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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 10 November 2011.)

The CHAIR: We will be examining the Auditor-General's Report 2010-11 for the Minister for Police; Minister for Correctional Services; Minister for Emergency Services; Minister for Road Safety; and the Minister for Multicultural Affairs for 30 minutes. I remind members that normal standing orders relate to this session, so members need to be on their feet when they ask questions. I also remind members that it is an examination of the Auditor-General's Report, not this year's budget or other matters, which can be asked in other sessions.

Mrs REDMOND: Thank you, Mr Chairman. I rise in my capacity as shadow minister for multicultural affairs to ask a couple of questions on this very late provided Auditor-General's Report that we have only had for a matter of minutes before being here for the examination.

I refer to the bottom of page 42, activity 17, and that now appears to combine multicultural youth and volunteer services. I also want to refer to page 47, on the sixth line down in grants and subsidies. I notice that the grants and subsidies have increased from $832,000 last year to $1.009 million this year, an increase of $177,000, and I notice that in the description of the activity, under activity 17, there is a reference to the activities 'designed to implement the state government's policy commitments and promote equity of access to services'.

The minister and I were both at the Federation of Ethnic Communities Councils of Australia conference last week, and I spoke about the fact that the government had withdrawn its funding for the special unit that was to be placed in the RAH to provide equity of access, or to assist with providing equity of access to ethnic communities. The money has been withdrawn, in spite of a plan having been put in place ready for implementation, and it was withdrawn at the last minute. My question to the minister is: given that there has been an increase in the grants and subsidies under this area, why was that plan withdrawn, when the government says that equity of access to services is one of its priorities?

The Hon. J.M. RANKINE: I think since we have come to government we have increased multicultural grants by about 700 per cent, so it has been a significant increase. Of course, we would always like to have more money for those grants because we know what a great job those multicultural communities do with relatively small amounts and how far that money stretches. It has been a significant increase.

I do recall the Leader of the Opposition's speech the other day. In fact, I spoke the following day to highlight what we are doing in our health services. I am happy to refer this question for more detail to the Minister for Health and Ageing, but I am advised that these services are being integrated into all our public hospitals here in Adelaide so that there is no wrong door for a person to go in to seek help and assistance. They will actually get that whether it is in the Modbury Hospital, the Royal Adelaide or the Flinders.

I am happy to refer this question in more detail to the Minister for Health and Ageing, but rather than have one hospital being the hospital for people from an ethnic background, we think they should be able to access the services they need from any public hospital.

Mrs REDMOND: Is the minister saying that the provision of the service that was planned through and with the assistance of the Multicultural Services Council and so on, which I alluded to the other day, is going to be implemented in every hospital in this state; and, if so, where does the funding for that show?

The Hon. J.M. RANKINE: I am advised that the committee that the member is talking about was for the Central Northern Health Service, and it is now the Wider Metropolitan Adelaide Health Service that covers those areas. As I said, I am happy to get a detailed briefing for you from the Minister for Health and Ageing. These are not the budget papers: this is the Auditor-General's Report.

Mrs REDMOND: I refer to page 29. There are a few other pages but on page 29 in particular we had the disaggregated disclosures of assets and liabilities, program No. 17 (which is the third-last column from the right). As I indicated, on page 42 we have the building community showing activity 17 now comprises multicultural, youth and volunteer services. If we go to, for instance, the disaggregated disclosures, expenses and income, I believe last year multicultural was shown under activity 2 and was not combined (as it now is) with youth and other services.

Can the minister advise how the figures under activity 17 (that is, the third column) compare with the figures for multicultural? What I want to know is how do they compare with what is allowed for multicultural? How are we meant to make an assessment as to these matters if one year you have it as a separate activity for multicultural and the next year you have combined it with other activities?

The Hon. J.M. RANKINE: Again, I do not glean from the Auditor-General's Report that there is any criticism in the aggregation of these activities. They have been aggregated and, again, these are not the budget papers. Again I point out that, as far as multicultural grants are concerned, they have increased.

Mr GOLDSWORTHY: I think we will start with some police questions, then we will go to emergency services, road safety and then correctional services.

The CHAIR: In that order? Thank you.

Mr GOLDSWORTHY: I refer to Volume 3, page 1025, under the heading of 'Retention of records for seven years' as follows:

The payroll information from HRMS [Human Resources Management Systems] used to calculate income maintenance payments is only kept for two years as SAPOL's policy is to overwrite electronic data every two years.

Minister, do you know how this compares with the maintenance of electronic data in other government departments?

The Hon. J.M. RANKINE: I am told that SAPOL keep their electronic records in accordance with the State Records schedule. They overwrite the electronic information every two years but the hard copies are kept.

Mr GOLDSWORTHY: The last line of that same paragraph reads as follows:

Further the claim files are not compliant with the retention of records requirements of the WRCA and State Records Act 1997.

How exactly are SAPOL's current policies and procedures on retention of records not compliant with those acts?

The Hon. J.M. RANKINE: I am told we do comply as an agency with the act but there were some deficiencies in relation to some of the individuals undertaking that work.

Mr GOLDSWORTHY: Minister, in view of your answer to that question in terms of the deficiencies with some individuals undertaking that work, what measures have you or the department put in place to remedy that so that we do not get a repeat occurrence?

The Hon. J.M. RANKINE: I am advised that the policies have been updated and audit controls have been put in place to ensure that this does not recur.

Mr GOLDSWORTHY: That is usually the standard answer we get to questions like that. Can you tell me how the policies have been amended and what measures have been put in place?

The Hon. J.M. RANKINE: I am happy to provide that information for you. I will take that on notice, but it will be quite some detailed information. We will get that for the member.

Mr GOLDSWORTHY: Minister, I have been in this place for nearly 10 years, and it seems that—

The Hon. M.J. Atkinson interjecting:

The CHAIR: Member for Croydon, you are not helping things.

Mr GOLDSWORTHY: It seems that this is the standard answer, time after time. You have been in government for almost 10 years. You have been through 10 budgets, 10 Auditor-General's Report question and answer times. Surely, you can be better prepared than this. This taking these questions on notice takes you three months, six months, to get back to us on these things. It is just not good enough, minister. You have been doing this for 10 long, tedious years. The government has been playing at this game for 10 long, tedious years. It is about time you got your act together on things like this. I move to the very top of page 1026, which talks about closed workers compensation files, and I quote from the text:

Closed workers compensation claim files could not be provided for a sample of employees as evidence the claims were approved to close in accordance with SAPOL's Injury Management Work Instructions.

