because it is an extraordinarily large department with a lot of different responsibilities. They, of course, run public transport and infrastructure. The Office of Infrastructure runs the BER programs, assisted by the real estate management group. The energy division, of course, manages energy.

I am also advised that some of those numbers include separation packages, but I do not know the details of those. However, I do not believe that the department is top heavy. In fact, the current amalgamation, if you like, of bringing together TransAdelaide with the former public transport division, will give an opportunity to reduce some of those positions by not having duplicated management, and that is a process we are seeking to undertake.

I do not believe that the department is top heavy. The full range of responsibilities is very wide and I am very happy to show that on paper, because I am quite proud of what the department does. It does a very good job, in my view. I must say that it is now recognised, for example, by the commonwealth as being the standard setter in the delivery of infrastructure projects. You and I both know that a few years ago that may not have been said, but it is certainly said now by Canberra. It is a very large department, and I can assure you that I know that full well by the number of dockets that come through the office. I am very happy to show where those people are, because I do not think this department has anything at all to hide in the quality of the work that it does with the people it has.

Mr HAMILTON-SMITH: I refer to the same budget line and page, same Auditor-General's page number. How many TVSPs are expected to be taken in 2010-11, and at what expected cost, noting that employee expenses increased by $15.1 million, mainly due to TVSPs, in the past year?

The Hon. P.F. CONLON: It is again far too early to say how that will work and when. In fact, the scheme has not been published as yet, so there is no official way to understand it. Anecdotally, we understand that because of a strong job market there is an interest in packages, but it is far too early in the process to give anything concrete for the next year.

Mr HAMILTON-SMITH: Page 1576 of Volume 5 deals with Metroticket revenue. The Auditor-General has commented on a number of issues, including Metroticket revenue and reconciliation processes, which were either not performed or not performed on a timely basis, as was the case for the department's processes for recovering the Metroticket cash shortages from bus contractor payments. Can the minister advise what action is being taken to ensure that these matters are being addressed, as DTEI's response to the findings are not made clear in the Auditor-General's Report?

The Hon. P.F. CONLON: I would highlight that most of the issues identified were timing issues as a result of staffing levels, which have subsequently been addressed. The identified value and risk of the matters were also considered to be relatively low level, but the department has reviewed all the issues identified and has strategies implemented to address them. Appropriate policies and procedures and support operations to mitigate further problems associated with the issues raised have been documented, and I guess the proof will be in the next year's Auditor-General's Report.

Mr HAMILTON-SMITH: On the same subject and page number, is the state government planning to no longer have ticket clerks present at railway stations throughout metropolitan Adelaide?

The Hon. P.F. CONLON: I am certainly not aware of any concrete plans to do something like that. The introduction of the smartcard ticketing system will make some changes for the better to the way we work and the way people purchase tickets, but we do not have any articulated plans for that as yet.

We still have to introduce that system. It is a system we have been very careful about as a result of what we have seen in other states. We have an advantage in this state—I do not know who started it—because we already have a single ticketing system for buses and trains, which was a complexity that others had to deal with and start up. We have bought an off-the-shelf system, which operates in a number of European cities and, I think, some North American cities, so we know it works for a consolidated ticketing system.

It will offer opportunities that we do not have at the moment with the paper ticketing system. With the growth of capacity to do things online, it is obvious that with an electronic system you are going to be able to do a lot of updating or adding credit to your smart card in a way that you cannot do now. It will change how we do business. It will be better for customers, but I do not believe we have any articulated plans at present.

Make no mistake, though, we have been looking at efficiencies as a result of the budget and, if efficiencies are to be made, we will seek to make them. As I have said on the record, we have attempted to work in a very cooperative way with Ashley Waddell and the train and tramways union; that has been a good relationship. Anything we do, we will do through appropriate discussion with them.

To reassure people, we do not have any articulated plans about that—not to my knowledge. If there is something that I do not know about, I am very happy to bring it back to the house but, as I said, no doubt there will be the opportunity for change as a result of moving to smart card technology. I must say that, because of what we have seen in other states, smart card technology does have some functionalities that we can explore down the track to do more. But, having learnt from others, we will be starting it up at the basic ticketing level and moving on from there once that is all bedded in.

Progress reported; committee to sit again.


[Sitting suspended from 13:02 to 14:00]


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