The next sentence states:

Audit was informed by management that the files were either sent to archives and could not be easily located or were lost when SAPOL changed to a new archiving company.

What is the number of the files that cannot be located by SAPOL?

The Hon. J.M. RANKINE: I am sorry; we do not have those numbers with us. Again, I am happy to take it on notice. I take umbrage at the member carrying on here, saying that he gets the same answers and has been getting the same answers for 10 years.

Mr Goldsworthy interjecting:

The CHAIR: Member for Kavel!

The Hon. J.M. RANKINE: These issues have not been raised for 10 years. Different issues are raised at different times through different agencies. What we have are people working in these agencies who to the best of their ability apply due diligence. I think it is fair to say that the Auditor-General highlighted that all the legal requirements were undertaken in relation to the operation of SAPOL; but, yes, there are some issues that need to be addressed, and we have assurances from the department that they are being addressed.

Mr GOLDSWORTHY: In that same paragraph, the next sentence states:

Sample testing of closed workers compensation claims also found SAPOL was not following its policy to complete the 'claim closure checklist' for all claims as evidence that claims were approved to close prior to closing of the workers compensation claim.

I hope that you can answer this question, minister. What items are on that claim closure checklist?

The CHAIR: Member for Kavel, if you wish for an answer to the question, can I suggest that you leave the commentary out.

The Hon. J.M. RANKINE: I am told that there is a very detailed checklist on these files and that the auditor found that not in every case were these checklists completed. We have, again, put new processes in place to ensure that that occurs in the future.

Mr GOLDSWORTHY: So, you cannot answer the question in terms of what items are on the checklist, is that right, minister?

The Hon. J.M. RANKINE: That is exactly right. I am sorry; I do not have a copy of the checklist here with me. If you had given me prior warning, I would have happily brought a copy of the checklist along. Again, I can take that on notice, and we are happy to give you a list of those items on the checklist.

Mr GOLDSWORTHY: I refer to the same page (page 1026) and the heading 'Other issues'. Four issues, if you like, are highlighted under 'Other issues'. It is to do with income maintenance calculation. In the report it states that in response 'SAPOL advise appropriate action would be taken to address these matters.' Please, minister, can you advise the house what action is being taken to address them?

The Hon. J.M. RANKINE: We have, as I am advised, implemented an automated income calculator, which we are hoping will reduce the human error in relation to these calculations and improve the policies and processes around the calculation process.

Mr GOLDSWORTHY: I have one last question on police issues, and then we will move to Emergency Services. I refer to page 1,047, where it states in the table, 'employee benefits expenses', at the bottom of the page under the TVSPs, where an amount of $250,000 was paid in the reporting period, which, I understand, concerned four packages. Can the minister tell us what were the individual amounts of each one of those TVSPs and the position of the SAPOL employee that that relates to?

The Hon. J.M. RANKINE: No, I am sorry, I cannot give you the individual payments, but I can confirm that four TVSPs were paid out. The four employees were either employed under the Public Service Act or they were weekly paid employees. So, none of the four were police officers.

Mr GOLDSWORTHY: We will move to Emergency Services now. I have to speak in support of what the Leader of the Opposition said a few minutes ago in relation to the supplementary report of the Auditor-General's Report just being trotted in about an hour or so ago in relation to matters concerning the South Australian Fire and Emergency Services Commission, the CFS, the SES and other Emergency Services agencies. I am not sure whether the timing was accidental or what may have resulted in the supplementary report just being lobbed today, on the very day that we are asking questions of the minister in relation to those specific agencies.

I had prepared a number of questions in relation to the Auditor-General's Report, ending 30 June, obviously not the supplementary report; but we will go to the supplementary report. I refer to page 156 in relation to the Port Lincoln project, the collocated site at Port Lincoln. Pages 156 and 157 give us a fair bit of commentary in relation to that specific issue. Halfway down the page it says that the total final cost for the project was estimated at between $4.9 million and $5 million. I understand that was considerably more than the original budget for the project, so can you advise what the original issue budget for the project was?

The Hon. J.M. RANKINE: Can I start by saying I am really surprised that the member for Kavel would suggest or infer that somehow or other the Auditor-General was planning, to use your words, 'to drop this in the chamber' to reduce any level of scrutiny by this house. You have been here long enough to know that the Auditor-General is the only person—

The Hon. I.F. Evans: He didn't say that.

The Hon. J.M. RANKINE: Yes, he did.

The Hon. I.F. Evans: No, he didn't.

The Hon. J.M. RANKINE: Yes, he did.

Mr Goldsworthy: I said that it was interesting timing.

The Hon. J.M. RANKINE: Inferring that somehow or other the Auditor-General is colluding to bring in the report so that it is not subject to any scrutiny is just ridiculous, and I would imagine he would take great affront to that. I am told that the budget for the Port Lincoln facility at the time of the report was estimated, as it says, between $4.9 million and $5 million, but at that time they were still dealing with some outstanding contractual work, so the current budget, I understand, is $5.4 million.

Mr GOLDSWORTHY: Same page, under the paragraph 'Follow up on the Port Lincoln project and management actions as part of the 2010-11 assets audit review', second last dot point, 'The Crown Solicitor advised SAFECOM in August 2011 that the anti-corruption branch of the police has concluded its investigation and referred the matter to the DPP, the director for public prosecutions.' Has anybody been charged as yet?

The Hon. J.M. RANKINE: We have had no information from the police in relation to that as yet.

Mr GOLDSWORTHY: No information at all in relation to what the DPP is or is not doing with the issue?

The Hon. J.M. RANKINE: I understand it is with the DPP and we have no further information other than that.

Mr GOLDSWORTHY: I move on to page 157. About two-thirds of the way down the page it talks about review of the three delayed capital works projects completed by another pre-qualified contractor that revealed they were completed on the following dates: Balaklava, Hamley Bridge and Wilmington. There would obviously have been some original budgets set for those capital works projects. Given the fact that you had to change contractors part way through the completion of those projects and the new contractor had to take over, what was the eventual cost? What was the final cost of those projects compared to the original budgets set for those projects?

The Hon. J.M. RANKINE: I am advised that for Hamley Bridge we were invoiced and paid $149,317; for Balaklava, $303,390; and for Wilmington, $483,722. As for the original budget, again, I do not have that information here, because that is not part of the Auditor-General's Report as I understand it. I am sorry; you can laugh all you like, but I did not bring—

Mr GOLDSWORTHY: In the two minutes we have left we can move to Correctional Services and at least we might get one question in on this. I refer to page 150, under the heading at the bottom of the page—

Members interjecting:

The CHAIR: Will the member for Norwood and the member for Croydon have their little discussion outside the chamber.

Mr GOLDSWORTHY: Under the heading 'Shared Services' it states, quoting from an audit:

Audit identified a number of instances where either policies and procedures had not been established or where established they had not been reviewed for a number of years...

What specifically were these policies and procedures, and has that situation now been corrected?

The Hon. J.M. RANKINE: I am told the most significant issues that he raised were the absence of documented policies and procedures in relation to business processes that Shared Services undertakes on behalf of the department. Audit identified a number of instances where either policies and procedures had not been established or, where established, they had not been reviewed for a number of years; a number of key reconciliations having longstanding reconciling items which were not being followed up and cleared in a timely manner; the absence of an independent review over payroll master file changes; and the general ledger journals not being authorised in accordance with departmental policy. I am advised that, in response, Shared Services SA advised that action was being taken to address the matters raised by the audit.

Mr GOLDSWORTHY: I will go page 171, where the heading is 'Resources provided free of charge'. Under point 1 there it talks about the former Noarlunga Community Corrections Centre. I understand that was transferred to the Department of Transport, Energy and Infrastructure (DTEI). Can you advise us what the reason was for that transfer for no consideration?

The Hon. J.M. RANKINE: I am advised that we built a new facility not very far away from this particular property and, while we consider what will be done with that property, it has been moved over into DTEI.

The CHAIR: That ends the examination of the report of the Auditor-General for the Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety and Minister for Multicultural Affairs. Now I move to the examination of the Auditor-General's Report for 2010-11 for the Minister for Finance and the Minister for the Public Sector for 30 minutes. I remind members that ordinary standing orders apply and members must be upstanding to ask questions. I also remind members that this is an examination of the Auditor-General's Report and not other matters.

The Hon. I.F. EVANS: Minister, referring to part C, page 75 raises the superannuation liability and the superannuation industry expense paid by the government. Why is the government looking at bringing the Electricity Industry Superannuation Scheme back under government control; what is the likely increase in our superannuation liability; and what is the increase in the interest cost?

The Hon. M.F. O'BRIEN: Member for Davenport, we will have to take that one on notice.

The Hon. I.F. EVANS: Through the Chair, I will just check: you are the minister in charge of the superannuation issue with the division of responsibilities between yourself and the Treasurer? You are looking after superannuation?

The Hon. M.F. O'BRIEN: Yes.

The Hon. I.F. EVANS: I will start from that point, then. Is the government looking at bringing the Electricity Industry Superannuation Scheme back under government control? Let us answer that question first.

The Hon. M.F. O'BRIEN: We will get an answer on that, if we can come back to that.

The Hon. I.F. EVANS: Minister, the Auditor-General's Report outlines the Public Service savings targets in part C of the report. It raises the issues of the agencies making savings through having vacancy rates. It particularly raises the department of families and communities which has about 150 vacancies on page 19 of part C. It states:

...Families and Communities was 157 FTEs below its cap, primarily due to vacancies held to achieve overall budget management strategies.

I think it is a fair assessment to say that they are deliberately holding vacancies to create a saving, so what is the mechanism there? Cabinet has set savings targets by offering TVSPs. When they have 157 positions vacant, does cabinet make a decision that they cannot then fill those 157 positions or how is the savings protected?

The Hon. M.F. O'BRIEN: This is a decision that is made at the departmental level by the CE to run within the set budget parameters for that department and it does not come to cabinet for consideration. It is purely an operational matter.

The Hon. I.F. EVANS: My point is that if the department is reporting to you as the finance minister saying, 'We have made this saving, as required,' and they have made the saving by deliberately holding vacancies, in this case of 157 people below its cap, what is to stop the agency then employing those people and not making the saving, because the cap has not changed? What I am asking you is: what is the cabinet process to protect those savings? Cabinet may have decided they are going to make the savings in other areas, but the agency has decided, 'Well, we can make the savings not by cutting procurement or the other issues you want to do; we will just hold the vacancy rate.' What I am asking is: how does cabinet protect its savings?

The Hon. M.F. O'BRIEN: Your previous question asked me what the scope of my responsibilities are vis-a-vis superannuation. On this one, you have erred. This is actually a measure for the Treasurer, but the answer is that the department in question, Families and Communities, had cost pressures and determined that the best way of dealing with those cost pressures was to run at 157 FTEs below cap. However, on this type of issue the Treasurer is actually responsible.

The Hon. I.F. EVANS: Is that because it is a savings measure, not because it is the public sector?

The Hon. M.F. O'BRIEN: It is because it is a savings measure. Exactly.

The Hon. I.F. EVANS: I will come to the public sector, because the Treasurer is responsible for monitoring the savings in relation to the public sector. My understanding is that you are in charge of the public sector. The government has stopped reporting the number of public servants in its budget papers. On page 18 of Part C, the Auditor-General reports on the full-time equivalent reduction management strategy. The opposition FOI'd the number of public servants who would normally be reported in the budget papers but this year were not. We got an answer back that indicates that, instead of a reduction in the Public Service as promised, there are actually 519 extra public servants.

I am wondering what control mechanism the minister has put in place, because I think the taxpayer would be saying, 'Well, why are we paying all these separation packages to reduce the Public Service?', when the figures returned from the freedom of information request show that, for the public non-financial corporations, the 2011 estimate was 4,765. For June 2012, the estimate was 4,590. For the public financial corporations, for June 2011 it was 538 and for June 2012 it was 548. If you then add them on to the budget figures, what you actually get is an extra 519 public servants. What control mechanism is there and why has the Public Service increased by another 519 FTEs?

The Hon. M.F. O'BRIEN: It is a fairly lengthy explanation in terms of issues with Health having to take on particular skill sets in areas like nursing and, as you are aware, running outside their set budget parameters and, conversely, having skills that are no longer required within the public service and offering TVSPs, and that process takes a little time. In answer to your question, I am addressing this particular issue. It is of concern to me that we ought to be getting on top of public service numbers a little more strategically than is currently the case.

Within the last three or four months there has been a unit created within Premier and Cabinet that came out of the Public Service Performance Commission, and one of its functions is to establish a sustainable public service. By that, it is intended that we will monitor numbers and, in part, we will do that when we have in place an e-recruitment system that can monitor the recruitment activities right across the public service. That is currently being worked up as a proposition in conjunction with the e-recruitment process which will allow Premier and Cabinet to keep track of what is going on in terms of recruiting activity.

Through that, we will also be able to monitor knowledge of the skills required by various areas within the public service and place people who are surplus to requirement with emerging vacancies as shown up by e-recruitment. I believe that, in large part, that will deal with the issue that the member for Davenport has highlighted and that we will, within a very short period of time, get on top of this particular issue. In due course, I will report back to the house on progress with e-recruitment and the function of the section within Premier and Cabinet that is looking at a sustainable public service.

The Hon. I.F. EVANS: Minister, you can understand why the public would be a bit bewildered by your answer, given that the government has been in control now for over nine years and the public service has increased from about 66,000 to about 85,500. So, it has gone up roughly 18,500 from a base of 66,000—about a 30 per cent increase—and you are saying that you are now starting to put in place a process to measure the size of the public service. The question I ask is: given that every agency supposedly has a cap, who has been monitoring the cap? Surely you have already had a process in place for some years about monitoring the size of the public service, so what is going to be different under an e-recruitment mechanism that you have not already put in place after nine years?

The Hon. M.F. O'BRIEN: As to who monitors, it is Treasury, because it is part of the budget setting and budget monitoring process. But, in answer to your question why is it so, at some time in the not so distant past, in relation to the command and control model that the South Australian Public Service was operating on—which I have to say probably had more similarities with the way in which the Soviet Union ran its bureaucracy—it was determined that we would get away from that highly centralised bureaucratic model and work on a more decentralised way of operation. That was not unusual to South Australia. I think right throughout the western world, and certainly in the east, bureaucracies were decentralised and responsibility was thrown back to the chief executive officers.

If you want an example, today we are looking at considering calls for greater autonomy within schools: for the school councils and the principals to make hiring and firing decisions, and a whole range of other decisions that have normally been made centrally through DECS in South Australia. This process that is underway within education departments right around Australia, and is largely being driven by the commonwealth government, is not unusual. The process that I have described probably commenced 15 to 20 years ago, so we have ended up with a highly decentralised way of doing things.

Probably four to five years ago we made a decision that this was not really the most effective way to be doing things—it was too decentralised—and one of the things we did was establish Shared Services. It has been a difficult process—bringing in a whole range of functions and, ultimately, centralising them—but the briefings that I have had indicate that it will deliver the saving benefits.

The fact is we can now pretty well immediately determine what the spending activities are within each of the departments. Several years ago that would have taken an inordinate amount of time and we would never have been fully assured that the answers that we were getting, save for the payment on invoices throughout the Public Service, were true and accurate. In part, the issue that we have with Public Service numbers is due to that process of decentralisation.

What I have described with the e-recruitment process is bringing that function ultimately into a centralised process the way we have with payroll, accounts payable and accounts receivable. Once we have achieved that we will know exactly what is going on. In answer to your question why is it so, it is because a decision was made some time in the past (it might have been a Labor government administration, it might have been a Liberal government administration) but that decision was made and we are now dealing with the consequences and attempting to rectify them.

The Hon. I.F. EVANS: In relation to Shared Services, pages 13 and 14 of the Auditor-General's Report raise the issue of the Shared Services contingency fund in case Shared Services does not make its savings. What is the level of the Shared Services contingency fund? What is the budget of the contingency fund? How much has been drawn down?

The Hon. M.F. O'BRIEN: We normally do not disclose contingency figures.

The Hon. I.F. EVANS: If that is the case, could the minister explain why the Auditor-General's Report reveals that the capital contingencies are $130.1 million? This is an internal contingency, it is not a contingency for—that is the general capital contingency, not the Shared Services capital contingency, head of Treasury. This is an internal contingency, it is not an EBA contingency. I can understand why you would not disclose that, although the Auditor-General does give a figure of a bit over $500 million for the total contingencies.

Given that it is an issue about savings and the only place that contingencies are going to go is from the contingency fund to Shared Services to cover the savings, I think it is a legitimate question to ask what is the level of the Shared Services contingency line?

The Hon. M.F. O'BRIEN: You have now clarified the question. The contingency is $5 million. There is a $5 million saving that will result from Health getting up and running its Oracle system, and that is taking a little time to get in place. Up until Oracle is up and running and interfacing with Shared Services, that $5 million will not be realised, but when that occurs the $5 million per annum will be able to be realised. Up until that point in time, it is a contingency.

The Hon. I.F. EVANS: So, on page 13 of part A—

The Hon. M.F. O'BRIEN: The Oracle figure is only $2 million.

The Hon. I.F. EVANS: On page 13 of part A, it states:

Audit is advised that the Budget continues to include a contingency to allow for the possibility that savings from shared services are not achieved.

Is your advice to the house that it is $2 million or $5 million or a different figure?

The Hon. M.F. O'BRIEN: This is going to be greeted with much unhappiness, but the 'five' is a figure. Health accounts for two and then there is another three, but it will not impact on the budget bottom line because it is a contingency. We will actually come back to you with a little more detail on that.

The Hon. I.F. EVANS: Page 14 talks about SA Health and e-Procurement and its interface with Oracle. Page 14 mentions that the achievement of a significant part of the savings each year was dependent on SA Health having e-Procurement. There has been a decision to exclude it out of e-Procurement—or to delay it, at least. What is the level of saving that was expected out of health going to e-Procurement?

The Hon. M.F. O'BRIEN: I think that two or three questions back I talked about SA Health and the Oracle system. That was actually e-Procurement. That is the $2 million that I have mentioned. Yes, for the reason that I gave, it is a contingency. A decision has not been made by SA Health as to whether it will ultimately interface with Shared Services, but it is our strong desire that that interface will occur and that the savings will be realised.

The Hon. I.F. EVANS: What is the annual turnover rate of staff in Shared Services?

The Hon. M.F. O'BRIEN: It is 16 per cent.

The Hon. I.F. EVANS: Given that you are the minister in charge of the Public Service but not savings, how does that compare to other sectors of the Public Service? Is 16 per cent high or about the average?

The Hon. M.F. O'BRIEN: I have been advised that 16 per cent is broadly in line with the attrition rate or the turnover rate throughout the Public Service.

The Hon. I.F. EVANS: Part A page 14 of the report talks about this whole Oracle/Department of Health issue. Treasurer Snelling told the house that there was $60 million worth of unreconciled accounts. Can you confirm that the original figure was around $200 million when the issue was first identified?

The Hon. M.F. O'BRIEN: Member for Davenport, what page are we dealing with?

The Hon. I.F. EVANS: Part A page 14, which deals with Oracle and the health department generally—the Auditor-General's supplementary report which was tabled today and which says that the health accounts are so bad they still cannot even produce a supplementary report to the supplementary report.

The Hon. M.F. O'BRIEN: I do not have a briefing on that. It is a question better handled by the Minister for Health.

The Hon. I.F. EVANS: So, Shared Services has no role in reconciling the up to $200 million worth of unexplained accounts?

The Hon. M.F. O'BRIEN: That is in part the nub of the issue. At this particular point in time, until Oracle is up and running and interfacing with Shared Services, Shared Services provides no financial services to health.

The Hon. I.F. EVANS: Treasurer Snelling's statement to the house—explaining your responsibilities—said that you were responsible for some parts of SAFA, I think he said from memory. Can you explain for me the division between you and the Treasurer in relation to that area, just as a matter of process?

The Hon. M.F. O'BRIEN: It is the insurance function and the Fleet SA function. I was getting the briefing as to whether I actually went into a little more detail.

The Hon. I.F. EVANS: The Auditor-General's Report raises the issue that the government was going to negotiate with the Public Service about a new reward to replace the loss of the long service leave, or the annual leave. Can you update the committee in relation to the negotiations?

The Hon. M.F. O'BRIEN: This is a matter that is being handled by the Treasurer.

The Hon. I.F. EVANS: With all due respects, Mr Chairman, it is actually raised in the Auditor-General's Report and I am allowed to ask a question on it.

The CHAIR: It is but your question was about ongoing negotiations which relate to this financial year, which is not the Auditor-General year.

The Hon. I.F. EVANS: But if the Auditor-General raises it in his report, I am legitimately allowed to ask a question on it.

The CHAIR: You can ask a question about the amounts in that report.

The Hon. I.F. EVANS: Are you seriously suggesting to the committee, Mr Chairman, that the Auditor-General has erred by raising something that is not to do with the accounts? He has raised it in his report. This is my 30 minutes of fame to ask—

The CHAIR: And you are wasting it, aren't you?

The Hon. I.F. EVANS: —the minister responsible anything I want that is raised in the Auditor-General's Report. It is raised in the Auditor-General's Report, I ask the simple question because it will be a cost.

The CHAIR: Next question.

The Hon. I.F. EVANS: The Auditor-General's Report raises two different figures on the issue of e-Procurement reform on pages 12 and 13. On page 13 he raises the figure of $23 million over six years and on page 12 he raises a figure of $30.4 million. Why the difference?

The Hon. M.F. O'BRIEN: Member for Davenport, I said I would get back to you on the issue that you raised about the electricity supply industry and whether they were going to be moving over to Super SA. I have been advised that discussions are currently underway and that if an arrangement is put in place it would be such that there is no additional burden to government and that the risk would stay with the electricity industry. Could you repeat that question?

The Hon. I.F. EVANS: You can take that question on notice, because I will have another question. I am running out of time. The Auditor-General on page 23 raises the issue about not having the material ready for tenders to go out in time and, therefore, not having competitive tendering. What is your role, minister, in relation to the negotiations for the procurement of the cleaning services being extended to Spotless without going to tender? Is that your responsibility, given that it is a procurement process of some tens of millions of dollars?

The Hon. M.F. O'BRIEN: That falls within my purview. I have noted comments of the Auditor-General about agencies not having their tenders prepared in time to be put out to the market before the expiry of existing contracts and allowing the existing contracts to run on while the work is done within the agency. On the issue of Spotless, I will come back to the member for Davenport with a detailed answer.

The Hon. I.F. EVANS: Have there been any complaints registered with the government about Spotless' performance, and what consideration was given to those complaints before proceeding to negotiate with Spotless for expanding the contract without going to tender?

The Hon. M.F. O'BRIEN: The role of the procurement board and my role at this particular point in time, and it may well change, is the setting of the broad policy parameters and then ensuring, through a process of monitoring, that the policy settings of the procurement board are followed. The CEs are ultimately responsible under the procurement act following the guidelines set down in the procurement act and also set down from time to time by the procurement board.

So, issues in relation to the performance of Spotless would be better directed to the minister whose department is being serviced by Spotless. My interest would be basically in whether the policy directions set down by the procurement board are adhered to, and that is really also the role of the Auditor-General. So, it is the broad policy settings that sit with me.

The CHAIR: That concludes the examination of the Auditor-General's Report 2010-11 for the Minister for Finance and Minister for the Public Sector. We will now examine the Auditor-General's Report for the Minister for Education and Child Development for 30 minutes. I just remind members that ordinary standing orders apply to this session, so members need to be on their feet when they ask or answer a question. I also draw members' attention to the fact that it is an examination of the Auditor-General's Report 2010-11. All questions must be referenced to the report. It is not a time to speculate about future policy but to examine those reports. Minister, are you ready to go?

The Hon. G. PORTOLESI: Yes, I am. Can I introduce, for the benefit of members, Julieann Riedstra, who is the chief financial officer for the Department for Education and Child Development.

Mr PISONI: I refer the minister to page 259 of the Auditor-General's Report, the recharge for teaching practicum program.

The CHAIR: Which volume are you referring to, member?

Mr PISONI: The volume that relates to the Department for Education and Children's Services.

The CHAIR: In other words, you don't know. That's all right, I have found it—Volume 1.

Mr PISONI: I have a printed version here and we are dealing with this portfolio, are we not?

The CHAIR: Yes, we are. Go ahead. Don't waste your 30 minutes.

Mr PISONI: The department pays teachers an allowance for supervising university students. This allowance arises out of the DECS award and an increase was granted to the Industrial Relations Commission in March 2006. The Auditor-General has been critical of the department's inability to claim an unpaid amount of $3.1 million as of 20 June 2010. The Auditor also noted that the department was negotiating with the universities to establish a formal arrangement.

In other words, there aren't any formal arrangements at the moment—or there certainly weren't as of 20 June—to settle outstanding amounts, despite the fact that a draft agreement was prepared in 2008 covering those periods from 1 January 2009 to 2010. Are you able, minister, to explain whether since this report, or since that date, that $3.1 million has been claimed from the universities?

The Hon. G. PORTOLESI: A core element of all undergraduate and graduate teacher education programs is the professional experience placement. Satisfactory performance during the placement is an essential component of the teaching qualification and teacher registration. As prescribed in the award, the department pays teachers an allowance for supervising university students undertaking the teaching practicum program. It is the department's policy to recover the cost of the supervision from the universities where the undergraduate teachers are placed.

Originally no formal agreement was in place documenting the terms and conditions of this arrangement. The allowance arises out of the teachers' DECS award. An increase in the allowance was granted by the Industrial Relations Commission of South Australia in March 2006. The tertiary providers have disputed the increase to the allowance paid to the supervising teachers on the basis that the tertiary providers are not parties bound by the teachers' award.

The department has developed a formal binding commercial agreement, deed for fee and on-costs for the supervision of professional experience placements, that establishes the obligations of all parties in regard to the fee paid by tertiary providers to the department for teachers to supervise professional experience placements for pre-service teachers. The deed covers the period 1 April 2011 to 31 December 2013 and has provision to be extended for a further three years.

The deed was received by all offices of the vice-chancellors of the universities on 9 June 2011 for signing. The University of South Australia has signed the agreement, but formal agreement from Adelaide University, Flinders University of South Australia and Tabor College still has not been reached. The department has continued to work with the relevant universities to resolve the outstanding amounts. The department is continuing the negotiations to resolve the outstanding amounts.

Mr PISONI: What are the outstanding amounts as of today?

The Hon. G. PORTOLESI: I would be very happy to take that on notice.

Mr PISONI: Can the minister then explain to the house why it is when an inquiry was made by The Advertiser to your department that they were told that these amounts had been paid? Why aren't you able to tell the parliament the same thing that the journalist at The Advertiser was told when they made these inquiries?

The CHAIR: I just draw to your attention that a copy of The Advertiser is not before me so I am not sure if that is a valid question or not. Do you have a copy of—

Mr PISONI: It is not about The Advertiser.

The CHAIR: No; you made the comment that you are basing—

Mr PISONI: It is not about a story in The Advertiser.

The CHAIR: You just said that.

Mr PISONI: No; an inquiry made by The Advertiser about this issue.

The CHAIR: By whom?

Mr PISONI: By a reporter at The Advertiser. An inquiry was made by a reporter at The Advertiser to the minister's office and the department. They were told by the minister's office or the department that the outstanding amount had been paid and therefore was no longer an issue. I am asking for that to be answered in the parliament.

The CHAIR: No; I understand your question very clearly. I am saying that the audit report in question is here. The assertion you are making, I have nothing before me to support that assertion. How can I ask the minister to respond to an assertion which I cannot verify?

Mr PISONI: Did your department tell an Advertiser journalist that the issue had been settled and that there was no outstanding amount?

The Hon. G. PORTOLESI: I would like some clarity as to which Advertiser article the member for Unley is referring to that is the basis of his question. It does not ring a bell with me, this Advertiser inquiry, in relation to this but I could be wrong. I am advised that a total of $3.1 million has been paid. I ask the member for Unley to table the article to which he refers. Will you table the article?

Mr PISONI: No, I asked the question.

The CHAIR: Will the minister please take a seat. The comment I made is that the member for Unley based a question on an assertion. I cannot verify that so the question is not in order. I just remind the member for Norwood that he is not here, unless he wants to ask a question and comes to the front to ask questions.

Mr PISONI: My next question refers to revenues from SA government on page 271 of the same volume. If we refer to that page we will see that those revenues there from the SA government increased by $136 million to fund increases in salaries and wages. We had a very boastful education minister at the last budget telling us there was an extra $204 million spent on the education budget, but what the Auditor-General tells us is that $136 million of that money was simply there to fund increases in salaries and wages. The perception given by the former education minister (now the Premier) was that there was actually additional funding for education which led to a bigger commitment for education from this government.

The CHAIR: Your question?

Mr PISONI: The question I have is that there is an additional $204 million added to the budget this year and that leaves $68 million that is not accounted for through wages and salaries. Are you able to explain where that extra $68 million went?

The Hon. G. PORTOLESI: I think the member is confused. This is a revenue item.

Mr PISONI: Yes, revenues from SA government. From the government to the department.

The Hon. G. PORTOLESI: And your question is?

Mr PISONI: What is the other $68 million?

The Hon. G. PORTOLESI: It is the difference in budget to revenue. So what is the question that you want answered?

Mr PISONI: The question is that there is an extra $204 million in the budget. Here we are seeing that $136 million was given from the government to the department, leaving an extra $68 million unaccounted for. I am asking what it was for.

The Hon. G. PORTOLESI: What you are doing is comparing a budget figure with a revenue figure. If you would like us to break it down and provide more detailed information as to the budget figure, I am very happy to do that.

Mr PISONI: You will take that on notice. On that same figure, did that $136 million in revenues from the government fully fund the increases that were awarded in the EBA, not just in salaries but also in additional non-instruction time for teachers and staff within the department, or were there savings that had to be made elsewhere in order to fund that?

The Hon. G. PORTOLESI: We will take that on notice.

Mr PISONI: I refer to page 272, where we have a list of the number of employees by act, if you like. I am certainly happy for you to take it on notice; I do not expect you to have this answer. Can I have the number of full-time employees and the salary value of those employed under the Education Act that are delivering department services that are not in schools? In other words, I am referring to those who may be at Flinders Street or in regional offices.

The Hon. G. PORTOLESI: I am very happy to provide that breakdown.

Mr PISONI: Can I also have the same thing for the School Services Officers Award, the Children's Services Act, the PSA and the weekly paid?

The Hon. G. PORTOLESI: We will do our best to break it down by location.

The CHAIR: I think the question was school site versus non-school, rather than location by location.

The Hon. G. PORTOLESI: That's right; whether people are placed in school sites or children's centre sites as opposed to, say, Flinders Street.

Mr PISONI: Just to make it clear, I am trying to determine how many staff are in non-teaching positions. I want to take you to page 273 where the Auditor-General has printed a table that describes a shift of enrolment of full-time students from government schools to non-government schools, and it tells us that the chart also includes full fee paying overseas students. We can see that back in 2006, in our government schools, we had 163,278 students. In 2011 we had 161,260 students.

That is a decrease of 2,018 students in that five-year period and, in non-government schools in that same period, we actually saw the number starting at 85,306 now up to 92,430, which is an increase of 7,124 students in the non-government sector. Are you able to explain, minister, why we are seeing this drift to the non-government sector from the government sector and whether your department has taken any interest in comparing those figures to what is happening in other states?

The Hon. G. PORTOLESI: Of course, this is a matter that we take seriously. I will just ask my officer to show me that table again. I have to say, here in South Australia, we have a very good collaborative relationship with the Catholics and with the non-government school sector. The total school enrolments for South Australia were 253,690, which represents an increase, when compared to 2010, of 775. The SA government share of total enrolments has declined over time, with a marginal drop of 0.2 per cent being experienced in 2011.

The percentage of students in government schools compared to the percentage of students in non-government schools has been steadily declining since 2006 as an increasing proportion of students are enrolling in non-government schools. We are working hard to address this matter. There are a number of schools that we know about—Mark Oliphant, for instance, that is at capacity. So, we are seeing a trend back to the public sector, but I have to say that in everything that we do, whether it is government or non-government, it has to be about quality, and that is our priority.

Mr PISONI: What evidence do you have to make the claim that you are seeing a trend back to the government sector from the non-government sector?

The CHAIR: The minister actually gave an example of Mark Oliphant College.

The Hon. G. PORTOLESI: That's right; that's what I said. I said 'Mark Oliphant'. We have a school there where people are bursting at the seams to get in.

Mr PISONI: There are 2,018 fewer students in the government system now than what there was five years ago, and you are saying that there is a trend back to the government system. I am asking for that evidence. I am happy for you to bring it back. Perhaps you can give us the combined enrolments of the schools that were closed to open the Mark Oliphant school so we can get a comparison as to whether there are the same number of students, fewer students or more students in that region that are using those schools.

The Hon. G. PORTOLESI: I am happy to bring you the data back. I also said that we have had a marginal drop of 0.2 per cent being experienced in 2011.

Mr PISONI: That is not a drift back, it is a continual drop. It is another drop. You did mention the non-government sector. I will take you to the same page, where we have seen grants to non-government schools of $926 million for the last financial year, as opposed to $1.045 million the previous financial year. 'Grants to non-government schools, $926 million ($1.045 million)'. I assume that is last year's figure. Are you able to clarify that and perhaps also explain why the grant is less, if that is the case.

The Hon. G. PORTOLESI: I am advised that the explanation is that that represents a reduction in commonwealth funding. The grants to non-government schools from us here in South Australia was $142 million last year and $155 million this year, but I will provide you with other information if I have it.

Mr PISONI: Was any of that increase from $142 million to $155 million part of the election commitment that was made by Labor in the lead-up to the election for additional funding for the non-government sector? Has that negotiation started? Is that part of it, or is this simply an adjustment to deal with the formula that is already in place?

The Hon. G. PORTOLESI: I am aware of what the member refers to and we will have to check the budget papers. We do not have that information handy, but I do have some information that the member might be interested in in relation to transfer payments to non South Australian government entities.

The $114 million decrease is explained by $119.1 million decrease in transfers to non-government schools, $167.7 million decrease in transfers for Nation Building Economic Stimulus Plan, $30 million decrease in transfers for low socioeconomic status school community, $2.1 million decrease in transfers for literacy and numeracy national pride, $0.5 million decreased in other various transfers to non-government schools, and $81.2 million increase in transfers for non-government schools per capita. There was a $4.7 million increase in transfers to SACE Board and a $0.5 million decrease in other various transfers to non-government schools.

Mr PISONI: I take you to page 296, regarding the PPP for the new super schools. I refer to the estimate outlay of the remaining life of the agreement. In nominal terms, it is $868 million to Pinnacle Education. You spoke about the oversubscription to the Mark Oliphant school, and I know that there has been talk about bringing in transportable buildings to deal with that. Are you able to explain whether those transportable buildings will be the responsibility of Pinnacle Education and the education department and, if it is the education department, who will be maintaining those buildings? Will it be Pinnacle Education, the department, or will separate contracts be let? If it is Pinnacle Education, what effect will that have on any variation in the contract with Pinnacle Education?

The Hon. G. PORTOLESI: We are still negotiating that matter.

Mr PISONI: Negotiating with whom, sorry?

The Hon. G. PORTOLESI: We are still working out how to deal with the oversubscription. That is what we are working out, and we are talking to a number of parties.

Mr PISONI: Are there variation payments in the contract for Pinnacle Education that would make it unattractive for the department to use Pinnacle Education in order to provide the additional accommodation?

The Hon. G. PORTOLESI: It is simply speculation, Mr Chair. I undertook to provide information. You are making assumptions. You are making assumptions.

Mr PISONI: It is a question about the various clauses in the contract.

The CHAIR: Given that that matter will be reported on in this coming financial year, I think you are going to have to wait for the Auditor-General's Report next year to see what has happened.

Mr PISONI: I do not need your advice, Mr Chair, thank you very much.

The CHAIR: Member for Unley, can you please resume your seat? I do not appreciate your smart alec response, either. You have the next question.

Mr PISONI: I am waiting for an answer on this question. Either the minister can say she will bring it back or she can answer the question.

The CHAIR: No, I have made my ruling; next question, or we can suspend the time now if you like. It is up to you.

Mr PISONI: The next question I would like to take the minister to relates to page 302 where, in your receivables, there are negative figures for allowance for doubtful debts. Last year we had a figure of $14.95 million. This year we have a figure of $13.473 million. Are you able to advise the house what is the nature of those doubtful debts and what is the provision for write-off?

The Hon. G. PORTOLESI: I am happy to provide more detailed information but, for now, I can report that the allowance for doubtful debts is recognised when there is objective evidence—that is, calculated on past experience and current unexpected changes in client rating—that a receivable is impaired and an allowance for impairment loss has been recognised in other expenses in the statement of comprehensive income for specific debtors, and debtors assessed on a collective basis for which such evidence exists. I am happy to provide you more detailed information.

Mr PISONI: I take you to page 307, borrowings. We have got obligations under finance leases of $926,000 there. Are you able to explain what they are, considering that in the previous year we had no figures in that block?

The Hon. G. PORTOLESI: The finance leases relate to the public-private partnership agreement and are interest-bearing.

Mr PISONI: I take you to contract labour, contract services and charges—so that appears right through the—

The Hon. G. PORTOLESI: Which page, please, Mr Chair?

The CHAIR: 270.

Mr PISONI: —referring to services and purchasing. You made the claim on radio just recently, minister, that the cleaning contracts were interim, where cleaners were appearing in schools between 7.30am and 6pm. I have a copy of the Underdale High School cleaning tender which is identical, in times of performance and services, to the dozens of cleaning tenders that have gone out this year, many of which have been converted into contracts where the time and presence of services actually provide that the contractor must complete that part of the service, being ongoing cleaning services, between 7.30am and 6pm Monday to Friday, excluding public holidays, during the school year, unless by prior arrangement with the minister or site manager. Are you able to advise whether any schools are being cleaned on the new contracts outside the 7.30am to 6pm times?

The Hon. G. PORTOLESI: I do not think that I did refer to the term 'interim', but I am happy to stand corrected. I referred to trial arrangements that were being put in place, and schools do have the flexibility (and the member wants us to empower local schools) to negotiate this, but if I can get an answer in relation to the detail you request, then I will.

Mr PISONI: Is this the new contract that has been set up to deal with the changes to the Fair Work Act? These are not being handled by schools: the department is making these decisions and signing these contracts. These contracts are not being managed by schools: they are being managed centrally. Is it the standard contract that cleaners are expected to clean between 7.30am and 6pm, Monday to Friday, excluding public holidays and school holidays?

The CHAIR: In the report is this referenced? I can't find it, sorry.

Mr PISONI: This is reference page 270, referring to purchasing and services.

The CHAIR: Can you help me out? I cannot find it. Can you assist me? Page 270, did you say?

Mr PISONI: Supplies and services: $654 million dollars' worth.

The CHAIR: What are you asking for then?

Mr PISONI: I am asking for confirmation that the new contracts signed for cleaners restrict cleaners to cleaning school buildings between 7.30am and 6pm.

The Hon. G. PORTOLESI: We do not have the contract in front of us, but I am happy to seek that information.

Mr PISONI: Could you also bring back to the house how many contracts have been let this year with that time and performance clause that refers to the 7.30am to 6pm cleaning time?

The Hon. G. PORTOLESI: That is a question that could only be answered by taking it on notice, and I am happy to do that.

Mr PISONI: I refer to page 277 regarding income under 'Student and other fees and charges' of $131,257,000 up from $124,474,000 the previous year. Can you confirm what percentage of this increase is from increases in school fees for public school students?

The Hon. G. PORTOLESI: I will provide that information for you. I will take it on notice.

Mr PISONI: Could you also provide what the additional fees and charges were for the previous year 2010 and budgeted for the 2011 year?

The Hon. G. PORTOLESI: If that information exists, I am happy to provide it.

Mr PISONI: Referring again to salaries on page 272 where it lists the number of staff employed under awards. I do not expect you to answer this now. You needed to bring it back to me last time I asked this question, and I am happy for that to happen. Are you able to provide for each department or agency reporting to the minister how many surplus employees there will be as of 30 September 2011? For each surplus employee, what is the title or classification of that employee and/or the total cost of the employee?

The CHAIR: Member for Unley, that is a question for question time, not a question for the Auditor-General's Report. You are moving into this financial year. That is my ruling.

Mr PISONI: She can bring it back.

The CHAIR: No.

Mr PISONI: And it is referred to—

The CHAIR: You can ask—

Mr PISONI: I am referring to the Auditor-General's Report—

The CHAIR: No.

Mr PISONI: —about employees.

The CHAIR: The Auditor-General's Report does not refer to the 2011-12 year. We are looking at 2010-11.

Mr PISONI: I will have it for—

Mr Marshall interjecting:

The CHAIR: No. You can ask that question in question time. I am ruling it out of order. I can give you another question, if you like, to make up for it. Does the member for Unley wish another question? I am being lenient.

Mr PISONI: On page 309, it talks about the PPP-related commitments. We are seeing PPP maintenance commitments. Future operations and maintenance commitments are payable in nominal fees and terms. We have figures here in categories within a year, and later than one year but not later than five years, and then later than five years. For 2011 and 2010 they are very similar figures. Are you able to advise the house as to whether there will be any impact on the liabilities with interest rate changes, or alternatively with any change of the downgrading of South Australia's AAA credit rating?

The Hon. G. PORTOLESI: That is pure speculation, so I am not in a position to respond to that question.

Mr PISONI: So are you saying there is no contingency? Is that the answer?

The CHAIR: I gave the member an opportunity. The time has clearly expired for the examination of the Auditor-General's Report for the Minister for Education and Child Development.

Progress reported; committee to sit again.


[Sitting extended beyond 18:00 on motion of Hon. J.J. Snelling]


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